This is an interesting article on the state of the property market I thought I would share with you. It appears Austalians are rushing in too quick to get in on the increased grant. Before you make the biggest financial decision of your life - DO YOUR RESEARCH. I've seen smart people get ripped off in good times and I've seen idiots do their research and get bargains in bad times.

First-home grant hit by price jump
Bridget Carter and
Turi Condon April 04, 2009
Article from: The Australian


HOUSING prices at the lower end of the market have soared by as much as $20,000 since the Government more than doubled the first-home owners grant late last year.
The jump in prices, particularly in hard-hit areas such as western Sydney, has wiped out the benefit of the grant, which amounts to 14,000
for an existing home and $21,000 for a new home.
Mark Jennings, director of real estate agent Ray White Macarthur in Sydney's west, said sale inquiries had almost doubled to 700 a month.
"The entry level for the market was $250,000; now it is as much as $270,000," he said. One seller had put her three-bedroom house in the suburb of St Andrews on the market last November for $279,000, Mr Jennings said. The owner took the property off the market for
several months then offered it again for $289,000. A few days ago, the property sold for $295,000.

"There has been a definite pick-up in the last few months," Mr Jennings said. Carol Taylor sold her three-bedroom home in the western Sydney suburb of St Helens to a first-home buyer. She put the property on the market for $290,000, hoping she would reap $280,000. "It was
only on the market for 24 hours before it sold," she said. She got the $290,000.
Developers say the volume of lower-priced residential sales in NSW has
caught up with more buoyant states such as Queensland and Victoria. Investa property group's group executive of land sales, Lloyd Jenkins, said its lower-priced land and house and land packages accounted for 75per cent of sales, up from half of sales a year ago. At its two residental projects in Sydney's west and northwest, first-home buyer sales had increased 100 per cent in the year to December 31.
The story was similar in Melbourne's western suburbs.
The median price in the first-home buyer enclave of Caroline Springs was up 4 per cent to $324,500, a rise of $12,000 since October. Residex figures showed the median price in Broadmeadows was up 6 per cent and 4.5per cent in Niddrie.
Surging prices at the lower end will flow through to the middle of the
market, but slowly and in smaller percentage terms, said BIS Shrapnel senior economist Jason Anderson. The 400-basis-point fall in interest rates since September had had a bigger impact on the volume of sales and prices in the lower and middle markets, he said.
While the proportion of first-home buyers taking out loans had jumped from a low 15 per cent to 26 per cent since the grant was increased, they were still a relatively small proportion of the market.
BIS Shrapnel is forecasting housing prices to rise in all capitals
by June next year: Sydney, Brisbane and Canberra up 2per cent; Adelaide and Hobart, 3 per cent; Melbourne and Darwin, 4 per cent; and Perth up 1 per cent.
JPMorgan chief economist Stephen Walters believes the lower end of the market could deflate quickly.
The investment bank forecasts interest rates will remain low or rise only marginally by the end of next year, putting the cash rate at 2.5 per cent at the end of 2010. However, JPMorgan expects a big jump in unemployment to 9-10 per cent by late next year. "That's an extra 500,000 people losing their jobs," Mr Walters said. "I think boosting the
first-home market is policy that's a bit shortsighted. Why pump money into a market where the buyers are particularly susceptible to losing their jobs?"
Mr Walters is bearish on housing prices, forecasting they will fall by 10
per cent in the next year or so, mostly from the slowdown at the upper end.

http://www.theaustralian.news.com.au/business/story/0,,25287000-36418,00.html