Victoria’s construction industry may miss out on an uplift in home building activity which other states are enjoying from the Commonwealth HomeBuilder grant, an industry leader has warned.
Speaking after data last week showed that sales of new or off-the-plan homes are rising in every other state but falling in Victoria, HIA’s Victorian Executive Director Fiona Nield has warned that the closure of display homes during Stage 4 restrictions in Melbourne means that builders in Victoria may miss out on the uplift created by the HomeBuilder grant.
Announced in June as part of the Commonwealth response to COVID-19, the HomeBuilder scheme offers up to $25,000 to those who either build new homes (including off the plan purchases) to use as their main residence or who substantially renovate existing homes.
To be eligible, however, consumers need to have a contract for construction signed on or before December 31.
This is likely to be problematic in Victoria as display homes have been closed in Metropolitan Melbourne since the beginning of Stage 4 COVID restrictions in early August.
Under the Victorian Government’s reopening roadmap, these facilities will remain closed until the third stage of reopening which will occur on October 26 at earliest.
This, Neild says, means the window of opportunity between when display homes reopen and when contracts need to be signed to qualify for HomeBuilder will be very small – particularly considering the need to choose builders and work through detailed design requirements such as material selection.
The upshot is that new home construction in Victoria will remain weak during the remainder of the year and into 2021.
“During stage 4 restrictions, Victorian home buyers have been unable to visit display homes and meet with builders around all the critical decisions necessary for contract signings,” Neild said.
“If sales in Victoria continue to decline in September, which appears likely given the ongoing restrictions, this will impact on the number of homes commencing construction later this year and into 2021.
“The stage 4 restrictions are also now inhibiting many Victorians ability to access HomeBuilder, which is available for a very limited period of time.
“To be eligible for the grant, home buyers need to sign a home building contract by 31 December 2020. Even after home buyers are able to visit display suites and choose their builder, there will be limited time to complete the detailed design requirements before this deadline.”
Neild’s comments come as the latest data shows that sales of new or off the plan homes are on the rise across all major states except for Victoria.
In its latest New Home Sales report, HIA says new home sales increased in Queensland, New South Wales, Western Australia and South Australia during the month of August by 19.1 percent, 11.7 percent, 11.4 percent and 7.4 percent respectively.
In Victoria, sales plummeted 14.4 percent as display homes and land sale offices in Melbourne were forced to close under Stage 4 restrictions.
Neild’s concern has been echoed by others.
In an open letter to Premier Daniel Andrews on September 7, the Urban Development Institute of Australia, Master Builders Victoria and the Property Council of Australia called for the reopening of display homes, land sales offices, sales suites and open-for-inspections by appointment only with COVIDSafe measures to be brought forward from the third step of reopening on October 26 to the second step on September 28.
In their letter, aforementioned organisations argued that the length of time during which restrictions have remained in place has meant that the pipeline for new home sales in Victoria will have been decimated for the months of August, September, October and possibly November.
With December and January typically being quiet months, this could mean the new home sales pipeline will be decimated for six months.
This, combined with the overall impact of COVID19 on the housing sector, means activity in new home construction could be damaged going into 2021 and the prospect of a construction-led economic recovery could be compromised at least in Victoria.
In terms of HomeBuilder, aforementioned organisations say the closure of display homes until October 26 at the earliest will create difficulties for buyers in accessing the grant.
Typically, the process of entering into a new home contract takes around eight to twelve weeks once a builder is chosen and interior/exterior selections are considered.
Accordingly, many Victorians who wish to access the grant will now need to view and purchase a home online – something which is unappealing given the significance of home buying decisions.
Neild says display homes should be open as soon as possible.
“Home buyer access to display homes and centres for material selection are pivotal for the signing of home building contracts. It is critical that home buyers be permitted to attend these premises by appointment as soon as possible,” Neild said.
“Display homes and centres operated safely throughout the COVID-19 restrictions until stage 4 with builders applying minimum numbers of visitors, along with appointment only arrangements, and all necessary cleaning and tracing protocols in place.
“The recent introduction of COVID safe plans brings these practices together and provides a solid framework for ongoing management of these premises. HIA believes these practices should be applied now to assist these premises to re-open as soon as possible.”