The Federal Government’s HomeBuilder program will be extended for three months under changes announced today whilst timeframes for the commencement of construction under the program will be extended and price thresholds for eligibility of new builds will be expanded.
But the size of the grant will be reduced where building contracts are signed after December 31.
In a joint announcement, Prime Minister Scott Morrison, Treasurer Just Frydenberg and Minister of Housing and Assistant Treasurer Michael Sukkar outlined changes to the Commonwealth HomeBuilder program.
Previously announced in June in response to COVID-19, the program aims to help stimulate Australia’s economy and construction sector by providing grants of $25,000 for consumers who either build new homes or substantially renovate existing homes.
To meet eligibility requirements under the program’s original design, consumers needed to sign a contract with their builder before December 31.
As well, construction needed to commence within three months of contract signing whilst the price of new builds was capped at $750,000.
Under the changes, however:
- The deadline for signing building contracts will be extended until March 31 next year.
- Where contracts are signed after December 31, the grant’s value will be reduced to $15,000.
- The timeframe during which construction must commence after contract signing will be extended to six months.
- Price caps for new builds will be increased to $950,000 in New South Wales and $850,000 in Victoria (price caps elsewhere remain unchanged).
Whilst the HomeBuilder program has been well received overall, the changes address concerns about aspects of its original design.
In Victoria, there had been fears that the December 31 deadline for contract signing was too tight as the second COVID lockdown in that state had seen display homes closed for most of August and September.
This had left little consumers with little time to make design choices and select their builder – a process which typically takes eight to twelve weeks.
There have also been fears more generally that the program’s tight timeframes may lead to constraints on the availability of builders and tradespeople amid a sudden surge of simultaneous projects.
Finally, there have been concerns that requirements for construction to commence within three months of signing are too onerous in the case of multi-residential projects and that the original price cap of $750,000 for new builds is insufficient in more expensive markets such as Sydney and Melbourne.
Across metropolitan Sydney, modelling performed by the Urban Development Institute of Australia’s NSW division showed that the cost to deliver an average home including land costs, taxes and developer margins amounted to over $800,000.
According to the Government, the changes will see the program support construction of an additional 15,000 homes in addition to the 27,000 homes expected to be supported prior to the changes.
It will also support an extra 3,000 to 5,000 home renovation projects.
Prime Minister Scott Morrison welcomed the scheme’s extension.
“HomeBuilder is a key part of my government’s Economic Recovery Plan for Australia,” he said.
“We’re keeping people in jobs and putting Australians’ dream homes within reach.”
“It’s critical we keep the momentum up for Australia’s economic recovery. Extending HomeBuilder will mean a steady pipeline of construction activity to keep tradies on the tools.”
Housing Industry Association Managing Director Graham Wolfe agrees.
“The extension of HomeBuilder is both a step forward for jobs and a step towards a return to pre-COVID levels of home building for the housing industry,” Wolfe said.
“Most importantly the extension of HomeBuilder will provide a step up for thousands more Australians who aspire to home ownership.”