The Federal Government has announced significant increases to the Grant available to first home buyers. The new measures now bring the total available to those buying a newly constructed home to $26,000 increasing to $29,000 in regional Victoria (subject to certain requirements).
First home buyers purchasing an established home will now be entitled to between $14,000 and $17,000 (subject to certain requirements).
First home buyers will be eligible for the new additional assistance for contracts entered into from 14 October 2008 to 30 June 2009.
Despite the good news, first home buyers are being cautious, preferring to wait out the current economic crisis and to adopt a wait-and-see approach to house buying.
Some critics are of the view that the extra money is not going to stimulate the housing market sufficiently; it will just push prices up by the amount of the grant, thus continuing the housing affordability problem.
The root cause of the crisis, according to Prof Steve Keen of the University of Western Sydney’s school of economics and finance, is excessive debt. He worries that more borrowing by home owners off the back of the new increased grant will merely lead to a bigger bubble and a 'scarier final bust'.
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