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New home sales fall as HomeBuilder ends: HIA

New home sales tumbled in April as the HomeBuilder scheme concluded but a significant volume of building work is set to commence in 2021, according to a housing association.

The Housing Industry Association’s (HIA) New Home Sales report has revealed that new home sales were 54.4 per cent lower in April 2021 compared to March.

HIA economist Angela Lillicrap attributed this decline to the end of the federal government’s HomeBuilder scheme.

The extension for applications for the HomeBuilder program concluded in April, with applicants being given until 30 April 2023 to submit all supporting applications.

The scheme – which was extended in 2020 to provide a $15,000 grant for building contracts (new builds and substantial renovations) signed between 1 January 2021 and 31 March 2021 (inclusive), aims to provide eligible owner-occupiers (including first home buyers) with a grant to build a new home or substantially renovate an existing home.


It also aimed to boost the residential construction sector by encouraging the commencement of new home builds and renovations.

The federal government recently extended the construction commencement requirement for the HomeBuilder grant from six months to 18 months for all existing applicants.

In a joint statement, Treasurer Josh Frydenberg and Assistant Treasurer Michael Sukkar said that the extension will bring the total level of expected government support for the construction sector under the HomeBuilder scheme to $2.5 billion.    

Ms Lillicrap also said that despite falling below recent peaks, sales in April 2021 were just 2.7 per cent lower than the average month prior to the coronavirus pandemic shock.

Sales in April 2021 declined across all the five largest jurisdictions compared to the previous month. They fell by 71.7 per cent in South Australia, 65.6 per cent in Queensland, and 65.4 per cent in Victoria, 22.4 per cent in NSW, and 15.7 per cent in Western Australia, according to the report.


The report – which is based on a monthly survey of the largest volume of home builders in the five largest states and is an indicator of future detached home construction – also compared sales in 2021 to 2019 (which is considered to be a “normal” year) as the housing market in 2020 experienced both “record highs” and “record lows” due to the COVID-19 shock, Ms Lillicrap said.

It found that sales in April 2021 were higher than their monthly average in 2019 in NSW (up 30.3 per cent), and Western Australia (up 27.5 per cent). However, the report said that sales declined in Queensland (down 4.8 per cent), South Australia (down 13.4 per cent), and Victoria (down 26.5 per cent) over the same period.

Commenting on the report findings, Ms Lillicrap said: “This sales result for April 2021 is an encouragingly strong result. It suggests that there is a significant volume of new homes to be built for customers not eligible for HomeBuilder.

“There is an unprecedented volume of building starts set to occur in 2021. HomeBuilder and lower interest rates have facilitated in a surge in demand for detached homes that ensures a record number of new detached homes will be built this year and into 2022.

“A cooling in sales is to be expected as the grants available through the HomeBuilder program came to an end in March.”

She concluded: “The demographic shift in population towards regional locations and low interest rates will continue to drive demand for new homes over the months to come, albeit at a level well below recent peaks.”

March figures from the Australian Bureau of Statistics (ABS) showed that the value of new owner-occupier loan commitments for the construction of new dwellings fell 14.5 per cent in March to $3.6 billion, marking the first fall since June 2020 when the HomeBuilder grant was introduced.

However, the figures also showed that commitments in this segment was at record-high levels, and is 123.6 per cent higher than in March 2020.

[Related: New home sales drop as HomeBuilder end looms]

New home sales fall as HomeBuilder ends: HIA

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Malavika Santhebennur

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.

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