Potential beneficiaries of housing stimulus
About the author:
- Author name:
- By Tom Sartor
- Job title:
- Senior Analyst
- Date posted:
- 02 June 2020, 12:40 AM
- Sectors Covered:
- Resources, Metals
Stimulating construction and manufacturing would generate the largest positive spillover for the broader economy in the post-COVID recovery according to the ANU. Announcement of Federal stimulus in the form of new homeowner grants is widely expected this week.
This would combat a drop in new home sales and resi construction, and would support supply and affordability. It would support activity linked to ~1 million construction jobs, and indirectly support household wealth, consumer confidence, spending and therefore many other jobs and segments.
Traditionally the states have offered $5-10k grants only to first home buyers, but Federal grants may apply across the board. The dollar value of potential grants this week are understood to be at least $20k, while lobbyists are calling for $40-50k.
The actual figure is expected to be in between. The Rudd government tripled the first home buyer grant to $21k during the GFC.
Separately, recommendations from the Federal Financial Relations report chaired by David Thodey are due to be made to the NSW and Victorian Governments this week.
The potential abolishing stamp duty (a barrier to home ownership), is expected to be a key theme.
News this week has potential to support the housing-facing sectors & companies
Construction / Building materials: New home building will benefit the materials suppliers, while alterations & additions will be more important for fixture wholesalers. However some stocks have already recovered to pre-COVID (alte February) levels, versus a materially weaker demand outlook.
Consumer Discretionary: Supportive housing conditions are correlated with consumer spending (general wealth effect and sentiment).
Banks: First home buyer (FHB) activity has been picking up over the last few weeks and additional stimulus should further boost activity. This should be positive for credit growth. From a banks’ asset quality perspective, the new homeowners grant would also be positive as it will provide support to the struggling construction industry.
Developers / REITS: Stimulus would be positive for sentiment and affordability – with stimulus usually directed towards new housing and first home owners. REITs exposed to any increase in consumer confidence, housing related spend may be beneficiaries due to improved sentiment.
Potential beneficiaries of news on housing stimulus
- Acrow Formwork
- JB Hifi
- Nick Scali
- Harvey Norman
- Temple & Webster
- Cedar Woods
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