First homebuyers grab increased grant

The Rudd government is under pressure to extend its generous first homebuyers grant following a sharp increase of newcomers to the housing market.

First homebuyers are cashing in on the grant that was doubled to $14,000 for existing homes and tripled to $21,000 for newly-built homes in October last year.

Between October and November the number of new houses purchased by first homebuyers jumped by almost 10 per cent, Australian Bureau of Statistics figures show.

In November, first homebuyers snapped up 11,665 new dwellings, up from 9,901 in October.

But the newcomers, who represent about one quarter of the market, failed to offset an overall decline in purchases of about one per cent during the same period.

Between October and November, the number of houses purchased by non-first homebuyers fell by more than 3,000.

Mortgage lenders say the increased grant, due to expire on June 30, should be extended to help to stabilise the market during the economic downturn.

"First time buyers are vital to the health of the housing market so the continuation of incentives to encourage them should be carefully considered," Mortgage and Finance Association CEO Phil Naylor said.

Federal Housing Minister Plibersek said the figures were encouraging but did not indicate whether an extension of the grant was under consideration.

"There's a high degree of enthusiasm there that's been backed by the actions of the federal government and...prompted by the reduction in interest rates," she said.

The federal opposition said an extension would take the federal budget further into deficit and do nothing to ease the estimated 200,000 shortfall in housing.

"Extending the grant is only going to drive the budget further into deficit and not solve any of the longer-term problems," Opposition housing spokesman Scott Morrison said.

Mr Morrison said exorbitant state and local government charges associated with new housing development must be cut and more land released.

He also criticised the Housing Affordability Fund that will provide $512 million over five years to subsidise costs associated with new housing.

"All it is effectively doing is enabling the government to pay, in selected instances, state and local government tax and charges.

"That's feeding a habit, not curing the habit."

The federal government on Wednesday announced the 33 projects that would share in the first $112 million of the fund.

Ms Plibersek said the grants were targeted towards areas of high demand and homebuyers would save between $10,000 and $15,000 per lot.