New home sales rose 77.6% in June, from a record low result in May, off the back of the Government’s HomeBuilder program. While it will need sales figures from the next couple of months to get a more accurate picture of the impact of HomeBuilder on new homes and construction jobs, HIA said new home sales figures are highly responsive to how much consumer confidence there is in the market. Source: Timberbiz
HIA Chief Economist Tim Reardon said the rebound in new home sales in June did not fully offset the dismal results of the preceding three months.
He said the HIA was cautious of over interpreting data from a single month, but that it was a clear indication that HomeBuilder would help protect jobs in the sector in the second half of 2020 and into 2021.
The Australian Forest Products Association (AFPA) CEO Ross Hampton said the HIA’s latest figures indicated there was returning confidence in building new homes and that would be a relief for the regional communities who rely on processing timber products.
“To increase that confidence even further all States and Territories need to put in place supportive policy to complement HomeBuilder. Some States (e.g. WA, QLD and TAS) already have measures in place, but we urge those State governments that have not yet announced complementary stimulus to support new home demand, to do so,” Mr Hampton said.
Mr Reardon said additional sales data from July and August would be necessary before drawing accurate estimates on the impact of HomeBuilder on employment in the sector. New home sales data was highly responsive to changes in consumer confidence.
“New Home Sales fell to their lowest level on record in March and continued to fall in April and May,” he said.
“Without intervention, a significant contraction in the volume of work on the ground would have occurred in second half of 2020 leading to a contraction across the wider economy. Up to half a million jobs were at risk without government intervention.
“The improvement in June can be seen across all the states which is a good indication that the HomeBuilder program is working, to varying degrees in each jurisdiction.”
Mr Reardon said the HomeBuilder program had seen confidence in the market improve.
“Western Australia experienced the largest improvement with sales more than doubling during the month of June, albeit from an exceptionally low base. This is not surprising given the State Government’s ‘Building Bonus’ program, which if combined with the first home buyer scheme can provide support exceeding $50,000.
“This will create significant employment opportunities and not just in the home building sector,” Mr Reardon said.
The cancelation rate (percentage of sales cancelled during the month) remains elevated at 23%, down from a peak of 30% in April. This suggested that there were still many households that had made the decision not to proceed with a previous new home purchase in light of the changed economic conditions.
“If the momentum from HomeBuilder continues, we will see more slabs poured before the end of the year, protecting jobs across the economy in manufacturing, retail and professional services,” Mr Reardon said.
Across the country, Western Australia had the largest monthly increase in June compared to May 2020, rising by 211.2%. South Australia followed, increasing by 157.1%. Victoria (+47.8%), Queensland (+43.3%) and New South Wales (+12.6%) also recorded significant monthly increases.
