As the development industry called for an extension of the $14,000 grant to all homebuyers to stimulate a dormant market, Reserve Bank deputy governor Ric Battellino warned the funding could backfire.

Analysts also forecast a potential housing crisis later this year
with rising unemployment pushing up to 460,000 households "close to the
edge" through mortgage stress.

Mr Battellino said the $21,000 available to first-home buyers could end up being priced into the cost of the home.

"It doesn
t take long for the average house price to increase by
$20,000 and leave the buyers no better off," he said. Forecasts were
for a "substantial rise in unemployment", he added.

Human Resource manager Emma Holmes, 26, moved into her first home, a
unit at Seaton, less than two weeks ago and described the grant as a
"massive boost".

"It was great because it basically covers stamp duty and fees, the sorts of costs that creep up on you a bit," she said.

"I
d hate to see it not around after June, because too many people will miss out."

Stock market analysts ABN Amro said the first-home owner segment was becoming "inherently risky".

"The confluence of artificially high housing prices, lack of savings
record and higher unemployment risk makes the first-home buyer segment
a high-risk segment," he said.

Economists Fujitsu Consulting said it expected to see a significant rise in mortgage stress this year.