A renewed interest in detached housing will put our economy into recovery mode, according to the Housing Industry Association’s Chief Economist Tim Reardon.
While new home sales fell marginally in October, Mr Reardon notes this is due to the winding up of HomeBuilder, which was intended as a “short lived mechanism to improve confidence in the housing market” and has done just that.
Despite the slight fall in October, new home sales remain 31.6 per cent higher for the October quarter than in 2019.
“HomeBuilder was the catalyst for improving consumer confidence in the housing market. The strength of the market response is due to several factors in addition to HomeBuilder,” Mr Reardon explained.
“Lower interest rates and fiscal stimulus, such as JobKeeper, have also seen households more willing to spend on housing.
“Households have redirected their expenditure from travel and entertainment towards housing, including renovating their home.
“Expenditure on small scale renovation projects is now around 25 per cent higher than this time last year.
“An unexpected reversal to the urbanisation trends of the past century has seen an increase in demand for detached housing. There has been a sudden shift in Australia’s population away from central Sydney and Melbourne to all other regions.”
The HIA New Home Sales report – a monthly survey of the largest volume home builders in the five largest states – is a leading indicator of future detached home construction.
New home sales in the three months to October 2020 were higher in all regions when compared with the same period in 2020: Western Australia (132.2 per cent), South Australia (38.1), Queensland (26.0 per cent), New South Wales (14.6), and Victoria (2.2 per cent).
“The detached housing market continues to perform strongly and as it accelerates will pull the rest of the Australian economy forward into 2021,” Mr Reardon predicted.