UDIA National has today unveiled the findings of new research and recommendations designed to support an extension and re-design of HomeBuilder given the extended economic downturn facing Australia as a result of COVID-19.
UDIA National has lodged a submission with the Commonwealth Government explaining how the loss of immigration and population growth will challenge the national economy. This results in a strong case for extending and modifying HomeBuilder to harness domestic demand to boost housing construction and economic growth.
The Commonwealth Government rightly recognised the crucial role played by the housing and construction sectors in boosting jobs, wages and activity when it launched HomeBuilder in June.
However, Australia now faces a sustained downturn in immigration and population growth, which usually fuel much of the nation’s economic prosperity and demand for new housing construction. That is why UDIA National sought to partner with Urbis to quantify the effect. Our research found:
Net Overseas Migration (NOM) accounts for 56 percent of Australia’s dwelling demand, with natural domestic population increases accounting for 44 percent
An average per annum reduction of over 50,000 homes per year will occur in the number of new homes being constructed over the next five years
$17.9 billion less direct gross value added (GVA) being contributed to the Australian economy between 2020 and 2025 from the loss in construction.
The research did however also find that the residual domestic demand is substantial and could play a crucial role in lifting Australia’s economy especially over the short to medium term. UDIA is now recommending a second tranche of funding to support HomeBuilder as well as design solutions to the Scheme to maximise the benefit.
These recommendations include:
Allocating an additional $1.25bn funding stream to support the construction of 50,000 new homes with an anticipated economic stimulus of at least $3 billion into the Australian economy;
Adjust the timelines applying to the scheme to provide for greater participation by apartment, townhouse and land development projects that more appropriately mirrors housing demand within Australia by:
Extending the timeframes for building contract signing (or split or two-part contracts) or sales contracts (for 1-part contracts) to be entered into from December 31, 2020, by six months to June 30, 2021;
Extending the construction timeframes, depending on the nature of the project, with:
Detached housing to have a new commencement timeframe of December 31, 2021, and
Semi-detached and attached housing (ie: townhouse and apartments projects) to have a new commencement timeframe of December 31, 2022.
Redefining the definition of “commencement” to allow for flexibility which accounts for differences in staging, timing and triggers for detached, semi-detached and attached housing products.
Amending the definition of house and land price thresholds to remove land costs and in doing so, provide parity between new housing construction and renovation projects;
Increase the income thresholds of the scheme to capture a wider range of buyers, given the current limits reflect an approach tailored largely to first home buyers;
Providing for the construction of manufactured homes to be used in land lease community to be captured by the scheme, recognising their current exclusion due to requirements around certificate of title;
Extend the current grant’savailability in Victoria from December 31 for a further six months and allow for a subsequent extension of the start of the construction phase for a further six months in recognition of the effects of the severe, extended lockdown currently in place; and,
To ensure that there is no dislocation in the market, any new arrangements to the scheme’s application should be applied immediately from the date of announcement (rather than a latter date, which would risk seeing homebuyers freeze or delays decisions).
UDIA National has lodged its submission with the Commonwealth Government and is available here.
We look forward to engaging with the Government on its ongoing work to support Australia’s economic recovery.