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Sales of new detached homes in a ‘super cycle’

Sales of new detached homes across Australia increased by 11.3 per cent in December, putting the level of demand in ‘super cycle’ territory, according to a leading economist.

The Housing Industry of Australia (HIA) New Home Sales Report shows there was a significant increase in demand for freestanding homes in the second half of 2021.

HIA economist Tom Devitt said people wanting larger homes is leading to the biggest jump in demand they have seen in over a decade.

“The increase in sales in December marks the fifth consecutive monthly increase in new home sales a full nine months since the end of HomeBuilder,” Mr Devitt said.

“This is the highest level of new home sales since 2011, excluding the three largest spikes associated with HomeBuilder.

“Sales in the final quarter of 2021 were also 25.5 per cent higher than the previous quarter.”

Mr Devitt said demand for space has led the drive towards freestanding homes.

“Underlying demand for housing remains exceptionally strong as the pandemic continues to push households toward lower density living,” he said.

“It appears that the more time people spend under lockdown and working from home, the higher is the demand for detached housing and renovations activity.

“These factors are driving a ‘super cycle’ of housing demand across Australia.”

While demand is high, Mr Devitt said skills shortages and rising costs are causing significant issues with new builds.

“The constraint on home building is not demand but the availability of land, labour and materials.

“The shortage of labour and materials has led to construction timeframes increasing significantly,” he said.

“As a result, the volume of approved-but-not-yet-commenced work is at its highest level in over a decade.”

On a quarterly basis, sales in Queensland increased in the three months to December 2021 to be 49 per cent higher than the previous quarter.

This was followed by Victoria (up 36.8 per cent), New South Wales (up 30.2 per cent), and South Australia (up11.2 per cent).

Western Australia saw the only quarterly decline, down by 8.8 per cent.

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Rowan Crosby

Rowan Crosby is a freelance journalist specialising in finance and real estate.