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The end of the beefed up first home owner grant (FHOG) is unlikely to see that sector of the market grind to a halt, according to a report released by QBE LMI on Friday.
Should the increased grant end as scheduled on 30 June, the industry is likely to see first home buyer demand spike in coming weeks followed by an “immediate brief shock” in terms of dwelling demand and prices, the report found, based on an analysis on the effect of the increased grants earlier in the decade.
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However the combination of increasing first home buyer-aged households, rising rents and low interest rates will continue to support first home buyer demand, QBE LMI said.
The report also found that rising unemployment and an expected increase in interest rates are unlikely to cause a wave of defaults.
With first home buyers now likely to borrow only 90 or 95 per cent LVRs and unemployment likely to peak lower than in previous periods, QBE LMI said large scale defaults were unlikely.
