Builders call for $50,000 house-building subsidy

Builders are calling on the Government to offer incentives of up to $50,000 to encourage the construction of new houses and prevent a spike in unemployment.

The sector's holding up okay at the moment thanks to the wage subsidy scheme and a backlog of work booked ahead of the pandemic, but there are fears it could all come undone later this year.

"History unfortunately tells us that when we have an economic downturn, the construction industry gets hit hard - and it gets hit harder than most industries, so we have to anticipate it," Registered Master Builders chief executive David Kelly told The AM Show on Thursday.

A recent survey of the group's members found nearly two-thirds had less work lined up than usual, with the post-Christmas period looking bleak.

Consumer confidence is the industry's Achilles' heel, as the impact of job losses begins to reverberate.

"Will people still spend on building a new home, or that extension or renovation? And secondly, will the banks lend? That's what our members are saying they're most worried about."

Eighty-six percent of respondents in the survey said consumer confidence was a concern, followed by access to finance (66 percent), with banks perhaps reluctant to loan money.

Kelly says as the third-biggest sector of the economy (according to Statistics NZ, only 'professional scientific and technical services' and 'rental hiring and real estate services' are bigger), if the work dries up it will have a devastating impact.

So he wants the Government to follow Australia and stump up cash for new builds. The federal government across the Tasman is offering AU$25,000 grants for new homes or substantial renovations, but Kelly recommends New Zealand double that and go for $50,000.

"We think that's interesting to have a look at that, and see how that stacks up... What's the alternative? If we don't do this, if we have more and more businesses going broke, there's a massive cost to that."

The existing subsidy granted under the KiwiSaver scheme he said was a bit complicated to access, and maxes out at $10,000.

"The Australian one is more comprehensive - it's not just first-home buyers."

Kelly said the industry had a "good hearing" with Housing Minister Megan Woods in June, but is urging a decision be made soon.

"This could be the perfect time for people to build... because interest rates are low and predicted to stay low," said Kelly.

"Secondly it will be easier to get a builder or a tradesperson than it has been for some time. And the other thing is to think about property as a long-term investment... Property is a good investment in New Zealand and will continue to be so."

Unemployment was at 4.2 percent in March, the last time Statistics NZ updated the figure. That's expected to rise markedly when the agency releases new data in the first week of August.

Article supplied by Dan Satherley

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