The government has come under increasing pressure to extend the increased first home buyer grant as fears grow that the grant’s positive effects will be reversed by the worsening economic conditions likely to plague the economy for the coming year.
Housing finance figures released by the ABS yesterday showed first home buyers spurred another improvement in home loan activity.
The total number of dwellings financed rose 3.5 per cent in January with the percentage of first home buyers growing to 26.5 per cent.
John Kolenda, executive director of Loan Market Group, said if the grant expired on June 30 there could be a “dramatic drop off in activity” which could threaten the current improvement in the residential real estate sector.
Property analysis group Residex has also warned that the government could trigger a price collapse by suddenly cutting off the grants, according to The Australian Financial Review.
While the government has acknowledged the success of the increased grant finance minister Lindsay Tanner said yesterday its extension would depend on a very tough May budget, with many issues up for consideration.
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