HomeBuilder welcome, but fears remain

The Morrison government’s home stimulus package will provide stability but the residential building sector is bracing for a further hit.

Reece CEO Peter Wilson. Picture: David Geraghty.

The Morrison government’s home stimulus package will provide “stability” for builders and tradies for coming months but the residential building sector is bracing for a further hit when Canberra’s massive stimulus program rolls off in September.

The $680m HomeBuilder package, detailed on Thursday, is intended to spark activity in the mid-priced home sector, driving activity ranging from design and building supplies to finance, to help combat the recession.

The package, which includes cash grants of up to $25,000 for new homes and home renovations, had been anticipated by major developers, but is smaller than the Rudd government’s housing stimulus after the global financial crisis.

Building suppliers welcomed the package, with Reece chief executive Peter Wilson saying it was “critical” that the government do all it would to protect the sector and the jobs of the tradies that rely on it.

“It will provide stability for our customers, particularly tradies, alongside the businesses and communities that they support … we are very aware of the challenges facing all sectors for the remainder of the year and beyond,” he said.

Mr Wilson pointed to the fragile state of small business customers, with widespread concerns about the state of the economy when stimulus measures end in September.

 

“We are also conscious how tricky it will be to forecast what the broader ramifications might be for the economy at large, and what it means for the day-to-day cash flow of our customers, further reinforcing the need for stimulus measures such as this one,” he said.

Urban Taskforce director Tom Forrest said that as current works-in-progress were completed, this stimulus would help fill the order book and keep thousands of workers employed in the residential construction sector.

The cash grant, which is means-tested, can be used for new homes valued up to $750,000 including land, or renovations worth between $150,000 and $750,000 if the home is valued at no more than $1.5 million before the work begins.

There are also concerns it may struggle to spur new apartment buildings as projects have just three months to get under way, prompting industry calls for an extension and for price caps to be lifted so more city projects can be undertaken.

Shares in listed companies with exposure to home construction and renovation got a slight bump on the announcement of the HomeBuilder program.

Reece finished up 1.2 per cent at $9.94 a share, its highest closing since the coronavirus pandemic shook the markets in mid-March. Lighting fixtures retailer Beacon Lighting jumped 6.5 per cent to close at $1.07 a share. Concrete supplier Adelaide Brighton lifted by 2.4 per cent to $3.36. Building materials company James Hardie edged up to $26.72.

Commonwealth Bank’s retail banking boss Angus Sullivan said the lender would work with customers to help them access the HomeBuilder grants “to support the economic recovery”.

Still, the Urban Development Institute of Australia NSW called for an increase in the $750,000 cap on new home builds under the HomeBuilder scheme, saying Sydney represents more than two-thirds of the housing supply needed in NSW and was critical to jobs.

“The federal government’s tight timeline makes it near-impossible for developers to engage in pre-sales for the apartment sector, which engages a large part of the construction workforce in long-term employment,” chief executive Steve Mann said. The Australian Paint Manufacturers Federation, the peak industry group representing companies like Dulux Australia, Colormaker Industries and Mirotone, said stimulation of the construction industry would also help revive Australian manufacturing.

“The benefit of supporting the construction industry goes well beyond the direct employees, with a large number of inputs being made in Australia. For example, 90 per cent of paint used in Australia is made locally,” APMG chairman Pat Jones said.

“By supporting new work and jobs in the construction sector, the stimulus will create a flow-on effect to support other manufacturing jobs in the economy,” he said.  Australian-listed Reliance Worldwide said the government’s HomeBuilder package would “cushion” the impact of the ­recession on the construction ­sector.