Each month, the Housing Industry Association (HIA) surveys the 100 largest home builders in Australia, together accounting for over a third of all new home builds across the nation.
Based on this survey, HIA has revealed that new home sales fell by 4.3 per cent in May compared with April, with the total number of new home sales down 20.3 per cent when compared with the previous quarter.
Sales are also 18.2 per cent lower in the three months to the end of May than at the same time in 2019, which was already at a seasonal low due to the upcoming federal election.
Meanwhile, the number of project cancellations, which typically lies around 7-9 per cent, are now at 26 per cent. This compared with a 17 per cent cancellation rate recorded following the GFC.
Commenting on the findings, HIA chief economist Tim Reardon said: “New home sales have fallen in each of the three months since the introduction of COVID-19 restrictions. This will flow through to a reduction in the volume of work on the ground in the second half of this year.
“In March, new home sales fell to their lowest level on record, they fell further in April and lower again in May. The first signs of this contraction will flow through to work on the ground as early as July, before falling more significantly from September onwards,” Mr Reardon added.
Mr Reardon noted that the recent announcement of the federal government’s HomeBuilder program should “arrest the fall in new home sales” as well as “improve market confidence, not just in the home building sectors but across the wider economy.”
The government announced the $688-million HomeBuilder package earlier this month, with an aim to stimulate property market activity.
A $25,000 grant will be made available to owner-occupiers looking to “substantially” renovate to build a new home between 4 June and 31 December 2020.
A national price cap of $750,000 has been set for new home builds, and a renovation price range of $150,000 to $750,000 will apply to renovating an existing home with a current value of no more than $1.5 million.
Those building a new home must also commence construction within three months of the contract date.
“This will improve the outlook for employment in the sector in the second half of 2020 and into 2021,” Mr Reardon concluded.
[Related: HomeBuilder scheme hotspots revealed]
Hannah Dowling is a journalist for mortgage business, the leading source of news, opinion and strategy for professionals working in the mortgage industry.
Prior to joining the team at Mortgage Business, Hannah worked as a content producer for a podcast catering to property investors. She also spent 6 years working in the real estate sector at a local agency.
Hannah graduated from Macquarie University with a Bachelor of Media and Journalism.