Australia to Expand First-Home Buyer Assistance to Lift Economy

(Bloomberg) -- Australia will provide 10,000 extra places in a program to help first-home buyers and encourage construction as the economy recovers from the impact of the Covid-19 pandemic.

The First Home Loan Deposit Scheme will be expanded from Oct. 6 to support the purchase of a new or newly built home, Treasurer Josh Frydenberg said in a statement. About 20,000 people have already used the program, which allows them to purchase their first property with a deposit of as little as 5%, he said.

“The government recognizes that saving a deposit has become a more significant barrier to entering the housing market than the ability to service a home loan,” Frydenberg said. “The additional guarantees will be available until June 30, 2021, and will drive more construction and support jobs as part of our economic recovery plan.”

Frydenberg is set to ditch fiscal restraints and unveil a massive surge in government spending to restart the economy when he presents his budget on Tuesday, Oct. 6. The plan is set to see the budget deficit widen to A$220 billion ($158 billion), or 11.6% of gross domestic product, this fiscal year, according to the median estimate from a Bloomberg survey of economists. That’s A$35.5 billion higher than the Treasury’s July forecast.

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