First-home buyers revitalise the market
Tim Colebatch
February 16, 2009
AUCTION clearance rates have rebounded in Melbourne, Sydney and Canberra, confirming signs that the Federal Government's short-term lift in the first-home buyer's grant has kicked the sector back into life.
A week after the Bureau of Statistics reported that loans to first-home buyers surged in December, auction clearance rates on the first weekend of the 2009 season were 70 to 75 per cent in all three cities, up from barely 50 per cent late last year.
Industry sources say the rebound is due to falling interest rates and the Government's decision to treble temporarily the first-home buyer's grant for new housing, and double it for existing homes.
The bureau's figures showed almost 40 per cent of all people taking out loans to buy a home in December were first-home buyers. Stockland managing director Matthew Quinn said last week 65 per cent of Stockland customers were now first-home buyers.
In the United States, housing demand and prices have gone into freefall, pitching the country into recession. The Federal Government is keen to make sure it does not happen here.
Ironically, the scheme's success will put the Government under pressure to extend it after June 30, when it is scheduled to cut out. A decision is likely to be made in the May budget.
Deputy Prime Minister Julia Gillard said yesterday the Government would decide what to do about paid maternity leave in the same budget, and would also "have more to say about supporting people who are looking for work".
The US Congress on Saturday finally passed a modified version of President Obama's $A1.2 trillion stimulus package, including cuts in social security taxes and a rise in the level of unemployment benefits.
The Australian Council of Social Service and Family First senator Steve Fielding have criticised the Federal Government for failing to lift the unemployment benefit from $225 a week, among the lowest in the Western world. In other news:
¦Eurostat reported that Europe's economic growth crashed in the December quarter, with output slumping by 1.5 per cent from September in the 27-member European Union, the world's biggest market. The US has reported a 1 per cent fall. Australia's figure will be released on March 3.
¦Finance Minister Lindsay Tanner has ruled out tax rises to pay for the Government's $42 billion stimulus, and ridiculed Opposition attacks on the rise in debt to pay for it.
"The debt level involved here is the same as applied under Howard in 2002 … as a proportion of the total economy," Mr Tanner said. "For the previous 20 years, the debt level was higher for 17 of those 20 years. The world didn't come to an end."
Net debt, he said, would be "around 5 per cent of the total economy. That's like a person on $100,000 a year borrowing $5000."
KEY POINTS
¦Clearance rates surge in Melbourne, Sydney and Canberra.
¦Rebound due to low interest rates, first-home buyer's grant.
¦Grant's temporary increase may be extended in May budget.
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