WA Government throws interest-free lifeline to builders
With thousands of homeowners waiting years for new homes to be built, the WA Government has resorted to offering interest-free loans to builders in an effort to clear the backlog.
Western Australians who have been waiting years for their new homes to be built have been offered a glimmer of hope by the state government.
Residential builders are being offered an interest-free loan facility to help them complete unfinished properties, and get Western Australians most affected by delayed construction timeframes into their new homes.
The Builders’ Support Facility will provide interest-free loans to support eligible residential builders complete new homes that have been under construction for more than two years.
WA’s Treasurer, Rita Saffioti, said the initiative is a direct response from a recent roundtable that in December was exclusively reported as taking place by API Magazine.
A maximum of $300,000 will be available to each eligible builder (up to $60,000 per property), with payments made in instalments to stimulate more completions.
The scheme is an extension of a program that has already seen $13 million worth of relief payments paid to 13 building companies.
Just over $4 million across 137 residential construction contracts as part of a builder support package. In addition to the housing projects undertaken by that department, a further $9 million has been paid to builders completing Department of Finance projects.
A maximum of $300,000 will be available to each eligible builder (up to $60,000 per property), with payments made in instalments to stimulate more completions.
Massive new home deficit
The loan scheme aims to help builders complete outstanding projects, as well as prevent further insolvencies, and more homes being left incomplete.
The talks that led to the decision were held between the Cook Government, HIA WA, and the housing and construction industry, with the aim of boosting housing supply and affordability in Western Australia.
“We know that the construction industry has experienced significant labour and material price hikes over the last few years,” Ms Saffioti said.
“This has delayed some residential builders from completing homes as the cost has increased significantly.
“We have also seen many families building new homes left stranded with incomplete projects and no timeline for delivery.
“The innovative loan facility will enable builders who have been unable to complete homes under construction for two or more years due to cashflow constraints, to complete these projects.”
REIWA CEO Cath Hart said the various constraints in the building industry have seen people turn to the established homes market instead of building, putting more pressure on an already tight market.
“The COVID building incentives saw a huge spike in building approvals, but that hasn’t translated to completions.
“In the last three financial years WA has averaged 14,000 new dwellings per year, which is just 42,000 additional homes; over the same period our population has grown by about 60,000 new households.
“And while we need new homes for new arrivals to WA, there are people who have been waiting years for their home to be finished.
“There are many people waiting for their new homes to be completed and this is hampering the usual turnover in both the rental and sales markets as people remain in their current homes for longer than planned,” Ms Hart said.
The situation has been compounded by new data showing the number of homes listed for sale fell to a record low of 3,648 at the end of December with homes selling in near record times on the back of high demand.
This was 23 per cent lower than in November and 49 per cent lower than in December 2022.
The critical shortage of rental accommodation has continued, with a vacancy rate of just 0.7 per cent.
Builders still struggling
Housing Industry Association WA Executive Director Michael McGowan said a dearth of skilled labour and cashflow limitations have been builders’ biggest challenges over the last 12 months.
“As the residential building industry normalises over the next 12 months, the targeted Builders’ Support Facility is a measured way to support those needing short term assistance to complete homes that have been under construction for more than two years, by providing a short-term cash injection targeted at getting homes finished without impacting the wider industry.
“When a builder enters administration, the industry and the State suffer. The builder and their family lose everything, trades and suppliers suffer losses, with consumers having to wait to re-start the home building process.
“The Builders’ Support Facility will hopefully minimise the number of people that have to go through this process,” he said.
Builders have to have been in business for over four years to comply, with expressions of interest now open.
