A wave of home-building and renovation work is the goal of a $444 million stimulus package unveiled by the state government as it seeks to pull the state economy out of a coronavirus-induced downturn.

The bulk of the 'Building Bonus' package is $319 million to build, buy, renovate and maintain social housing across the state, including at remote Aboriginal communities.

But the talking point is $117 million worth of $20,000 cash grants to anyone building a new home, including properties in a development under construction, that they plan to either live in or own as an investment. 

Premier Mark McGowan said the grants were available to foreign and interstate investors.

Mr McGowan defended the decision to not means test applicants or apply property value caps, saying the package was about stimulating the construction sector, which had seen few contracts signed in the past two to three months.

"While it may mean that some people on some higher incomes may be the beneficiaries, the main point of it is to get people back to work, to get apprentices on the job, to keep trainees there and to get more people employed," Mr McGowan told reporters on Sunday.

"You can always consider means testing and perhaps in a non-pandemic environment that's what you'd do but ... we need to get building happening."

He urged all local councils to speed up approvals.

Applicants must sign up by the end of the year and can also vie for the federal government's $25,000 HomeBuilder payment announced last week.

First home buyers can also apply for the state government's existing $10,000 grant and stamp duty concessions, bringing the total potentially available to them to almost $70,000.

The state government says now is the time to build a residence while interest rates are at record lows.

The WA economy is forecast to slump into recession next financial year, with the pandemic delivering a $12 billion hit.

No new cases of the virus emerged overnight on Saturday, leaving the state's active cases at 31.

Industry support

While most property groups have welcomed the package, others have highlighted the need for further economic reform.  

Housing Industry Association WA director Cath Hart said Western Australia had the nation's shortest project pipeline of just 13 weeks, and construction sector workers and tradespeople would be "breathing a sigh of relief".

“This package could generate about $2 billion in additional activity for West Australia’s residential building sector which will help industry weather the challenging 12-18 months ahead,” Ms Hart said.

Ms Hart said the timing of the announcement was critical, expecting the last of the existing WA projects to head to site by the end of this month and the sales trough to emerge as a trough in construction activity by late June.

“We’ve already seen a massive slowdown in activity since coronavirus hit, and we had downgraded our 2020/21 forecast to fewer than 10,000 new dwellings being built across WA - this will make a huge difference to our outlook for residential building,” she said.

“We now have a powerful kickstarter for recovery with the state’s Building Bonus and social housing packages, the federal HomeBuilder program plus efforts to slash red tape with the planning reforms announced last month.”

Property Council of Australia WA executive director Sandra Brewer said the addition of the state government’s Building Bonus on top of the federal governments HomeBuilder scheme (announced last week) was an “absolute game-changer for Perth’s languishing residential property market”.

“We are pleased to see the state government chose to top up the federal government’s HomeBuilder scheme by $20,000 and increase the supply of social and affordable housing, both measures suggested in Property Council’s 7-Point-plan for economic recovery,” Ms Brewer said.

“We’re thrilled the State Government has adopted our suggestion to expand the existing 75 per cent off-the-plan transfer duty rebate to developments under construction, a measure that has been consistently advocated by Property Council WA.

“The decision to enable the Department of Communities to acquire approximately 250 dwellings will help absorb some of the pipeline of apartments under development and will accelerate projects to construction stage.”

The Urban Development Institute of Australia WA (UDIA WA) chief executive Tanya Steinbeck has also welcomed the news and highlighted the critical difference point of difference to the federal scheme was that the state government’s scheme was not means tested and had no cap on the property value.

“The McGowan government has acted decisively and precisely with this Building Bonus grant. They have demonstrated a detailed understanding of the mechanics of the market, and the grave situation the housing construction industry was facing in the coming months without government support,” Ms Steinbeck said.

“The land development industry provides the platform for buyers to choose the location that suits their needs, with the amenity they require to create a place to call home that is bespoke to their individual requirements.

“There are 5,000 land lots available across the metropolitan area over the coming months, combined with a diverse range of new home designs that provide the ultimate housing choice for those looking to take advantage of extraordinary economic circumstances.” 

Calls for further reform

The Chamber of Commerce and Industry of WA (CCI WA) recognised the state and federal governments had sought to further support the construction industry and jobs but said it did not “provide a long-term fix to the challenges faced by WA’s residential and commercial construction sector.”

“The fundamental challenges for the sector are weak business investment – particularly outside mining – and low population growth,” CCIWA said in a statement issued today.

“The only sustainable fix for those challenges is to create a competitive advantage for WA businesses through a lower tax and regulatory burden. Once international border restrictions are lifted, policies to better allow the migration of skilled workers will also play an important role. 

“It is also important to recognise the State Government has undertaken a range of planning reforms to improve the regulatory environment. It has so far however, ruled out meaningful tax reform that could stimulate the economy, including the proper investigation of how a shift from stamp duty to a broader-based land tax might occur.”