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Homebuilder subsidy extended, but payment whittled down

Tony Ibrahim avatar
Tony Ibrahim
- 4 min read
Homebuilder subsidy extended, but payment whittled down

Thousands of homes could have their renovations subsidised after the government announced an extension to its $921 million Homebuilder program -- only, the grants paid will be smaller.

About 15,000 more homes could be renovated or built under the revised HomeBuilder subsidy, after the federal government announced it will be extended for a further three months until 31 March, 2021.

Prime Minister Scott Morrison said the subsidy will help stimulate the construction sector during the COVID-19 pandemic, an industry that contributes $100 billion a year and represents about 5 per cent of the Australian gross domestic product.

“We’re keeping people in jobs and putting Australians’ dream homes within reach,” Mr Morrison said. “It’s critical we keep the momentum up for Australia’s economic recovery.”

Worth 60 per cent of the original

The Homebuilder subsidy, part of the government’s economic recovery plan for dealing with the COVID-19 pandemic, will be dropped from $25,000 to $15,000 from 1 January to 31 March, 2021.

To be eligible for the grant, from $150,000 to $750,000 would have to be spent building or renovating a new home. However, the maximum cap has been lifted for a couple of states, rising to $850,000 for Melbourne and $950,000 for Sydney.

Construction work was originally required to begin within three months of contracts being signed, but the requirements have since been relaxed. All eligible contracts signed on or after 4 June 2020 can now break ground within six months and still receive the grant.

Contracts signed before 29 November must be carried out by builders with licences registered before 4 June 2020, but contracts signed thereafter can be completed by builders who obtained their licence at a later date.

Aiming for 42,000 new builds and renovations

The government estimates a total of 42,000 residential homes will have their construction or renovation subsidised by the homebuilder grant.

Michael Sukkar, the minister for housing and assistant treasurer, said the government had received 23,877 applications as of 20 November, putting it on track to surpass its original target of 27,000.

“This is a temporary and targeted programme and we want to give buyers the confidence and support to enter the market right now at a time when the economy needs it most.”

Most Homebuilder recipients -- about four-fifths -- are using the grant to build residential homes; the majority in Victoria, followed by Queensland and New South Wales.

Homebuilder statistics as of 20 November, 2020. Source: Commonwealth Treasury

StateNew buildRenovationsTotal




































Homebuilder's extension is forecast to subsidise a further 15,000 projects at a cost to taxpayers of $241 million, pushing the total cost to $921 million.

More work to the home, more work for builders

The decision to extend homebuilder was generally welcomed by the building industry, even though the payment has been reduced.

The Housing Industry Association (HIA), the body advocating for the residential building sector, estimated the extension of homebuilder would contribute about $6 billion in construction work to the Australian economy.

“(Our) forecasts predicted a significant drop in housing demand in 2021 as HomeBuilder projects finished,” Graham Wolfe said, managing director of HIA.

“This extension will ensure that the demand is carried forward to 2021 and activity will continue throughout the year.”

A HIA report released in November found Homebuilder had propped up the housing market. In the three months to October, new home sales lifted by 31.6 per cent when compared to a year earlier.

The Property Council of Australia (PCA), an advocacy group representing the interests of more than 2200 property groups, said the extension will mitigate a shortfall in construction work brought about by halted immigration and slowing population growth -- especially in the states impacted the hardest by the COVID-19 pandemic.

“The extension of the deadline for commencement is very welcome as it will allow more homes to enter the pipeline,” Ken Morrison said, chief executive of PCA.

“The increase of the price cap for new builds in NSW and Victoria is a sensible move that will give more Australians access to new homes and boost jobs and recovery across the two states that have been impacted most by the pandemic.”


This article is over two years old, last updated on December 1, 2020. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.

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This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

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