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The increase to the First Home Owner Grant (FHOG) appears to have stimulated buyer activity and the majority of brokers believe the boost should now be extended past its June 30 deadline.
ABS data for November showed the percentage of home loans taken out by first home buyers rose to a seven year high of 23.6 per cent – almost a quarter of all loan approvals.
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Government figures released earlier this month also showed that more than 5,000 first home buyers applied for the upped FHOG in November.
With evidence that the initiative has been effective brokers believe the grant boost needs to be given more time to reach its full potential.
Over 80 per cent of the 573 respondents to Mortgage Business’ latest weekly straw poll said the beefed-up grant needed to be extended past its proposed deadline of 30 June this year.
Just 15 per cent said the boost shouldn’t be extended while one per cent said they were unsure.
Rather than simply cutting off the grant increase in June, the Real Estate Institute of Australia (REIA) has called on the government to review its impact before making any decisions.
President of the REIA Noel Dyett said there’s no point removing the incentive without first assessing whether it has been effective and whether in fact it might be good policy to continue it into the future.
“Our attitude is that rather than setting timelines and deadlines the government should be monitoring the boost while it’s in place,” Mr Dyett told Mortgage Business.
While Mr Dyett said that he hoped the government would consider extending the grant if it were needed, such an extension should only be announced near the proposed deadline.
“I don’t think the government should come out and say yes, we’ll extend it, because then people will sit back and wait rather than act now,” he said.
Simon Pressley of 6-Point Finance expressed similar sentiments to Mr Dyett.
“The best thing about the FHOG boost is not just the increase to the grant but the expiry date of 30 June 2009. It creates a call to action to encourage first home buyers to act now,” he said.
“The FHOG boost is working. We are now busy helping many first home buyers to develop a plan so that they can buy a property before 30 June.
“Let the June 30 deadline do the job it has already started. There is always the option of waiting to mid-June and announcing an increase then if the economy needs it.”
