New home sales fall as HomeBuilder end date approaches

With the government’s HomeBuilder scheme due to expire on 31 March, the Housing Industry Association finds that new building sales in January fell to just 30 per cent of December’s sales totals.

HIA’s New Home Sales report attributes the difference in volume to the HomeBuilder scheme drawing forward sales in December.

HIA chief economist Tim Reardon said the January result was encouraging given the usual slowdown in activity that occurs at the beginning of the year, and that more sales are expected off the back of the housing grant.

“After drawing forward sales into December, HomeBuilder will also push sales back until the end of March when the reduced $15,000 grant ends,” he said.

“For this reason, sales are expected to remain flat in February before another surge in March. The March surge will not be of the same quantum as December due to the lower grant offering.”

The HomeBuilder grant was introduced in June last year to keep the pipeline of work in the construction sector from drying up, with high uptake prompting the government to extend the program in November.

Under the modified version, owner-occupiers can receive $15,000 when purchasing new builds valued at under $950,000 in New South Wales, $850,000 in Victoria, and $750,000 in all other States and Territories.

RELATED: February property bounce: Listings and auction sales increase

The impact of the scheme can be detected in the ABS approvals data, which saw building approvals for private houses jump up 15.8 per cent in December, marking the sixth straight month of growth.

“New Home Sales reached remarkable heights in the December 2020 quarter, almost 100 per cent higher than at the same time the previous year,” said Reardon.

“The impact of HomeBuilder is already being observed in record high housing finance results and approvals data and this will lead to strong jobs growth in the industry in 2021.”

“Low interest rates, rising house prices and a demographic shift in demand towards detached housing and regional areas should ensure ongoing demand for new homes albeit at a level significantly below that observed in the last quarter of 2020.”

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