Leading mortgage broker Loan Market Group has called for more measures in the May 12 Budget to boost the property market after the Reserve Bank of Australia today left official interest rates on hold at 3.0 per cent.

Loan Market Group Executive Director John Kolenda said the residential real estate sector faced uncertain times with the expanded First Home Buyers Grant scheduled to end on June 30.

Mr Kolenda said the boosted grant and the big reductions in home mortgage rates over the past six months had maintained some buoyancy in the residential real estate sector despite established house prices dropping 6.7 per cent in the year to March, 2009.

“But with the expanded grant scheduled to end and no more relief expected in the near future from the banks on interest rates, there are some worrying signs ahead for the property market,” he said.

“We are hoping next week’s Federal Budget will provide some solutions for the real estate sector and would-be homeowners.”

Mr Kolenda said doubling the First Home Buyers Grant to $14,000 for established homes and $21,000 for newly built properties had provided a solid foundation for the Australian property market during the global economic crisis.

“We are urging the Government to extend the boost to the grant for another six months,” he said.
Mr Kolenda said Loan Market Group’s most recent online survey had found respondents were more interested in the Budget containing measures to help the property market than further income tax cuts.

“People who have been paying rent for years are now realising the dream of home ownership thanks to the expanded grant scheme and the lowest interest rates in almost 50 years,” he said.

“And those who own homes also want to see some stability and avoid property prices crashing, as they have done in the United States and the United Kingdom.

“A lot more people are concerned about the value of their homes than they are about getting more tax cuts.”

Mr Kolenda dismissed claims that the increased grant had inflated property prices and made thousands of first-time borrowers vulnerable to bankruptcy if they join the growing jobless queues.

“The grant has provided stability for the residential real estate sector and those people entering the property market are borrowing under a much stricter lending regime,” he said.