Home sales were 40 percent higher in the March quarter against last year, buoyed by the HomeBuilder program and low rates.
Australia’s New Home Sales Stay Buoyant In Early 2021
HINDMARSH, Australia — New home sales were nearly 40 percent higher in the first three months than during the same period last year.
The Housing Industry Association‘s new home sales report found sales in the March quarter increased across all the nation’s five largest states.
Overall, sales were 39.4 percent higher in the March quarter compared to the same quarter last year.
Strong new home sales resulted from the Morrison government’s HomeBuilder program, record low-interest rates, changing population dynamics, and improving market confidence.
“In December 2020, there was a near-record volume of new home sales as households rushed to finalize contracts to build a new home before the end of the (HomeBuilder) AUD 25,000 ($19,403) grant,” Housing Industry Association economist Angela Lillicrap said.
“This same effect can be seen in March as households rushed to get access to the AUD 15,000 grant ($11,642).”
She said the HomeBuilder program has brought forward demand for new homes and, as a consequence, sales over the coming months are expected to cool from recent highs.
The HomeBuilder program ended in March, but at the weekend, the government extended the deadline to begin construction by an additional 12 months.
“To receive the HomeBuilder grant, construction is required to commence within six months of signing a contract to build. Builders may delay the signing of some contracts to allow for greater flexibility and more detailed planning of projects,” Lillicrap said in the Housing Industry Association’s February report.
“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.”
Those who were eligible for the grant before its March 31 conclusion — some 121,000 building applications, according to the government — will now have 18 months after signing contracts to commence construction.
“The HomeBuilder extension will support Housing Industry Association members who have been severely impacted by global supply constraints and labor pressures,” Graham Wolfe, managing director of Housing Industry Association, said in a tweet.
Treasurer Josh Frydenberg said the scheme would cost the government AUD 2.5 billion ($1.94 billion) but had helped tip some AUD 30 billion ($23.28 billion) into Australia’s construction sector amid the Covid-19 pandemic.
“All 120,000+ HomeBuilder applications will now have 18 months to commence construction from their contract date,” tweeted Michael Sukkhar, Minister for Housing and Assistant Treasurer. “This means the huge economic impacts we have already seen will continue into 2022.”
The HomeBuilder scheme was introduced during the depths of the pandemic and late last year was extended to March, although the size of grants was trimmed from AUD 25,000 ($19,403) to AUD 15,000 ($11,642).
(Edited by Vaibhav Vishwanath Pawar and Praveen Pramod Tewari)