Three-month extension for HomeBuilder scheme
From the Desk of the Chief Economist - HomeBuilder Extension is a Win for All
On 29th November 2020, the Federal Government decided to extend the HomeBuilder program, allowing it to run until 31st March 2021. The decision was made based on how highly effective the HomeBuilder program is in driving demand to the construction sector, thus protecting jobs by supporting the construction of new homes and home renovations.
To date, the HomeBuilder program is expected to support the construction of 27,000 new homes, with an additional 15,000 homes projected under the extended timeframe. The HomeBuilder program has been adjusted according to housing market conditions and after further consultation with the construction sector.
HomeBuilder Program Decisions
Below are changes to the HomeBuilder program:
A $15,000 grant for building contracts (new builds and substantial renovations) signed between 1st January 2021 and 31st March 2021, inclusive.
An extended deadline for all applications to be submitted, including those applying for the $25,000 grant and the new $15,000 grant. Applications can now be submitted up until 14th April 2021 (inclusive). This will apply to all eligible contracts signed on or after 4th June 2020.
An extension to the construction commencement timeframe from three months to six months for all HomeBuilder applicants. This will apply to all eligible contracts signed on or after 1st January 2021 but will also be backdated and apply to all contracts entered into on or after 4th June 2020.
An increase to the property price cap for new build contracts in New South Wales and Victoria to $950,000 and $850,000, respectively, where the contract is signed between 1st January 2021 and 31st March 2021, inclusive. (Note: The existing new build property price cap of $750,000 will continue to apply in all other States and Territories).
A change in licensing requirements and registration for builders and developers:
Where an eligible contract is signed on or after 29th November 2020, the builder or developer must have a valid licence or registration before 29th November 2020.
Where an eligible contract is signed before 29th November 2020, the builder or developer must have a valid licence or registration before 4th June 2020.
A Win for All
The latest Housing Industry Association’s (HIA) new home sales data showed 31.6% higher in the three months to October 2020 when compared with the same time last year.
The HomeBuilder extension builds upon the extension of the First Home Loan Deposit Scheme announced in the Federal Budget 2020, which delivered 10,000 guaranteed loans to allow first home buyers to obtain a loan to build a new home, or purchase a newly built home, with a deposit of as little as 5.0%.
This gives first home buyers more confidence to enter the market, particularly as both the HomeBuilder program and First Home Loan Deposit Scheme can be accessed independently and in conjunction with virtually any State Government level first home buyer initiatives. Together this creates an extremely attractive package to allow first home buyers to enter the market, which will have a flow-on effect on the construction industry.
An increase in the property price caps for new builds in New South Wales and Victoria is in line with property market conditions, allowing more first home buyers to enter the market. HIA predicts that the extended HomeBuilder will generate an additional $6 billion in construction work, boosting economic activity and supporting hundreds of thousands of workers directly up and down the supply chain.
The HomeBuilder extension is a win for all, continuing to support housing demand in 2021.