A Sydney economist has voiced concerns that the increased first home owner grant could be detrimental to the property market and see thousands of young home buyers fall into bankruptcy.
Professor Steve Keen of the University of Western Sydney told The Daily Telegraph the first home buyer incentives were effectively encouraging the least wealthy segment of Australians into the property market in the face of growing economic instability.
“These low-paid first home buyers are the people who are most vulnerable to the economic downturn,” he said.
Dr Keen said extending the first home owner incentives would only end up over-inflating house prices further.
Australian house prices already cost nine times the average household income, compared to the seven times average income recorded in the UK and US before their markets crashed.
Dr Keen said this could see Australia endure its own version of the US housing crisis.