investors stay out – give first homebuyers a chance

I'm not a first home buyer, and agree with those who predict the doubling of the FHBG to $14,000 for existing homes is just going to drive already overinflated prices higher. The bigger the bubble, the bigger the bust come June 30 when the grants stop.

Out of sympathy for first home buyers, we investors should take a breather and let them compete among themselves.

There'll no doubt be more listings now, so that might dampen prices…..though somehow I doubt it, judging by the enthusiasm with which the grants have been met. There may be more houses put up for sale, but there's also going to be LOTS more FH buyers flooding open inspections now.

Add the recent 1% interest rate drop, and it's clear that any early signs of an emerging buyers' market have evaporated in most places. Certainly here in Adelaide the agents are smiling once more.

So investors, sit back and chill. Once this taxpayer-funded party's over then we'll see how things really are. For Rudd and co to be splurging $10b of the surplus in this desperate way, they must be fearing a global recession is a real possibility. Trouble is, when you mess with the economy by artificially boosting it short-term, it often backfires.

At least that's my take on it – keen to hear others's views.

Carlin