The grant, which provides $20 000 to those buying or building new homes in regional areas, including Shepparton, was set to cease on June 30.
Instead, Victorian Treasurer Tim Pallas announced it would be extended until the middle of 2021.
“We know the coronavirus pandemic is making it even tougher for young people to achieve their dreams of home ownership — that’s why we’re extending the grant which has helped so many regional Victorians,” Mr Pallas said.
Sessions Builders sales manager Rocco Iaria said the coronavirus pandemic had cemented the need for the scheme to boost both confidence and the economy.
“I think it's a great thing for the economy, given the current circumstances of COVID-19,” Mr Iaria said.
“With the low interest rates, plus the current conditions, it will give (first home buyers) more confidence to go ahead with a build and give them more scope with their budget to build something a little bit better.
“There was talk of extending it anyway but I think the coronavirus has actually confirmed the need, and the state and federal governments are trying to do anything to stimulate the economy — especially in regional areas."
First home buyers account for 30 per cent of Sessions Builders’ clients and Mr Iaria said the business had already seen a flow-on effect from the announcement.
“We had noticed in the initial stages (of coronavirus) a few people were hesitant in signing up, just waiting to see how things will pan out,” he said.
“But we've noticed the last two weeks we've had quite a vibrant inquiry base and then, especially the last few days, we've had a few of the younger ones, first time buyers, are quite keen to get started.
“We've had a couple just recently come back to us; previously they were putting it off thinking they didn't have time to get everything sorted and now with the extension they've come back to us and said we can go ahead.”
Auctioneer and principal of Kevin Hicks Real Estate Kevin Hicks said the extension was welcome news.
“There's been some uncertainty, particularly in the young ones that might be in the restaurant trade and their jobs have been jeopardised,” Mr Hicks said.
“We've had a few young ones buy in the last month because it was only on the table until June 30 and that made them consider the block and buy the block.
“It gives them another 12 months to buy a bit more time and consideration for what they want to do, and they can shop around more with the tradies and build the house of their choice.”
Without the extension, Mr Hicks had predicted a reduction in sales of house and land packages and said when combined with favourable interest rates, the grant would provide a lasting benefit for the housing market.
“I think it will hold the floor in the market, which will then avoid a depressed market,” he said.
“If we can put a floor in the market there'll be less reduction, if any.”
While modelling by the Victorian Department of Treasury and Finance predicted property prices could fall by up to nine per cent by the end of the year, Mr Hicks said the local market remained strong, with greater demand than product.
“At the moment we can't see any discount in the marketplace,” he said.
“It's still firm but if the job market is effected for any length of time that has to come into play.
“Interest rates are so reasonable, there's a lot of opportunists who should enter into the residential investment market with the sheer number of portfolios dropping dramatically.”
The regional grant is part of the government’s Homes for Victorians package, which also offers stamp duty exemptions on land and existing homes, and discounts for new homes up to $750 000.