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Building boost for builders & renovators

As our nation heads into inevitable recession in the wake of the COVID-19 crisis, the federal government’s newest economic stimulus package, the HomeBuilder program, has been welcomed by building advocacy groups. WORDS: My Weekly Preview with AAP.


Building boost for builders & renovators

As our nation heads into inevitable recession in the wake of the COVID-19 crisis, the federal government’s newest economic stimulus package, the HomeBuilder program, has
been welcomed by building advocacy groups. WORDS: My Weekly Preview with AAP.

It was not the news Australia wanted to hear, but it came as little surprise. Federal Treasurer Josh Frydenberg last week confirmed Australia is now in a recession after 29 consecutive years of economic growth. It is believed to be the worst recession in 90 years.

The Australian economy shrank 0.3 per cent in the March quarter amid bushfires and the early stages of the coronavirus pandemic. But the economic shock will be much worse in the current June quarter, when the full impact of virus-related shutdowns occurred.

Mr Frydenberg had pledged the first federal budget surplus in 12 years, but an update in July and the next budget in October are expected to confirm deep deficits.

Prime Minister Scott Morrison has described the news as a heartache for the country.

“I really didn’t want to see a recession ever again in Australia,” he says. “As a government we worked so hard to bring the budget back into balance … to see COVID-19 hit it like a torpedo is absolutely devastating.

“Where we find ourselves now is heartbreaking.”

Mr Morrison says the economic fallout could have been much worse, were it not for his government’s response to the pandemic. And he has outlined the federal government’s $688 million HomeBuilder program as a positive initiative to reduce the negative effects on the economy and boost the hammered construction sector.

Announced last Thursday, the income-capped construction scheme will offer grants of $25,000 to people who want to renovate their home or build a new one before the end of the year.

New house and land packages worth up to $750,000 and renovations worth $150,000 or more will be eligible.

Master Builders Australia, who welcomed the news, had predicted a 40 per cent decline in residential construction with 450,000 jobs on the line over the next
six months because of coronavirus.

The program is expected to provide around 27,000 grants, support 140,000 direct jobs and another one million related jobs in the residential construction
sector, including businesses and sole-trader builders, contractors, property developers, construction materials manufacturers, engineers, designers and architects.

The news provides some welcome relief for the Sunshine Coasts industry, according to Housing Industry Association (HIA) regional manager Ken Smith.

“HIA had predicted the supply of new houses could drop to as low as 111,000 in 2020-21, rather than the 171,000 original predicted in February this year. This incentive will ensure that the significant contraction in new home-building activity in 2020-21 is not realised.”

He says although the majority of pre-COVID-19 construction work has continued, contraction in the volume of homes to be built, project cancellations and postponements for the next six months had created unparalleled concern.

“The grant reflects HIA’s call on the government to provide support for the housing industry to limit the impact of COVID-19 and bring forward housing activity into the second half of 2020 to avoid a significant drop in housing starts and jobs,’’ Mr Smith tells My Weekly Preview.

“The HomeBuilder package will support the delivery of tens of thousands of new home and renovation projects. HIA estimates it could generate over $15 billion in national economic activity.

“Most importantly, this incentive will support hundreds of thousands of jobs. The housing industry directly engages more than one million people – builders, trade contractors, designers, professional service providers and others. It provides jobs for many thousands more in the manufacturing and retail sectors, which supply the materials, products, white goods and furnishings that go into our homes.

“Stimulating home-building activity has been an effective recovery catalyst in past economic shocks.”

In an immediate response the developer behind the Sunshine Coast’s Harmony community, AVID Property Group, fast-tracked the release of 38 blocks of land five months ahead of schedule as inquiries tripled.

This follows last week’s release of 33 blocks, which were snapped up in less than two days.

“The HomeBuilder grant is causing a rush amongst those keen to get a foot on the property ladder or secure a new home,” AVID Queensland general manager Bruce Harper says. “We have seen a substantial increase in inquiries and buyers. This [grant] will be a catalyst for thousands of Australians to make the decision to embark upon purchasing their first home, upgrade to a new home, or downsize. In the peak of the COVID-19 pandemic we saw inquiries drop as buyers were a little uncertain about the future.

“However, we have seen this shift with inquiries picking up significantly – back to the levels we were seeing in February before shutdowns occurred.”

Master Builders Queensland CEO Grant Galvin agrees the package will be key to ensuring residential construction in the state doesn’t fall off a cliff by August or September. He is now calling on the Queensland government to step up and offer further support.

“We’re also hoping the Queensland government will come to the party and follow suit by expanding the $15,000 First Home Owners’ Grant to all new home builds. That would put Queensland firmly at the front of the game and mean anyone building a new home in Queensland would be eligible for $40,000 towards their new home, not just first homebuyers.

“We’re also asking the Queensland government to urgently bring forward and consider new opportunities for social housing – whether this be a new social housing construction program or maintenance of existing stock.

“Programs like this have a clear community benefit, as well as ensuring the industry has a clear pipeline of work and certainty, and support smaller contractors, who won’t necessarily see the benefit of the new home stimulus or the renovation package on offer.”

Mr Galvin says the renovation component of the package is also welcome.

The Australian Bureau of Statistics December 2019 quarter reports that $2214.0 million was spent on renovations across the country in that period.

While there has been criticism of the renovation component’s price range, which is capped at $750,000, Mr Morrison has defended it.

However, Labor leader Anthony Albanese is doubtful the program will spark a rush of people taking out loans or spending cash on major works.

“There aren’t too many battlers out there who have a lazy $150,000,’’ he says. “That’s a pretty decent renovation to your bathroom or to your kitchen.”

Mr Albanese says his recent bathroom makeover cost far less than $150,000. “It didn’t have pearl taps, it didn’t have a gold bath. That’s a substantial amount. We’ll wait and see what the take-up is.”



HomeBuilder grant

HomeBuilder will provide eligible owner-occupiers (including first homebuyers) with a grant of $25,000 to build a new home or substantially renovate an existing home.

A new home’s property value must not exceed $750,000.

Renovation projects to an existing home as a principal place of residence must be valued at $150,000 and $750,000, and the value of the existing property cannot exceed $1.5 million.

Contracts must be signed between June 4 and December 31, 2020.

Construction must start within three months of the contract date.

The grant can’t be used to build swimming pools, tennis courts, outdoor spas, saunas, sheds, garages or used on investment properties.

HomeBuilder will complement the existing Queensland First Home Owners’ Grant program, stamp duty concessions and other grant schemes, as well as the Commonwealth’s First Home Loan Deposit Scheme and First Home Super Saver Scheme.

To qualify you must be an Australian citizen and not be earning more than $125,000 per year as an individual or $200,000 per year as a couple (based on 2018-19 tax returns).



First homeowners

The Queensland First Home Owners’ Grant is applied to contracts dated from July 2018.

The $15,000 grant can be used for buying or building a new house, unit or townhouse that is valued at less than $750,000.



Building advice

Thinking of building? Here are some tips from HIA Sunshine Coast.

Q.Why is it worth going to the trouble to find the right builder? What can happen if you don’t choose the right builder?

A. There are two keys to successfully choosing a good builder. Most importantly, deal with a professional new home builder – someone with a solid reputation and professional subcontractors who will work closely with you throughout the building process. Secondly, don’t rush. Take time to consider all aspects of your build and ask lots of questions – the more information you have, the easier it is to eliminate uncertainties.

Further by choosing a builder that belongs to an industry association such as the Housing Industry Association, it helps to ensure that you are choosing someone who belongs to a professional association, which has members codes of ethics, provides education and training for members and promotes the notion of members being leaders in their industry.

Q. Where should you look for a builder?

A. The benefit of using online tasking sites is that you can check reviews from other customers and save yourself time ringing around for quotes. You can also source someone locally to do the work so they will know the area, be able to come quickly and may have some knowledge of the kind of building you are asking them to deal with. You can also choose from a lot of quotes, meaning you can get something done at the best price. Having said that, word of mouth remains one
of the best ways to find a tradesman. This is because the reference will come from someone you know and trust.

Q. What are the main questions to ask a prospective builder?

A. Peace of mind still comes from asking the right questions. Before you hire a builder, ask about licenses, insurance and experience and make sure you are in agreement on a quote and create a detailed prepared time line that you can both agree on.

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