Rise in demand for barely utilised Queensland building boost comes too late

Demand for the $10,000 Queensland building boost has picked up strongly since the scheme was extended in January, but it could close with as much as half of the funding set aside for the scheme unclaimed by new home buyers and builders.

The scheme will close on April 30, having been extended from the original closure date of January 31.

In the three-month period from January 11 to April 19, the Queensland Treasury has received more than 5,000 applications, taking the total to 8,929 applications.

As of April 19 the Queensland Treasury has approved 6,367 grants worth $63.6?million, according to figures obtained by the Australian Financial Review.

This is less than half of the $140 million originally set aside by the Bligh government when it was launched on August 1 as an incentive aimed at boosting the housing market in the wake of the January 2011 floods and GFC.

However, this figure could potentially rise above 50% should the remaining applications be approved and should the scheme receive more applications between now and September 1.

New home buyers and builders must sign a contract by April 30 but have until September 1 to submit their application to qualify for the $10,000 grant.

In August 2011, the first month of the scheme there were only 100 applications, and fewer than 600 in September.

The Newman government is set to announce new initiatives to help the struggling property market when it releases its budget on September 11.

These will include reinstating a $7,000 stamp duty discount for existing home owners who buy a new home from July 1, and the discount will cost the government $900 million. The scheme was scrapped by the Bligh government last year.

New Treasurer Tim Nicholls has called the building boost a botched scheme that provided no real benefit to the housing sector.

“The fact that under half of the $140 million originally allocated in the scheme has been paid out in grants is a clear indication it was a poorly targeted and designed scheme,” he says.

However, Property Council of Australia Queensland executive director Kathy MacDermott says the scheme had helped and was desperately needed.

MacDermott says the scheme had been affected by low consumer sentiment and cautious buyers.

In addition she says the Queensland housing market is being dragged down by lower property valuations by banks, which makes it harder to secure financing.

The building boost is one of six state housing incentive schemes that will come to an end over the next few months.

According to a CommSec report, Queensland has the fastest economic growth rate in Australia of 9.8% but is being held back by a weak housing market.