Housing First Home Owners Boost extension


Budget Review 2009-10 Index

Budget 2009 10: Housing

First Home Owners Boost extension

Peter Hicks

Funding of $539 million over three years is provided in the 2009–10 Budget for a six month extension to the First Home Owners Boost (FHOB). The FHOB was announced by the Government in its October 2008 Economic Security Strategy.[1]

The FHOB provides eligible first home buyers with $7000 for the purchase of an established home and $14 000 for the purchase of a new home. These amounts are in addition to the $7000 available under the ongoing First Home Owners Grant (FHOG).

When announcing the FHOB, the Government stated all contracts entered into by 30 June 2009 would be eligible and estimated that over 150 000 first home buyers would benefit. The expected cost was put at around $1.5 billion over 2008–09 and 2009–10.[2]

Under the extension to the FHOB announced in the 2009–10 Budget there will be no change to the amounts for eligible first home buyers entering into contracts between 1 July 2009 and 30 September 2009. However for contracts between 1 October 2009 and 31 December 2009, there will be a halving of the amounts available to eligible first home buyers. During this period, the FHOB will provide $3500 for those purchasing established homes and $7000 for buyers of new homes.

The FHOG was established via agreement between the Commonwealth and states and territories and came into effect on 1 July 2000. It was developed as part of the arrangements for implementing the new tax system and designed to offset the impact of the introduction of the GST.

The arrangements with the FHOB parallel the Additional First Home Owners Scheme which first applied between March 2001 and 31 December 2001 when an additional $7000 grant was available to first home owners building or purchasing new homes. The Additional First Home Owners Scheme was then extended but at the lower amount of $3000 for new homes built or purchased between 1 January and 30 June 2002.[3]

Payments under the FHOG have averaged close to $1 billion annually and expenditure under the Additional First Home Owners Scheme totalled almost $0.5 billion. With the announced extension, total outlays under the FHOB will be about $2.1 billion. This means that by the end of 2009–10, total direct budgetary outlays to first home buyers since 1 July 2000 is likely to be approaching $13 billion.[4]

The following table shows both the number of first home buyers and their average loan size since January 2008. Substantial increases have been recorded for both these measures since October 2008 although at least part of the surge in the number of first home buyers, especially in March 2009, can be attributed to the pull forward effect of the measure which at that stage was being scheduled to end in June 2009.

Recent first home buyers—number and loan size

Month

No.

Average new loan size
(a) ($'000)

Jan-08

10 441

231.8

Feb-08

10 667

227.9

Mar-08

9 265

230.0

Apr-08

9 814

237.0

May-08

9 643

243.1

Jun-08

8 805

243.1

Jul-08

9 879

246.4

Aug-08

8 818

250.8

Sep-08

9 372

260.9

Oct-08

9 910

264.5

Nov-08

11 775

269.4

Dec-08

14 413

269.8

Jan-09

12 514

268.0

Feb-09

14 321

281.7

Mar-09

17 652

286.0

(a) – excludes alterations and additions

Source: Australian Bureau of Statistics (ABS), Housing Finance.[5]



[1].    K Rudd (Prime Minister) and W Swan (Treasurer), Economic security strategy, media release, 14 October 2008, viewed 19 May 2009, http://www.pm.gov.au/media/release/2008/media_release_0550.cfm

[2].    K Rudd and W Swan, Economic Security Strategy.

[3].    A brief history of first home buyers schemes is provided in: P Hicks, S Kompo-Harms and R Webb, Appropriation (Economic Security Strategy) Bill (No. 2) 2008–09, Bills digest, no. 61 2008–09, Parliamentary Library, Canberra, 2008, viewed 15 May 2009, http://www.aph.gov.au/Library/pubs/bd/2008-09/09bd061.pdf

[4].    Hicks, Kompo-Harms and Webb, p. 4.

[5].    Australian Bureau of Statistics (ABS), ‘Table 9a’, Housing Finance, cat. no. 5609.0, (electronic version), ABS, Canberra, 2009, viewed 14 May 2009, http://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/5609.0Mar%202009?OpenDocument

 

 


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