HomeBuilder package ‘most effective stimulus in a decade’
14 July 2020
This week, The Australian reported that the take-up rate of the federal government’s $688m HomeBuilder program could underwrite up to half all new expected dwellings in the housing market over six months, with the building industry saying some regions were recording highest activity levels in a decade.
The projections come as the housing sector on Monday, 13th July 2020 recorded a 77 per cent jump in new home sales for June, the same month the scheme launched offering $25,000 grants for people to build new homes or substantially renovate.
The Master Builders Association has reported that in the past four weeks, activity in the sector had returned to pre-COVID-19 levels, saying the package had delivered the “most effective stimulus in decades”
The Australian understands almost 40,000 people have registered for HomeBuilder grants since the scheme was launched by Assistant Treasurer Michael Sukkar on June 4.
Treasury modelling originally forecast the program would support 21,000 new home builds and 7000 renovations or “rebuilds”.
While not all registrations will translate into approvals, Treasury expects the original forecasts to be significantly exceeded
The economic shutdown had threatened to slash new home builds from the average 175,000 a year to as low as 100,000 because of the COVID-19 shutdown.
Master Builders Association chief executive Denita Wawn told The Australian: “Just today I been told by industry veterans who head some of the largest home building businesses in the country that this is the most effective government stimulus that they have seen in decades in the industry.
“Reports from members are backing this up on daily basis.
“Builders (who) have been doing it tough for years say they have had the best month in terms of sales since the GFC.
“State and local governments need to get cracking getting HomeBuilder applications processes up and running, fast-tracking land releases, land titles and planning approvals so we can get more people into their own home and keep builders and tradies working.”
Ben and Elise Keeler hope to use HomeBuilder to build their first family home in Cedar Woods' flagship project, Bushmead in WA. The Perth couple, who are currently renting in a neighbouring suburb have just purchased a house and land package, through local developer Cedar Woods, in June, soon after the package was announced, in Bushmead estate just 16km from the Perth CBD.
The extra grant offered by the state government as a sweetener to build a new home will see the Keelers ahead $45,000 when the home begins construction in coming months.
“It is like a mini Lotto win. It takes the load off a bit,” Mr Keeler said. “We were looking at established homes but began looking into the grants and decided to build. We’re looking forward to getting out of the rent trap.
“We have a young family and we want to bring them up in our own home where we don’t have to worry about rental inspections and can paint the little girl’s room pink if we want to.”
Mr Sukkar said the latest HIA data showed HomeBuilder was doing “exactly what it was intended to do — generate immediate construction activity that will engage tradies straight away”.
“HomeBuilder is about encouraging those who may have pulled back from undertaking a new build or substantial rebuild in March when the pandemic hit,” he said.
The head of one of the county’s largest construction companies, ABN Group chief executive Dale Alcock, said it had dragged Western Australia out of a five-year slump with an immediate pick-up in activity. “There has been frantic activity … anyone who qualifies has come out of the woodwork,” he said. “It’s been an amazing response. This is one of those industries that rides a rollercoaster … we were coming off a very low base. But the response has been a bit overwhelming … it’s a great problem to have.
“We are waiting to see four weeks on if we are going to see a moderation of inquiries.”
The HIA said there needed to be several more months of data to demonstrate whether the pick-up would be sustained.
The program has also faced criticism from Labor which called for more investment in social housing.
HIA chief economist Tim Reardon said the rebound in new home sales in June did not fully offset the dismal results of the preceding three months and “we are cautious of over-interpreting data from a single month”.
“Additional sales data from July and August will be necessary before drawing accurate estimates on the impact of HomeBuilder on employment in the sector,” he said.
Image Description: Bushmead's newest purchasers, Ben and Elise Keeler with their children, Arabella and baby Luka, at their rental property in Helena Valley near Perth.