Australia Extends First-Time Home Buyers' Grant for Six Months

May 13, 2009

Australia's government will extend cash handouts for first-time home buyers by six months to bolster the housing market and help an economy that has sunk into its first recession in two decades. Former Prime Minister John Howard introduced a A$7,000 ($5,300) grant for first-time property buyers in 2000 to boost a slumping housing market. Prime Minister Kevin Rudd last year tripled the payments for new homes to A$21,000 and doubled handouts for existing houses to A$14,000. Rudd's handouts were scheduled to revert to the original A$7,000 grant after June 30. First-time buyers can continue to claim A$21,000 for newly built properties and A$14,000 for established homes on purchases before Sept. 30, Treasurer Wayne Swan said today in his annual budget. From Oct. 1 to Dec. 31, the grants will be reduced to A$14,000 and A$10,500 respectively. Both payments will then revert to A$7,000, he said. The handouts and Australia's lowest interest rates in 49 years have stimulated the property market and bolstered the economy as the global recession roils export earnings. Home-loan approvals rose 4.9 percent in March from February, the sixth consecutive increase, a report showed today. ``In light of the continuing global uncertainty and the success of this initiative, we will extend the boost for a further six months,'' Swan said. Investment in new housing will decline 2.5 percent in the year ending June 30 and will be unchanged the following year, according to government forecasts released in today's budget. Housing investment will surge 11.5 percent in the year ending June 30, 2011, it estimated. Australia's economy will post no growth in fiscal 2008-2009 and contract 0.5 percent the following year, the government predicted.