The state government doubled the previous $10,000 grant in June 2017 to encourage regional growth, with the program expected to be have reached its completion by the end of June this year.

But with a predicted, unprecedented, financial downturn likely over the coming months, the decision has been taken to extend the grant until the end of June 2021 in order to continue to encourage investment within regional communities.

The grant is available in 48 council areas. Since its inception, there have been 98800 recipients across the state.

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Modelling from the Department of Treasury and Finance predicts that property prices could fall by up to nine per cent by the end of the year, along with the unemployment rate more than doubling to 11 per cent in the September quarter.

Treasurer Tim Pallas said the extending of the grant was a way to encourage more first home buyers into the market at a difficult period in history.

"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," he said.

"Owning your own home shouldn't be a pipe dream - we're helping out with the financial kick-start they need to make it a reality."

To be eligible for the grant, the purchaser or purchasers must be first home buyers buying or building a property valued at $750,000 or less and it must be used as the principal place of residence for 12 continuous months following settlement.

The state government on Wednesday released modelling that forecasts 270,000 Victorians could be out of work as a result of the health crisis. Unemployment is expected to peak at 11 per cent in the September quarter, which is more than double the current rate while economic output is forecast to drop by $32 billion - or more than $1 billion a week - during the next six months.

"From a government point of view, these figures are bleak and quite frankly catastrophic," Mr Pallas said.

"Let's not sugar coat it, we are in for difficult times. It's worse than I thought we'd land."

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