The deadline for starting construction under the HomeBuilder grants program has been extended by another 12 months by the federal government.

Many who were eligible for the grant before it expired on March 31 - around 121,000 building applications, according to the government - will now have 18 months to start construction after signing contracts.

This is an extra year than was previously permitted.

Mr Frydenberg said the plan would cost $2.5 billion to the government but would help inject $30 billion into Australia's building industry in the wake of the COVID-19 pandemic.

In February, approvals to construct private homes reached a new peak, fueled by HomeBuilder and historically low interest rates.

Private house approvals have increased by nearly 70% since the launch of HomeBuilder in June 2020, according to the Australian Bureau of Statistics.

Home approvals increased by 15.1 percent in February to 13,939 homes, surpassing the previous high of December last year.

The HomeBuilder program began in the midst of the COVID-19 pandemic and was extended until March of last year, though grant amounts were reduced from $25,000 to $15,000.

The Property Council of Australia welcomed the deadline extension on Saturday, claiming that HomeBuilder had become an "economic bullseye" and that the extension would relieve pressure on home builders to start construction as soon as possible.

The Housing Industry Association stated that its members were hampered by supply chain problems and labor shortages, and that they needed the extra 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."

Denita Wawn, the chief executive of Master Builders Australia, said that 70% of builders were experiencing delays or cost rises for labor and materials, but that they could now space out their building pipeline.

Labor's housing spokesman Jason Clare said the move "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."

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