$50,000 bonus for new home builders would boost economy
Builders of new homes would receive a $50,000 cash incentive under a New Home Boost scheme proposed by the Property Council of Australia to reinvigorate the housing market, generate jobs and boost consumer confidence.
"Some big and bold thinking is required to get the Australian economy going again after the impact of the COVID-19 pandemic," says Property Council of Australia CEO Ken Morrison.
"As Australia's biggest employer which contributes over 13% 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."
The council says the scheme could potentially stimulate the construction of 50,000 new dwellings, supporting more than 200,000 jobs, by bringing forward market demand for new housing.
Meanwhile, Master Builders Australia has called for $13.2 billion building and construction stimulus.
The proposal is based on EY modelling that shows the investment would lead to: $30.9 billion in GDP; the creation of 105,500 jobs in construction and across the economy; and $17.6 billion in expanded construction activity (new dwelling starts, renovations and commercial construction activity).
"Building and construction is shaping up to be one of the industries worst hit in the long term by the COVID-19 economic crisis. We know from previous downturns that it takes four times longer for our industry to recover than the rest of the economy," says Master Builders Australia CEO Denita Wawn.
"This economic crisis is not the result of a market failure; it is the result of the lockdown imposed by governments in response to the public health emergency of COVID-19. We are asking our political leaders to show the same courage and vision in supporting our industry as they showed in responding to the health emergency."
Corelogic's quarterly economic report shows a mixed response from the property market to COVID-19. While housing prices have shown only a mild slowdown, falling only half a per cent by early May, the real pain has been felt by declining sales volumes, which fell 40% over April.
"It is not just hesitant buyers that are creating low levels of transactions. Vendors are also hesitant to sell amid economic uncertainty."
More worrisome is the possible shock to the property market when mortgage holidays expire.
Housing debt was 142.1% of disposable household income at December 2019, a record high.
According to the report, "if reductions in income mean this debt cannot be serviced, there may be increased incidences of distressed sales, which would bring broader housing market values down further".
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