Low end property owners reap the benefits

HOMEOWNERS whose properties are worth less than $500,000 are reaping the greatest rewards of government grants and low interest rates.
Economists say prices will rise by 5 or 6 per cent in Sydney suburbs where the median house price is below half-a-million dollars thanks to demand by first-time buyers.

Auction volumes picked up yesterday as the market swings into gear for the year after a lacklustre end to 2008 when Sydney property prices slipped more than 4 per cent. Weekly clearance rates in the past fortnight reached a peak of 70.8 per cent but the number of properties auctioned was low.

Agents say the most activity is among first-home buyers who are taking advantage of state and federal grants worth up to $24,000.

On Friday, Reserve Bank Governor Glenn Stevens flagged further rate cuts and said the effect of successive falls in the cash rate were only beginning to have an impact.

He said he expected a recovery in the housing market to begin later this year.

Australian Property prices monitors' senior economist Liam O'Hara said the upper end of the market would continue to fall or remain flat while the interest rate cuts would further boost activity at the bottom end.

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