According to the Housing Industry Association’s (HIA) monthly survey of the largest volume of home builders in the five largest states, new home sales were 11.8 per cent higher in the seven months after COVID-19 restrictions came into effect than they were over the same duration last year.
The HIA's New Home Sales report shows that, in Western Australia, new home sales in the seven months from March 2020 were 95.7 per cent higher than at the same time in 2019, despite a fall in sales in the month of September.
According to Tim Reardon, HIA chief economist, this should result in a rise in new home building to levels seen a few years ago (but not quite at the boom levels of 2014).
Likewise, over the seven months to September, sales in Queensland increased by 7.1 per cent, and 3.3 per cent in NSW, while South Australia remained steady, with a 0.5 per cent rise over this period.
However, Victoria registered a 10.8 per cent fall.
Looking at the stats on a monthly basis, new home sales increased by 29.7 per cent in South Australia in September compared with August 2020, followed by Victoria and NSW, which increased by 16.7 per cent and 6.1 per cent, respectively.
“Sales in Victoria were surprisingly strong considering stage 4 restrictions were still in place,” Mr Reardon noted.
“This result likely reflects contract negotiations that commenced before restrictions came into effect.”
However, sales in Queensland and Western Australia both declined during the month, by 4.2 per cent and 11.5 per cent, respectively.
Sales increase attributed to HomeBuilder
Mr Reardon attributed the overall rise in sales figures to the federal government’s $688-million HomeBuilder scheme, which he said has been successful in boosting confidence for customers who had delayed a major investment decision earlier this year.
“HomeBuilder was designed as a short and sharp consumer incentive to shore up the number of new homes commencing construction in the December and March quarters,” he said.
“The program has also brought buyers into the market that would otherwise not been able to purchase their first home for a number of years.
“The increase in sales will support the construction of detached homes in the wake of the COVID-19 recession and pull the rest of the economy forward into 2021.”
indeed, the federal Minister for Housing and Assistant Treasurer, Michael Sukkar, noted that the HIA data showed that since the HomeBuilder scheme was announced, new home sales had increased by 49.8 per cent compared.
He added that, following the announcement of the scheme, new home sales had been higher each month than in any month in the past two years.
Commenting on the data, Mr Sukkar said: “This phenomenal result shows HomeBuilder is delivering on its promise to protect the jobs of Australia’s tradies by providing the stimulus the construction industry needs as we get to the other side of the COVID-19 pandemic.
“Across the board, the construction industry is saying that HomeBuilder is delivering for Australia’s tradies and home buyers, which is driving stimulus in the economy at a time it’s needed most.”
Delays in processing times
However, Mr Reardon noted that there is a limited window of opportunity for prospective HomeBuilder customers to purchase a new home under the scheme, with the program ending on 31 December for eligible sales.
He noted that delays in processing times of loan applications were acting as a barrier in this scheme.
“Delays in the processing of new home loan applications is the most significant constraint to getting these new building projects under construction,” he warned.
“Processing times for new home loans remain at around two months. Access to finance for new home construction has become exceptionally tight following new regulations introduced in recent years.”
[Related: Detached housing approvals boom]
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.