A national affordable housing organisation has called on the federal government to scrap its first home owner grant.

The grant, which was raised from $7,000 to $14,000 for existing dwellings and from $14,000 to $21,000 for new homes as part of Labor’s $10.4 billion stimulus package last year, is due to expire on June 30.

The National Shelter has called on Treasurer Wayne Swan to axe the scheme when he hands down his second budget on Tuesday, saying it inflates housing prices beyond the value of the grant.

“We’d be in favour of getting rid of all of it,” chief executive Adrian Pisarski told ABC Radio on Monday, adding if the scheme was continued, it should be means-tested.

“That actually targets those lower-income families who really struggle to get into the housing market and doesn’t advantage wealthy families who can support their kids into the market at the cost of those lower income families.”

But the Master Builders Association says the enhanced scheme should be kept as it is, minimising the effects of the global financial crisis.

“We put to the government that … the best bang for the taxpayers’ buck would come from keeping the boost for new housing,” chief executive Wilhelm Harnisch said.

“It does generate new activity, it does generate jobs, it also has the multiply effect into retail, manufacturing and other sectors.”

AAP