HomeBuilder renovations: where are the most owneroccupied dwellings below $1.5 million?

The HomeBuilder scheme announced in early June is intended to boost activity in the construction sector.

ConstructionDwelling construction is expected to see a lagged decline in activity off the back of COVID-19, as the recently recovering trend in dwelling approvals began to slip in April, led by a decline in unit approvals.

However, the $25,000 incentive for building a new home, or renovating an established one, comes with a set of extensive eligibility criteria.

Part of the eligibility for the renovation component of the scheme is that properties must be owner-occupied, and not exceed more than $1.5 million in value.

So where are the most owner-occupied properties under $1.5 million?

Using CoreLogic’s extensive property database, we have put together a count of properties by region.

The count of properties are those that we estimate are owner-occupied, and have a high confidence valuation of less than $1.5 million.

The top and bottom 10 regions by number of these properties is listed below.

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The list also includes the median dwelling value for all properties across the region of measurement (not just the owner-occupied properties valued below 1.5 million), and a rough estimate of the portion of all family households that are below the $200,000 income limit for the HomeBuilder scheme.

These additional data points are not factored into the count of properties generated, but provide some context around typical market values and household income.

What to make of the data

The data suggests that the highest number of owner-occupied properties is located in the Melbourne – South East region, which spans from Mount Waverly out to Bunyip.

In fact, there are four Melbourne regions that have over 100,000 owner-occupied properties estimated to be valued under $1.5 million.

These regions represent the fringe of the metropolitan area, and include some relatively low income areas compared to the inner-city regions of Melbourne.

The Perth – North West region has the second highest volume of properties. The Perth – North West region spans from part of Glendalough, up to the Yeal Nature Reserve in the north.

The ‘Bottom 10’ list of regions reflects one of two characteristics. For Sydney’s Northern Beaches and Eastern Suburbs, many properties surpass the $1.5 million property value cap to qualify for a renovation grant.

For parts of outback and regional Australia, there is just a low population of dwellings.

Even where dwellings fall well below the $1.5 million threshold for a renovation grant, many of these owner occupiers will not take up the homebuilder incentive for renovations.

Dwelling

In fact, CoreLogic estimates there are about 4.4 million owner-occupied properties across Australia with a high confidence valuation below $1.5 million, but the federal government estimates the scheme may only support about 7,000 renovations.

While part of this is the income cap put on the scheme, it is also due to the high value of renovations that is set in the eligibility criteria.

The renovations qualifying for the HomeBuilder Scheme must be worth between $150,000 and $750,000.

For areas where dwelling prices and incomes are relatively low, this may lead to owners over-capitalising on renovations, where they cannot recoup the cost of upgrades to the property.

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Eliza Owen

About

Eliza is head Of Residential Research Australia for Corelogic and a respected property market commentator. Eliza holds a first class honours degree in economics from the University of Sydney


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