Industry under threat if First Home Owners Grant not extended

With the first home owners grant (FHOG) coming to an end in a few months time, AFG's Mark Hewitt warns that if the government chooses not to extend it, the industry could be left "staring over a cliff" at the end of June.

The comments come on the back of the latest AFG Mortgage Index figures, which revealed that $2.6 billion in mortgages were sold in February 2009 - the highest volume since November 2007 ($2.7 billion). This marked a 40% increase between January and February 2009 sales, and was driven by a high volume of first homebuyers keen to get loans across the line before the 30 June 2009 deadline.

In NSW, first homebuyers comprised 34.5% of the total market. They also made up a significant portion of the market in Victoria (26.8%), Western Australia (25.2%) and SA (15.6%). Nationally first homebuyers comprised 26.1% of all mortgages sold.

However Hewitt, AFG's general manager for sales and operations, said the dramatic increase of first homebuyers was a "double edged sword"

"It's positive in that it underpins the future recovery of mid-level property markets by getting significant numbers of people onto the property ladder," he said.

"But we're concerned that if the government doesn't announce an extension to the grants fairly soon, we'll continue to pull demand forward, and will be left staring over a cliff come the end of June 2009."

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