In early June 2020 when the Federal Government announced the $25,000 HomeBuilder grant, there was no way of foreseeing the extent to which a second wave of COVID 19 infections, and subsequent Stage 4 restrictions in Victoria, would affect the ability to take up the grant.
Given the successful take up of the grant in the least affected states of Western Australia and Queensland, there is a strong case to extend the lifeline which the stimulus sought to provide to the building and construction sector. According to the Master Builder Association, a 12-month extension of the HomeBuilder package would boost GDP by between $4 – $4.5 billion, create more than 4,500 new jobs and result in up to 6,200 dwelling starts.
The Government is unlikely to move on extending the current $680 million package before the October budget as it will seek to maximise the demand ahead of the December 31st 2020 deadline. As at the third week of August, approximately 43,000 Australians had registered for the HomeBuilder programme, including 11,500 in Victoria. Victorians have been granted a 3-month construction commencement extension by the Victorian State Revenue Office.
The initial treasury numbers had predicted approximately 27,000 applicants would take up the $25,000 grant scheme, supporting new home builds or renovations. Additional incentives at a State level also offer a significant boost provided the applicant meets the following eligibility criteria:
- Is an Australian citizen aged 18 years or older and an individual, not a company or trust.
- Earns an income of less than $125k or $200k if you are a couple.
- Is spending between $150k and $750k on a renovation for a home that has been previously valued at less than $1.5 million; or
- Is building a new home worth less than $750k.
- The property is not an investment property and will be their principal place of residence.
- Is building or renovating with licensed builders.
- A building contract has been entered into prior to the end of this year and the building has commenced within three months of the contract date.
The grant for first-time buyers is complementary to existing State and Territory first homeowner grants, stamp duty concessions and the Government’s First Home Loan Deposit scheme, as well as the First Home Super Saver Scheme. For example, in New South Wales, Western Australia and the Northern Territory savings are up to $45k, Victorians can save between $45k and $55k.
Land sales in Perth have boomed as a result of the Federal and State incentives where in the June quarter alone 3,300 lots were sold, compared to 2,000 sales in the previous quarter. A further benefit for first home buyers in Western Australia is provided by credit available through the “Keystart loans”.
The grant can also help those buying an off-the-plan apartment, although projects that commence construction within 3 months of contract signing are somewhat limited in their availability. One central Melbourne development, located in Fishermans Bend that does qualify for commencement within the timeframe has managed to secure more than 150 sales since the $25,000 HomeBuilder bonus was announced, most of which were secured during lockdown.
The RBA recently noted the construction sector employs more than 1.1 million people and has already shed at least 5% of its workforce since March 2020. The importance of the sector coupled with the success as a stimulus package provides a strong case for the extension of the HomeBuilder Grant into 2021.
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