Homebuilders to lead recovery with $688m boost

Australia’s residential construction sector has been handed a $688 million lifeline, with grants of $25,000 to be made available to build new homes or undertake significant renovations.

Homebuilders to lead recovery with $688m boost
Bleak housing construction forecasts may not be realised under the Morrison government's HomeBuilder stimulus. Photo: Shutterstock (Image source: Shutterstock.com)

Australia’s residential construction sector has been handed a $688 million lifeline, with grants of $25,000 to be made available to build new homes or undertake significant renovations.

Prime Minister Scott Morrison unveiled the federal government’s HomeBuilder program last night, saying it would allow for a tradie-led recovery of the national economy.

Grants of $25,000 will be available for people building new homes valued at up to $750,000, including land, or renovations worth between $150,000 and $750,000 for houses worth less than $1.5 million.

The grants are in addition to state and territory first homebuyer stimulus grants and stamp duty concessions. 

The scheme will be means tested, and open to individuals earning less than $125,000 per year, or $200,000 per couple.

Contracts must be signed between now and the end of 2020, with work required to start within three months of the contract date.

Mr Morrison said he expected the package to create 140,000 new jobs, and up to a million indirect employment opportunities.

Opposition Leader Anthony Albanese, however, said the scheme was restrictive, poorly targeted, and would likely not create as many jobs as the Prime Minister claimed.

Real Estate Institute of Australia president Adrian Kelly last week urged the government to consider established housing in its relief package, saying that only providing the stimulus to new builds could have detrimental effects on the wider economy.

Homebuilders, however, cheered the package, with Master Builders Australia saying it would be a massive relief to thousands of homebuilders and tradespeople across the country.

Housing forecasts have painted a bleak picture for the homebuilding industry post-COVID-19, with up to 30 per cent of of work in the pipeline cancelled and some states facing falls in activity of up to 50 per cent.

“HomeBuilder will be a lifeline for an industry facing a valley of death in the coming months. It will mean more new homes, more small businesses and jobs are protected and provide a stronger bridge to economic recovery for our country,” Master Builders chief executive Denita Wawn said.

“Based on the Government’s estimated 27,000 grants, we think the scheme will be used for $10 billion in building activity, supporting the viability of 368,000 small builders and tradies – the businesses which employ 800,000 people in communities around Australia.”

Ms Wawn said the scheme was structured to get building activity started immediately, and would also provide safeguards around quality and consumer protection.

“Making HomeBuilder grants accessible through state and territory channels should streamline its rollout, and building work must be carried out by a registered or licensed builder,” she said.

The Housing Industry Association was also effusive in its praise for the package.

HIA managing director Graham Wolfe was more bullish than the MBA for the scheme’s stimulative potential, saying it could generate up to $15 billion in economic activity,

“Most importantly this incentive will support hundreds of thousands of jobs across Australia,” Mr Wolfe said.

“The housing industry directly engages more than one million people - builders, trade contractors, designers, professional service providers and others.

“It provides jobs for many more in the manufacturing and retail sectors, which supply the materials, products, white goods and furnishings that go into our homes.”

Mr Wolfe said HomeBuilder would help ensure the HIA’s forecasts that housing starts could drop to 111,000 across Australia in 2020-21, down some 60,000 from pre-coronavirus expectations, would not be realised.

“The package will see slabs poured in the second half of the year, meaning jobs are kept and houses built,” he said.

“Stimulating home building activity has been an effective recovery catalyst in past economic shocks.

“HIA is confident it can again support the national economy through this difficult period.”

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