HomeBuilder stimulus boosts new home sales

Sales numbers have bounced 64pc since the announcement compared to the two months prior.

The number of new home sales rose 64.4 per cent following the June announcement of the HomeBuilder stimulus package. Photo: Nick Clayton

New home sales have risen by almost two thirds on the back of the federal government’s HomeBuilder stimulus package which helped to restore the turbulent building sector, according to Housing Industry Association analysis

The onset of the pandemic in March saw the highly reactive new home sales market plunge as consumer confidence fell. But in the two months following the June announcement of the $668m grants package, sales numbers have bounced 64.4 per cent compared to the two months prior.

Chief Economist at the HIA, Tim Reardon, said the $25,000 grant to eligible new residential homes, together with the improving health conditions and easing of restrictions across most jurisdictions, caused confidence in the market to improve.

“Housing data has been ricocheting through the COVID-19 period,” Mr Reardon said.

“While we are cautious of over interpreting data from only two months, this is a clear indication that HomeBuilder will help protect jobs in the sector in the second half of 2020 and into 2021. Additional sales data in August will be required before drawing accurate conclusions.

Federal housing minister Michael Sukkar said confidence boost will help better position the economy as the country faces its first recession in 30 years.

“By giving Australians confidence and support to enter the new home market, or make it more affordable to add to their existing home, we are protecting and creating more jobs across the construction industry at a time when the economy needs it most,” Mr Sukkar said.

West Australia has emerged as the biggest beneficiary of the grant program, aided by strong housing affordability and additional state government grants and concessions, with sales up 170.6 per cent since the June announcement. South Australia was another strong performer through the period, recording a 142.1 per cent increase, followed by Queensland (up 42.4 per cent), Victoria (up 39.5 per cent) and New South Wales (up 9.6 per cent).

Sales began to slow in most states through July compared to June.

“The strength of New Home Sales is not consistent across all jurisdictions. Western Australia has seen an exceptional bounce in sales due in part to the addition of the State government’s building bonus,” Mr Reardon said.

The burst of energy in the sector will unlikely be sustainable in the longer term said the economist, with the number of residential properties starting construction to be lower than normal.

“Nationally, we expect that New Home Sales will settle in the coming months to a more sustainable level but the number of new homes commencing construction will continue to slow for at least the next 12 months,” Mr Reardon said.