Federal Budget Impact on Housing - Comsec

So what did the experts get out of the Federal Budget and its impact on housing industry? The following is a brief analysis undertaken by Commonwealth Bank. You can read the rest of it here

Where to for housing?

• The latest data on housing lending was highly encouraging, although substantially driven by the upgraded First Home Owners grant. The number of loans to owner-occupiers hit 13-month highs in March while loans to build

new homes hit seven-year highs.

• Not only are home loans rising, but building approvals have risen solidly for the past two months and home prices are also edging higher. In most parts of the globe, housing markets are becalmed with home prices down 10-20

per cent on a year ago.

• First homebuyers have driven the housing recovery and they will continue to be a driving force until at least the end of the year.

• For builders, tradesmen and building material suppliers, the extension to the first homebuyers grant is clearly good news. The problem for the first home buyers is that the additional demand for established dwellings will

continue to put upward pressure on prices.

• A key reason why the grant is in place for established dwellings is to support home prices. In other countries home prices are slumping. But in Australia, prices have been largely flat, but are now starting to edge higher

again. The stability of house prices is important in supporting consumer wealth, confidence and spending.

• Surprisingly Federal Treasury expects dwelling investment to fall by 2.5 per cent in the current financial year with no change in activity in 2009/10. A strong 11.5 per cent lift in dwelling investment is expected in 2010/11.