As we come to the conclusion of the year, and as the harsh restrictions across the country start to lift, the worst of the COVID-19 pandemic seems to be behind us. However, the economic damage that it has caused is on the forefront, with numerous years of predicted recovery in the country’s future.
Fortunately for those in the residential construction industry, there is an integral part for them to play in the government’s plan for recovery. Their two-point plan involves the extension of HomeBuilder Grant a further three months to March 2021 and providing extra funding for low cost finance from the National Housing Finance and Investment Centre (NHFIC). By securing investment in residential construction, they are supporting future jobs for Australian builders at all levels and investing in prolonged economic growth.
The introduction of the HomeBuilder Grant, combined with the low interest rates and first home buyer incentives, saw a surge in demand of new detached homes. It is expected that its extension will see at least 12 000 new housing projects and between 3 000 and 5 000 new major renovation projects. According to the HIA, this is expected to “add $6 billion in construction work boosting economic activity and supporting hundreds of thousands of workers directly, up and down the supply.”
COVID-19 has also impacted population spread, influencing where this increase in home building is likely to take place. There has been a shift in population growth from high rise apartments to lower density housing and regional locations, with students and young job seekers not being attracted to the cities for education or employment. With HomeBuilder and the First Home Buyers Scheme in place, and this attraction to detached housing over high rise apartments, October has seen detached building approvals hit a 20 year high, with an increase of 18.6% in the three months to October, and are 23.2% higher than the same time last year.
The Federal Government is also providing an additional $1 billion (taking the total to $3 billion) to the NHFIC to provide more low-cost finance to eligible applicants, including community housing providers so they can provide more affordable housing. They have also contributed an extra 10 000 places to the First Home Loan Deposit Scheme. These changes are expected to generate over $1.5 billion in economic activity.
With the government’s investments already taking form and producing visible economic outcomes, the residential construction industry is bound to be a significant contributor to economic recovery in 2021 and onward.
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