The federal government has extended the deadline to begin construction under the HomeBuilder grants program by an additional 12 months.

Those who were eligible for the grant before its March 31 conclusion – some 121,000 building applications, according to the government – will now have 18 months after signing contracts to commence construction.

This is a year longer than previously allowed.

“This extension in the commencement date for which the first slab can be laid is a very important step,” Treasurer Josh Frydenberg told reporters.

“It will help ensure a pipeline of economic activity.

“This program has grown over time because more people have decided to use this grant to fulfil their own dreams … you have to remember when we put this program in place to start with, jobs were being lost on building sites across the country.”

Mr Frydenberg said the scheme would cost the government $2.5 billion but had helped tip some $30 billion into Australia’s construction sector amid the COVID-19 pandemic.

Approvals to build private homes hit a record high in February, fuelled by HomeBuilder and record low interest rates.

The Australian Bureau of Statistics said since the introduction of HomeBuilder in June 2020, private house approvals have risen by almost 70 per cent.

In February, home approvals jumped by 15.1 per cent to 13,939 houses, breaching the previous peak set in December last year.

The HomeBuilder scheme was introduced during the depths of the COVID-19 pandemic and late last year was extended to March, although the size of grants was trimmed from $25,000 to $15,000.

The Property Council of Australia on Saturday welcomed the deadline change, saying HomeBuilder had been an “economic bullseye” and the extension would ease pressure on home builders to begin construction quickly.

The Housing Industry Association said its members had been constrained by supply chain issues and labour pressures, and needed the additional time.

“The uptake of HomeBuilder has created a lifeline of work for tradies and helped support tens of thousands of first home buyers to achieve their dream of owning a home,” the HIA’s Graham Wolfe said in a statement.

“Members have been severely impacted by global supply constraints and labour pressures. Builders and their clients have also been juggling delays in finance approvals, planning and building approvals and land title.”

Master Builders Australia chief executive Denita Wawn said 70 per cent of builders were struggling with delays or cost increases for labour and materials, and they could now space out their construction pipeline.

The Labor opposition also welcomed the change, with housing spokesman Jason Clare saying it “should have been made a long time ago”.

But Housing Minister Michael Sukkar said: “The opposition did not support the HomeBuilder program, the opposition opposed HomeBuilder … the opposition sadly has been left wanting when it comes to the residential construction industry.”

-AAP