Hi sharedawealth, Yes, prices did rise again in 2008/9. Why did they rise? From a coordinated fiscal and monetary response from the government and the RBA. Lots of cash splashes for first home buyers and dramatic cuts to interest rates. So, can this happen again? No one knows with absolute certainty, but you can make a guess at the odds of it happening.
So far, the government has resisted reviving the FHOG. I think they wont do it at all. Why? Ratings agencies have explicitly said that their ratings on our banks are a function of government fiscal restraint. That's why the government is holding back this time around.
As for the RBA, they are doing what they always do - following the market & are slashing rates. Will this revive the housing market? I dont think so, for two reasons. 1) The banks aren't passing the cuts on in their entirety, and 2) it takes more than rate cuts to get the first home owners buying again, they also need a deposit. A lot of them are skint, or nearly skint. The grant is essential to get them in the market again.
