A sharp uptake in off-the-plan and new build sales is potentially underpinning the nation’s real estate market, with owner-occupiers taking advantage of various stimulus packages, according to LJ Hooker.
Mathew Tiller, LJ Hooker’s Head of Research, credits “pent up demand” after the shutdown, record low interest rates, and the various state and federal-led stimulus packages for the surge in off-the-plan and new build sales over the past two months.
“The Federal Government’s $25,000 HomeBuilder grant is available to anyone that buys an off-the-plan apartment or new house and land package, and the majority of states are offering first home buyers additional cash, which when combined provide considerable incentive for first home buyers to get into the market.
“Traditionally, it’s investors which have been the main driver of off-the-plan purchases; however, it’s not the case this time. With investors excluded from most government stimulus measures, it’s first home buyers and young couples looking to upsize, and retirees looking to downsize that has driven this surge in sales activity.
“Record low interest rates have also played a big part in lifting demand with mortgage repayments, in some areas, now being on par with rental payments.
“The Federal Government’s HomeBuilder package has reportedly had very high take-up since it was launched in June; and this measure has been amplified by the introduction of state governments’ stimulus packages, such as waiving stamp duty for first home buyers or additional incentives to build a new home or purchase off-the-plan.”
In Queensland, LJ Hooker Broadbeach recorded $17 million in sales, with 80 per cent being off-the-plan or new builds.
Similarly, in the Australian Capital Territory, LJ Hooker Project Marketing ACT also recorded an increase in sales volume of more than $100 million during June and July, with over 85 per cent of sales in off-the-plan and new builds.
LJ Hooker Marketing ACT Managing Director Andrew Ligdopoulos said: “We have seen record inquiry levels across all our new developments, which we have marketed since May, culminating in record sales throughout June and July”.
“The majority of buyers are owner occupiers with the main buyer groups being first home buyers and upgraders.
“Downsizers were less inclined to make decisions in the early stages of COVID-19; however, as market conditions and sentiment improve this buyer group is now also becoming more active.
“Surprisingly, investors are still making up a relatively small part of the market given Canberra’s very low vacancy rates and high yields.
“This increase in overall activity and improved market sentiment can be attributed to the local and Federal Government stimulus packages, but the general mood and positivity in the community around the way the Territory is handling COVID-19 and the stable local economy have also helped underpin this upswing in market activity.”