HomeBuilder doesn’t go far enough for tradies

The Morrison government housing stimulus package should tide tradies over but it is no nirvana for hard-pressed sectors.

Electrician Andrew Hardingham, owner of Sydney Electrical and Data, is unsure HomeBuilder will help to revive tradies’ fortunes. Picture: Britta Campion

The Morrison government housing stimulus package should tide tradies over during the worst of the recession and prevent prices from going into a downward spiral, but it is no nirvana for hard-pressed sectors, those on the ground and industry forecasters say.

The HomeBuilder scheme unveiled this week copped a mixed reception, with social housing builders and high-rise apartment developers missing out, but the $688m package could provide a lifeline for both builders and suppliers that rely on Australia’s housing obsession.

The government’s strictly targeted package, which will target middle Australia and focus on the outskirts of major capitals and regional towns, has disappointed those hoping for more support for premium markets, but will spark about 27,000 projects, according to JPMorgan.

Some would have been carried out before the package was put in train, but it could prompt a 7.1 per cent lift in single-family housing starts and an 11.2 per cent jump in renovations through to the end of 2021 — a welcome boost for a suffering industry.

CoreLogic head of research Tim Lawless says house and unit construction has slowed from the end of last year, but the apartment supply overhang had some way to go in NSW and Victoria, especially considering the stalling of overseas migration and inner-city apartment rental demand from students.

He sees most benefit going to new housing estates that developers have already prepared.

“Considering the higher supply levels across the nation’s largest apartment markets, as well as the longer lag between signing the contract and construction commencing for off-the-plan apartments, it’s logical to assume most of the benefit from the HomeBuilder program will flow towards detached housing, particularly greenfield housing estates that are shovel-ready,” he says.

On the ground, the home construction industry is split on the effectiveness of the HomeBuilder scheme and the extent to which it will help the fragile sector.

Thursday’s announcement of the program, which provides grants of up to $25,000 for new homes and renovations worth between $150,000 and $750,000, came after weeks of high-level lobbying and created an immediate flurry around residential construction.

Google analytic trends show searches for “home renovation”, “tradie” and “architect” all jumped on June 4 on the scheme’s announcement, while “HomeBuilder grant” was the most searched-for term of the day.

Online services marketplace Oneflare saw traffic almost double on news of the scheme, chief executive Billy Tucker told The Weekend Australian.

“Posts requesting building jobs jumped 140 per cent on Thursday. We also saw a 123 per cent increase in architect jobs,” Tucker says. “Based on that, I think this program will work.”

Online tradie platform hipages saw the number of jobs posted in the renovations category increase by a factor of four compared to the week prior, while the number of jobs posted in the home extensions category increased more than six times.

“We see these grants as helping to boost the construction sector, with the potential to provide a $5.86bn lift to the wider economy,” says hipages chief executive Roby Sharon-Zipser.

Not all signs are promising. Online directory ServiceSeeking saw no noticeable increase in the number of jobs listed on Thursday.

Founder Jeremy Levitt says the stringent criteria surrounding what the grants could be used for, as well as the scheme’s December expiry, made HomeBuilder a “bit of a non-starter”.

“This grant will simply go to those who were already about to carry out a renovation, as the typical sideline applicant won’t have time to put in a development application, with drawings etc and get approval before the scheme ends,” Mr Levitt said.

Andrew Hardingham, who runs a small electrical contracting business that employs eight people, says he has been consistently busy in Sydney during Electrical and Data’s 11-year history. But when the coronavirus hit, one-third of his business disappeared — and he is not sure HomeBuilder will provide much help.

“I think in its current form the impacts will be limited,” he said. “If there’s consideration given to expanding the eligibility criteria and extending the time frame, it is much more likely that we will see some benefit from it.”

He suggests a rejig to allow for more types of work. “It’s worthwhile the government considering widening that to small businesses and kitchen and bathroom renovations rather than looking at only larger home renovations. Otherwise I’m just not sure it’s going to be enough of a boost,” he said.

Engineering, architectural and design firms are also unsure the scheme will be enough to save the sector’s job pipeline from drying up as the effect of the coronavirus crisis begins to hit.

A survey of the engineering and architectural firms by Consult Australia revealed that two-thirds of firms have lost, on average, one-third of their business throughout the coronavirus pandemic, with more than half expecting their business to reduce further over the coming months.

Northrop Consulting Engineers chief executive Jamie Shelton says the HomeBuilder scheme has done little to change that outlook. “This scheme will help a bit in parts of our business. It’s not making a substantial difference for us,” he says.

“The construction industry is absolutely — from both the design and construction sign — yet to see the full impact of coronavirus,” he warns, pointing to the need for help for high-rise projects.

“This will absolutely help some of the residential land development projects on which firms like ours provide the engineering services for the land. The issue is there is not a lot of engineering or architecture involved in the actual houses,” he says.

Building suppliers are hopeful their businesses will benefit.

Adbri Masonry in Sydney supplies concrete bricks, blocks, pavers, retaining walls. Chief executive Nick Miller says any stimulus that can create more shovel-ready projects is welcome in the current environment, while pushing to include more projects in major cities.

“While the regions will likely see greater benefit, property prices in Sydney and Melbourne make the eligibility thresholds harder to achieve. We’d really like to see the criteria broadened so it’s accessible to more Australians, supporting more construction activity and jobs,” he says.

Spotlight Group, the country’s largest fabric, craft, party and home interiors retailer, expects to catch some of the spillover. Deputy chairman Zac Fried anticipates it will drive positive sales outcomes for both Spotlight and Harris Scarfe businesses, “especially in the homewares and home-decorating categories”.

While critics want the $688m scheme to be expanded, the Morrison government is counting on the construction industry’s well-known multiplier effect kicking in.

The chief of the country’s largest listed residential developer, Stockland, Mark Steinert, says the HomeBuilder scheme supports about a million construction jobs across the country.

“Australia’s residential property sector generates over $100bn annually for our economy and creating new homes and apartments is one of the most important job multipliers in the country, with the Australian Bureau of Statistics establishing that every dollar spent on residential construction generates a three-dollar impact in the broader economy,” Steinert says.

Cement, Concrete and Aggregates Australia chief Ken Slattery says the scheme is a “major step” towards a broader economic stimulus package for the construction industry.

“It will form an important part of the broader recovery stimulus needed,” Slattery says.