Buyers of freshly built homes would get a $50,000 cheque from
the Morrison government under a $2.5 billion plan from the Property Council to
kickstart the economy amid Reserve Bank warnings the housing sector faces an
extended period of pain.
The council also wants the
abolition of stamp duty, the broadening of the GST and a "welcome
migration" campaign aimed at luring foreigners to Australia. On Wednesday,
the group said without change the residential sector would weigh on the economy
in the wake of the coronavirus pandemic.
Home builders have already reported
contract cancellation rates of more than 30 per cent since the shutdown of key
parts of the economy to prevent the spread of the virus, while the construction
sector, which employs more than 1.1 million people, has shed at least 5 per
cent of its workforce since March.
Council chief executive Ken Morrison said bold policies
were needed to get the economy, expected to shrink by 10 per cent in the June
quarter, re-started with the housing sector a key element of the recovery.
“As Australia’s biggest employer which contributes over 13 per
cent of GDP, the property industry can be a powerhouse behind economic recovery
and growth with the right policy settings and market incentives from the
federal, state and territory governments,” he said.
At the heart of its
proposals is a $50,000 "new home boost" for buyers of new housing,
which the council estimates would stimulate the construction of 50,000
dwellings and support 200,000 jobs.
It would dwarf the $21,000 in grants that were available to
first time home owners who bought new buildings during the global financial
crisis under the Rudd government's stimulus program.
The program would
run for 12 months and be limited to 50,000 properties, while there would be no
cap on the value of the home.
The council is also
calling for major tax changes to support the sector, including the removal of
state stamp duty and its replacement through a broadening of the GST base. Only
four large areas, including fresh food, education and health, are excluded from
the GST.
The Morrison
government is expecting net migration numbers to collapse this financial year
and next due in large part to the restrictions on global border movements.
The council wants a "Welcome to Australia" migration plan that
would include a major advertising campaign to promote the country as a safe and
healthy destination. It argues the current points system for skilled migration
should be temporarily lowered and people encouraged to live in major capitals
as well as regional centres.
Housing construction and the property sector is growing as an issue for
the Reserve Bank, which noted in the minutes of its most recent meeting that a
drop in employment, incomes and wealth will have a direct impact on general
consumer spending.
The minutes, released on Tuesday, show building companies are
already reporting a drop in demand for new and established housing while
cash-strapped Australians are moving back in with their parents or
share-houses.
"Lower incomes and
confidence, as well as lower expected population growth, were expected to
affect demand for new housing for an extended period," the minutes showed.
There are also concerns about the commercial property sector,
with rents in major capitals expected to fall with many businesses having staff
working from home rather than CBDs.