Industry experts have applauded the announcement of a “tradie rescue package” but do not believe that the government’s plan goes far enough.
Prime Minister Scott Morrison recently outlined more of his plan to get the economy moving again post-COVID-19, with the construction and entertainment sectors likely to get an economic boost.
Under the recovery plan, new household construction and major renovation projects could get a grant from the government.
The plan could also see households given cash to spruce up their own home, with grants for renovations likely to help kickstart the construction sector.
Master Builders Australia chief executive Denita Wawn welcomed Mr Morrison’s latest stimulus package.
“It’s fantastic. Any expenditure by governments on Sydney’s infrastructure is a welcome by the industry,” Ms Wawn said.
While welcoming the new stimulus package, Ms Wawn highlighted the dangers that the property sector is facing, with builders noting up to a 40 per cent decrease in work in the pipeline.
“In the 1990s recession, we were one of the last industries to be adversely affected, but it took us four times longer to recover. So our focus has always been on that six-month lag,” Ms Wawn noted.
Housing commentator and property developer Ian Ugarte does not believe the proposed plan goes far enough.
Under the suggested extensions to the $4 billion “Tradie Rescue Package”, Australian home owners could be given grants of up to $40,000 to build or renovate their properties, but strict criteria need to be met, like making houses more resilient to natural disasters.
“I understand the Prime Minister wants to place conditions on the funding to reduce rorting, and Ms Wawn has suggested it would be good to set the criteria to making houses more resistant to natural disasters and address property defects,” Mr Ugarte said.
However, Mr Morrison’s plan, which requires certain criteria to be met, is a “big mistake” and will limit applications, according to Mr Ugarte.
“Our entire economy, including the building industry, is being held hostage to a pandemic that has seen mum and dad property investors haemorrhaging financially due to job losses and little to no rent coming in from tenants who are equally as financially squeezed by the effects of COVID-19.”
“It’s vital that the funding is extended to include making existing homes and investment properties more resilient to serious economic downturns, like the one we’re experiencing right now. This will create cash flow for builders, higher yields for landlords and lower rents for tenants,” he continued.
Mr Ugarte said he had seen panicked mum and dad investors ditch their untenanted properties and suffer a significant loss because they felt they had no other choice.
Instead, the builder and property educator believes investment properties currently sitting vacant could present an opportunity that would make securing new tenants easier and double their rental yield almost immediately, and see this yield continue year-on-year.