HomeBuilder scheme could create ‘vacuum’

Property watchers fear the federal government’s $688 million HomeBuilder scheme will do little to create demand for new houses and renovations.

Instead, number crunchers at CoreLogic believe the $25,000 grants will simply bring forward construction works that were already planned.

“This side-effect from housing stimulus has actually been seen before and it has a name: a vacuum effect,” CoreLogic head researcher Eliza Owen said on Friday.

Eligibility for the HomeBuilder scheme is extremely restrictive, leading many critics to question how many people could benefit.

* Recipients must be owner occupiers

* Single applicants must earn no more than $125,000 per year or $200,000 combined income for couples

* Contracts must be signed by December 31

* Construction must commence within three months of the contract date

* For renovations, the existing property value must be no more than $1.5 million, and the renovation must be worth between $150,000 and $750,000

* For new builds, the house and land value must not exceed $750,000.

Labor and the Greens have argued the stimulus should have been targeted at social housing.

Prime Minister Scott Morrison said at the launch of the plan it would provide around 27,000 grants and support 140,000 direct jobs and another million related jobs.

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