WA extends Building Boost as research shows more stimulus needed

Western Australia has extended its $20,000 Building Boost for new home builds, at the same time that new research has been released saying that more targeted stimulus is needed if the housing construction sector is to lead Australia’s post-COVID recovery.

WA Treasurer Ben Wyatt this week announced a six-month extension to the program, which has been hailed as a major catalyst for a strong surge of activity in the state’s homebuilding sector.

The grants are available to WA residents or interstate migrants who sign a contract by December 31 to build a new house or buy a property in a townhouse development that is under construction.

The extension is likely to alleviate pressure on WA tradies to carry out the works, with homebuyers given 12 months rather than six for their builders to start construction.

Urban Development Institute of Australia WA chief executive, Tanya Steinbeck, said developers had been scrambling to get enough titled land ready to keep up with demand prior to the extension being announced.

“Land developers have experienced record sales since the announcement of both the state and federal housing stimulus measures and I don’t think anyone could have anticipated just how quickly and substantially demand for new land and housing would skyrocket once the bonus came into effect,” Ms Steinbeck said. 

Nigel Satterley, head of WA’s biggest private land developer Satterley Group, said he was pleased that the industry’s communication with the state government around the challenges of the grant had produced a positive result.

“This incredibly successful scheme has provided a much-needed boost to the housing industry and the broader WA economy and these deadline extensions are essential to ensure that momentum can be maintained, and that development can proceed in an orderly manner with work sites continuing to operate safely,” Mr Satterley said.

Master Builders Association WA executive director John Gelavis said the extension would ensure homes were built safely and to high standards of quality,.

“When we pitched the idea to government in March this year, we were delighted to see how successful the Building Bonus program had become in building a pipeline of work for the industry,” Mr Gelavis said.

“However due to the tight time frame our members raised concerns around safety and the availability of subbies, so we are glad the Premier has listened to our calls for an extension and acted.”

While the WA grants have been hailed as a strong success, new research by the Australian Housing Research Institute has urged both federal and state governments to introduce a wider range of measures to help the homebuilding industry lead an economic recovery.

AHURI’s latest report, undertaken by researchers from Curtin University, University of Sydney and University of Adelaide found that non-residential construction was more impactful on the economy, followed by residential construction and then infrastructure spending.

Director of AHURI’s Curtin research centre, Steven Rowley, said while the HomeBuilder package and other measures such as WA’s Building Boost had made a positive impact on development activity, the federal government needed to do more to produce a bigger impact.

Professor Rowley said further stimulus measures would be particularly needed into 2021 as the HomeBuilder grants expire in December, likely resulting in a significant fall in building activity.

“Housing markets across the country have very different characteristics, are at very different stages in their recovery and therefore require different types and levels of intervention,” Professor Rowley said.

“Further stimulus measures need to be targeted at markets most in need of support and government needs to work with industry to identify the most effective interventions. Some markets will recover much quicker than others and may not need further support.”

The report recommended stamp duty reform could aid a market recovery in all states, while institutional investment in housing should be incentivised through additional tax reforms.

Any stimulus, however, would need to be tailored to suit individual markets, while large-scale funding of social housing development and refurbishment should also be encouraged.

“Never has there been a better time to create the conditions for institutional investment in rental housing where returns are potentially more stable than other property sectors,” Professor Rowley said.

“Government also needs to be cognisant of changing patterns of consumer demand and invest in areas where demand pressures exist, particularly regional Australia where markets are often slow to respond to demand changes.”