The HIA believes the surge in demand for new detached homes will help pull the Australian economy out of recession. HIA’s Chief Economist, Tim Reardon, said there had been a strong increase in new homes sales following the announcement of HomeBuilder and this is now resulting in an increase in the volume of work on the ground which will accelerate into 2021. Source: Timberbiz
“The announcement of HomeBuilder was the catalyst for a surge in demand for new detached homes, but there are numerous other factors at play,” he said.
Applicants currently have until the end of the year to register for the $25,000 grant, which is available for new homes and major renovations. They then have three months to start work on their project.
Victorians have six months to start work on their HomeBuilder projects, following an extension granted in response to the severe lockdowns in the state, while a similar extension was announced by the West Australian government on Wednesday.
Industry groups in South Australia say last week’s state-wide lockdown has underlined the need for a similar extension in South Australia.
“The final factor pulling the market forward has been the resurgence of the first home buyer. First home buyers have been taking advantage of this narrow window of opportunity as house prices have remained flat, interest rates at record lows and with the assistance of government support programs,” Mr Reardon said.
“They account for around 40% of the market in 2020, which is the highest share of the market in a decade.
“Access to finance has been a major constraint in recent years and the easing of these restrictions will further assist first home buyers to enter the market.”
The nature of the COVID shock had seen the population shift out of high rise in preference for lower density housing and toward more regional locations.
And the trend of rural and regional populations moving to metropolitan areas ceased this year as students and young job seekers were not attracted to the cities for education or employment.
Mr Reardon said that after the GFC, around half a million Australian’s returned home.
“In 2020, the number of returning Australasians is significantly less than this, but due to the nature of this year’s shock there is a very strong preference for a detached home from these returning residents.
“For these reasons the rental market also remains in very tight supply, outside of Sydney and Melbourne, indicating a rise in house prices,” he said.
“We do expect these trends to revert back to 2019 trends, when trade and travel return to normal levels.
“The sooner the restrictions are eased the smaller the ripple effects on the housing market over the next five years.”
Mr Reardon said the surge in the detached housing market had been offset by very poor conditions in the high-rise market in Sydney and Melbourne. The detached housing market would absorb some of the skilled workers from the high-rise construction sector, but the outlook for multi-units remained very poor.
“With the outlook for a strong new home building market and a strong renovations market, employment within the sector will grow into the new year,” Mr Reardon said.
Master Builders SA policy director Will Frogley expects the number of HomeBuilder applications to soar in the lead up to next month’s deadline, and fears there will be a shortage of tradespeople to deliver projects.
“There will be a massive influx of applications between now and the end of the year,” he said.
“The eight largest builders in the state alone have more than 2500 preliminary agreements signed where the client has not yet officially signed the contract, and therefore applied for the grant.
“Footings and site preparation contractors were already booked out until after Christmas and delays with one trade will lead to the next trade and so on.”
