5 Jul 2009

First home grants boost NSW housing market

10:21 am on 5 July 2009

First home buyer grants are continuing to boost the housing market in the Australian state of New South Wales.

The number of first home buyer grants taken up across the state was 7,354 for the month of June, compared to 4,311 for February.

The trend in the figures mirrors trends in sales and grants on newly constructed homes.

From a low of 256 grants on newly purchased homes in January, figures have climbed steadily over the months, with 816 such grants in June - a six-month increase of 313%.

NSW Treasurer Eric Roozendaal dismissed suggestions that the state and federal stimulus payments to first-time home buyers were creating an artificial housing bubble that may burst once the payment schemes are trimmed.

"It's precisely what you do in an economic downturn," he told reporters in Sydney.

"We are directly targeting the housing construction sector - it is depressed (and) it has a huge multiplier (effect) right through the economy."

First-time home buyers receive $14,000 from NSW and commonwealth grants and a total of $24,000 in grants if they buy a new home.

From October 1, the federal component will be reduced, bringing the figures down to $10,500 for established homes and $14,000 for new homes.

From January 1, 2010, the grants in both categories will be reduced to their original amounts of $7,000.

But the NSW government added an additional $3,000 in the November 2008 mini-budget for the new buyer/new home purchase category.

The NSW grants and concessions will last through the 2009/10 financial year and will be re-evaluated closer to June 2010.