HomeBuilder overheated building industry

The popular HomeBuilder grants handed out during the pandemic contributed to overheating in the construction sector.

The $25,000 grants for home builders and renovators did successfully stimulate the sector during the pandemic – which is what it was set up to do – but arguably too much, with the costs of construction hitting record highs.

The KPMG review of the HomeBuilder program done on behalf of Treasury found the grants were not the only factors piling pressure onto the sector, with external supply chain issues and state level construction grants also adding fuel to the fire.

The grants program was introduced in June 2020, offering grants of up to $25,000 towards new homes and large renovations.

In 2021, grants of $15,000 grants were introduced for eligible owner-occupiers.

During this period, the construction sector was plagued by acute labour, material and land shortages, with input prices in construction lifting 17.3 per cent between June 2021 and June 2022, according to Australian Bureau of Statistics data.

The report also found some issues with the design of the scheme and its implementation, including the short time frame to start construction, and confusing definitions for eligible renovations.

Jurisdictions were also not made aware of the program when it was announced, which led to implementation challenges.

“A key lesson learned was the need for the Treasury to consult earlier with jurisdictions to leverage their grants administration expertise, particularly prior to public announcements,” the report said.


Poppy Johnston
(Australian Associated Press)


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