Short-term property prices are tipped to rise 5 per cent if the first home owners grant boost is not extended beyond the June 30 deadline, a report has found.
Research conducted by BIS Shrapnel for QBE LMI found demand for new and established dwellings will be pulled forward if the boost is not extended, with prices forecast to rise 5 per cent.
In October last year, the federal government doubled the first home buyers grant to $14,000 for those buying an existing home and tripled it to $21,000 for those constructing their own home or buying a new home.
Perth's median house price is currently $412,500, according to latest March quarterly data from the Real Estate Institute of Western Australia.
The report also found that should the boost be extended beyond the June 30 deadline, first home buyer demand could peak at 180,000 loans in 2009.
First home buyer demand stabilised at an average of 129,000 loans per annum since 2006.
The report also found that following the introduction of the homes grant boost coupled with falling interest rates, the borrowing power has increase for first home buyers.
"The average size of a loan to first home buyers has increased from $264,500 in October 2008 (when the grants boost was first announced) to $280,600 in February 2009," the report said.
Housing groups around the country have called on the federal government to extend the homes grant boost, with some calling for the boost to be extended for the construction of new homes.
