Articles - Industry News

Grants Important for New Building

2nd June 2015
John Gelavis Column - 02/06/15

By John Gelavis

Published in New Homes Magazine, The West Australian on 30th May 2015

One of the key policy positions of Treasurer Mike Nahan and the State Government is the support of first-homebuyers who purchase a new home. This was clearly articulated in the State Budget with two key announcements.

This had two elements, the first being the retention of the First Home Owner Grant for new-home construction and also the stamp-duty exemptions and concessions. The second was the announcement of the Social Housing Investment Package.

Worth $560 million, it will deliver 1000 additional social-housing dwellings during the next two financial years. It will not only provide much-needed assistance for people on the social-housing waiting list but also provide a boost to the residential-construction sector and support jobs, just when dwelling investment is forecast to moderate.

The main reason identified by the State Government for continuing to support first- homebuyers in the new-housing market was all about employment, which is extremely critical to West Australians at present with the resource sector moving into production phase and unemployment slowly increasing.

According to the Construction Training Fund, the building and construction industry in WA is 10.45 per cent (annualised) of the State’s workforce and there are an estimated 145,000 people working in the sector at present as well as more than 8000 construction and electrical apprentices in training.

Additionally, independent research, commissioned by the HIA and conducted by the Centre of International Economics, found that in WA the multiplier effect was quite significant. A one per cent productivity improvement generates an additional $4.85 of economic activity in WA per increased dollar of activity in residential building.

For these reasons, the HIA has strongly adopted a policy to support the retention by State governments of the FHOG for new-home construction only.

It’s important to remember that FHOGs were originally implemented as compensation for the introduction of the GST, which was applied to new homes but did not apply to existing homes at the point of sale. Despite this, over time they have been applied across all classes of residential property.

The application of FHOGs to the purchase of new homes only has been shown over time to provide an effective stimulus to the broader economy and there are major efficiency gains to be realised from targeting housing policies (including measures to assist first-homebuyers) and increasing the supply of new homes.

Housing policies targeted at the construction of new homes, in all forms, can effectively increase the overall housing stock for all households, which is a positive for affordability.

With the changes occurring in the State economy, this decision to focus on new-housing construction was the right one, as it creates jobs, increases much-needed housing stock and has a valuable multiplier effect in the State economy.

The retention of stamp-duty exemptions and concessions for first-homebuyers also presents a great opportunity for anyone looking to build a new home at the present time.


Picture: WA Housing Centre