The detached housing market continued to perform strongly and as it accelerates will pull the rest of the Australian economy forward into 2021, according to the HIA. Source: Timberbiz
The HIA’s chief economist, Tim Reardon, said that new home sales had fallen marginally by 1.3% in October to remain 31.6% higher for the three months to October compared with the same time last year.
The HIA New Home Sales report – a monthly survey of the largest volume home builders in the five largest states – is a leading indicator of future detached home construction.
“HomeBuilder was the catalyst for improving consumer confidence in the housing market. The strength of the market response is due to several factors in addition to HomeBuilder,” Mr Reardon said.
“Lower interest rates and fiscal stimulus, such as JobKeeper, have also seen households more willing to spend on housing.
“Households have redirected their expenditure from travel and entertainment towards housing, including renovating their home,” he said.
“Expenditure on small scale renovation projects is now around 25% higher than this time last year.”
Mr Reardon said that an unexpected reversal to the urbanisation trends of the past century had seen an increase in demand for detached housing. There had been a sudden shift in Australia’s population away from central Sydney and Melbourne to all other regions.
He said the “sea changers’’ and “tree changers” had taken 2020 as an opportunity to pursue their dreams, students and workers hadn’t been drawn to the opportunities of the city as they had in the past and there had been few new migrants.
“As a result, metro-city populations have declined unexpectedly in 2020,” Mr Reardon said.
This switch in the urbanisation trends would revert when the economies of Sydney and Melbourne returned to full strength.
“Despite the strong shift in demand for detached housing, the cancellation rate of new home projects remains slightly elevated,” Mr Reardon said.
“The cancelation rate is typically below 10% and in October remained elevated at 16.1%.”
This suggested that there was a small number of households that were bearing a disproportionate burden of this economic shock.
“Victoria has finally seen a pick-up in new home sales due to HomeBuilder,” Mr Reardon said.
“A 10.0% rise in sales in October is encouraging. This sees sales in the past year in Victoria just 8.0% lower than in the previous year.
“Sales in all other regions fell in the month of October. This reflects the ending of the stimulus effect of HomeBuilder, which was designed as a short-lived mechanism to improve confidence in the housing market.
“The strength of this recovery in detached housing will assist in pulling the Australian economy forward into 2021,” Mr Reardon said.
Across the country, sales the country new home sales in the three months to October 2020 were higher in all regions when compared with the same period in 2020: Western Australia (132.2%), South Australia (38.1%), Queensland (26.0%), New South Wales (14.6%), and Victoria (2.2%).
