UDIA tells SA Government to keep Housing Construction Grant

SA's peak representative body for urban development says it's a mistake to remove construction grants for home buyers.

The Urban Development Institute of Australia (UDIA) has warned against the removal of the South Australian Housing Construction Grant, claiming it will be detrimental to home buyers.

“The property industry in SA is still only in the early stages of recovery with the rate of new home approvals continuing to disappoint, so we think removing the grant is premature and may serve to dampen consumer confidence even further,” said Terry Walsh, UDIA (SA) Executive Director.

Introduced by the State Government in October 2013 and discontinued as of this month, the grant provided up to $8500 to support locals building new homes worth up to $400,000, while smaller grants were available for homes worth up to $450,000. There were 4300 grants awarded in total.

“During a critical time for the local property industry, the Housing Construction Grant has been a fantastic incentive that’s had a positive effect on new home buyers, including many young people entering the market for the first time,” said Walsh.

“We think removing the grant, particularly in light of relatively weak market conditions, will have the opposite effect and prove detrimental to new home buyers."

Walsh also points out that slowing buyer activity will impact the broader property development and construction industry, which could contribute to higher levels of unemployment across the state.

After a promising first half of 2013, new home lending in South Australia lost momentum and declined by 6.8% in October 2013, but research by the Housing Industry Association shows the SA housing industry is beginning to show signs of recovery.

HIA SA regional director Robert Harding has said new home approvals had increased by 13.5% since the grant was introduced – and warned removing it now could have knock-on effects.

Meanwhile, the SA Government will continue to provide First Home Owner Grants of up to $5000 for established homes until its scheduled cut-off in June this year.