The number of first home buyers has risen to an 11-year high as the federal government’s HomeBuilder scheme helps boost the number of people securing their piece of the property market.
Data from the Australian Bureau of Statistics showed that in October the number of owner-occupier first home buyer loan commitments increased by 3.4 percent.
The increase was more than 30 percent higher than in any pre-COVID month since 2009, when the Rudd government temporarily tripled the first home owners grant as part of an economic stimulus package for the Global Financial Crisis.
Amanda Seneviratne, head of finance and wealth at the ABS, said that commitments for the construction of new dwellings had risen 10.9 percent in October making them the most significant contribution to owner-occupier housing loans in Australia.
“Feedback from lenders was that there had been a large increase in first home buyers applying for these construction loans over the last few months,” Seneviratne said.
She added: “The value of construction loan commitments has risen by 65.6 per cent since July, which coincides with the June 2020 implementation of the Government’s HomeBuilder grant in response to COVID-19.”
About 24,000 Australians have taken up the grants which Treasury previously estimated would be taken up by 27,000 people by the end of the year; at the cost of $680 million.
News Corp’s The Australian reported on Friday that Treasury now believes that 40,000 people will take advantage of the scheme by the end of the year.
The scheme has also won praise from the building sector for helping Australians get a foot in the door of the property market and for helping the building industry cope with the economic downturn induced by the CCP (Chinese Communist Party) virus (novel coronavirus) pandemic.
CEO of Master Builders Australia Denita Wawn said, “The HomeBuilder grants are also the leg up that thousands of Aussies need to help them overcome the daunting deposit gap and get themselves into the housing market.”
“We know that owning your own home is one of the most effective ways for people to build household wealth to provide financial security during their working lives and their retirement. So extending HomeBuilder also provides huge long term benefits,” Wawn said
The news of its success comes after the Morrison government announced it would extend the scheme until the end of March 2021 to support the $100 billion construction sector.
“HomeBuilder is a key part of my government’s Economic Recovery Plan for Australia. We’re keeping people in jobs and putting Australians’ dream homes within reach,” Prime Minister Scott Morrison said.
Initiated by the federal government in June, HomeBuilder provides all eligible owner-occupiers with a grant of $25,000 to build a new home or substantially renovate an existing home. A reduced grant of $15,000 is available between Jan. 1 and March 31, 2021.
The grant does not just apply to first home buyers; however, construction must be contracted to commence within three months of the contract date. Income caps on applicants apply: singles who earn more than $125,000 and couples who earn more than $200,000 are not eligible for the scheme.
New home builds can not exceed a $750,000 cap, and renovations must cost between $125,000 and $750,000. Homes valued at more than $1.5 million are excluded.