HomeBuilder scheme: construction industry warns of 'bust' if program isn't extended

The federal government’s HomeBuilder scheme could have the opposite effect than intended, leading to a construction bust in 2021 if it is not extended, builders warn.

The $688 million scheme was announced in June in a bid to boost the economy and act as a lifeline to the home building industry during the COVID-19-related recession.

It is likely to see an extra 9600 jobs created, according to Treasury figures.

Uptake appears to be strong in Queensland and Western Australia where land and house prices are more affordable, allowing Australians to meet the scheme’s strict requirements and access the $25,000 grant to build a new home. Some Sydney buyers have struggled to get access, as it only applies to new homes worth up to $750,000.

But the scheme has a looming December 31 end date everywhere except Victoria, forcing some builders to turn potential customers away to meet their obligations with current clients who have signed contracts. Victorians have a three-month extension given the strict, stage four lockdown.

Izaac Mathieson, general manager of sales and marketing of Queensland-based building company Hallmark Homes, said the group had made a year’s worth of sales in four months and was buckling under the demand.

“A soon as [the announcement] hit, our monthly volume tripled,” he said. “We’re in a recession and turning away business – not because we don’t have the capacity but because we can’t meet the criteria set by the federal government.”

An applicant would miss out on the $25,000 grant if construction did not begin within three months of signing a building contract, according the scheme’s guidelines.

He said an initial soil test which could take 48 to 72 hours was now taking up to three weeks.

“We’ve made the conscious decision to not take any more deals. We’ve got to start construction three months from the signing of the contract,” he said. “If they extended it to a six-month timeline, we could effectively double the amount.”

Jon Stoddart, managing director of residential construction supply company Stoddart Group, warned there could be a construction bust after a huge ramp-up.

“Every boom has a bust, doesn’t it? Let’s try and minimise that impact,” he said. “A large volume [of homes] has been sold. [We’re bringing] a lot of construction forward in a short period of time.

“They’re going to have a fantastic time for the next six months but then that dies out. It would be better if that lasted for 12 or 18 months.

“The industry is big enough to deal with the boom but it’s what happens after that’s the worry.

“Everyone’s flat out working six days a week … If we could slow the process down and get a more even flow, then that’s a better outcome.”

Metricon chief executive Mario Biasin said the building company saw some of the biggest uptake of the scheme in regional Victoria and South Australia but was only beginning construction due to COVID-19-related restrictions and issues with how the grant was administered.

He warned of delays from lenders who cannot count the grant as part of a buyer’s deposit in some states. Hopeful home buyers have faced other hurdles with the portal in most states only opening months after the June announcement.

“With COVID-19 restrictions we have in place [in Melbourne], it’s probably added about 20 to 30 per cent [to the time] required in order to build a home. That’s why we’re desperate for those restrictions to be eased,” he said.

“It could add over a month’s extra construction time depending on whether it’s a single or double-storey home.”

Minister for Housing and Assistant Treasurer Michael Sukkar said the HomeBuilder eligibility parameters were set to spark construction activity in the second half of 2020 to protect tradies’ jobs.

“HomeBuilder is protecting the jobs of Australia’s tradies and is providing the support the construction industry needs, as it was designed to do, as we get to the other side of the COVID-19 pandemic,” he said in a statement to Domain.