Up to 15,000 families are one step closer to home ownership, thanks to the Rudd government's $10.4bn bid to stop the Australian economy from falling into recession.
When the First Home Owner Grant (FHOG) was doubled for new house purchases in 2001, the number of new dwellings built increased by 3,000 per month over a nine-month period, according to the Housing Industry Association (HIA), Australia's largest building association.
HIA managing director Dr Ron Silberberg said the current $1.5bn boost to the FHOG will increase new dwelling production by 15,000.
"This measure will provide an immediate stimulus for new housing and help restore business confidence across the sector, particularly in the building product manufacturing sector," Silberberg said.
Prime Minister Kevin Rudd and Federal Treasurer Wayne Swan announced the $10.4bn Economic Security Strategy on Tuesday to strengthen the Australian economy "in the face of the worst global financial crisis since the Great Depression".
The FHOG boost was announced as part of the package to "stimulate housing activity and give first homebuyers a better chance in the housing market".
Effective immediately, first homebuyers who purchase established homes will be entitled to a $14,000 FHOG, up from $7,000, and those who purchase a newly-constructed home will receive an extra $14,000, taking their total grant to $21,000.
This is on top of the first homeowner's grants that are administered by each state, such as the First Home Bonus in Victoria, which tops up the FHOG by up to $8,000.
The scheme will benefit roughly 150,000 first homebuyers, and all contracts entered into by 30 June 2009 will be eligible.
REIA president Noel Dyett said the funding boost, combined with last week's reduction in interest rates, should provide "a much-needed impetus to first homebuyers who have been waiting to enter the housing market".
"The decision should also see a positive response by the home construction industry in increasing the production of new dwellings," said Dyett.