The lure of $25,000 caused a surge of new home sales in December as buyers rushed to qualify for the Federal Government’s HomeBuilder grant.
A report by the Housing Industry Association (HIA) shows the positive impact the incentive is expected to have on the construction industry in the coming year.
The number of new homes purchased in December was almost double that recorded in November, with buyers trying to secure the maximum amount on offer before the end-of-year deadline.
“This is the second strongest month of new home sales in the 20 year history of the survey, only exceeded by March 2001,” said HIA economist Angela Lillicrap.
“New home sales in 2020 increased by 32.5 percent compared to 2019. This is an exceptional result given the nature of the pandemic and the effect that it has had on the broader economy.”
The HIA conducts a monthly survey of the largest volume home builders in the five largest states. It is considered a leading indicator of future detached home construction.
The HomeBuilder incentive was announced in June last year, to support jobs in the residential construction sector in response to the economic downturn caused by COVID-19.
It provided eligible owner-occupiers – not just first time buyers – with a tax-free $25,000 towards building a new house or substantially renovating an existing property.
The amount was reduced to $15,000 on January 1 and will be available until the end of March.
“The extension of the timeframe to commence building from three months to six, which was announced in November, played a significant role in December’s results,” Ms Lillicrap said.
It caps off a buoyant quarter for new house sales across Australia in comparison to the same time last year.
South Australia recorded the biggest increase, up 188 per cent, followed by Victoria (103.1 per cent), Queensland (99.9 per cent), Western Australia (99.2 per cent) and New South Wales (61.7 per cent).
Ms Lillicrap does not expect the remarkable volume of sales will continue into January, even with a reduced grant still available.
Low interest rates, improved lending assessment and growth in the price of established homes should, however, assist the new home market in 2021.