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No Last Minute Rush By First Time Home Buyers
Potential first time home buyers have not been involved in any last minute rush to secure the Federal Government housing grant ahead of the October 1st deadline, when the government pares back the generous terms of the subsidy, a leading mortgage broker says.
As part of the government’s fiscal stimulus package last October, in response to the global economic slowdown, the government doubled the first home owners grant to $14,000 for existing homes and to $21,000 for new properties.
From October 1st, the government intends to reduce the subsidy to $10,500 and $14,000 respectively, until the 1st of January, at which point the grant will return to its original level of $7,000 for both categories,
According to mortgage broker the Loan Market Group, home loan enquiries from first time buyers have steadily fallen from their mid-year peak.
“There was no sign of people looking to cash in before the generous grant is pared back,” executive director John Kolenda said in a statement.
The increased federal subsidy has been very successful in stabilizing the property market, with more than 140,000 Australians making use of the grant to purchase homes.
Government data shows the proportion of first-time home buyers taking out a mortgage struck a record high of 28.5 per cent in May. In July it was 25.7 per cent.
According to Mr. Kolenda, without the federal government grant, more onerous lending conditions imposed by the major banks would have made it extremely difficult for some first time property buyers to secure the financing they required.
“Other people considering buying a property have also been sitting back waiting for prices to fall.”
The combined effects of both the increased subsidy levels and half century low interest rates has had the desired effect of propping up the property market, creating conditions that have made it possible for a large number of Australians to afford buying a house.
“The residential real estate sector in Australia has so far weathered the worst of the downturn and the grant has played a major part in shoring up the market.”
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