The federal government has extended the construction commencement requirement of the HomeBuilder scheme to address the unintended delays due to the COVID-19 pandemic.

Under the changes, existing HomeBuilder applicants will now have 18 months to commence the construction of their home, up from the previous requirement of six months.

Qualified applicants are those who signed contracts during the HomeBuilder eligibility period between 4 June 2020 and 31 March 2021.

Treasurer Josh Frydenberg said this is a crucial move to support the economy and the construction industry, especially amid the impacts of the COVID-19 pandemic.

"Extending the construction commencement requirement will smooth out the HomeBuilder construction pipeline, support jobs in the construction sector, and ensure that existing applicants facing difficulties in starting construction on their new builds and renovations are not denied a HomeBuilder grant due to circumstances outside their control," he said.

More than 121,000 Australians have already applied for the grant. This is expected to support around $30bn of residential construction projects.

Housing Minister Michael Sukkar said the demand for HomeBuilder shows that it has achieved its goal of encouraging Australians to participate in the housing market.

“The swift introduction of HomeBuilder gave Australians the confidence to build or rebuild a home during a period of great uncertainty. It has successfully protected the more than one million jobs dependant on the residential construction sector," he said.