SCC Chartered Accountants

More for first homebuyers

First homebuyers can sleep easier with the announcement of an increase to the First Home Buyers Grant.

First home buyers are already eligible for a grant of $7000, which is funded by the Federal Government and administered by the states.

The offer, effective immediately, triples the $7,000 grant now payable under the existing first-home owners grant if new entrants to the market sign a contract on a newly built home before June 30 next year. It doubles the grant to $14,000 for contracts signed on established homes.

More than 150,000 Australians are expected to be helped by the improved grant.

The higher grants, which follow last month’s 1 percentage point cut in official interest rates, will give a shot in the arm to a housing market hit by higher interest rates and falling consumer confidence.

This move by the Federal Government has been welcomed by many, although some commentators have suggested it may lead to an increase in housing prices.

Australia's housing market has headed sharply southwards in recent months, with the building approvals showing a 3.7 per cent decline in seasonally adjusted terms in August. In the same month, the total number of dwellings financed for owner-occupiers fell by a seasonally adjusted 2.2 per cent in August to 48,903 - the first time the figure had dropped below 50,000 since 2001.

The Prime Minister, Kevin Rudd, said the move was designed to stimulate construction and help first home buyers, tackling the economy's "twin challenges" of a subdued housing industry and poor affordability.

Anyone who signs a contract to buy their first home between 14th October 2008 and 30th June 2009 will be eligible.