HomeBuilder lifts property sentiment: survey

According to figures released by the federal government, as at 9 October, the state and territory Revenue Offices had received 11,367 HomeBuilder grant applications.

Launched in June of this year, the federal government’s $688-million HomeBuilder scheme provides a $25,000 grant to eligible owner-occupiers “substantially renovating” or building a new home from 4 June to 31 December 2020.

So far, a total of 8,884 applications have been applied for for new build houses, while 2,483 applications have been for rebuilds/renovations, according to Treasury figures.

Victoria has received the most applications of all states (totalling 4,176), followed by Queensland (2,536 applications), NSW (2,331 applications), while there were 946 in South Australia.

Tasmania Revenue Offices had received 454 applications, closely followed by ACT (429), while just 29 have been sent in to the Northern Territory Revenue office.

The WA state revenue office currently only accepts applications once first construction milestone is achieved. This includes when foundations have been laid for new build and off-the-plan when title is issued to the applicant. All other states and territories accept applications when sales and/or the building contract is signed.

As such, there were a total of 466 applications received in WA.

Commenting on these figures, Minister for Housing and Assistant Treasurer Michael Sukkar said: “The figures show HomeBuilder is off to a much stronger start than forecast. Given the construction industry’s long project lead times, this level of applications was not expected until November.”

“Every HomeBuilder application represents a signed contract, which means more work in the pipeline, keeping our tradies on site, on the tools and in a job.

“These applications will be progressively paid when construction milestones are met. This practice is in line with state and territory-based home buying programs.”

Mr Sukkar highlighted that confidence in the property industry is inching up, citing the ANZ/Property Council Survey for the December 2020 quarter, which found that the national confidence score for the upcoming December 2020 quarter increased by six index points to 82.

While the increase is marked, it is still well below a neutral score of 100 and the survey historical average of 123.

Indeed, the online survey of 857 respondents found that three-quarters of residential building developers said they expected the HomeBuilder package to have a positive impact for their business over the next quarter, up from 68 per cent in the previous survey.

Commenting on the survey findings, ANZ senior economist Felicity Emmett said that while property sentiment has mildly improved, it has remained “depressed” amid the COVID-19 crisis, and the associated restrictions imposed by the federal and state governments to curtail its spread.

“While sentiment in the housing sector remains negative, it is clearly improving. The residential construction outlook is a highlight, helped by the federal government’s HomeBuilder program,” Ms Emmett said.

“The scheme, along with other state government initiatives, is clearly giving the housing construction sector a boost, although with population growth dropping sharply and the rental market under pressure, headwinds remain for the housing sector.

“While sentiment is very weak, government support has clearly helped to prevent the worst. HomeBuilder, JobKeeper and the raft of other government stimulus measures are helping to underpin sentiment.”

The result of the ANZ/Property Council Survey followed a 14-index point improvement in the September quarter, which came after confidence levels dropped to their lowest level in the survey’s history in the June 2020 quarter.

Western Australia recorded a 25-index point jump to return to positive territory (107) in the latest survey, followed by South Australia at 98, NSW at 84, the ACT at 81, Queensland at 79 and Victoria at 64.

After slipping in the June 2020 survey, residential construction expectations for the next 12 months have remained in the positive territory at nine index points.

Stimulus vital for economic recovery

Property Council of Australia chief executive Ken Morrison has also attributed the boost in the index scores and sentiment for the residential construction industry to stimulus measures such as HomeBuilder combined with support from state and territory governments for new and first home buyers, which he said was much needed.

“HomeBuilder is the pop star of government stimulus measures released so far – highly effective, immediate and good value for money,” Mr Morrison said.

“As the scheme has become available in all states and territories, we have seen a big lift in sentiment among those in residential development,” Mr Morrison said.

“The challenge will be maintaining this momentum beyond December when the current scheme expires and we are looking at a huge drop in population growth due to close borders.”

Despite noting the uptick in sentiment, Mr Morrison warned that there is still a long way to go before property industry sentiment returns to its pre-COVID-19 levels, and added that government stimulus measures will be vital for the property industry to drive economic recovery.

“As household income supports such as JobSeeker and JobKeeper are wound back over the next few months, all levels of government will need to step in with initiatives that will deliver fast and effective stimulus to build momentum for recovery,” Mr Morrison said.

[Related: HomeBuilder ‘arrests’ home sales decline]

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.