While the full economic effect of the government’s First Home Owner Grant and stimulus package remains to be seen, it is clear that first homebuyers have been flocking back to open houses, auctions and real estate agents. And they’ve been heading to Deposit Power in droves too, with applications for Deposit Guarantees from first homebuyers up by around 30 per cent on last year.

The number of first homebuyers in Australia rose by 25.5 per cent in the December 2008 quarter compared to the previous quarter, according to the latest REIA/Deposit Power Housing Affordability Report.

REIA figures also show that first homebuyers currently make up a greater proportion of the total homebuyer market than usual - another sign that the Government initiatives aimed at stimulating the market appear to be working.

Sales of new homes rose in March 2009 for the third consecutive month, buoying the project home building market, according to new statistics from the Housing Industry Association (HIA). The HIA attributed the healthy figures to the First Home Owners Boost for new dwellings and the low variable interest rates.

Overall the boost to the First Home Owner Grant could be seen as a good move as it is stimulating the property market which a lot of people depend on, and has had positive effects on the whole economy because of the flow-on effect of this.

Deposit Power’s increase in deposit guarantee applications highlights that many first homebuyers are more conscious of their investment options, which is especially important in an economy where confidence is lacking.

Using deposit guarantees, which substitute for cash deposits, means that first homebuyers can leave their other investments to grow until settlement time when they pay the full purchase price of a property.

As with all investments, property purchases should be considered carefully before making such a large commitment. While interest rates are currently at 49-year lows, it is normal for rates to fluctuate over the term of a home loan so it is important that homebuyers factor this in and make sure they are not overcommitted financially.

The increased activity is expected to continue as the 30 June deadline for the First Home Owner Boost approaches, and the industry is reviewing the initiative to assess its effectiveness. There is also talk that the government may remodel the First Home Owner Grant to favour ‘green’ housing and support the introduction of a new energy efficient building code.

The speculation will continue as the industry scrutinises the government’s stimulus package and the First Home Owners Boost. However its achievement so far can be seen in the fact that many first homebuyers have been encouraged to reconsider the property market - in an economy where they may have been less likely to do so.