Federal Government Home Builder Scheme Good News for Construction & Development Sectors

Federal Government Home Builder Scheme Good News for Construction & Development Sectors

Arnold Development Consultants congratulates the Federal Government on this stimulus initiative.

Government Unveils $688m ‘Home Builder’ Scheme

Prime minister Scott Morrison has unveiled the first details of the government’s $688 million “home builder” scheme.

The scheme will fund grants worth $25,000 for home renovations between June and end of December. To be eligible, single applicants must earn less than $125,000 a year or $200,000 per couple.

New homes valued up to $750,000 will qualify as will renovations worth between $150,000 and $750,000 that result in the property being worth $1.5 million.

The prime minister is expected to reveal more details of the scheme on Thursday.

The announcement comes as the construction sector faces rising construction costs, a drop in migration, falling house prices and demand.

The industry has been rife this week with stimulus package theories, from dollar-for-dollar matching on renovations to $20,000 for any home buyer and social-housing initiatives.

Related: Australia Enters First Recession in 29 Years.

Prime minister Scott Morrison spoke about a stimulus package with 2GB’s Ben Fordham and said they needed to make a move before September to help tradies and smaller contractors.

“We’ve been looking closely at the residential building sector”. Morrison said.

“We are more interested in larger projects and new home builds and things like that, because you get towards the end of the year, post about September – where the economists are telling us, the states telling us also – that we are looking at a bit of a drop off in that current home building that’s going on. And that’s not good for tradies, not good for jobs.

“The other thing about those sorts of projects is [compared to building school halls] is you’re going to get more of your local tradies involved in these things”.

On Wednesday, Frydenberg conceded the country had entered a recession “on the basis of the advisor that I have from the Treasury department about where the June quarter is expected to be”.

Property Council of Australia chief executive Ken Morrison said they were expecting the announcement soon on how the government planned to stimulate new housing construction as part of it’s economic response to the Covid-19 pandemic.

“This will be critical in supporting jobs and economic activity as the economy reboots following the pandemic,” Ken Morrison said.

“Residential Construction is a huge jobs engine and is facing a demand ‘perfect storm’ as unemployment grows, migration plummets and confidence is understandably weak.

“The country needs housing construction to be a driver of economic recovery, not a drag on it.”

Related: Residential Construction Falls to 19 Year Lows – ABS

Social housing key to stimulus: Grattan Institute

Grattan Institute program director Brendan Coates said money for social housing not home buyers grants, was the key to construction stimulus.

“Large handouts would prompt some more residential construction by encouraging some people to bring forward their home purchases.”

“But under such scheme, governments also end up giving grants to people who would have bought a home anyway.”

“Even the more pessimistic industry forecasts expect 110,000 homes to be built in Australia next year. Giving $20,000 to all of these home buyers would cost $2.2 billion without adding a single construction job.”

Coates said this would be passed onto house prices and a renovation boost would increase trade prices as research suggested home improvement levels were already pre-Covid-19 levels.

“The Morrison government should repeat another GFC-era policy, the social housing initiative, under which 19,500 social housing units were built and another 80,000 refurbished over two years, at a cost of $5.2 billion,” the program director said.

“Under the initiative the federal government funded the states to build social housing units directly or contract community housing providers to act as housing developers.

“Building 30,000 new social housing units today would cost between $10 billion and $15 billion. Because state governments and community housing providers won’t have to worry about finance, marketing and sales, they’ll be able to get to work building homes much quicker than the private sector.

“The boost to the economy would be pretty immediate.”

Source: The Urban Developer – Date: 4/06/20 – https://theurbandeveloper.com/articles/residential-stimulus-packagetoweatherperfectstormutm_source=TUD+Master+List&utm_campaign=7621e1cb38EMAIL_CAMPAIGN_2019_07_03_11_11_COPY_01&utm_medium=email&utm_term=0_9f25b32131-7621e1cb38-188379859