New homes and renovations trend

According to the Housing Industry Association’s monthly report, sales of new detached homes increased by a further 11.3 per cent in December 2021 – which was the highest level excluding spikes associated with HomeBuilder. 

The report also indicated sales in the final quarter of 2021 were 25.5 per cent higher than the previous quarter, nine months after the grant scheme had ended. 

HIA economist Thomas Devitt said the demand for housing remains strong as the pandemic continues to push households toward lower-density living. 

“It appears that the more time people spend under lockdown and working from home, the higher is the demand for detached housing and renovations activity,” Mr Devitt said.

“The constraint on home building is not demand but the availability of land, labour and materials.”

He said the shortage of labour and materials has led to construction time frames increasing significantly.

“As a result, the volume of approved-but-not-yet-commenced work is at its highest level in over a decade,” Mr Devitt said.

Home equity drives renovations

Sunshine Coast broker at Mortgage Choice Gordon MacVicar told Mortgage Business while the pandemic drove sales across the region, renovations were a major trend for home owners.

“If we go back pre-COVID, we had a lot of people trapped in loans that they couldn’t refinance out of, and we had clients who needed to consolidate debt, but there wasn’t enough equity in their homes,” Mr MacVicar said. 

“What we’ve seen now is everyone’s got three to $500,000 worth of equity – and more people are willing to access that.”

He said the boom had given people the opportunity to consolidate their debt, and renovate or modernise their homes.

“As a result, we’re seeing a boom and trades and everything up here because people are now accessing their equity to spend locally,” Mr MacVicar said.

The HIA report showed on a quarterly basis, sales in Queensland increased in the three months to December 2021 to be 49.0 per cent higher than the previous quarter. 

This was followed by Victoria (+36.8 per cent), NSW (+30.2 per cent), and South Australia (+11.2 per cent). Western Australia saw the only quarterly decline, down by 8.8 per cent.

[Related: Loan settlements rebound and refinances hit record highs]