First homebuyers are now eligible for a $10,000 grant for newly-constructed homes in Western Australia.
But buyers of established homes are now only eligible for a $3000 grant.
Both kinds of purchases were previously eligible for a $7000 state government contribution.
The first home owners grant changes were flagged in the 2013/14 state budget and the legislation was amended in parliament last week.
The changes came into effect on Wednesday.
Treasurer Troy Buswell has said the changes to the scheme aimed to give people an incentive to build new homes and ease the state's housing shortage.