First home grants are dangerous

The average first home buyer's mortgage is now bigger than the average mortgage taken out by existing home buyers. Before the federal government boosted its first home buyers grant in October last year the average loan to new buyers was lower than that taken out by non-first-home buyers.

Now the national average loan for first-home buyers has increased $50,000 to $283,000 which is about $25,000 more than loans to buyers.

Professor Julian Disney, the director of the social justice project at the University of NSW, supported the supersized grant as an economic emergency measure. But he said the Government should consider winding back the original $7,000 grant to prevent a new housing bubble.

"Every month the risk of inveigling people into a dangerous situation increases," he said.

Source: Sydney Morning Herald