$2m surge in homebuyer rebates as costs bite land developers

A developer has paid out more than $2m in rebates to care workers building new homes in Geelong and Melbourne housing estates since June.

Occupational therapist Beth Crosby secured a $20,000 discount on a block of land in a Villawood Properties estate that helped get her and partner Ethan, as well as their dog Nova, on the path to building a new home.

A developer has paid out more than $2m in rebates to care workers building new homes in Geelong and Melbourne housing estates since June.

Villawood Properties has spent almost $7m on its Care Worker Support Program since 2017, including $2.17m after June 1, when the developer increased the grant to $35,000 as it celebrated a 35th anniversary.

Villawood started the care worker program in Geelong and has since helped 360 families through $6.93m in grants at its key greenfields housing developments, including 130 in Geelong estates such as Coridale at Lara.

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The program is open to people employed as nurses, emergency services, teachers, including in early child care workers, and medical staff.

In the past five months, 62 families have taken up the grant.

The main purchasers to date have been nurses, disability support workers and childcare teachers, with more than 100 sales to nurses.

“Giving care workers the certainty that they will be able to live near where they work enables them to offer better care for the community in growth corridors,” Villawood Properties executive director Rory Costelloe said.

“Across the nation, suburbs on the fringe are the largest growing employment areas so it stands that we would want to attract highly qualified care workers as part of this mix.

“When you have a good mix of community-minded people who genuinely care about each other and can live close to work, you’ve got the formula for a positive, thriving, successful and most importantly, sustainable, community.”

Villawood Properties executive director Rory Costelloe, centre, said the care workers program had helped people from all sorts of roles build a home. Picture: Peter Ristevski

Villawood started the program after ABS research showed care workers could earn as much as $21,000 less than the average annual income.

The boost in buyers taking up the grant comes many developers increased rebates to address falling land sales amid rising building costs.

Mr Costelloe has repeatedly called on the nation’s finance industry regulator to relax the 3 per cent serviceability buffer lenders must assess homebuyers’ loan applications on.

APRA introduced the 3 per cent buffer in October 2021, when record-low interest rates, rising house prices, a credit growth blowout and looming post-lockdown economic surge all pointed to a home lending crisis.

Although some measures are showing rising interest rates have put more borrowers into mortgage stress, the Reserve Bank reported an increase in mortgage arrears from a low level this year.

The buffer is designed so lenders meet their responsible lending obligations by assessing borrowers’ ability to repay loans in a climate of rising interest rates.

Mr Costelloe said the 3 per cent buffer was no longer relevant, and damaging the market, with buyer inquiries falling away and prospective buyers pulling out due to inadequate finance.

“The industry is losing up to 25 per cent of weekly sales from people who pay a deposit on a block of land or a house and land package, then discover the effect of the 3 per cent margin and then cancel their purchase,” he said.

Originally published as $2m surge in homebuyer rebates as costs bite land developers