The Federal Government has just announced a new building grant, which will be available for first and existing homeowners.
The program, called HomeBuilder, will see $25,000 made available for the construction of new homes or significant renovation projects.
The scheme is designed to stimulate the construction industry, which employs one million people, over the next six months as our economy recovers from the coronavirus.
There are two elements to the scheme, but the income means test is the same for both, which is a salary cap of $120,000 for singles and $200,000 for couples.
The first part of the HomeBuilder program is a $25,000 grant for homebuyers who sign a contract before the end of the year to build a new home that is priced below $750,000.
Importantly, the project must begin within three months of the contract date to help kickstart the construction sector.
There are other eligibility factors, however, the property must be built as a home and not an investment, and licensed tradies must be used for its construction.
The renovation part of the program also provides $25,000 for substantial renovations to an existing home.
However, with this one, the renovation must cost more than $150,000 and can’t include the construction of external dwellings or additions such as granny flats or pools.
This part of the scheme is designed to supercharge all of the various trades that rely on renovation activity for their livelihoods from painters to plumbers and electricians.
Unlike other construction stimulus packages in the past, this one has a very limited timeframe as well as scope of accepted works.
This should prevent the construction of shoddy dwellings because the project must begin within three months of contract date.
Investors are not eligible either, who are the buyer type that usually gets stung from this type of grant in the long run.
The Federal Government has indicated that the program will hopefully result in the construction of 30,000 additional dwellings or significant renovations by the end of the year.
This will help to keep hundreds of thousands of tradies employed as well as support ancillary workers in homewares as well as retail generally.
The HomeBuilder scheme will also provide a welcome boost to real estate markets across the nation.
Although the latest data has found that prices have generally held their ground in most capital cities, including Brisbane, confidence has still been somewhat lacking.
This sort of stimulus package is just what the doctor ordered and will help reignite buyer activity in the months ahead, including for established properties.
That’s because the grant, while lucrative, is not available to everyone because of the income means tests as well as maximum property price points.
Also, most homebuyers prefer established homes over new ones, because of their superior locations and capital growth potential – and that is something that a $25,000 grant will not change.