The possible removal of the First Home-Owners’ Grant (FHOG) increase in June will be “disastrous for the building industry”, according to director Peter Travlos of Stockdale and Leggo Taylors Lakes.

“It would be unwise to stop it now that the market is starting to pick up. First home buyers will be shut out of the market place because they just won’t be able to afford buying property,” he said.

The Government doubled the grant for first home-buyers and tripled it to $21,000 for newly-constructed homes as part of its $10.4 billion stimulus package last year.

The increases subsidies have helped first home buyers take a record 26.9 percent of all new home loans in January.

If the boost which is due to expire at the end of June ends, first-time buyers will be eligible to receive only $7000 from the Federal Government.

Whilst last week Prime Minister Kevin Rudd said at a community Cabinet meeting that the increased grant always had finite time-frame, and that “all good things must come to an end,” Government insiders have reportedly suggested that the grant may be extended in a slightly modified form.

But when Neos Kosmos English Edition (NKEE) contacted the Prime Minister’s Office for a decision on the grant, a Government spokesperson refused to comment on budget speculation.

Experts are divided on the extension of the FHOG, which is thought to have caused inflation at the lower end of the market.

“The FHOG has definitely provided support to the lower end of the housing market, although it is difficult to disentangle this effect from the increase in affordability coming from lower interest rates,” said ANZ economist Riki Polygenis.

“The extra support for new building activity should be extended given the looming shortage of housing in Australia. Whether or not support to purchasers of established houses should be continued is more debatable.”

Opposition housing spokesman Scott Morrison urged Mr Rudd to provide certainty by immediately announcing a decision on the increased grant.

“Kevin Rudd’s weasel words will only add to the stress of first home buyers who are already having to deal with significant delays as increasing numbers of applicants attempt to access the boost before June 30,” he said.

When contacted by NKEE a spokesperson for Mr Morrison would not confirm whether or not he supported the FHOG extension but instead said that they were waiting on a solid proposal from the Government and that their support would depend on how the Government would source its funds.

Andrew Alexis, 23, who was looking to build a new house said he was not fussed if the FHOG boost was removed.

“Since the FHOG boost was introduced, the price of titled land has increased and therefore it is now even more expensive to build than before. I’ve also observed that houses in the lower bracket have increased in price so I don’t think that first home buyers have benefit overall anyway. It will be interesting to see what happens to the demand if the boost is removed.”

The Victorian Government’s first home buyers’ bonuses; $3000 for established homes and $5000 for new homes – are also due to expire on June 30.

A spokesman for Treasurer John Lenders would not confirm whether or not this would be extended but said that details of the budget would be released on the May 5.