Another 10,000 first home buyers will only have to save a five per cent deposit thanks to an extension of a federal government scheme.
The First Home Loan Deposit Scheme will be available from budget night next Tuesday to 30 June next year.
It allows first home buyers to obtain a loan for a new or newly built home with a deposit of as little as five per cent, with the government guaranteeing up to 15 per cent of the loan.
The scheme has already helped close to 20,000 first home buyers.
Treasurer Josh Frydenberg said the loan deposits could be used in conjunction with HomeBuilder, which provides grants of $25,000 for new homes and major renovations.
"Helping another 10,000 first home buyers to buy a new home through our First Home Loan Deposit Scheme will help to support all our tradies right through the supply chain including painters, builders, plumbers and electricians," Mr Frydenberg said.
"At around five per cent of GDP, our residential construction industry is vital to the economy and our recovery from the coronavirus crisis."
The price caps will be higher for this round of the loan deposit scheme, including $950,000 for Sydney, $850,000 for Melbourne and $650,000 for Brisbane.
Australian Treasurer Josh Frydenberg arrives to deliver a fiscal strategy speech at Parliament House in Canberra. Source: AAP
The announcement comes before Tuesday's federal budget, which will show a record deficit of about $200 billion and debt heading towards $1 trillion as the government seeks to stem the economic damage from the coronavirus pandemic.
It is widely expected the government will bring forward income tax cuts, deliver a raft of tax breaks for business, introduce a wage subsidy for hiring extra workers and boost investment in infrastructure and manufacturing.
Some economists are also predicting the Reserve Bank could cut interest rates on Tuesday to a record 0.1 per cent and make other policy changes to add bang to the government's budget day buck.
Mr Frydenberg has pitched the budget as a two-step process, with a boost in spending now to fuel growth and get people back into work followed by a shift back to fiscal restraint once unemployment is "comfortably back under six per cent".
Unemployment hit 6.8 per cent nationally in August, with the three hardest-hit states being SA, Queensland and Victoria and youth unemployment sitting on 14.3 per cent.
The Australian economy contracted by seven per cent in the June quarter, confirming the nation was in recession following the 0.3 per cent decline in the March quarter.
Labor is concerned the government's winding down of the JobKeeper wage subsidy and supplemented JobSeeker payment comes at a time when the economy and labour market remain weak.
It wants to see a comprehensive jobs plan.
