New loan facility aims to assist home builders in completing unfinished properties
The WA government’s recent announcement of an interest-free loan facility to assist home builders in completing unfinished properties has garnered praise from the Real Estate Institute of Western Australia.
“Supply is the greatest issue facing the property market at the moment,” REIWA CEO Cath Hart said. “An increase in building completions, particularly those that have been under construction for several years, will help ease some of the pressure in the sales and rental markets.”
Hart said that while there has been a significant surge in building approvals due to the COVID building incentives, this has not translated into completed projects. Over the past three financial years, Western Australia has only averaged 14,000 new dwellings per year, resulting in a mere 42,000 additional homes, REIWA reported. In contrast, the population has grown by approximately 60,000 new households during the same period. This discrepancy has led to delays in completing homes, leaving potential homeowners waiting for years.
The impact of these delays is felt in the established homes market as well, Hart said.
“Firstly, there are many people waiting for their new homes to be completed, and this is hampering the usual turnover in both the rental and sales markets as people remain in their current homes for longer than planned,” she said. “In addition, the various constraints in the building industry have seen people turn to the established homes market instead of building. This is putting more pressure on an already tight market.”
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Furthermore, these delays hinder the addition of new rental properties to the market, as investors are awaiting the completion of single dwellings or larger complexes, Hart said. This contributes to the ongoing scarcity of rental stock in the region.
The newly introduced Builders' Support Facility aims to address these issues by providing interest-free loans to eligible residential builders who have been working on new homes for over two years. In addition to helping builders complete their outstanding projects, the loan scheme also seeks to prevent further insolvencies that would leave more homes unfinished.
“WA needs a strong and consistent pipeline of new dwellings to meet the needs of our growing population so any measure that gets homes out of the ground is greatly appreciated,” Hart said.
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