Homebuilder surpasses 11,000 applications, majority for new builds

Homebuilder surpasses 11,000 applications, majority for new builds

A $680 million government initiative intended to stimulate the construction industry during the lull of the coronavirus pandemic has yielded more than 11,000 applications, but so far only about 800 people have received the funds.

The government’s Homebuilder grant pays out $25,000 to eligible applicants spending from $150,000 to $750,000 on a renovation or a new build, in an effort to keep the construction industry afloat and prevent further eroding of the Australian economy.

Federal housing minister Michael Sukkar revealed 11,367 applications for the homebuilder grant were received by state and territory revenue offices as of 9 October, since the initiative’s introduction in early June.

“Given the construction industry’s long project lead times, this level of applications was not expected until November,” he said.

“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.”

About 800 of these applicants have received the $25,000 grant, Mr Sukkar said, as it is dispersed after certain construction milestones have been reached.

“Provided you meet that criteria, you’ll absolutely get the grant,” he told Sky News. “You’ve got to lay the (concrete) slab.”

Possibility the initiative could be extended -- but time will tell

Treasury estimates the $680 million grant will support about 27,000 projects, but it’s possible more projects could be supported and that the initiative could be extended beyond its December 31 expiry date.

“A scheme that’s working well, that’s supporting the industry … all of those factors go in favour of the program,” he said.

“... We’re keeping a really close eye on it and we’ll make a call as that date (31 December) gets closer.”

The data paints a general picture of the initiative’s uptake as states and territories have different guidelines.

Most accept applications when sales or building contracts are signed, but Western Australia, for instance, begins taking applications once construction commences and milestones have been reached.

Almost 80 per cent are for new builds

Of the 11,367 applications submitted, 8884 are for ‘new builds’ and not ‘rebuilds’, accounting for a share of 78 per cent.

Victoria, a state continuing to wrangle with a second wave lockdown, held the highest number of overall applications at 4176, followed by Queensland at 2331 and New South Wales at 2331.

The remaining states and territories had fewer than a thousand applications. The Northern Territory had the fewest at 29, as of 9 October.

  New Build Rebuild Total
NSW 1,517 814 2,331
VIC 3,364 812 4,176
QLD 2,070 466 2,536
WA* 432 34 466
SA 800 146 946
TAS 398 56 454
ACT 276 153 429
NT 27 2 29
TOTAL 8,884 2,483 11,367

Building industry worries what’ll happen after Homebuilder

An uptick in business was observed by construction industry associations, which generally praised the initiative.

The Housing Industry Association (HIA), an industry body representing the residential building, renovation and development sectors, said sales lifted by 11.8 per cent over the seven months since COVID-19 restrictions came into effect when compared to the same period a year earlier.

“HomeBuilder has been successful in providing consumer confidence for those customers that had delayed a major investment decision earlier in the year,” Tim Reardon said, chief economist at HIA.

“The program has also brought buyers into the market that would otherwise not (have) been able to purchase their first home for a number of years.”

The Property Council of Australia (PCA), an advocacy group championing property owners, investors and managers, said Homebuilder had contributed to an uplift in sentiment for the residential construction sector, but added business still trailed pre-pandemic levels.

“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 closed borders,” Ken Morrison said, chief executive of PCA.

Government stimulus measures are beginning to wind down over the coming months, causing unease and uncertainty in the industry, Felicity Emmett said, senior economist at ANZ.

“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,” she said.

“Looking ahead, the recent federal budget should build confidence both in the property sector and more broadly, although the outlook remains extremely challenging and further stimulus may be required over coming months.”

 

Did you find this helpful? Why not share this news?

Advertisement

RateCity

Money Health Newsletter

Subscribe for news, tips and expert opinions to help you make smarter financial decisions

By signing up, you agree to the ratecity.com.au Privacy & Cookies Policy and Terms of Use, Disclaimer & Privacy Policy

Advertisement

Learn more about home loans

Savings over

Select a number of years to see how much money you can save with different home loans over time.

e.g. To see how much you could save in two years by switching mortgages,  set the slider to 2.

How can I get ANZ home loan pre-approval?

Shopping for a new home is an exciting experience and getting a pre-approval on the loan may give you the peace of mind that you are looking at properties within your budget. 

At the time of applying for the ANZ Bank home loan pre-approval, you will be required to provide proof of employment and income, along with records of your savings and debts.

An ANZ home loan pre-approval time frame is usually up to three months. However, being pre-approved doesn’t necessarily mean you will get your home loan. Other factors could lead to your home loan application being rejected, even with a prior pre-approval. Some factors include the property evaluation not meeting the bank’s criteria or a change in your financial circumstances.

You can make an application for ANZ home loan pre-approval online or call on 1800100641 Mon-Fri 8.00 am to 8.00 pm (AEST).

Interest Rate

Your current home loan interest rate. To accurately calculate how much you could save, an accurate interest figure is required. If you are not certain, check your bank statement or log into your mortgage account.

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

Monthly Repayment

Your current monthly home loan repayment. To accurately calculate how much you could save, an accurate payment figure is required. If you are not certain, check your bank statement.

How much is the first home buyer's grant?

The first home buyer grant amount will vary depending on what state you’re in and the value of the property that you are purchasing. In general, they start around $10,000 but it is advisable to check your eligibility for the grant as well as how much you are entitled to with your state or territory’s revenue office.

What is a construction loan?

A construction loan is loan taken out for the purpose of building or substantially renovating a residential property. Under this type of loan, the funds are released in stages when certain milestones in the construction process are reached. Once the building is complete, the loan will revert to a standard principal and interest mortgage.

Does Australia have no cost refinancing?

No Cost Refinancing is an option available in the US where the lender or broker covers your switching costs, such as appraisal fees and settlement costs. Unfortunately, no cost refinancing isn’t available in Australia.

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

If I don't like my new lender after I refinance, can I go back to my previous lender?

If you wish to return to your previous lender after refinancing, you will have to go through the refinancing process again and pay a second set of discharge and upfront fees. 

Therefore, before you refinance, it’s important to weigh up the new prospective lender against your current lender in a number of areas, including fees, flexibility, customer service and interest rate.

Can I refinance if I have other products bundled with my home loan?

If your home loan was part of a package deal that included access to credit cards, transaction accounts or term deposits from the same lender, switching all of these over to a new lender can seem daunting. However, some lenders offer to manage part of this process for you as an incentive to refinance with them – contact your lender to learn more about what they offer.

What is an ombudsman?

An complaints officer – previously referred to as an ombudsman -looks at formal complaints from customers about their credit providers, and helps to find a fair and independent solution to these problems.

These services are handled by the Australian Financial Complaints Authority, a non-profit government organisation that addresses and resolves financial disputes between customers and financial service providers.

How much of the RBA rate cut do lenders pass on to borrowers?

When the Reserve Bank of Australia cuts its official cash rate, there is no guarantee lenders will then pass that cut on to lenders by way of lower interest rates. 

Sometimes lenders pass on the cut in full, sometimes they partially pass on the cut, sometimes they don’t at all. When they don’t, they often defend the decision by saying they need to balance the needs of their shareholders with the needs of their borrowers. 

As the attached graph shows, more recent cuts have seen less lenders passing on the full RBA interest rate cut; the average lender was more likely to pass on about two-thirds of the 25 basis points cut to its borrowers.  image002

How personalised is my rating?

Real Time Ratings produces instant scores for loan products and updates them based what you tell us about what you’re looking for in a loan. In that sense, we believe the ratings are as close as you get to personalised; the more you tell us, the more we customise to ratings to your needs. Some borrowers value flexibility, while others want the lowest cost loan. Your preferences will be reflected in the rating. 

We also take a shorter term, more realistic view of how long borrowers hold onto their loan, which gives you a better idea about the true borrowing costs. We take your loan details and calculate how much each of the relevent loans would cost you on average each month over the next five years. We assess the overall flexibility of each loan and give you an easy indication of which ones are likely to adjust to your needs over time.