Mixed response for grant reprieveTuesday, June 16, 2009 For the property market, the most important revelation to come out of the federal budget was that first-home buyers will get some reprieve with the boost to the first-home buyers grant being extended to the end of September.After this the boost will be halved, providing a $10,500 bonus to first-timers buying an existing dwelling, or $14,000 for those buying a new home. This decision is sure to be met with a mixed response. Many people have been vocal in their disapproval of the grant, suggesting the incentive has brought forward demand from first-home buyers and artificially inflated prices in our mortgage belts. On the flipside, the argument is that demand from first buyers has been relatively flat since 2004. As interest rates dived, house values fell and the Government provided a boost to the grant. Pent-up demand was released, resulting in the flurry of activity we now see. For many of these affordable areas the recent price growth is simply offsetting the falls in housing prices that many recorded between 2004 and 2009. I expected the Government to maintain the $21,000 boost for new dwellings and wind back the grant for existing dwellings to $7000. The logic for this is it makes sense to focus the greatest stimulus on areas of the housing market that will provide the greatest benefit to the economy. A focus on stimulating new dwelling sales would also help alleviate our chronic housing undersupply.
- SMH, Tim Lawless |
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