A leading construction industry group is calling for further stimulus to support the sector.
Master Builders Australia (MBA) has proposed for a 12 month extension to the government's HomeBuilder scheme, as well as further support in the form of new initiative CommunityBuilder.
MBA proposed CommunityBuilder would involve the Federal Government providing grants to those in the not-for-profit and community sector to fund 25% of the construction of facilities like libraries, training centres, and sports facilities.
Denita Wawn, chief executive of MBA, said the new stimulus measure, coupled with HomeBuilder, would provide vital support for the construction industry.
“CommunityBuilder is a new stimulus measure we are calling for that would employ the highly successful HomeBuilder model to kickstart work for the thousands of SME [small and medium-sized enterprises] commercial construction businesses that employ hundreds of thousands of tradies around the country," she said.
“Our modelling suggests that an investment of $3.8 billion will deliver a boost of $6.8 billion to GDP and create 13,000 new jobs.
“A 12 month extension of HomeBuilder will boost GDP by between nearly $4 billion and $4.5 billion, create more than 4,500 new jobs and result in up to 6,200 new dwelling starts."
Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.
Smart Booster Home Loan
- Discount variable for 1 year <=80% LVR
- No ongoing fees
- Unlimited redraw facility
Monthly repayments: $1,476
- Discount variable for 1 year
- No ongoing fees
- Unlimited redraw facility
Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.
Ms Wawn said although HomeBuilder had offset some of the fallout from COVID-19, the construction industry faced a severe downturn over the next 18 months.
“Despite the positive impact of the highly effective HomeBuilder grants, we have downgraded our forecast for the housing sector by 25% for 2020/21 so that we are now predicting a 27% fall in homebuilding activity compared to 2019/20,” she said.
“Commercial construction activity is forecast to slump by 17%.
"You will not see many cranes in the sky, and it will mean that thousands of businesses are at risk of simply exiting the industry along with the thousands of jobs that they provide.”
HomeBuilder applications open with a whimper
Treasury revealed on Friday the uptake of HomeBuilder had been well under expectations, with only 247 applications made so far across the country.
“As of 7 August, South Australia had received 157 applications, Tasmania had received, by the 4 August, 90 applications, and those are [all] the applications that have been received to date,” Jenny Wilkinson, Treasury’s fiscal group deputy secretary, told the COVID-19 select committee.
“To date, no payments have been made…because the criteria for payment hasn’t occurred.”
The $25,000 grant was announced on June 4 by Prime Minister Scott Morrison but states have only started accepting applications in the last few weeks.
The government has forecasted 27,000 Australians will build or renovate their home using the grant.
The scheme has faced heavy criticism since its announcement, due to its criteria.
To be eligible for HomeBuilder you must be spending between $150,000 and $750,000 on renovations that have been previously valued at less than $1.5 million, or be building a home worth less than $750,000, including land value.
You must also be an Australian citizen aged 18 years or older and be on an income of less than $200,000 for couples and $125,000 for singles.
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.
In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.
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