Having successfully maintained demand in the residential property market through the boost to the first homeowner grant, the federal government has extended the deadline in hopes of continuing the benefits.
Treasurer Wayne Swan said the boost would be extended for another six months, including three months at the full rate of $7,000 to $14,000, before cutting it in half until the end of the year.
However, the funds provided to first homeowners in the recently extended First Homeowner Grant Boost Scheme have become built into purchase prices, creating somewhat of a bubble, according to Warwick Clarke, independent investment property analyst with Cameron Baird Group.
"A bubble has been created and it's unsustainable. I don't think the first homebuyer section of the market is presenting a good value at the moment. Investors are better off buying older, cheaper and smaller one bedroom apartment that won't appeal to first homebuyers because these properties can easily be rented. I think the small one-bedders are probably the best investment at the moment as some of these have much lower than replacement cost and they represent better value," said Clarke.
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