Builders have pinned hopes on new construction incentives, but Queensland’s peak industry body has cast doubts over the scheme’s success.
Builders have pinned hopes on new construction incentives, but Queensland’s peak industry body has cast doubts over the scheme’s success.

Cracks form in HomeBuilder foundations

TOWNSVILLE builders have pinned hopes on new construction incentives to rebuild a dire past of slow business, but Queensland's peak industry body has cast doubts over the scheme's success.

The federal government launched the HomeBuilder scheme on June 4 to "drive economic activity" in construction with a grant of $25,000 to build a new home or "substantially" renovate an existing home in a bid to lift Australia out of economic ruin in response to COVID-19.

The stimulus package was to be administered through states and territories, with Queensland one of the first to sign up to the plan, which is valid until December 31, with construction required to begin within three months of the contract date.

The response for some regions was almost instant, with building companies such as G.J Gardner Homes in Townsville left running off their feet to meet the spike in demand.

Townsville director Natasha Whiteside said display homes had been filled with "excited" future homeowners every weekend since the announcement.

"It's just gone crazy and everyone's buzzing," she said.

"Eighty per cent of our total builds would be on the back of the stimulus.

"Anyone who's been running a business pre-COVID in Townsville knows what a slog it's been but, for the first time in what feels like a decade it's a very nice secure feeling."

The state government added to the incentive to build with another $5000 boost to build in regional areas, in addition to the $15,000 first-home owners grant totalling $45,000 worth of incentives for Townsville residents hoping to crack the market.

Kiall Franzmann, director of Franzmann Constructions which specialises in major renovations, said he was able to employ two additional staff members on the back of the stimulus and recorded a 50 per cent increase in inquiries.

The program, which is expected to provide about 27,000 grants at a total cost of about $680m, has been flagged by the industry's governing body as problematic in its rollout by the state government.

On August 20, Master Builders Queensland chief executive Grant Galvin wrote to Treasurer Cameron Dick citing concerns that contracts would "fall over" due to not meeting the required time frames to build.

He also raised concerns over the administrative process which excludes the grant money as part of the deposit and cannot be considered by banks when seeking finance.

"This limits access to the grant to those who can afford to build without it," Mr Galvin's letter says.

"A concern for builders is it may lead to many of the build contracts signed to date falling over as owners fail to secure finance.

"Lenders tell us that the situation has arisen from the responsible lending obligations which require them to assess a customer's situation when granting a loan on the evidence they present at the time of that loan assessment."