The size of the deposit is the leverage that one has to borrow more. The ability to borrow more, pushes the purchase price one is going to pay by an ever more increased amount.
Most banks require 10% deposit.
$450,000 deposit required. $45k.
Previously some buyers didn't have the deposit required, with the grant they do. So become buyers now, and not later which has shifted demand, from the future to now.
Or consider the buyer who had $45k deposit plus the $14k fhog. They now can borrow $590k with their $59k deposit. Their $14k has increase their borrowing power by 31%! Now I know they still need to service the higher loan, but hey if they can afford it the banks will lend it.
Its important to remember the differences of nominal values versus a leveraged exponential. There has been some calls that from commentators not to pay too much, but when the grant is there, and there is a deadline, and there is competition in the market less than $500k with the fhob's all clambering for the same property......
Question is this. What happens when the (manipulated) demand is removed, the demand which has allowed people who 1 - weren't in a position to borrow but are now 2 - were thinking of buying later, but did now for fhog 3 - borrowed more because of the grant
And the comments about fhog not being a driver of the market, now don't quote me, but I seen a survey which stated the normal market share was about 20% had increased to 30% during the grant times. Thats NOT an increase of 10% more fhobs entering the market, thats 50% more fhob's. And to make up another 10% of the ENTIRE demand (don't know how to work out that as an increase in demand). When the fhog is reduced back to original levels, does fhogs go back to 20% or less.......
I like property as an investment, and believe that it should always be a part of an investment portfolio, but the dream of borrowing as much money as you can, with a she'll be right mentality,
Just my thoughts/rambles and maybe even my opinion who knows?
