- Mid-2020 the housing construction market was in a 3-year slump, expecting worse
- HomeBuilder has cost twice what was originally planned, with 75K applicants
- First home buyers have flooded the market, but some could be priced out as grants end
Back in mid-2020 (it seems an age ago) the home construction market was all doom and gloom. Housing construction was on a “three-year slide” and the proposed HomeBuilder grant scheme was forecast to “do little” to change things.
After the peak of 2018 with 230,000 housing starts, the market had fallen to 165,000 and was expected to fall below 130,000. The pandemic would only make things worse.
How times have changed.
Several federal and state grant schemes aimed squarely at first home buyers in order to kick start the construction industry have worked a treat.
Perhaps overly so. Original quotations for the federal government’s HomeBuilder scheme were around $920 million, and yet now look likely to soar past $2 billion.
Twice as many applicants came forward than the federal government had predicted, and so the scheme has since been wound back, and is set to end this month.
75,143 households had applied for the $25,000 grant by the end of December, causing Housing Minister Michael Sukkar to remark he was “pleasantly surprised” by the uptake.
The program has claimed to be supporting $18 billion of new projects. Victoria has been the state taking most advantage, with 17,382 new builds associated with the grants and 4,213 rebuilds. Queensland (13,507 / 3,016) and New South Wales (8,714 / 4,973) are next.
The program was initially designed to end in December but was extended to March 2021, with the grant reduced to $15,000. There has been some back and forth about timing issues for applicants, in that the build has to commence within six months, and whether applicants can receive their money in time.
Meanwhile, most states and territories employed a $10K or so grant for first home buyers, as well as stamp duty exemptions, home loan assistance and other concessions.
What a change from mid-2020
First home buyers increased their share of the property market by 54% over 2020.
An incredible turnaround. Low interest rates, a resilient economy and all this government money to build your own home. Why not?
Well, for some the race is on, and some will be left behind. Already, prices are rising, and could rise more than the grants, meaning they have been eaten up. Many potential first home buyers will now find themselves priced out of the market.
They’ve propped up the market during the pandemic, but with some cities expecting to see their prices rise 20% this year or the next, first home buyers could get left behind.
As for those predicted horror show numbers for new housing builds, the past year actually saw 186,000, a 19-month high for Australia. In Perth, they are on a 3-year high.