The Federal Government has today announced a $680 million 'HomeBuilder' program to support the residential construction sector.
Until the end of 2020 the program will provide owner-occupiers with a grant of $25,000 to build a new home or substantially renovate an existing one, but there's a catch: renovators must be spending at least $150,000 to be eligible.
Construction must be contracted to commence within three months of the contract date, and applicants will be subject to a range of eligibility criteria, including income caps of $125,000 for singles and $200,000 for couples based on their latest assessable income.
A national dwelling price cap of $750,000 will apply for new home builds, and a renovation price range of $150,000 up to $750,000 will apply to renovating an existing home with a current value of no more than $1.5 million.
The program is expected to provide around 27,000 grants.
The Morrison Government expects the program will support 140,000 jobs directly and another one million related jobs in the residential construction sector.
The program has been welcomed by industry associations like Master Builders Australia (MBA) and the Housing Industry Association (HIA) and follows some dire warnings from the sector that half a million jobs were at risk without Government intervention.
In May HIA forecasted that new home building was about to fall in half from 200,000 new homes constructed by the Association in FY19 to just 112,000 in FY21.
But with the announcement of the HomeBuilder program, HIA says the package could generate over $15 billion in national economic activity.
"Most importantly this incentive will support hundreds of thousands of jobs across Australia," says HIA managing director Graham Wolfe.
"The housing industry directly engages more than one million people builders, trade contractors, designers, professional service providers and others. It provides jobs for many thousands more in the manufacturing and retail sectors, which supply the materials, products, white goods and furnishings that go into our homes.
"This incentive will help to address the projected decline in housing activity over the next 12 months."
MBA CEO Denita Wawn has also welcomed the program, describing it as a "lifeline" for an industry teetering on the edge of disaster.
"HomeBuilder will be a lifeline for an industry facing a valley of death in the coming months. It will mean more new homes, more small businesses and jobs are protected and provide a stronger bridge to economic recovery for our country," says Wawn.
"Based on the Government's estimated 27,000 grants, we think the scheme will be used for $10 billion in building activity, supporting the viability of 368,000 small builders and tradies the businesses which employ 800,000 people in communities around Australia.
"Supporting the home building industry is essential to strengthening the economy and helping Australia recover from the impacts of the pandemic. Residential building activity gives back more than double to the communities that sustain it with every $1 invested in home building activity providing $3 to the wider economy."
The announcement comes just a day after Federal Treasurer Josh Frydenberg declared Australia's economy to be in recession.
His announcement was made in conjunction with the release of the National Accounts for the March Quarter which showed a GDP contraction of 0.3 per cent, making it virtually certain that a recession will be confirmed in June considering most of the impact to the economy was felt during April and May.
"It was in this quarter the March quarter that consumer and business confidence fell to its lowest level on record. That the ASX 200 lost a third of its value and, on the 16th of March, saw its biggest daily fall of 9.7 per cent on record," said Treasurer Frydenberg yesterday.
"When combined with the ongoing drought, which saw farm GDP fall by 2.4 per cent in the quarter, and the devastating impact of the fires that were raging across many states, one looks back on the March quarter, and there wasn't much good news.
"Seen in this context, the fact that the Australian economy only contracted by 0.3 per cent shows the Australian economy's remarkable resilience."
Updated at 9:47am AEST on 4 June 2020.
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