HomeBuilder a boost as Sydney leads price charge

Extended government stimulus, cheap credit and rising confidence are driving a lift in home prices.

The Morrison government has extended the HomeBuilder package. Picture: Brett Wortman

The Morrison government‘s extension of the HomeBuilder package could boost the real estate investment trust sector as time frames for work are extended.

The move to extend HomeBuilder from the end of this year to contracts signed before the end of March will operate nationally and bring the program in line with Victoria.

Building will be able to commence up to six months after the contract has been signed, which compares to most states currently at three months.

The move addresses industry concerns about order books filling in several states and will assist in removing bottlenecks in the HomeBuilder program.

Grants will be trimmed next year from $25,000 to $15,000 but this has been partially offset as the price cap has jumped to $950,000 in NSW and $850,000 in Victoria. It remains $750,0000 in other states.

Residential developer Stockland is expected to benefit more than Mirvac, which has a greater focus on luxury apartments.

“Given Stockland‘s greater exposure to master planned communities and lower price point aiding elevated first homebuyer participation, the extension of the stimulus will benefit it more than Mirvac,” Macquarie said.
About 57 per cent of Mirvac‘s residential business is comprised of land estates.

“The extension of HomeBuilder is likely to provide general support to the housing market which could also encourage a return of investors into the market, which would be an additional positive for Mirvac and Stockland,” Macquarie said.

The broker said that continued demand may also lead to price rises and better margins.

REA Group chief economist Nerida Conisbee said price growth was “well and truly back”, particularly for houses with 80 per cent of Australian capital city suburbs currently seeing house price growth.

But growth in unit markets was not as strong, primarily because rental markets are still weak post-COVID. Nevertheless, just 31 per cent of Australian suburbs are seeing price declines for units, Ms Conisbee said.

“The city leading the charge is Sydney with 95 per cent of suburbs seeing house price growth and 78 per cent seeing price growth for units. Canberra and Hobart markets are also strong,” she added.

Ms Conisbee said the two surprises were Melbourne, which is particularly strong despite a prolonged lockdown, and Perth. “Conditions in Perth are improving rapidly, but there is still a lot of catch up to be made given the prolonged weak conditions in that market,” she said.