A 15.4 per cent leap in the number of dwelling approvals and a 25.3 per cent rise in the value of housing construction loans during September shows the effectiveness of the HomeBuilder program.
However, both the Property Council of Australia and the Housing Industry Association have warned that a second construction cliff is expected in 2021, unless the measures are extended.
The data from the Australian Bureau of Statistics shows a 15.4 per cent rise in the number of dwelling approvals and a 25.3 per cent jump in the value of housing construction loans in September.
Chief Executive of the Property Council of Australia Ken Morrison said the new data showed HomeBuilder was an effective measure, but warned that it is a temporary boost, not an indication of future trends.
“HomeBuilder has been the popstar of government stimulus policies released to date: highly effective, immediate and great value for money,” Mr Morrison said.
“It has helped protect hundreds of thousands of jobs and stimulated activity right at the time the economy needed it most.
“As successful as this measure has been, housing construction is still facing a second cliff in 2021 as flat population growth kicks in.
“It would make a lot of sense to extend HomeBuilder to the end of the financial year to keep this momentum going until net overseas migration can return as a traditional driver of activity.”
HIA Chief Economist, Tim Reardon, said while the building approvals data is a positive indicator of future building work, the impact of HomeBuilder will slow.
“Based on the strength of New Home Sales in September, we expect finance approvals and building approvals to continue to be strong next month, before the positive impact of HomeBuilder starts to slow,” Mr Reardon explained.
“These high volumes of sales, loans and approvals following the announcement of HomeBuilder will be relatively short lived.
“HomeBuilder was designed to provide consumers with confidence to return to the detached housing market. It has been very effective at achieving this goal.
“This new work entering the pipeline will offset the significant declines observed from March as restrictions were announced and will ensure a stable supply of new building projects over the next nine months.
“When balanced against the June quarter, the record volume of loans and approvals will not lead to a record number of new home commencements.”
Mr Reardon also warned that any September increase of multi-unit approvals is misleading.
“The small number of multi-unit projects that are gaining approval at this time are likely to have commenced the planning and building approval process years ago and do not reflect current market conditions.
“It is evident in today’s data that HomeBuilder has been successful in creating work on the ground in the December quarter. This will protect jobs in the construction industry and the wider economy,” Mr Reardon concluded.