theaustralian.news.com.au - 13th May 2009

First-home grant offer extended

HOME buyers have been given an extra six months to collect a souped-up handout to get into the property market with the Rudd Government yesterday extending the $7000 top-up to the first-home buyers grant until the end of the year.

The grant, which will cost $539million over three years, will continue at its present level of $21,000 for new homes and $14,000 for existing homes until the end of September.

It will then be stepped down to $14,000 for new homes and $10,500 for existing homes until the end of the year.

From January 1, the first-home buyers grant will revert to its original level, which is $7000 for new and existing homes.

The announcement, in last night's budget, came as the Australian Bureau of Statistics revealed first-home buyers accounted for a record share of 27.3 per cent of new home loans.

Total home lending soared in March, up 6.7 per cent on February.

Investors also showed their first signs of returning to the market, with investment loans rising 4.7 per cent in March.

Treasurer Wayne Swan last night told Parliament the first-home owners boost had supported employment and helped 59,000 Australians buy their first home.

The housing industry had lobbied hard for the Government to extend the boost, which was raised in October to prop up activity in the construction sector in the face of the severe financial downturn.

The Government had originally set a deadline of June 30 for the boost to end, with critics arguing the grant pushed up housing prices and reduced affordability for other home buyers.

Kevin Rudd had fuelled a frenzy among first-home buyers last month, warning in relation to the boost that all good things must "come to an end".

Housing Minister Tanya Plibersek yesterday said the housing boost had been "phenomenally successful".

In a joint statement, Ms Plibersek and Mr Swan said: "Extending the first-home owner's boost will mean more opportunities for Australians to enter the housing market for the first time, and will support many thousands of jobs in the vital housing sector along with the companies in the housing supply chain."

The construction sector said the latest lending figures showed the boost to the first-home buyers scheme had been the most successful element of the Government's efforts to stimulate the economy.

It had urged the Government to maintain a "substantial margin" between the grant for new homes and existing homes, to maximise the impact of the grant in driving construction activity.

The Government said it was stepping down the boost on October 1, to ensure a "responsible phasing out" of the measure.