There is speculation the Federal Government will pretty much scrap the extra first home buyers grant of $14,000 in the May budget ‚€“ except in Victoria, where the Brumby Government has elected to maintain the extra $14,000 for those buying and or building brand new homes.
Should we be upset over the end of the boost for first home buyers?
After careful consideration, and as one who would miss out on the boost, I say good riddance!  The bonus of $14,000 has served to only distort the market. Since the introduction of the first home buyers' "boost", housing prices for the lower-end sector, priced between $250,000 - $450,000, have dramatically risen. According to RP Data-Rismark, both house and flat prices in Australia increased in value by 1.6% in the first three months of the year, growing even though the economy had officially entered a recession. The extra boost whilst generous, has motivated more first time home buyers to enter the market than there ordinarily would be. The relationship between supply and demand dictates, more demand relative to supply, and prices rise. So naturally the prices of established homes in the lower sector have risen, making even these homes unaffordable for many average Aussie families.
Perhaps without the financial boost, distorted property prices may very well come back in line, with affordability.
I wonder if we are actually heading for a housing crisis later this year. With the prediction of rising unemployment levels many households may well find they are close to the edge. Experiencing mortgage stress, because they are in an overvalued home, which ordinarily with out the extra $14,000 they couldn‚€™t afford anyway.
Sonia Williams a mother of two, qualified accountant, author and founder of the site Show Mummy the Money
, where you can learn how to, save, make and protect their money. This information is correct at time of writing. It is general advice only and has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information.