Fears promised Northern Territory housing grants could hurt builders
Both major parties in the Northern Territory are promising Australia’s most generous home builder grants for first homeowners, ahead of next month's election. While they're expected to be popular, there are fears the construction market could overheat meaning tighter margins for building companies.
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00:00Darwin's urban sprawl set to accelerate following the Northern Territory election in August.
00:09The country Liberal Party and Labor promising Australia's most generous home builder grants
00:14for first home buyers.
00:16The CLP offering $50,000, Labor $60,000.
00:22The country Liberals also promising $30,000 to anyone who moves to the Territory and builds
00:28a home, regardless of whether they already own a property.
00:32This local builder, not happy with either policy.
00:36I was pretty disappointed to tell you the truth.
00:38He believes the grants will lead to a profitless boom for his business, due to a predicted
00:44rising costs for land, materials and skilled labor.
00:48Subcontractors will be in high demand, they're already in high demand now, blocklayers and
00:54tilers in particular.
00:55While you may think builders would be happy with any boom, they have limited scope to
01:00increase their prices, as they compete to attract clients who could instead buy and
01:05establish property in Australia's cheapest capital city housing market.
01:10The value of the grants also ringing alarm bells for economists.
01:14A very generous scheme in a small market with limited capacity in the building industry
01:23raises a series of pretty substantial risks.
01:27But he believes they can be managed.
01:29Governments need to ration the amount of stimulus that goes into the market at any one time
01:34so that the building industry can keep up.
01:37The Housing Industry Association, not so concerned.
01:41Fantastic.
01:42No other state or territory in Australia has made such an offer and I think it's great.
01:48It's going to go a long way.
01:51Also not perturbed, major party leaders.
01:54I think at different times we've seen an escalation of those builds.
01:58I don't think we'll see that now.
02:00People don't have confidence to build here in the territory because they're not sure
02:04that this is a safe enough place for them to live going forward.
02:07Something a cash incentive may be able to fix.