BGC breaking records as WA new home sales surge

Western Australia’s stimulus-driven construction boom has propelled the state’s biggest builder to a record monthly sales result for any builder in Australia, with BGC Housing Group signing more than 1,000 new build contracts in June.

WA home builders had been battling to keep their order books full for much of 2020, with industry activity at historic lows as a trend of declining activity dragged into its fifth consecutive year.

Earlier this year, signs of recovery had begun to emerge, with 2020 tipped as the turning point until the COVID-19 pandemic derailed the upturn before it could begin.

That all changed in early June, however, after Prime Minister Scott Morrison and WA Premier Mark McGowan unveiled generous grants to build new homes.

First homebuyers in WA were the biggest beneficiaries, becoming eligible for up to $69,000 in government stimulus by combining the $25,000 HomeBuilder package with WA’s $20,000 Building Boost, along with the state’s $10,000 first homebuyer’s grant and stamp duty concessions.

BGC Housing Group executive general manager Michael Bartier said the impacts were immediate, with June becoming the biggest selling month in the company’s 60-year history.

“June was our biggest, and we believe the nation’s largest single month result in history,” Mr Bartier told Australian Property Investor Magazine.

“We did more than 1,000 sales in the month of June, it was just unprecedented, we’ve never seen anything like it.

“Probably our greatest challenge during that period was just managing COVID restrictions and ensuring we had physical distancing. 

“We had, in some instances, requests for 70 home appointments at any one time in the showroom, it was just nuts.

“Even if we had known the size of the stimulus coming we never would have expected a result like this. The most bullish forecasts might have been 500 sales, or something to that effect.”

Mr Bartier said BGC Housing Group was expecting to achieve around 2,500 housing starts across its various homebuilding brands in 2020 prior to COVID, but had revised that figure towards 3,500 following the stimulus boost.

Housing Industry Association new home sales data showed all builders in WA were enjoying a stimulus-driven bounce, with sales across the state rising 170 per cent since the grants were announced, eclipsing the increases in activity in any other Australian state.

“The WA government really consulted with industry, they listened to some of the requests and I think the WA state package was a little more considered and tailored than perhaps some of the other states around the nation,” Mr Bartier said.

“Ideally, in retrospect you’d like a bit more time and to have a bit more land supply, but I think all of those things can be classified as happy headaches.

“The reality is that WA was primed for a bit of activity. We had a bit of land stock luckily because things were quiet, but it just went nuts.”

Mr Bartier said the sales activity was not just dominated by first-time buyers, however, with many trade-up buyers and downsizers also taking advantage of WA’s $20,000 Building Boost.

“The quality of the punter that came out of the woodwork was higher,” he said. 

“It wasn’t just first homebuyers, there were trade up buyers, there was a bit of investment and we saw the average size of people’s deposits increase.

“During the downturn there were a lot of low-deposit products out there and the quality probably wasn’t there. 

“We saw the quality dramatically increase, a lot of the infill stock got soaked up really quickly,  but the sales were really well balanced, every one of our brands was in demand.

“There was a little bit of investor activity, and noting that we were at historically low levels of investment for a variety of reasons prior to that, I would suggest that at least 5 per cent of what came through could be coined as investors.

“We did see a lot of activity from parents looking to assist their kids, recognising this is probably a once in a generation opportunity, and even if their kids weren't yet in a position financially to enter the market, their parents would help them. 

“So there was a bit of that secondary activity as well.”

Mr Bartier was cautious, however, on WA’s prospects for a sustained recovery in the medium to long term, with population growth to be subdued for the foreseeable future due to the state’s hard border.

“There is a little bit of concern that we are pulling some of that demand forward and the market will be somewhat stifled by lack of population growth,” he said.

“But I think on the flipside to that, WA really is craving more rental stock, we are seeing a real squeeze on rental availability now, and we do need some more social and affordable housing 

“Once we come out of this and the COVID restrictions lift, there are so many employment opportunities in WA and we are such a remote, safe and clean place to live, we are expecting to see a flurry of migration, particularly from the east coast, as trades and employment seekers come back home.”