New home sales soar with one state blowing past expectations
New home sales in the three months to February trumped last year’s figures by 60.5 per cent, as the government’s celebrated HomeBuilder program considerably upped demand for detached housing. One state, however, far exceeded the rest.
HIA’s latest new home sales report has pinpointed the government’s HomeBuilder program as the catalyst for improving consumer confidence in the housing market.
According to the latest statistics, sales in the three months to February 2021 were 60.5 per cent higher than in the same three-month period last year.
“Record-low interest rates and rising house prices are sustaining market confidence into 2021. This strong level of consumer confidence, combined with the demographic shift to regional areas, is driving ongoing demand for new detached homes,” said HIA’s economist Angela Lillicrap.
Looking at state-by-state data, the strongest surge in new home sales occurred in South Australia, with growth hitting an extraordinary 149.7 per cent, followed by Victoria (69.1 per cent) and Queensland (60.4 per cent). NSW increased by 46.2 per cent, and Western Australia is up by 25.1 per cent over the same period.
“HomeBuilder was the catalyst for improving consumer confidence in the housing market,” Ms Lillicrap said.
“A surge in sales was observed following the announcement of HomeBuilder in June 2020, which led to strong sales through to the end of 2020.
“In December 2020, there was a near record volume of new home sales as households rushed to finalise contracts to build a new home before the end of the $25,000 grant.”
According to the economist, the full impact of the extension of the HomeBuilder grant, at a value of $15,000, will not be observed until the end of March.
“To receive the HomeBuilder grant, construction is required to commence within six months of signing a contract to build. As a consequence, it is possible that builders will delay the signing of some contracts to allow for greater flexibility and more detailed planning of projects.
“For this reason, we expect a surge in sales in March. Due to the lower grant offering, this surge will not be as large as the December 2020 surge,” Ms Lillicrap concluded.
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