Federal Government considering extending HomeBuilder grant again

author-avatar By on April 16, 2021
Federal Government considering extending HomeBuilder grant again

After a successful 10 months, the Federal Government is reportedly considering extending its HomeBuilder scheme for a second time.

As reported by The Australian, final applications for the $15,000 HomeBuilder grant, which closed on Wednesday, exceeded 121,000, more than four times what Treasury had estimated at the scheme's inception in June. 

And according to The Australian, the government is considering another extension after its recent success. 

The scheme was forecast to be relatively cheap when first announced at $688 million, but has since ballooned out to $2.5 billion, and Treasury estimates it will fuel more than $20 billion in direct construction and housing investment. 


Building a home? The table below features construction home loans with some of the lowest interest rates on the market.

The grant was created in order to save the construction and housing industry from a pandemic-induced collapse, and is now reported to be one of the main drivers of economic recovery. 

Modelling estimates HomeBuilder has contributed $103 billion in economic activity, created and sustained around 340,000 jobs. and contributed more than 5 percentage points to the GDP. 

Around 40% of HomeBuilder applications were first home buyers, the strongest share of new dwelling commencements since the Global Financial Crisis. 

Figures from the Australian Bureau of Statistics (ABS) released on Wednesday revealed new home commencements increased by 26.6% in the December quarter. 

Minister for Housing Michael Sukkar said the delivery of these 33,761 dwellings was largely due to the success of HomeBuilder. 

“HomeBuilder has driven the highest level of new home commencements in more than 20 years," Mr Sukkar said. 

“This record level of new home construction is protecting the more than one million jobs reliant on a strong residential construction sector.”

Housing Industry Australia's (HIA) chief economist Tim Reardon said the number of new houses commenced in the December quarter was the second highest level on record. 

“This record level of investment in new home building occurred six months after the announcement of the HomeBuilder program. The increase in commencements occurred across all jurisdictions," Mr Reardon said. 

“The record volume of home building will continue to retain jobs and absorb workers from across the rest of the economy." 

Opposition calls for extension to commencement timelines 

Labor MP and Shadow Minister for Housing Jason Clare said the government needed to extend the scheme’s construction commencement time frame from six to twelve months to ensure applicants didn't miss out. 

"This would also help sustain work for the housing construction industry when it is expected to drop off next year," Mr Clare said. 

"Under the current HomeBuilder guidelines, construction must commence within six months of signing the contract.

"Shortages of supplies such as timber have caused significant delays for some home builders which could mean they won’t comply with the current HomeBuilder rules and miss out on receiving the grant." 

But Mr Reardon said it was unlikely we had yet seen the peak of building commencements. 

"We anticipate that commencements will reach a new peak in mid-2021. This will see a very strong level of building activity into the middle of 2022." 

Originally announced in June as a $25,000 grant, HomeBuilder was extended for three months in November, but reduced to a $15,000 grant. 


Image source: Twitter

Disclaimers

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.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

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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Alex joined Savings.com.au in 2019. He is passionate about providing Australians with the information and tools needed to make them financially stable for their futures.

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