Oz extends first home grant
After much dismay from first-time buyers and developers at the news that the Australian Government was stopping the First Home Owners Boost Scheme, which was helping thousands to get onto the property ladder, it is now time for Celebration as the scheme is to continue until October...
Australian Prime Minister Kevin Rudd had been hinting that the grant would end next month, sending shockwaves through the property industry.
The grant, which awards first time buyers who are purchasing existing homes £7,000 and those buying new homes £10,500, will now continue in this format until October of this year - an extension of three months. It will end completely in December - an extension of six months.
Economist for Australian Property Monitors, Matthew Bell said, "This decision will continue the stimulus to both the housing construction and development sector, as well as the sales activity at the more affordable end of the property market.
"First Home Buyers now have some extra time to consider their potential purchase of a home to take advantage of the Boost.
"As always, first home buyers should carefully take into account their ability to meet mortgage payments in the future when interest rates inevitably rise, as well as their employment situation in a tough economy," added Mr Bell.
The scheme has helped to buoy up the struggling property market in Australia, increasing the number of buyers managing to get onto the ladder and in turn boosting the lenders.
Data from the Australian Finance Group (AFG) shows that the volume of mortgages arranged by the company rose by 36.8 per cent year-on-year in February to 7,673 loans, valued at £1.28 billion.
Of those, 26.1 per cent were taken out by first-home buyers, up from 25.8 per cent in January.
AFG General Manager of Sales and Operations Mark Hewitt said, "The dramatic increase we've seen in first-home buyers since the scheme came in is a double-edged sword.
"It's positive in that it underpins the future recovery of mid-level property markets by getting significant numbers of people onto the property ladder," he added.
Before the extension of the scheme to October was announced, Mr Hewitt had said, "We're concerned that if the Government doesn't announce an extension to the grants fairly soon, we'll continue to pull demand forward, and will be left staring over a cliff come the end of June."
Now that the extension has been granted, one could argue that the same problem will now be faced on October 1st, when adjustments to the scheme will come into force.
From that date, the scheme will be lowered which means that those buying existing homes will receive around £5,275 and those buying new homes £7,000.
As of December 1, 2009 the First Home Owners Boost scheme will cease and the existing £3,500 grant will continue to be available to all first home buyers.
Matthew Bell added, "The gradual removal of the boost should minimise any price falls in the more affordable end of the market associated with the end of the Boost, and continue to stimulate sales activity in the generally slower winter market."
Picture by Thiru Murugan