THE state government's new home building cash splash has "severely disappointed" sectors of the industry.
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Real Estate Institute of Tasmania president Tony Collidge criticised the government's $5 million funding pledge to the First Home Builders Boost for being selective.
"I just think the government would get more bang for their buck by giving it to everybody rather than a select few," he said.
"It would do more for the economy giving it to first home buyers."
The budget measure will extend the $20,000 grant for first home builders to the end of the year, when the handout will be reduced to $10,000.
The scheme was set to be reduced to $10,000 from July and scrapped altogether at the end of 2015.
Treasurer Peter Gutwein announced the policy on Sunday, saying the scheme had helped push the number of dwellings approved to 2633 in the year to March, compared with 1985 in the year to March 2014.
While Mr Collidge acknowledged the March quarter had delivered the strongest housing activity in five years in Launceston and Hobart, he believed the heavy lifting was being done by existing homeowners.
"I believe the government's numbers are very rubbery," he said.
However Harcourts Launceston director Tony Morrison said the stimulus package was "fantastic" news for the industry.
"We'll sell blocks of land which had slowed up heaps," he said.
"Young couples may buy the land and build houses and that's fantastic."
Mr Morrison said there was enough demand around to pick up existing homes on the market.
Mortgage broker Chris Antypas, from Aussie Launceston, said $20,000 wasn't quite enough and the initial $30,000 scheme should have been reinstated.
He said his business had "very few" applicants under the $20,000 scheme compared to the more generous handout which finished at the end of 2014.
Mr Antypas warned people planning to build homes to be wary of inflated quotes from builders.