According to economic forecaster BIS Shrapnel, Australia's housing market may be showing some signs of recovery, at least when it comes to new homes. Residential building is expected to rise by 10 per cent next year, which could help with the problem of rental shortages.
BIS Shrapnel is confident that the increases to the First Home Owner Grant will help to improve funding availability to build apartment complexes, and is calling for the increases to be extended beyond the June 30 cut off date.
As part of the government's $10.4 billion stimulus plan for the slowing economy, the grant for first-home owners buying a newly constructed home has been tripled to $21,000.
"Using more of the budget surplus to extend the Boost Scheme will have greater economic benefits than tax cuts, given the risk that tax cuts could be saved rather than spent," BIS Shrapnel senior economist Jason Anderson said.
"Alleviating housing shortages will limit growth in rents, which, if nothing is done, are forecast to increase by 10 per cent in 2009, up from eight per cent in 2008."
Mr Anderson believes that decreasing the current rental pressure in the market is more likely to benefit lower income households.
ACT, Victoria, Western Australia, Northern Territory and Queensland are expected to benefit the most from the temporary benefit.
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