New home buyers to get cash grants
Buyers of newly constructed homes – whether home owners or first home buyers – will be offered grants of at least $20,000 to help shield the building industry from the coronavirus-induced economic slowdown.
The federal government is poised to announce the scheme this week, sources said.
The objective will be to help "fill a gap" expected to open up in new housing construction in the second half of this year after the existing pipeline of projects slows down.
Lobby group Master Builders Australia has proposed a new home grant of $40,000 to ensure up to 130,000 homes are built in the 2021 financial year.
The dollar value of the government grant is understood to be at least $20,000, and between that figure and the larger amount the industry is lobbying for.
Both existing home owners and first home buyers will be eligible for the program, which will focus on boosting demand for new homes. The program, expected to be uncapped, is likely to run from July.
Treasurer Josh Frydenberg and Housing Minister Michael Sukkar have been working on the policy and are expected to announce the rescue package this week.
Prop up the industry
The Rudd government tripled the first home buyer grant to $21,000 for the purchase of new homes to prop up the industry during the 2008-09 global financial crisis.
Rory Costelloe, executive director of Villawood Properties, which develops residential housing lots in Victoria, NSW and Queensland, said the industry needed a stimulus to give people the confidence to buy.
"I know the industry has been calling for $50k," he said.
"Personally, I reckon that would be too much.
"I reckon some of the money could be better spent on particularly trying to assist existing contracts to settle.
"If people lose their job, then if the government could guarantee interest [payments] for 12 months or even 18 months, that would give far more people, and the banks, far more confidence, in settling blocks at the moment."
Mr Costello said Villawood was relatively fortunate with just 4 per cent of its contracts for land blocks being cancelled.
However, he said, in the broader industry cancellations had risen to between 10 per cent and 20 per cent because people did not have the confidence to go through with the purchase.
A report by Australian National University economists has found that stimulating the construction and manufacturing sectors would generate the largest positive spillovers for the rest of the economy in the post-COVID-19 recovery phase. Source: afr.com