Not granting oz's wishes

A grant to help Australians buy a first home and which has been credited with helping the country's property market deflect international downturn may not be continued past a June cutoff, Prime Minister Kevin Rudd said...

Under the Government's £729 billion first home buyers boost, the grant was tripled last year from £3,400 to £10,200 for newly-constructed homes to aid the stalling economy until June 30th this year.

Other first property buyers choosing existing homes received a doubled grant of £6,800.

"We've indicated that that will conclude in a very fixed and finite timeframe," Rudd told a community meeting in Perth late on Wednesday, according to Sky News Australia.

"It's had a real effect. We're still measuring its full effect, but I think it's very important that as a community we understand that deadlines are imposed for a particular purpose. All good things must come to an end," Rudd said.

Construction and real estate firms have called for the Government to continue the grant amid fears the property market may collapse without it as Australia teeters on the edge of recession. More than 42,000 people have taken up the grant.

Critics have warned the grant is encouraging inexperienced buyers to borrow amounts larger than they can afford, with average loans rising by 22 per cent from £111,700 to £136,500 since March last year.

Australia's economy is set to contract by 1.4 per cent in 2009, the International Monetary Fund said in its latest growth forecast, before growing 0.6 per cent next year.

The forecast is worse than the official Government forcast for growth of one per cent in 2008-09, issued in February, but likely to be downgraded in the May 12th budget.

Treasurer Wayne Swan on Thursday said a recession in Australia was "inevitable" as growth around the world went into decline, hitting most of Canberra's major trade partners.

Source: www.iii.co.uk