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The Real Estate Institute of Australia (REIA) is urging the government to increase the First Home Owners Grant to bring it into line with current property prices.
In a pre-budget submission to the federal government, the REIA has called for a review of the grant, given that its relative size has declined markedly in relation to property prices.
An increase of the FHOG is crucial to improving affordability in the housing market and encouraging the return of first home buyers, the REIA said.
When the FHOG was introduced in July 2000, the Australian quarterly weighted average median house price was $220,443, the REIA said.
The Australian weighted average median house price in the most recent quarter for which data is available, December 2010, was $545,873.
Translated, what this means is the $7,000 grant now covers little over one per cent of the median house price.
In addition to increasing the FHOG, the REIA has also proposed a scheme to encourage young Australians to contribute to voluntary superannuation by allowing access to superannuation for the purposes of raising a deposit for a first home.
“The scheme would be an adjunct to the First Home Savers Account but would allow flexibility for the saver to decide whether all or part of the voluntary superannuation payments was needed to augment the home purchase,” David Airey, REIA president said.
In addition to these measures for first time buyers, the REIA has also called on the government to retain current arrangements for negative gearing and ensure family homes are exempt from capital gains tax.