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Housing sector slams subsidy withdrawal

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While Premier Jay Weatherill pleads for industry assistance to replace Holden jobs, the residential building sector is asking him to reverse his decision to end a new homes grant.

The $8500 New Residential Housing Construction Grant, designed to stimulate the building industry, expires on December 31.

“The State Government’s decision to end the New Residential Housing Construction Grant will hit hardest families looking for affordable housing, as well as wider residential building,” the Housing Industry Association’ s Robert Harding said today.

“The Housing Construction Grant is helping to turn around the residential building industry, but the job is only half done.

“Indicators show the grant is critical in what is one of the worst downturns in housing in South Australia on record,” the HIA regional director said.

“We urge the Government to reconsider its decision”.

The State Government said the grant was designed to “pull forward” construction contrast and it therefore had a limited lifespan.

“The current Housing Construction Grant was introduced in Oct 2012 and has supported an additional 4,300 houses to be constructed,” the Premier’s office said.

“Grants schemes such as the HCG support activity by both incentivising the construction of housing construction and pulling forward demand.

“The continuation of the HCG would diminish the pull-forward effect of the grant.”

Since the introduction of the grant, housing approvals have increased by 13.5 per cent.

The HIA says this generated an additional $18.2 million to state revenue, higher employment and payroll tax and other charges which benefit state coffers.

“Generally, a $1 increase in residential productivity results in a 5 fold additional economic benefit,” Harding said.

“The grant undeniably has helped to tackle the housing industry crisis, but we are not yet out of the woods.

“As a cornerstone of the State’s economy, building activity stimulates economic activity and generates jobs for South Australians. Taking away this incentive will hurt this recovery and lock a significant number of families out of new housing.”

The HIA call was backed by the Urban Development Institute of Australia (SA).

“The UDIA is disappointed that the grant will no longer be available to people building a new home in South Australia,” said Terry Walsh, UDIA (SA) Executive Director.

“The property industry in SA is still only in the early stages of recovery with the rate of new home approvals continuing to disappoint, so we think removing the grant is premature and may serve to dampen consumer confidence even further.”

The Housing Construction Grant was established by the State Government last October to provide cash payments of $8,500 to people building new homes with a market value up to $400,000, with smaller grants available for properties valued up to $450,000.

The State Government has yet to respond to the HIA and UDIA’s statements.

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