Select Page

Amidst the coronavirus pandemic that heralded reduced activity in the broader property industry, the Australian federal government announced a $688 million housing package in early June 2020 to boost the home construction sector. The HomeBuilder grant program, introduced as part of measures to lift an economy dipping into a recession, offers $25,000 grants to Australians building new homes or undertaking significant renovations. 

Since the start of the coronavirus crisis, the Master Builders Association had noted a decrease in traffic through show homes of 90 percent. However, once it became clear that the government would announce a housing package as part of economic stimulus efforts, land buying inquiries increased up to threefold in some regions. 

Eligibility for the HomeBuilder grant is limited to existing homeowners and first-time buyers. Homeowners looking to renovate must spend at least $150,000 and not exceed $750,000 for the renovations, while the value of the property must not exceed $1.5 million. For those hoping to engage in new builds, the property value is capped at $750,000, while the construction must start within three months. 

Initially, the scheme was scheduled to run until the end of 2020, with the government looking to aid the construction of 30,000 homes. However, an extension was announced in late November that would extend the program up to 31 March 2021. With the extension, the grant amount reduced to $15,000, while the construction commencement timeframe was increased to six months. In New South Wales and Victoria, the price cap for new build contracts increased to $950,000 and $850,000, respectively. For all other states and territories, the initial $750,000 cap remains. 

For many, the HomeBuilder grant is a shot in the arm that can go a long way towards reducing new build or renovation costs. Michael Akkawi, an experienced property developer, is among those keen to see the scheme’s overall effect on the housing market. 

Potential Issues 

Unlike a first home owners grant, which can count towards a borrower’s deposit for a new home, individuals gain direct access to the HomeBuilder grant after meeting specific criteria. In some states, homebuyers cannot use the funding to supplement their deposit when applying for home building loans.  

While some states have implemented workarounds to allow the grants as part of loan deposits, it has been viewed as too late. In many cases, individuals found out that access to the money was possible only after building commenced, necessitating some to fill the funding gap in other ways, including loans.