Why the HomeBuilder lifeline must be extended

“So effectively in one quarter alone, we saw sales equivalent to the equal highest and equal lowest results of the last cycle,” said RPM CEO, Kevin Brown. 

Mr Brown said HomeBuilder had made a marked difference to sentiment, and welcomed the recent blanket extension of the grant across Victoria by three months, meaning that applicants now have six months from the time of signing an eligible contract to commence construction. 

However, he warned a sudden drop-away in activity loomed large without further government intervention and suggested that a minimum six-month extension of the grant’s current contract and build timelines would help even out demand through the remainder of 2020 and into 2021. 

“An extension would temper the pull-forward effect of the grant, while also giving buyers impacted by job security concerns more time to [weigh up] their options post-lockdown, and enabling developers to get more eligible stock onto the market to continue the momentum,” said Mr Brown. 

“A minimum six-month extension would also allow for a more realistic delivery of new builds through 2021 and into 2022, keeping the construction workforce in continued employment and protecting the industry’s vast economic multiplier effect on the economy.”

Despite calling for an extension into the HomeBuilders scheme, the property expert points to signs of life in the Victorian market.

International buyers have re-emerged following the return of economic growth in China, with foreign buyers accounting for a near three-year high (19 percent) of new dwellings purchased. 

“However, limits on migration will continue to impact the industry heavily, and without an indication of timing on border openings, it is extremely difficult to project how the recovery of the industry – particularly the investment and rental markets – will pan out,” said Mr Brown.

Supporting this philosophical view, Daniel Gradwell, associate director Property at ANZ, said while the fundamental housing picture was still relatively weak, the most recent quarterly data provided some light at the end of the tunnel. 

“Even though Melbourne appears to be one of the [hardest-hit] capital cities, we’re only seeing housing prices fall one to one and a half percent monthly at the moment – far from the extreme predictions many were making early in the COVID-19 crisis,” he said. “The property industry will be challenged by the lack of migration, but there are some emerging trends, and associated opportunities, that remain strong. 

“A growth area to watch will be [owner-occupiers] looking to downsize. This market has long-term potential given the number of baby boomers entering retirement, looking for smaller, quality properties with less maintenance.”

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