2021 Federal Budget: New Home Construction Support Continued
14 / 05 / 2021
Like most quantity surveyor contractors, we were keeping a close eye on the 2021 budget release this month, and whilst there was a lot of funding splashed towards COVID-19 vaccines, women and child care — the construction industry also faced some continual support through the HomeBuilder and First Home Loan Deposit schemes. Let us see exactly what that means for the Australian construction industry.
First, a bit about HomeBuilder
The HomeBuilder initiative was put into effect in June 2020 and was part of the Morrison government’s economic recovery plan to provide more work for the residential construction sector. This provided first home buyers and eligible owner-occupiers with a grant of up to $25,000 that would go towards the construction of a new property or the (substantial) renovation of an existing one.
There were a few criteria that had to be met, though. Chief among them were a few financial ones:
- Singles earning more than $125,000 p.a or couples earning more than $200,000 p.a collectively cannot apply for the grant.
- A price cap of $750,000 for national dwellings applies to new builds.
- Renovations must be between $150,000 and $750,000 and the property being renovated cannot be valued at more than $1.5 million.
- Construction must commence within three months of the contract date.
Over 120,000 applications have been received for the HomeBuilder grant. Initially, HomeBuilder was slated to end on the 31st of December, 2020, but the application process was extended to the 14th of April, 2021, with a three-month extension of the commencement window. A few days after that, the Morrison government announced that the commencement window for existing applications would once again be prolonged a further 12 months bringing it to 18 months.
How the 2021 budget boosts the HomeBuilder initiative
Federal Treasurer Josh Frydenberg announced that another 12-month commencement extension would be put into place for existing applications. So, whilst no new applications can be made for the initiative there is more potential for contractors to become involved with the work thanks to the extended commencement window. This will ultimately create more work for building contractors, quantity surveyors, architects and all those involved in the residential construction industry.
First Home Loan Deposit Scheme extension
The First Home Loan Deposit Scheme (also known as the New Home Guarantee scheme) was designed to help first homeowners both build and purchase a new home with an incredibly low deposit of just 5% — waiving the lenders mortgage insurance that is usually required for home loan deposits below 20%. An extra 10,000 places have now been added to this scheme, further encouraging new homeowners to purchase and — more importantly to the construction industry — build new homes.
With no shortage of land and a more than certain increase in residential construction in Melbourne’s outer suburbs, there are sure to be more applicants for the grant. This decision will ultimately funnel funds back into our local economy with more singles, couples and families starting new lives in new properties — boosting community value and providing more work for those in the construction industry.
Construction industry on the rise
Throughout the pandemic, few industries were allowed to operate — construction was one of those industries, which operated largely unaffected until stage four lockdown — which saw restrictions allow only 25% of a regular workforce on site. Since the final quarter of 2020, the industry has seen a return to normalcy. The extension of these grants is expected to boost the chances for potential work across the residential construction sector whilst also providing opportunities to first home buyers.
Though not a direct cash injection, this latest budget announcement is ultimately a win for construction — an industry that plays such a crucial role in our economy. Construction makes up around 8.5% of Victoria’s workforce — roughly accounting for 13% of the state’s economy and producing 9% of our country’s gross domestic product. Our quantity surveyor contractors welcome this continued support and look forward to working on many projects across Victoria and Australia over the next year and beyond.
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