The HomeBuilder grant started as a lifeline to keep the housing industry active as COVID-19 took hold. The original hope was that around 27,000 people would take advantage of a $25,000 grant to spend their own money on a new home or a major renovation. As the applications closed on 14 April this year, the final figure exceeded expectations and the industry is now set for what will be the busiest period of new home building in Australia’s history.
What HomeBuilder delivered
Since HomeBuilder’s launch on 4 June 2020, every housing supply indicators has gone from strength to strength. The data paints an amazing picture of activity over the life of the grant. After a slow start, applications turned into serious numbers in October. By year’s end, when the $25,000 grant concluded, 75,143 applications were received.
The grant was extended to 31 March and reduced to $15,000 and the market continued to take advantage. The final number of HomeBuilder applications reached 121,363 – more than four times the original expectation.
HomeBuilder is the largest direct injection of government money into the owner occupier housing market in Australia’s history. A predicted $688 million over six months morphed into over $2.8 billion over nine months. Clearly the scheme achieved its goal – to save jobs in the residential building industry and support related industries that are connected with home building, which covers thousands of manufacturers, suppliers and retailers.
Why HomeBuilder delivered
The reasons for the healthy take-up of the scheme are myriad – $25,000 is a significant sum, the price caps and income limits were appropriate (in most locations) to match buyers’ capacity, three states provided parallel incentives for new home buyers and renovators, interest rates have remained low, and households have been cashed up due to COVID-19 limiting personal spending.
Overlay the return of almost 500,000 Australian residents in the past 12 months to more than offset the expected gap from 200,000 plus migrants not arriving and you start to get a picture of what’s really happening in Australia’s housing market.
The industry is now experiencing record highs. New home sales are 42.6 per cent higher in the 12 months to March 2021, compared to the previous 12 months. Detached housing approvals are at an all-time high and still rising. The number of loans issued for the construction of a new home are more than double pre-COVID-19 levels. Meanwhile, December was the strongest quarter for the commencement of a new detached home, equal with March 2000.
Managing the peak
This unexpected and short-term peak in demand is causing a range of unintended consequences across the industry. Signs of shortages in labour and certain building materials started to emerge in late 2020. This is no surprise in the context of restricted international freight movements, heightened demand for housing materials in most developed economies, and much higher numbers of homes now in the pipeline.
To help with this, HIA worked with the government to gain a critical extension of start time, ensuring builders now have 18 months from contract signing to begin building work.
Working hard for members
HIA has worked closely with the Federal Minister for Housing Michael Sukkar and the government throughout the COVID-19 pandemic. Their support for our industry was critical during that time. Similarly, the Association worked closely with all state and territory governments to ensure the industry remained open for business.
HomeBuilder has set the scene for a record-breaking year in detached home building and renovation activity. Clearly there will be new pain points to come as the year progresses. We will discover the plan for re-opening international borders and the vaccine roll-out will continue. But one thing is certain – the payback for the Australian economy from supporting new home building is real and tens of thousands of Australians will move into their new homes in 2021 to achieve their dreams of home ownership.