Market confidence ensures strong start to 2021 for new home sales

New home sales have surged in Australia over the past 12 months, with the latest Housing Industry of Australia (HIA) New Home Sales report showing new home sales last month were 1.7 per cent higher than they were in February 2020. 

The HIA New Home Sales report – a monthly survey of the largest-volume homebuilders in Australia’s five largest states – is a leading indicator of future detached home construction.

“Sales in the three months to February 2021 were higher by 60.5 per cent than in the same three months the previous year,” HIA economist Angela Lillicrap said. 

Ms Lillicrap said the strong result reflected the significant impact the HomeBuilder scheme has had on demand for detached housing.

“HomeBuilder was the catalyst for improving consumer confidence in the housing market,” she said.

“A surge in sales was observed following the announcement of HomeBuilder in June 2020, which led to strong sales through to the end of 2020.”

She said there was a near-record of new home sales in December 2020 as buyers rushed to finalise contracts to build a new home before the end of the $25,000 grant, and the extension of HomeBuilder had led to continued demand.

“The full impact of the extension of the HomeBuilder grant, at a value of $15,000, will not be observed until the end of March,” she said.

“To receive the HomeBuilder grant, construction is required to commence within six months of signing a contract to build. As a consequence, it is possible that builders will delay the signing of some contracts to allow for greater flexibility and more detailed planning of projects.

“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.”

She said the current record low interest rates and rising house prices had ensured sustained market confidence so far in 2021.

 “This strong level of consumer confidence combined with the demographic shift to regional areas is driving ongoing demand for new detached homes,” Ms Lillicrap said.

Sales in the three months to February 2021 rose across all jurisdictions compared to the same time the previous year. 

New home sales are up by 149.7 per cent in South Australia, with Victoria’s rising by 69.1 per cent and Queensland’s by 60.4 per cent. 

New South Wales increased by 46.2 per cent and Western Australia is up by 25.1 per cent over the same period last year.

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