Perth’s home-building boom fueled by government grants
4th March, 2021
Building a new home in Western Australia has never been more popular, with applications for government incentives reaching new highs while placing pressure on builders to construct homes within the required timeframes.
In December, demand for the First Home Owners’ Grant was up 260 per cent, with more than 1600 applications received for the $10,000 grant. This was the highest monthly amount on record as buyers also scrambled to take up the WA government’s $20,000 Building Bonus, which was available until December 31.
There have also been more than 12,600 applications for the Federal Government’s $25,000 HomeBuilder grant in WA.
The government stimulus measures were having an unprecedented impact on the new land and housing markets in WA, Urban Development Institute of WA chief executive Tanya Steinbeck said.
While developers have worked extremely hard to bring sufficient land to market during the peak demand and there was still new land available in some of areas, the home building industry was at capacity in many areas, she said.
“While the financial incentives at a state level ended on December 31, the pressure is on for home builders to ensure that new homes are commenced within the required timeframes in order for buyers to be able to secure the financial incentives,” she said.
“These builders are now committed to delivering a record number of new homes and there are constraints on trades. With the closed border it is difficult to secure more workers and attain enough workers with the right skills such as bricklayers.”
Housing Industry of WA executive director Cath Hart said WA had been the strongest performing state since HomeBuilder and the Building Bonus grant were announced.
“Both schemes have sparked a huge boost in residential construction activity here in WA,” she said.
“We’re now forecasting 18,209 dwelling starts for 2020-21, a significant improvement from the 13,454 trough in 2019-20, so it’s great to see WA’s new home building market recovering given the challenges of 2020.”
Following the high demand, the state government decided to allow homebuyers one year to begin construction of their home from the time their contract was signed, instead of six months.
Ms Hart said the recent extensions on the commencement timeframes had provided more certainty for builders and consumers.
“In addition to this, there were obstacles encountered involving labour shortages and lending,” she said.
“Some builders had little choice but to turn clients away due to the high demand when the initial timeframes were still in place, but that bottleneck has started to ease since changes to the commencement timeframes were made towards the end of last year.”
Federal Housing Minister Michael Sukkar said the federal government acknowledged the demand for new builds in Western Australia had put pressure on builders to commence construction within the eligibility timeframe, which has been extended to six months to maximise HomeBuilder’s impact on employment.
“To alleviate concerns of the local builders, the Western Australian government may wish to consider adopting a construction commencement definition that aligns with other jurisdictions,” he said. “This will provide the sector with greater flexibility to deliver these builds.”
Ms Hart said people who wanted to build now could apply for the second edition of the Commonwealth’s HomeBuilder grant until March 31.
“The changes to the construction commencement timeframe from three to six months for applicants allows for a smoother workflow – a real contrast to what we saw in the latter half of 2020,” she said.