gizzy, I am not a first home buyer but like you, am looking. My view is that job losses will mount over the next 6 months so at best the property market will stagnate with risk to the downside if we see unemployment rise quickly as happened in past recessions like 1983 and 1992...therefore property could easily go lower, though I don't expect it will totally capitulate. Obviously we can expect lower interest rates but given a mortgage is a 10-20 year commitment, the outlook for the next year or two isn't the be all and end all and higher rates should be factored in over most of the loan period.
I reckon the first home buyer's grant just inflates that segment of the market so if it is removed you'll probably get a correspondingly lower price, more or less. It will also have brought forward a lot of buyers who could disappear later in the year as they are already set. If we see job losses, even with low interest rates there will be distressed sellers.
Having said the above if I see the right house at the right price I will buy it anyway, it's more than just a pure investment decision, it's a home so there is a little bit of sentimentality attached to it. But the next few months could see plenty of good opportunities....common sense suggests so anyway.
