In recent weeks there has been significant speculation and associated lobbying from various industry bodies surrounding potential Federal funding to stimulate the construction sector, particularly new home building.
The Property Council put together a $2.5million plan to kickstart the broader economy where buyers of newly built homes would benefit from $50,000 cash stimulus. The council has also campaigned for the abolition of Stamp Duty on property transactions among other associated initiatives.
Chief Executive of the Property Council has suggested that bold policies are needed to assist the economy, expected to shrink by 10% in the June quarter. The property sector is well placed to kickstart this broader recovery via an acceleration in housing construction given the sector has suffered very little ill effects from the current crisis apart from small contractions in transaction volumes.
“As Australia’s biggest employer which contributes over 13 per cent of GDP, the property industry can be a powerhouse behind economic recovery and growth with the right policy settings and market incentives from the federal, state and territory governments,” he said.
At the heart of its proposals is a $50,000 “new home boost” for buyers of new housing, which the council estimates would stimulate the construction of 50,000 dwellings and support 200,000 jobs.
Other key elements of the proposal include the plan running for just 12 months, limited to 50,000 properties and no cap on the value of the home. However, in media speculation surrounding the likely outcome, sources close to the Federal Government have suggested a more balanced approach to stimulate key sectors and also encourage renovation projects (not just new builds) to get a more blanket impact across the community and stimulate discretionary spending.
Homeowners may be offered grants of around $25,000 to build new homes under a new stimulus plan, but renovators will have to match the “free” cash dollar for dollar. Any grants made available through the scheme will be in addition to various existing state government initiatives that vary from state to state and/or territory.
The Morrison Government is expected to announce the final details of the scheme in early June
The Prime Minister is keen to use existing first homebuyer schemes already established in each state to deliver the grants which means the same limits on the value of the family homes that are eligible for the scheme are likely to apply which will prohibit wealthy buyers using the grants to purchase million-dollar homes.
Despite speculation to the contrary, the residential property sector has remained rather flat across the country with some pockets also continuing with growth trends. The impact of the economic shutdown in the sector to date has been limited to reducing transaction activity, particularly in the existing real-estate markets with values largely holding strong across the board in both existing and new residential markets.
However, despite the sector feeling no significant impacts on value, as a powerhouse cog in the economy any additional stimulus is considered key to kickstart the broader economy, rather than specifically targeting a bump in the property cycle, despite this being the likely outcome.