Regional Home Guarantee may ease housing shortages but buyers will have to wait for new builds

Ongoing construction delays could blow out further due to a new scheme that encourages people to build homes in the bush, stakeholders have warned.

Key points:

  • The federal government said its Regional Home Guarantee would offer 10,000 places a year from October
  • The scheme is designed to encourage people to build new homes in the bush
  • The building industry is already under pressure due to COVID-19 stimulus packages and supply shortages

The Regional Home Guarantee (RHG), announced as part of Tuesday night’s federal budget, will allow eligible applicants to build or buy newly built homes in regional Australia with only a five per cent deposit.  From October, the scheme will offer 10,000 places a year to first home buyers, people who have not owned a property in the past five years, and permanent residents.

Brett Partington, a builder of 38 years in Esperance, Western Australia, said new homes were sorely needed in the regions. But he also warned that a shortage of building materials was likely to delay construction times that were already taking years. 

“Some [builders] have got a two or three-year waiting list,” he said. “Wherever you went [in Australia], it’d be probably at least a one-year wait.”

Workers on a house being built
New houses are desperately needed in regional towns like Esperance. (ABC News: Dean Faulkner)

Real Estate Institute of WA vice president Joe White supported the new scheme but expected most buyers still to be waiting at least 18 months for new homes. 

“We have logjams in both supply and labour in finishing houses that are currently under construction,” he said.

“The builders can’t butter the bricks any quicker. But we do welcome [the new scheme] in the long run.”

Long waits for materials

Wayne Downes, who works for M&B Building Supplies in Albany, said he was waiting six months to fill orders that would have once taken a week or two. He said some products were only being distributed by allocation, rather than through orders of exact quantities, and those allocations were sometimes 50 per cent less than what he needed.

“By the mills and by the manufacturers, we’ve been put onto allocations,” he said.

“We get x-amount allocated to us per month, and that’s it. It’s not what we want. It’s what we can get.”

Mr Downes said countries all over the world had introduced building stimulus packages during COVID-19, and demand from nations with bigger populations was driving up prices and creating shortages.

The war in Ukraine could also have an impact, he warned, given that much of the world’s timber came from that region.

A close up of a female carpenter's hand marking up a piece of timber.
The building industry is suffering from significant supply shortages.(Flickr: El Gringo)

New housing desperately needed

Despite anticipated delays, Mr Partington believed the RHG was the best thing the federal government had done for the regions for a long time because of the desperate need for more houses.  Country rental markets have been hard hit in the past few years, which was making it difficult to fill jobs.

But Mr Partington said those considering signing up to the scheme should think about the risk of price increases and interest rate rises.

“I would really be looking at the fine print of what happens with the interest rate that you take on,” he said.

He wears a hi-vis top and stands near a saw
Mr Partington said the scheme would be good for the regions long-term.(ABC News: Emily Smith)

Mr Downes believed that as the RHG was not tied to building deadlines, and only 10,000 would be signed up each year, it would be more sustainable than previous stimulus measures.

“I think it will be a good thing,” he said. “We need housing in regional WA. I’m in Albany and you can’t find a rental for love nor money.”

Written: 5 April 2022

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