Currently, first-time buyers can apply for a $12,000 bonus to purchase an existing home in an urban area, meaning Darwin, Palmerston or Litchfield.
From 1 January 2015, this payment will be eliminated.
Treasurer David Tollner said the current system was inflating house prices by putting pressure on the limited supply of housing in Darwin.
“That’s why the Territory government will direct the first home owner grant (FHOG) solely towards the construction or purchase of new homes from next year,” he said.
Newcomers to property can access a grant worth $25,000 for the construction of a new home. This sum will be raised to $26,000 as of 13 May 2014.
In addition, though the grant is currently limited to properties worth less than $600,000, this limit will no longer apply.
Mr Tollner said the changes would lead to growth in housing stock and employment in the construction sector.
“Ultimately, we want this grant to encourage the construction of new homes, create more jobs in the residential construction sector and improve housing affordability by increasing housing stock,” he said.
“This is a far better result than merely creating a churn in existing dwellings that is widely accepted as having an inflationary effect on the cost of housing."