***Update: On 4 June the government introduced a $25,000 'HomeBuilder' Grant***
The Property Council of Australia has proposed the 'New Home Boost' grant as part of its seven-point plan to the National Cabinet for kickstarting construction and the economy.
Under the proposed scheme, the $50,000 grant would be limited to the first 50,000 purchasers of newly-built homes across the country, requiring an estimated $2.5 billion in federal government funding.
Unlike many of the first home buyer grants of between $7,000-$20,000 administered by state governments, the proposed grant would not have a property price cap and would be available to all types of buyers, not just first home buyers.
Eligible properties would only include those with on-site construction commencement dates between 1 July 2020 and 30 June 2021.
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The council estimates the scheme has the potential to stimulate the construction of 50,000 new homes and support over 200,000 jobs.
Ken Morrison, Chief Executive of the Property Council of Australia, said the Australian economy requires "big and bold thinking" to get going again following the effects of the COVID-19 pandemic.
“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,” Mr Morrison said.
In its report of the plan, the council said housing construction risks being a future drag on the economy.
"While industry, governments and workers have ensured that current construction projects have continued, the pipeline beyond this is dwindling alarmingly," the Property Council said.
"Real demand for new housing construction is set to ‘fall off a cliff’ in the face of economic uncertainty, the leap in unemployment and population declines."
The release of the plan coincides with new forecasts from the Housing Industry Association (HIA) of a near 50% fall in new home building which could put half a million jobs at risk over the next year.
HIA's Managing Director Graham Wolfe said the association expects only 112,000 new home building commencements next financial year, down from nearly 200,000 in 2018/19.
“The shock to the economy from the halting of overseas migration, the absence of student arrivals and uncertainty over the domestic economy will see the market at a lower point in December 2020, than it was during the 1990’s recession," Mr Wolfe said.
"It will then continue to decline though 2021, even with the return of overseas students and migration.
“This shock will reverberate through the residential building industry, up and down the supply chain. Employment in the sector is not expected to recover within the next two years."
Mr Wolfe said the necessary steps to a full recovery include restarting the economy and allowing international students to return.
“Drawing forward housing demand can also play a role in alleviating the emerging shock to new home construction and the wider economy. Traditionally, Australia has done this through empowering consumers to build new homes," he said.
According to Australian Bureau of Statistics (ABS) data cited by the Property Council, every dollar of residential construction generates $3 of activity across the wider economy, while Commonwealth Bank research estimates seven full-time jobs are lost for every $1 million reduction in residential construction spend.
The council said housing construction represents "a powerful economic multiplier".
"Creating new homes, apartments and retirement living units together constitute one of the most powerful job keepers and job multipliers in the Australian economy," the industry body wrote.
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