Housing stimulus a $100bn bonanza

The $25,000 HomeBuilder scheme could be extended after demand outstripped forecasts.

Housing Minister Michael Sukkar. Picture: Getty Images

Homeowners and first home buyers will drive more than $103 billion in economic stimulus with the government now considering extending the start date for construction under the $25,000 HomeBuilder grants due to demand for the cash payments outstripping Treasury forecasts by more than 400 per cent.

The Australian can reveal the final number of grant applications for the construction of new homes and major renovations has now exceeded 121,000 — four times the number that Treasury had originally forecast when the scheme was devised in June to rescue the construction and housing sector from a COVID collapse.

While it will see the cost of the scheme blow out from its budget of $688m to more than $2.5bn, Treasury estimates it will fuel more than $30bn in direct con­struction and housing investment.

Economic modelling by the sector estimates the scheme, now heralded as being one of the key planks of the economic recovery plan, had contributed to $103bn in broader economic activity and the creation and sustainment of some 340,000 jobs.

The modelling suggests the scheme alone will have contributed to more than a five percentage point boost to GDP.

The HomeBuilder scheme announced last year was to provide $25,000 grants for homeowners and first-home buyers for the construction of new homes or major renovations worth more than $150,000.

Originally due to expire in ­December, it was extended as a scaled-back scheme with loans of $15,000 until the end of March.

The Australian understands that the government is now considering extending the scheme for a second time.

It is estimated that 40 per cent of applicants have been first-home buyers which is the strongest share of new dwelling commencements since the global financial crisis. More than 80 per cent of the grants were for new homes, with the remainder allocated to major renovation projects.

Labor was highly critical of the scheme, claiming support should have been funnelled instead into social and public housing projects.

But Housing Minister Michael Sukkar said the scheme had benefited first-home buyers and suburban families across the country.

“HomeBuilder was designed to encourage those who may have understandably pulled back from undertaking a new build or substantial rebuild when the COVID pandemic hit to enter the market,” Mr Sukkar said.

“By giving Australians confidence and support to enter the new-home market, or make it more affordable to add to their ­existing home, HomeBuilder protected and created jobs across the construction industry at a time of significant economic uncertainty.

“Every one of the 121,363 HomeBuilder applications received represents a signed contract, which means more work in the pipeline, keeping our tradies on the tools and in a job.”

The latest housing data shows that detached-housing approvals in the three months to February 2021 were up 50.7 per cent on the same time last year, and new-home sales were 60.5 per cent higher over the same period.

Master Builders Australia chief executive Denita Wawn said both HomeBuilder and JobKeeper had saved the Australian economy.

“At this time last year, the housing industry faced the nightmare of hundreds of thousands of small builders and tradies going bust and jobs lost. There’s no doubt that we were staring into a valley of death that HomeBuilder has seen us safely through,” Ms Wawn said.

“HomeBuilder, along with JobKeeper, has been the absolute star of the economic recovery. The government deserves great credit for the strength of its leadership under extreme pressure and rolling out the right measure at exactly the right time.”

The Housing Industry Association has forecast a record level of housing starts, with 130,000 new detached homes projected to begin construction in 2021.

HIA chief Graham Wolfe said: “HomeBuilder had an immediate impact from the day it was announced. It injected confidence in the housing industry for builders, trade contractors, manufacturers, suppliers and into the retail sector at a time when hundreds of thousands of jobs were at risk.

“Workers in jobs that were disappearing early last year were reinstated as the pipeline of work from sales, design … through to construction expanded.”