FHOG to double to $14K

Cash thrown at economic woes | NEWS.com.au

First homebuyers

First homebuyers will be eligible for grants of up to $21,000 designed to stimulate housing activity.
The scheme will be time limited. All contracts entered into by June 30 next year will be eligible for the new assistance.

The payment under the first home buyers scheme will be doubled from $7000 to $14,000 and first home buyers who buy newly-constructed home will receive an extra $14,000 taking their total grant to $21,000.

The Government will invest about $1.5 billion in the housing market over 2008/09 and 2009/10 through this initiative.

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Sounds good to me, I'm looking at buying my first home in the near future

 

The scheme will be time limited. All contracts entered into by June 30 next year will be eligible for the new assistance.


Does that mean first home buyers prior to June 30 2009 would be eligible??

 

That's excellent news

 

And the price of a new house just went up by $14,000!

This is a bad sign for the property market.... This doesn't address affordibility issues or lack of supply.

when a government has to pay you $21,000 to build a new house, you know the system is stuffed.

 

Well if I were a FHB it would certainly put a smile on my dial. But is it all that good for the economy?

I well remember when the grant was first introduced back in 2000 - not only did it cause a flurry of activity in the housing market but prices were artificially stimulated, to the point where the $7K grant hardly mattered. The benefit was eaten up by the increasing prices in an alarmingly fast fashion.
Is this likely to happen again?
Yes, I understand where Rudd is coming from- wanting to stave off a recession and pump some confidence back into our seemingly stagnant property market, but I don't believe that doubling the grant is necessarily the answer. It may appear also to be a short term solution to kick up activity, but it may also well impact on affordability, making it worse, not better, for home owners (first or otherwise) especially in cities like Sydney and Melbourne.

 

Doubling the FHOG

Does anyone know when this kicks in? I'm about to exchange on my first house

 

Rudd is trying to kill two birds with one stone - stimulate the economy/employment and increase the supply of housing.

I don't think it is such a good idea, as it will increase household debt more, and perhaps promote an even worse downturn next financial year when the grant stops. The property market is probably over-inflated anyway, debt levels are very high making households vulnerable to any downturn, as ugly as it sounds the only remedy is a correction or a year or two of flat prices.

Maybe there are better places to throw stimulus money at other than the overinflated housing market.

 

Looking at the recent events around the world it is clear that no one has any idea how to tackle financial crisis. It is obvious governments are making it as they go. Only six months ago we were told we must push interest rates up and curve spending – today our government does exactly opposite. Policies are made on the run and no one can predict consequences. Yes, prices will go up or at least will not go down as predicted by many “experts” Everyone should know its not about affordability of first home buyers. It is about keeping housing industry alive. Which is Ok by me

 

Absolutely!!!

Same thing is going to happen where the prices are going to be pushed up faster than the $14,000 which is to help people buy homes.

At least lenders, mortgage brokers and real estate agents will be busier.

Cheers,

Dan

 

hmmm, wasn't that the whole idea behind the original first-home buyers grant? To help the building industry, more specifically to offset the expected effects of the GST? If I remember correctly it was not to help first home buyers. Funny how it has gradually morphed into something else, and now it has gone back to square 1 again!

 

yes and it states contracts so if you sign before the 30th and settle after the 30th it should be ok.

However, this needs to be verifed because the government hasn't given out all the details.

Cheers

 

Hopefully it would apply to existing contracts,
if not then maybe you can ask the vendor to let you cancel the contract and sign a new 1 and pay them a small amount for the inconvenience?

Cheers

 

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First home benefits - NSW Office of State Revenue