'Don't panic sign': WA home builders lured by cash splash urged to watch out for dodgy contracts
Western Australia's building watchdog has urged prospective home builders looking to take advantage of government grants to keep their cool and avoid being stung by dodgy contracts.
The warning came as the housing industry reported enormous increases in interest and conditional housing sales over the beginning of June.
With interest in new homes going crazy the building watchdog has warned prospective home builders should do their due diligence.Credit:Heather McNeill
Last week Building and Energy released 10 preparation tips for new home builders that included thoroughly vetting potential builders, going through the contract with a fine-tooth comb and making sure they see a home indemnity insurance certificate.
New home builders in WA could be eligible for up to $25,000 from the federal government’s HomeBuilder scheme and $20,000 from the WA government’s building bonus if they get a build under way by the end of the year.
The watchdog's building compliance director Sandy Randall said with the time pressure on the grants she did not want new home builders to skip over the important stuff when it came to signing a contract.
"For goodness' sake do some due diligence," she said.
"My concern is that there is going to be a huge stampede and in the rush for both parties, the builder and consumer, there is this urgency to get the contract signed and sometimes in that panic people may not take the time to go through things as carefully as they should.
"That could lead to disappointment down the road."
Housing Industry Association survey results for the weeks after the grants were announced reveal huge jumps in new home interest.
Land developer traffic jumped 220 per cent from the week starting June 7 to the week starting June 14 while conditional sales jumped 142 per cent from the end of May to 368 by mid-June.
Traffic through display homes has jumped 158 per cent from the end of May when the announcements were made while sales leads jumped from 880 to a whopping 3329.
Many developers wiped rebates and discounts off house-and-land packages within days of the grants being announced and prospective home builders have taken to social media to vent their frustration at builders already raising prices, but Ms Randall said it was up to consumers to ensure they were getting a fair price.
"That's a supply-and-demand kind of an arrangement," she said.
"If builders prices change unreasonably from one week to the next I guess it is up to consumers to keep looking until they find a builder that's prepared to offer what they consider is a fair and reasonable deal."
Speaking to the Jane Marwick Show podcast earlier this month, Glenn Stannard of WA builder Stannard Homes said even before the grants prices for materials had been going up after being held down for so long.
New Home Building Brokers managing director Tristan Kirkham said the market was between four and five times busier than previous months, particularly in the middle market with builds between $400,000 and $650,000.
He warned the sector was heading toward a pinch point when it came to development approvals and titles, with councils needing more resources to deal with the influx in new home applications.