Government urged to review FHOG boost before removing

The Real Estate Institute of Australia (REIA) has prepared a pre-budget submission to the Commonwealth Government, calling for a thorough review of the first home owner grant (FHOG) boost’s effectiveness before cutting it off at the proposed date of 31 June 2009.

REIA president Noel Dyett said “there is no point implementing an incentive scheme with a predetermined cut-off date to remove the incentive without first assessing whether it has been effective, or whether in fact it would be good policy for it to be continued.”

Accurate analysis of the impact of the boost can only be taken over an adequate time frame, Mr Dyett stressed with full assessment of the influence of other determinants – such as unemployment, interest rates and the state of the housing market.

Anecdotal evidence collected by the REIA suggests the boost has sparked increased interest in home ownership, but the REIA believes the lag in the supply response by builders and developers means much of this increased demand will not be satisfied until the second half of the year at the earliest.

The REIA believes the first home owners grant should be indexed to median house price movements to ensure it retains a direct correlation to increases in the cost of housing.