MORE than 150,000 first-home buyers will receive up to $14,000 extra in taxpayer funding to tempt them into a moribund housing market and revive building activity.
The Government yesterday sought to bring forward tens of billions of dollars' worth of new home sales over the next nine months by putting almost $1.5 billion on the table and setting a deadline for its offer.
The offer, effective immediately, triples the $7000 grant now payable under the existing first-home owners grant if new entrants to the market sign a contract on a newly built home before June 30 next year. It doubles the grant to $14,000 for contracts signed on established homes.
"This is designed to support activity in the housing sector," Kevin Rudd said. "And the housing sector is critical in terms of the overall performance of the economy."
The building industry has embraced the measure, with Housing Industry Association managing director Ron Silberberg predicting it would boost new dwellings by 15,000.
Master Builders Australia chief executive Wilhelm Harnisch said the confidence the measure would bring the market should help counter the effects of a local economic slowdown.
"Kick-starting the housing sector is a proven success formula for stimulating economic growth because of the multiplier effects it has on the broader economy, in terms of providing jobs as well as stimulating the manufacturing and retail sectors," he said.
Australia's housing market has headed sharply southwards in recent months, with the building approvals showing a 3.7 per cent decline in seasonally adjusted terms in August. In the same month, the total number of dwellings financed for owner-occupiers fell by a seasonally adjusted 2.2 per cent in August to 48,903 -- the first time the figure had dropped below 50,000 since 2001.
The Government's decision to massively, albeit temporarily, expand the first-home owners grant introduced by its predecessor comes just months after a bipartisan Senate committee report into housing affordability called for the scheme to be scaled back for established home sales.
The June report cited the Productivity Commission's criticism that grant top-ups could push up house prices, benefiting existing home owners at the expense of first-home buyers.
The Reserve Bank, which this month delivered its biggest interest rate cut in 16 years in a separate economic stimulus, also warned the committee of the higher housing prices that could flow from such policies.
Opposition Leader Malcolm Turnbull, however, backed the Government's package yesterday, saying he thought it "very unlikely" the supersized grants would overheat the housing market.
Some of the most strident critics of taxpayer subsidies of first-home buyers have come from the welfare sector, which wants the grants means-tested or a ceiling imposed on the price of the dwelling bought. They argue direct government funding of low-cost public and community housing would stimulate the economy and ensure less leakage into the pockets of established home owners.
Gregor Macfie, acting chief executive officer of the Australian Council of Social Service, said yesterday the welfare sector was still waiting for extra government funding to go towards the bigger priority of public housing.
