 First home buyer market slows
Australia's housing market has not seen a last-minute rush in first home buyers, despite the boost to the First Home Owner's Grant grant winding down from next month.
The boost to the first home owners grant is being reduced gradually from October 1 and then cut back to original levels from 1st January 2010.
Loan Market Group data shows loan enquiries from first time buyers had been falling during recent weeks, and are no where near the peak of demand seen mid-year. Lower interest rates and the grant boost had made home ownership more affordable this year, for many young Australians, executive director Mr Kolenda said.
However, with rising unemployment still a concern and with the boost winding down, the future of the housing market in Australia is uncertain.
It is recorded that more than 140,000 nationwide have received the FHOG boost since it was introduced last October. "There was no sign of people looking to cash in before the generous grant is pared back," executive director John Kolenda said in a statement.
"Other people considering buying a property have also been sitting back waiting for prices to fall."
The grant will be reduced to $10,500 and $14,000 respectively from October 1, before returning to its original $7,000 for both categories from January 1. The boost was introduced in October last year as part of the Rudd government's first stimulus package aimed at rescuing the local economy.
The governments own figures show the proportion of first home buyers peaked in May with a record high of 28.5 per cent. In July, that number had fallen by a small but noticeable to 25.7 per cent.
Mr Kolenda credits the grant boost for helping to support Australia's housing market during the global financial crisis and says the extra grant was a major incentive to many first time buyers. However, new tougher lending criteria from most banks will make securing a home loan harder in the future and may deter some first time buyers.
With less first time buyers in the market now than seen earlier in the year due to the boost is coming to an end, it is hoped that investors will step up to the plate and help the property market survive the next critical stage of the economic recovery. Property investors along with second and third time buyers could now come back into the market while rates are still so low.
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