New home sales reached “remarkable heights” in December 2020 and nearly doubled compared with the number of sales recorded in November, Housing Industry Association (HIA) economist Angela Lillicrap said.
The HIA New Home Sales report has shown that December 2020 was the second strongest month of new home sales in the 20-year history of the survey.
Ms Lillicrap added that this was only exceeded by March 2001.
“This surge in sales can be attributed to HomeBuilder as households finalised contracts to build a new home before the 31 December 2020 deadline to access the $25,000 grant,” she said.
“The extension of the time frame to commence building from three months to six, which was announced in November, played a significant role in December’s results.”
The report – which is a monthly survey of the largest volume of home builders in the five largest states and is an indicator of future detached home construction – has revealed that new home sales increased by 32.5 per cent in 2020 compared with 2019.
“This is an exceptional result given the nature of the pandemic and the effect that it has had on the broader economy,” Ms Lillicrap said.
However, she added that this level of volume of sales is not expected to continue into January.
The extension of HomeBuilder to allow contracts to be signed before March 2021 with a grant of $15,000 will support the sales of new homes into 2021, but not at this elevated level,” she said.
“Low interest rates, improved lending assessment and growth in the price of established homes will also support demand for new homes in 2021.”
The monthly increase in sales has been broad-based across the states with the exception of Western Australia, where sales declined by 9.5 per cent.
“Western Australia has been the strongest performing state since the announcement of HomeBuilder and the state government’s Build Bonus grant in June,” Ms Lillicrap said.
“Despite the underperformance relative to other jurisdictions, the December results are still elevated compared to previous years, with sales in the December 2020 quarter double the same time last year.”
Across the country, new home sales in the December quarter were higher in all regions when compared with the same period in 2019, with South Australia increasing by 188.3 per cent, Victoria by 103.1 per cent, Queensland by 99.9 per cent, Western Australia by 99.2 per cent and NSW by 61.7 per cent.
“The strength of new home sales is a positive sign that home building will support jobs on the ground throughout 2021,” Ms Lillicrap concluded.
[Related: Demand for detached housing continues]
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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.