Calls to extend HomeBuilder scheme amid construction frenzy

author-avatar By on April 08, 2021
Calls to extend HomeBuilder scheme amid construction frenzy

The government is facing renewed calls to extend the HomeBuilder scheme again due to record levels of construction and home loan approvals.

The federal government's HomeBuilder Scheme ended on March 31, although the extended deadline for grant applications formally ends on April 14.

On the same day as that 31 March deadline, Australian Bureau of Statistics (ABS) data showed construction approvals for private sector houses rose 15% in a month to its highest level on record, and was up more than 57% over 12 months. 

Lending for renovations also rose to its highest level since 2009, and the number of construction loans to owner occupiers in the three months February 2021 was 43.0% higher than the previous quarter.

With the construction of houses growing at its fastest pace in quite some time, the Morrison Government has faced renewed calls from the Labor Opposition to extend the scheme again. 


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

Over 96,000 HomeBuilder grants have been handed out, more than three times the predicted 27,000, and Shadow Housing Minister Jason Clare took to Twitter to call for another extension. 

"What is it going to take for the Government to start listening and fix the HomeBuilder Scheme so people don’t miss out on the grant?" he said.

"There is a real risk that some home buyers will miss out on the HomeBuilder grant because of a shortage of timber.

"There is a simple fix - change the HomeBuilder rules so you have 12 months to start construction after you sign a contract instead of 6."

Construction demand exceeding supplies 

The timber shortages mentioned by Mr Clare refer to statements by various builders saying the strict timeframes and supply issues are causing some customers to wait months for their constructions to commence. 

According to The ABC, the "perfect storm" of events such as record demand and intense pressure on supply chains is causing delays, and Master Builders Queensland (MBQ) deputy chief executive officer Paul Bidwell said the next few months could cause pain for both builders and their clients. 

"Builders are unable to deliver the contracts because they can't, say, get the timber products … the roofing materials, and there will be financial consequences," he said. 

"Consumers have a right to expect that the timeframes will be met, and the price will be met, but because of all the circumstances at play, it's proving very, very difficult."

So some customers missing out could be unavoidable without an extension of HomeBuilder, and Housing Industry Association (HIA) Chief Economist Tim Reardon, COVID-19 interruptions means spending on housing will continue to rise. 

“Demand for new housing has been surging since mid-2020 due to a combination of the HomeBuilder program, record low interest rates and the shift in populations away from apartments and capital cities towards detached housing and regional areas," he said. 

“Households have changed their spending habits in response to the COVID-19 interruptions.

"Many have diverted funds that would have typically been spent on travel and entertainment into buying a new home or improving their existing one."

Related: Is HomeBuilder working?

Federal Housing Housing Minister Michael Sukkar continued to sing HomeBuilder's praises recently, but according to The New Daily, the Treasurer's office did not say whether it was considering a further six-month extension. 

"HomeBuilder has delivered effective support and stimulus to protect the jobs of the 1 million Australians employed in the construction sector," Mr Sukkar said. 

"Treasury estimates HomeBuilder will support up to $18 billion worth of residential construction projects.

"HomeBuilder is supporting our economic comeback and will continue to support residential construction jobs well into 2022."


Photo by Bianca Sbircea-Constantin on Unsplash

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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author-avatar
William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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