Latest NewsBoom in New Homes on the WayMonday, 31 October 2016

The scene is set for a home construction boom after a record number of Australians rushed to take advantage of the First Home Owners Boost in September before the scheme was wound back from October.

In September more than 49,000 Australians took out mortgages for purposes other than refinancing, a seasonally adjusted record.

About 7600 were construction loans, the most since 1994.

Borrowers who before September 30 entered into contracts to build homes were eligible for the $14,000 temporary First Home Owners Boost on top of the $7000 first home owner grant.

From October 1 the boost fell to $7000 and will vanish in January.

First home owners buying existing houses were eligible for $7000 on top of the $7000 grant, but are now able to get a boost of only $3500, and will get nothing from January.

''It's one last surge,'' said ANZ economist Alex Joiner.

''Things will moderate from what has been frenetic activity over the last few months. This is not only as the grants are wound back but also as interest rates rise.''

Westpac economist Andrew Hanlan said the surge would ignite a construction boom.

''The upswing should kick in late this year and become a key growth engine of the economy through 2010,'' he said.

''It's not only first home buyers. Upgraders are continuing to respond to what are still extremely low interest rates.

Finance to upgraders is up 34 per cent so far this year.''

The Bureau of Statistics figures show lending to first home borrowers rose an extraordinary 86 per cent in the year to September, with lending for construction up 84 per cent. Lending to investors is up 18 per cent.

The latest RP Data house price index shows the typical Sydney price passing $600,000 and the typical Melbourne price approaching $500,000 after rising 9 per cent and 13 per cent respectively in the past year.

Apartment prices are lower and the houses bought by first home buyers are usually much cheaper.

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