The housing construction industry in Australia has received a massive boost after the Federal Government announced a $680 million stimulus package to help boost the sector in troubled times.

In a joint announcement, Prime Minister Scott Morrison, Treasurer Josh Frydenberg and Assistant Treasurer and Minister for Housing Michael Sukkar said the Federal Government would provide grants of $25,000 to build new homes or substantially renovate existing homes under a new HomeBuilder package.

To be eligible, households will need to have an income of les than $125,000 in the case of singles and $200,000 in the case of couples.

As well, the grants will only be available for homes worth $750,000 in the case of new homes and $1.5 million in the case of renovated homes.

In the case of renovations, meanwhile, homeowners will only be able to receive the grant where the cost of renovations falls within a threshold of $150,000 to $750,000 – a measure which the Treasurer says will mean grants will be given only to households who have ‘skin in the game’.

All up, the government expects to provide around 27,000 grants at a cost of around $680 million.

The grants are welcome for a sector which is likely to be impacted by COVID-19 as immigration slows and difficult economic conditions crimp domestic demand.

In its most recent forecasts, Master Builders Australia said COVID-19 had slashed 15.7 percent from its forecasts for the dollar value of commercial building work set to be done in 2020/2021 and 43,000 from its forecast for new home starts.

In their statement,  ministers said the package would help the building sector to deal with the fallout from COVID-19.

“This increase in residential construction will help to fill the gap in construction activity expected in the second half of 2020 due to the coronavirus pandemic,” the Ministers said.

“In doing so, HomeBuilder will help to support the 140,000 direct jobs and another 1,000,000 related jobs in the residential construction sector including businesses and sole-trader builders, contractors, property developers, construction materials manufacturers, engineers, designers and architects.”

Industry lobby groups welcomed the move.

“HomeBuilder will be a lifeline for an industry facing a valley of death in the coming months,” Master Builders Australia chief executive officer Denita Warn said.

“It will mean more new homes, more small businesses and jobs are protected and provide a stronger bridge to economic recovery for our country.”

Still, the NSW branch of the Urban Development Institute of Australia issued caution, stressing that thresholds would mean that many home owners within Sydney and other major cities within regional New South Wales will not qualify for the grants.

Based on data from Research4 and its own research, UDIA NSW cautioned that the average value of house and land packages across Metropolitan Sydney, Illawarra and the Australian Capital Territory each exceed the $750,000 threshold above which the grant for new homes will not apply.