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First Home Saver Account scheme to be made more flexible in budget changes announced tonight by Treasurer Wayne Swan.
 

Rules governing First Home Saver Account will be changed to make them more flexible, addressing a key concern young Australians have had in taking up the savings accounts to date.

Currently a First Home Saver Account must be held for a minimum 4 year period before accessing the funds to buy a first home (see other First Home Saver Account rules). If a first home is purchased before meeting the 4 year rule, the First Home Saver Account must be closed and the balance transferred to a superannuation fund. Many potential account holders saw this as too restrictive.

Under changes announced in the 2010 budget an account holder will be able to purchase their first home any time. The 4 year qualifying period to release the funds will remain, however the First Home Saver Account will be able to be paid into an approved mortgage at the end of this period. The rule change is designed to allow first home savers to be better able to make purchasing decisions appropriate to their changing circumstances.

First Home Saver Accounts provide tax concessions and bonus contributions from the Government to assist aspiring first home buyers realise their home ownership goals.

“We are improving the First Home Saver Accounts to help address the housing affordability challenge faced by so many young Australians” said the Treasurer in his 2010 budget speech.

The government will consult on the proposed changes in the coming months.

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The First Home Owners Boost has been extended for an additional six months, in budget measures announced tonight by the Treasurer.

The temporary scheme increasing the First Home Owners Grant was introduced last October to stimulate demand in the sagging housing sector, and was due to end on 30th June 2009. In response to the ongoing economic uncertainty and the success of the initiative, the Government will now extend the scheme for first home buyers until 31st December 2009.

The First Home Owners Boost will continue to provide first home buyers with $7000 for established homes and $14,000 for new homes for those entering contracts by 30th September 2009. When combined with the existing $7000 grant from the First Home Owners Scheme, first home owners will receive $14,000 for established homes and $21,000 for new homes.

The First Home Owners Boost will then halve to $3500 for established homes and $7000 for new homes, ceasing after 31st December 2009. So between 1st October 2009 and 31st December 2009, the First Home Owners Boost will provide $10,500 for established homes and $14,000 for new homes when combined with grants from the First Home Owners Scheme.

The extension is designed to continue stimulating housing activity and construction, and to help first home buyers to enter the housing market. The first-home owner's boost has already helped 59,000 Australians buy their first home. The extension will cost the Government $539 million over three years.

After 31st December 2009 when the First Home Owners Boost ceases, the $7000 First Home Owners Scheme grant will continue.

Read budget announcement

First home buyers continue to dominate in news about the property market, as the proportion of first home owners as a percentage of all new home loan volumes reached 26.9 per cent in February, its highest since this data was first collected in 1991.

The federal government's moves in October last year to double the first home owners grant to $14,000 for established dwellings and tripling it to $21,000 for new built homes has driven higher levels of activity by first time buyers. Meanwhile investors represented just 24 per cent of loans in February, compared with nearly 31 per cent in July 2008.

It is expected that first home buyers will continue bolstering the market for home loans until the middle of the year, when the federal government's boost to the first home owners scheme is scheduled to end on June 30.

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First home buyer commitments as a percentage of total owner occupied housing finance commitments increased from 26.5% in January 2009 to 26.9% in February 2009, the Australian Bureau of Statistics said today.

This is the highest level recorded since the series commenced in 1991. Since the introduction of the First Home Buyers Boost in October 2008 the average loan size for first home buyers has risen from $264,500 to $280,600. The average loan size for all owner occupied housing commitments fell from $255,900 to $253,200 for the same period.

Read ABS release here