HomeBuilder stimulus package favours house-and-land buyers; overlooks units

Multi-billionaire property developer joins several real estate players strongly critical of government’s $680m stimulus package.

Harry Triguboff in his office at Meriton. Picture: John Appleyard

Multi-billionaire property developer Harry Triguboff is among several real estate players strongly critical of the federal government’s $680m HomeBuilder stimulus package, which he claims favours house-and-land buyers over city apartment purchasers and developers.

The apartment mogul and founder of Meriton, which is building thousands of units on the eastern seaboard, says the package favours house-and-land buyers on city fringes and regional areas even though most new homes completed in Sydney are units.

“This decision completely baffles us because 68 per cent of new homes completed in Sydney are actually apartments. This is where the jobs are,” Mr Triguboff said.

In a statement to The Weekend Australian, Mr Triguboff questioned why the government was trying to manipulate the housing market by setting price caps that excluded certain areas and dwelling types. “Once again, the government has provided a stimulus which clearly discriminates between housing types,” he said.

In announcing the HomeBuilder stimulus package the government is trying to counter a predicted downturn in construction demand.

Under the scheme the federal government will provide $25,000 grants to eligible homeowners for new home builds and renovations but they must spend at least $150,000 of their own money. The contract must be signed between June 4 and December 31 and construction must commence within three months of the contract date.

The package has attracted widespread criticism because of the difficulties of applying it to apartment builds.

CoreLogic head of research Eliza Owen said while potential homeowners were likely to be keen to take advantage of the scheme, many had noted the policy offered help to those who were planning to build and renovate anyway.

She said the stimulus package would bring forward a planned ­decision to purchase property. “It reflects a surge in buyer activity soon after housing grants are made available, and a significant drop in activity thereafter.”

Housing Industry Association chief economist Tim Reardon is forecasting apartment starts would contract by 43 per cent next year (2020-21) in addition to the 27 per cent decline that was experienced this year.

“This would see apartment starts fall below levels experienced during the GFC,” he said.

But Housing Minister Michael Sukkar said HomeBuilder was focused on bringing forward as much residential construction activity as possible in the second half of 2020.

“It is designed to encourage projects which will employ tradies straight away,” Mr Sukkar said on Friday.

“HomeBuilder is also specifically targeted at Australians on middle incomes with property price caps so to be an effective catalyst to spark construction activity regardless if Australians choose to buy a house or an apartment,” Mr Sukkar said.

However, Meriton national sales manager James Sialepis said that under the housing stimulus package, no consideration was given to the scale and timing of apartment projects.

Disappointment

“The HomeBuilder package seems to be geared towards helping house-and-land owners and has left apartment developers and would-be apartment buyers very disappointed,” he said.

Mr Sialepis added that construction at all price points creates employment so this should be paramount towards government thinking.

“It will be nearly impossible for apartment developers to provide a product that can benefit from the recent stimulus, stifling many projects which could result in many job losses.

“There is a requirement that construction works commence, assuming finance is secured — all within three months of a sale which needs to magically happen before the end of the year.

The exclusions count

“This timeline also assumes that all relevant approvals and permits are secured. To make matters worse for apartment developers, the government has excluded all brand-new completed apartments and even those under construction, which nearly guarantees very few apartments could qualify.”

Mr Sialepis said it was not the first time that apartment developers had been disadvantaged by a government stimulus.

“The recent federal government’s First Home Loan Deposit Scheme was made available to first homebuyers with only a 5 per cent deposit, but when our buyers applied, they were told the property must be completed within 30 days of a sales contract being signed which is impossible if you are buying an apartment off the plan.”

In a wide-ranging attack on the federal and state governments, Mr Triguboff added that the government’s foreign surcharge duty of 8 per cent was also discriminatory.

“Overseas buyers must pay the 8 per cent surcharge on the total apartment price while house-and-land packages will only attract the surcharge on the land component when contracts are split.”

Mr Triguboff said sales of Meriton apartments were improving every week, but values had a long way to go before future development was commercially viable.

He warned the government to seriously consider what plans it had for the housing sector and announce them immediately ‘’so we can plan for the future”.

“Providing constant stimulus for house and land and not apartments could be very detrimental to our sector,” he said.