First home buyers buy as rents rise

First home buyers in NSW jumped by 50 per cent between February and March compared with existing home owners.Federal Government figures show that NSW remained the nation's home buying hot spot, with 6084 first-time buyers in March.The jump was expected and in part due to the Rudd Government's $21,000 First Home Owners Grant Boost was to expire in June, but has now been extended as announced in the May budget. The total number of home buyers across the country rose from 12,664 in February to 17,265 in March - an increase of more than a third.Housing Minister Tanya Plibersek has welcomed the six-month extension of the Home Owners Grant Boost, saying it would help more Australians realise their dream of home ownership."People who have been finding it difficult to get into the housing market are now seeing it as more affordable," she said. "By extending the grant, we are giving people more time to make a sensible decision."There would be long-term benefits for the economy, predicting a "flow-on effect" into the early part of next year as new homes are completed and home buyers require soft and hard furnishings to complete their new homes.A 12.3 per cent drop in the median house price in Sydney over 2008, and other drops before 2007 according to Housing NSW figures, could also be fuelling the buying boom.As house prices fell, rents increased. The median rent for NSW dwellings was $325, up by 8.3 per cent over the year. In Sydney, the median rent rose $5 to $390 in the March quarter.Some have predicted a minor reduction in first home buyers with the announcement after the extension.A Real Estate Institute of NSW spokesman said that, with tough times forecast to continue next year, the grant had not been extended long enough."We believe the additional incentive should run until at least July 2010," he said.