- 5 Jun, 2020

New home boost grant as the RBA & HIA raise property concerns

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Under a new proposed scheme the New Home Boost’ grant by Prime Minister Scott Morrison’s government, buyers of freshly built homes would get a $50,000 cheque under a $2.5 billion plan from the Property Council of Australia as part of its seven-point plan to the National Cabinet for starting up construction again and the economy.


Unlike many of the first home buyer grants of between $7000 – $20,000 administrated by state governments, the home boost grant would not have a property price cap and will be available to all types of buyers, not just first home buyers.

Related: First home buyers grant: Everything you need to know

With the ‘New Home Boost’ grants, the $50,000 cheque will be limited to the first 50,000 purchasers of newly built homes across the country.

This scheme came under way amid the Reserve Bank of Australian warning that the housing sector would face an extended period of hardships.

Home builders have already reported contract cancellation rates of more than 30% since the shutdown of key parts of the economy to prevent the spread of the COVID-19 virus.

The construction sector employs more than 1.1 million people and it has shed at least 5% of its workforce since March 2020, which was noted in the minutes of the Reserve Bank of Australia’s most recent meeting. This new proposal would stimulate the constructions of at least 50,000 dwellings and support 200,000 jobs.

construction worker who has been impacted by coronavirus painting wall

The program will run for 12 months and be limited to 50,000 properties and there will be no cap on the value of the house. The eligible properties would only include those with on-site construction commencement dates between 1 July 2020 and 30 June 2021.

Ken Morrison, Chief Executive of the Property Council of Australia, said the Australian economy requires “big and bold thinking” to get going again following the effects of the COVID-19 pandemic.  

Related: House prices continue to drop amidst Coronavirus pandemic

“As Australia’s biggest employer which contributes over 13 per cent of GDP, the property industry can be a powerhouse behind economic recovery and growth with the right policy settings and market incentives from the federal, state and territory governments,” Mr Morrison said.

The release of this new proposed scheme comes after the Reserve Bank of Australia’s concern and with new forecasts from the Housing Industry Association (HIA) of a near 50 per cent fall in new home building which could put half a million jobs at risk over the next year.

Another new economic modelling plan was commissioned by Master Builders Australia, who found a $40,000 uncapped new home building grant would deliver 14,000 extra new homes and replenish most of the constructions jobs that have been lost.

Denita Wawn, CEO of Master Builders said in a media release the construction industry was one of the worst hit sectors by the pandemic and urgent government support was needed. 

“We are seeking stimulus not subsidies from government, we want the National Cabinet to urgently implement this independently modelled stimulus package and establish a special task force to fast track commencement of construction activity.” Ms Wawn said. 

“Building and construction is shaping up to be one of the industry’s worst hit in the long term by the COVID-19 economic crisis.”

Related: Refinancing in tricky situations

“We know from previous downturns that it takes four times longer for our industry to recover than the rest of the economy.”

In addition to the home boost grant, this proposed stimulus package would also include funding for renovations to make homes more resilient to natural disasters and funding for commercial programs, such as cladding and asbestos rectification.

Under the proposed stimulus package, a $13.2 billion investment from the Australian government would deliver: 

  • $30.9 billion in GDP growth;
  • 105,500 jobs in construction and across the economy; and
  • $17.6 billion in expanded construction activity (new dwelling starts, renovations and commercial construction activity

Their proposal comes only a week after the Property Council of Australia lobbied the ‘New Home Boost’ scheme.

“There is no time to spare in meeting this threat to the viability of nearly 400,000 building businesses and the jobs of 1.2 million people employed in our industry.”

Ms Wawn added Master Builders wanted to see a dedicated building and construction industry taskforce established to oversee the implementation of the stimulus package. 

“For stimulus to occur building activity needs to commence. Builders and tradies cannot sustain their businesses and jobs on promises,” Ms Wawn said.

“We have seen that governments can fast track construction activity in response to natural disasters and COVID-19 is shaping up as an economic disaster.”

You might also like: First Home Buyers are Still Active on the Property Market

Words by Ece Demir

Sources:

Builders call on Government to introduce $40k uncapped new home building grant

Government pushed to introduce $50k grant for buyers of newly built homes

New home boost: $50k to home builders proposed as RBA raises property concerns

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