HomeBuilder grants fuel near doubling in new home sales: HIA

The number of new homes sold almost doubled in December as buyers rushed to beat the cut-off for HomeBuilder grants.

New home sales are expected to slow this year after a bumper end to 2020, with December contracts almost doubling. (Photo by Chris DELMAS / AFP)

A rush of activity from homeowners looking to beat the deadline for the HomeBuilder stimulus scheme saw the number of contracts for new homes almost double through December.

New home sales rose 91.8 per cent month-on-month through December in the final days that applications were allowed for the federal government grants, according to the Housing Industry Association’s latest new home sales report.

It was the second strongest month for new house sales on record, and compares to growth of 99.5 per cent in December 2019.

HIA chief economist Tim Reardon said it had been a “pretty exciting” six months for the industry

“The end of HomeBuilder has brought forward a huge volume of work that will ensure employment through 2021 and 2022,” Mr Reardon said.

“It has done the job it was designed to do.”

The Morrison government announced the scheme, which offered $25,000 grants to encourage new home building and major renovations across the country, in the midst of the pandemic. The scheme ran from June to December, with the commencement date of projects extended from three to six months to accommodate for demand.

Across the country, new home sales in the December quarter were higher in all regions when compared with the same period in 2019. South Australia was the strongest performer (188.3 per cent), followed by Victoria (103.1 per cent) and Queensland (99.9 per cent). Western Australian new work commitments slowed to 99.2 per cent after developers filled their books for 2021 in the early months of the scheme. New South Wales was the weakest recorded at 61.7 per cent.

The same level of purchases is not expected in January.

While international supply chains were impacted by border closures and lockdowns in the early months of the pandemic, Australian building was largely unaffected.

“The industry is capable of building that many homes. There will be pressure on and demand for tradespeople but it does not take us back to the previous levels of activity seen in 2017,” Mr Reardon.

However, the economist did note that some pressure was again being placed on international sourcing as the manufacturing industry played catch up due to global demand for products increasing, particularly from the US. This will cause some homeowners to have to consider alternatives for some purchases, including tiles, tapware and electronics.