Australia's largest building association says measures announced by the federal government to boost the economy will support the housing market and increase activity.
The government said on Tuesday it would invest about $1.5 billion in the housing market over 2008/09 and 2009/10, as part of a $10.4 billion package to help Australia counter the global economic crisis.
The Housing Industry Association (HIA) said a doubling in the first-home owners grant, announced as part of the plan, would stimulate construction activity.
The payment under the first-home buyers scheme will be doubled from $7,000 to $14,000 and first-home buyers who buy newly-constructed home will receive an extra $7,000 taking their total grant to $21,000.
HIA managing director Ron Silberberg said the plan would boost new home building by 15,000.
"It is appropriate that the measure targets assistance for new housing to meet underlying and effective demand," Dr Silberberg said.
The building rate of new houses has been falling and has widened the gap between the supply and current demand for dwellings, the HIA said.
The announcement by the federal government would lift the subdued activity in the residential building sector and in the Australian economy, Dr Silberberg said.
"This measure will provide an immediate stimulus for new housing and help restore business confidence across the sector particularly in the building manufacturing sector," he said.
However, building of houses needed to be cranked up by 45,000 a year to cover present demand, but this proposal is a step in the right direction, the HIA said.
Meanwhile, Mortgage broker Mortgage Choice Ltd said the federal government's decision to increase subsidies for first-home buyers was a bold move that will greatly benefit the property market.
"I would think the majority of housing industry participants - from buyers to builders, real estate agents, lenders and mortgage brokers - will be excited and pleased by this historic initiative," Mortgage Choice managing director Paul Lahiff said.
"Australia's growing population, increasingly tight rental vacancy rates, slow release of land and the rising cost of building materials are all contributing to a demand for housing that is not being met as well as it could be," Mr Lahiff said.
"The doubling of the first-home owners grant for all first-home buyers and a tripling for those who purchase a newly built dwelling, along with the recent significant decreases in interest rates, should provide a much needed boost to the Australian housing market."
"The great Australian dream of owning your home is still very much a part of our mindset, and those desiring their own piece of this country will be grateful for all the assistance they can get," he said.
