'Free money': Real estate agents flooded with calls about HomeBuilder grant

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'Free money': Real estate agents flooded with calls about HomeBuilder grant

By Jennifer Duke and Michael Koziol

Real estate agents in outer suburbs have been flooded with calls about the Morrison government's HomeBuilder grant for new homes and renovations, but major industry groups warn many people will fail to qualify unless the scheme is expanded and normal processes are suspended.

Liverpool-based realtor Dean Boskovic said he took 70 calls in 24 hours and had "probably eight buyers telling me they are ready to buy, they are ready to utilise the grant straight away".

Prime Minister Scott Morrison announced the $688 million HomeBuilder program in Googong last week.

Prime Minister Scott Morrison announced the $688 million HomeBuilder program in Googong last week.Credit:Alex Ellinghausen

Master Builders Australia boss Denita Wawn warned governments may need to exempt applicants from the program's rules unless banks and councils speed up loans and development approvals.

"HomeBuilder is deliberately targeted to kickstart building activity over the next months when the viability of small builders and security of jobs will be most under threat. This is what the industry asked for," she said.

"But the banks need to speed up lending, and state and especially local governments play their role and speed up approvals. Where there are intractable issues the federal government should consider exceptions."

Buyers are eligible for the $25,000 subsidy announced last week if they sign a building contract on a new home by the end of the year. The $750,000 limit on the property value makes it a perfect fit for home and land packages in the outer suburbs of major cities.

But Tom Forrest, chief executive of the Urban Taskforce, which represents property developers, said the scheme would have limited use in Sydney, where fewer packages were available under $750,000.

"If I was to be cynical ... I'd say it seems to be directly targeted at Queanbeyan," he said, referring to the NSW town in the seat of Eden Monaro, where there will be a byelection on July 4.

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"The price range is right for there, which was where it was launched. It's a good start but it doesn't really apply for Sydney and Sydney is the driver of the whole economy."

Mr Forrest told The Sun-Herald and The Sunday Age the government needed to do three things: "Extend the timeframe, have a look at the threshold and make it apply to all new homes."

The scheme is estimated to cost $688 million but is uncapped, meaning anyone who qualifies will receive the grant. There is also a renovation component; homeowners can claim $25,000 toward a renovation or knock down rebuild if their property's current value is below $1.5 million and they spend between $150,000 and $750,000 on the job.

Home renovations valued between $150,000 and $750,000 can also qualify (on property worth less than $1.5 million).

Home renovations valued between $150,000 and $750,000 can also qualify (on property worth less than $1.5 million).Credit:Louise Kennerley

The government expects the grants to fund 20,000 new home builds and 7000 renovations. The package aims to stimulate the construction industry amid the coronavirus-induced recession. Assistant Treasurer Michael Sukkar said the federal government would work with the states "to make the delivery of HomeBuilder as seamless as possible to achieve this objective".

Applicants must sign a building contract by December 31 and construction must start within three months of signing. Critics said the tight time frame meant many people who qualify would have been planning to undertake the projects anyway.

Real estate agents in the outer suburbs of major cities were inundated with calls from prospective applicants last week. Mr Boskovic, director of Bos Realty in Liverpool, said he took 70 to 80 calls in one day after posting about the program on Facebook.

"I'm getting so many first home buyers saying, 'Dean tell me all about it, we want to pull the trigger on this'," he said. "There have been a lot of buyers sitting on the fence because of coronavirus - this is going to be the kick that puts them over the edge."

Kresimir Kardum plans to buy an apartment off-the-plan in Liverpool, with Bos Realty's Dean Boskovic.

Kresimir Kardum plans to buy an apartment off-the-plan in Liverpool, with Bos Realty's Dean Boskovic.Credit:Steven Siewert

One such buyer is 27-year-old Kresimir Kardum, who plans to sign for a two-bedroom apartment in Liverpool off the plan, worth $480,000. "It's insane, I can't believe it," Mr Kardum said. "People are crazy not to utilise it. It is the government pretty much giving out free money, but it's not free money unless you capitalise on it."

It was a similar story in Melbourne, where Simonds Homes general manager Mark Richardson said the phones lit up "literally instantly" when the package was announced.

"Our foot traffic has increased, our web traffic has increased and the number of deposits we've taken in the last 24 hours has been substantial - it's all very positive coming out of the hibernation of COVID," he said.

Greg Deane, principal of Absolute Real Estate Strathpine, in Brisbane's northern suburbs, said: "People aren't jumping until they get all the details, but we're definitely getting some interest."

The Grattan Institute's finance program director Brendan Coates said the benefits of the new build scheme would mostly flow to "outer suburban areas and maybe some areas in the middle suburbs". For the smaller renovation scheme, "you are looking at renovations in the inner or middle rings of major cities".

Mr Coates said the people who would "really" benefit from the HomeBuilder scheme were retirees. "Some of them are going to look to downsize and they could use it to pay for a two or three bedroom unit in the centre of our cities and buy that new," he said.

Canen Richardson, managing director of Newcastle's Buildsmart Constructions, which also does designs, welcomed the scheme but doubted it would generate any new developments.

"We have a lot of people ready to kick their projects off. I've told them straight away that there's a slim chance of us getting this to contract in time," he said.

"Lead time between conception and signing contracts is usually at least six months for a custom build of any kind. It's a bit of a short turnaround for anyone to do home renovations unless they were going to do them anyway."

Mick Phillips of Belle Property in Charlestown near Newcastle said the package was "poorly constructed" and "rushed through". Applications usually took many months to get council approval, he said, while homeowners who could afford a $150,000 renovation in his region would likely have household income above $200,000 - making them ineligible.

with Zach Hope

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