Calls to extend HomeBuilder grant to save the new housing industry

House and land developers are calling on the federal government to extend the HomeBuilder grant by 12 months in a bid to reduce the catastrophic impact of the coronavirus pandemic on the industry.

Research released on Monday by the federal government’s National Housing Finance and Investment Corporation revealed that demand for new home construction would collapse over the next three years as Australia’s population growth plunged to levels not seen since World War I.

It is estimated that demand for housing could fall by anywhere between 129,000 and 232,000 dwellings, as border closures brought net overseas migration – typically half of which is made up of international students – to a halt. 

“If this decline is sustained, it could cause a contraction in construction activity that will add to the recessionary forces impacting on the economy,” NHFIC stated.

In light of the dire forecasts, those in the construction industry are calling on the government to extend the HomeBuilder grant by another 12 months, a move which they believe would help to stem some of the shortfall.

Master Builders Australia chief executive Danita Wawn said the NHFIC study showed the need for the federal government to drive a rebound in home building. 

“Without this our members will not have a pipeline of work, businesses will go under and jobs will be lost,” Ms Wawn said.

“HomeBuilder is proving to be one of the most effective government interventions in decades and we call on the federal government to maximise its positive impact by extending the program for 12 months.” 

Last month, Master Builder Australia predicted that overall home building would fall by 27 per cent in 2020-21 without a 12-month extension to HomeBuilder, costing the industry billions.

HomeBuilder was introduced in June as a stimulus for the economy, offering eligible new home builders $25,000 cash grants towards the cost of construction. The scheme is set to end on December 31.

The grant itself is paid after construction begins, which must happen within three months of contracts being signed. However, in August, the government announced it would grant an extra three months to allow more time for construction to start.

But industry leaders believe this will not be enough to help with home builders needing to buy a house and land package before the end of the year.

“In its current state, the HomeBuilder grant finishes on December 31 and with metro Victorian displays not set to re-open to the public until the end of October, it really doesn’t allow much time for keen home buyers to act,” Metricon Victorian general sales manager Drew Glascott said.

Demand from buyers was seeing house and land packages snapped up, even in Melbourne during stage four restrictions where buyers have been unable to inspect estates or display homes.

The federal government’s latest figures, given to Domain, show that as of September 11, more than 6000 applications for HomeBuilder had been received across the country.  More detailed figures are due to be released this week.

Oliver Hume chief executive Julian Coppini said in June, after HomeBuilder was announced, there had been a huge spike in sales to near-peak market levels in states including Queensland, NSW, SA and Victoria.

Mr Coppini said while sales had dropped back during the stage four lockdown in Melbourne, there was still steady demand from buyers keen to get their land to qualify for the HomeBuilder grant, even from lockdown.

Mr Coppini said the NFHIC research made it clear the grant needed to be extended so the demand from local Australian buyers helped offset the loss of net overseas migration.

“We’re hoping the government will extend HomeBuilder especially for Victorians.” 

Metricon’s Mr Glascott said regional Victorians had likewise been buying house and land packages throughout the pandemic.

“In regional Victoria we are experiencing record activity as savvy buyers seize the opportunity to secure a new home away from Melbourne,” Mr Glascott said.

Metricon was supporting calls to extend HomeBuilder grants by 12 months, in order to give buyers more time to build.

“It makes sense to extend the grant to maximise its intended benefit, not just to the construction industry but also to the economy,” Mr Glascott said. 

Burbank’s national general manager of residential housing Louis Sultan said the initial extension of three months had been a “blessing” to the industry, however with builders slowed by the coronavirus pandemic, more was needed.

“Everything has slowed down in terms of the Melbourne metro area because you can’t have more than five people on site at a time,” Mr Sultan said. “It’s slowed down construction by 50 per cent at least.”

Mr Sultan said while some people might think help for the industry might be selfish, inevitably it was about helping people into a home, retaining jobs and helping the wider economy.

“We’ve never seen anything like this and the long-term ramifications of it,” he said.

Domain contacted Federal Housing Minister Michael Sukkar about the possibility of extending the HomeBuilder grant, however, with budget discussions underway, he would not comment on the matter.