DEVELOPMENT applications (DA) for new builds have taken a dive and numbers are expected to drop even further.
A review by Tamworth Regional Council shows 103 DA's were lodged this quarter, down 33 per cent from the first.
Whispers of a $50,000 federal government first home buyers' grant and the potential for the state government to axe stamp duty are being blamed for residential construction coming to a grinding halt as people wait to see what they could save.
Some clients have already put builds on hold due to unstable job security in the COVID-19 pandemic, Dunst Bros Builders director Cameron York said.
"The last three years here have been pretty tough, it's up and down," he said.
"We went through years of positive growth and the last three years has been a roller coaster, we had good work and then the drought had a massive impact on income locally.
"It filters through the whole economy and I think in the next six to nine months we will see the full effects of COVID."
Mr York said a stimulus package would be welcome in the industry but a decision needed to be made soon.
"The government needs to put some clarity on what's being thrown around because people won't be able to make a decision and will sit on it," he said.
"If in three months they want to go forward, some builders could have been put off in that period of time, they need to keep the growth going and jobs in the sector for the economy."
What seemed to be a positive announcement from the government can have an extremely negative impact if it doesn't move quickly, Tamworth Regional Council general manager Paul Bennett said.
"Because that hasn't actually been addressed by the federal government, and by the state around stamp duty, everyone who is thinking about building a house has now stopped because they don't want to go ahead with building a house if there's a chance they will get a $50,000 kick-along," he said.
The Housing Industry Association this month revised its forecasts in light of the COVID-19 pandemic.
It now expects housing builds to be down by 27.5 per cent in NSW this financial year, and to take a further 34.1 per cent hit in 2020 to 2021.
HIA's regional director David Bare said if this happens, half-a-million jobs would be put at risk.
This shock will reverberate through the residential building industry, up and down the supply chain," he said.
"Employment in the sector is not expected to recover within the next two years," he said.
While the processing time for DA's was reasonable, the drop in lodgements was a concern, Tamworth Regional Council councillor Glenn Inglis said.
"I just looked at the percentage, that's 33 per cent down on the first quarter," he said.
"That's a big dive and you would think that the next quarter is going to be maybe even worse, it could be creeping up to 50 per cent."
The numbers were released as part of the council's quarterly progress review, it showed the average DA takes 38 days to be approved.
The estimated value of development in the first quarter was $42 million, this quarter it's down to $27.8 million.