Renewed optimism for first home buyers

Following the Rudd government’s announcement last week to boost grants for first home buyers by $1.5 billion, agents and builders have already reported a marked increase in inquiries from first home owners keen to take advantage of the bonus government money, and lower mortgage interest rates.

"First home buyers have been coming into our office, which is unusual as it's usually only second and third home buyers who can afford a new home”, suggested one house and land package sales manager.

Given the turmoil in financial markets, first home buyers along with property investors have been staying out of the market, with Reserve Bank of Australia figures showing demand for home loans has plunged to its lowest level since the early 1980s and loans to investors are at their lowest level on record.

The tripling of the first home owners grant for new homes could inject some stability back into the housing construction market. At the very least confidence in the property market has improved, and according to Citigroup’s director of economic and market analysis, Shane Lee, the extra government incentives should result in a property market recovery in the first half of 2009.

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