Government grants stop slide in new home sales

The federal government’s $688 million HomeBuilder initiative has stopped a decline in new home sales across Australia, with improving market confidence flowing into new builds.

New houses under construction
Government stimulus has ensured the new home sector will flourish for the next year. Photo: Shutterstock (Image source:

The federal government’s $688 million HomeBuilder initiative has stopped a decline in new home sales across Australia, with improving market confidence flowing into new builds.

Data from the Australian Bureau of Statistics showed COVID-19 initially caused a plunge in new home construction in all states, but that fall was now being cushioned by the government grants on offer.

Housing Industry Association chief economist Tim Reardon said the homebuilding sector was highly sensitive to changes in consumer confidence, which collapsed in the early stages of the pandemic.

Mr Reardon said confidence had improved through the combination of HomeBuilder and the easing of restrictions across most states.

“In the two months since June, New Home Sales have increased to be 64.4 per cent higher than the preceding two months,” Mr Reardon said.

 “While we are cautious of over interpreting data from only two months, this is a clear indication that HomeBuilder will help protect jobs in the sector in the second half of 2020 and into 2021. 

“Additional sales data in August will be required before drawing accurate conclusions.”

Mr Reardon said, however, the rebounding market was not consistent in all states.

Western Australia has seen an exceptional bounce in sales due in part to the addition of the State government’s building bonus.

“Sales in New South Wales were already slow at the start of 2020 and fell away dramatically in March. NSW sales in June and July 2020 are only 9.6 per cent higher than the previous two months and remain lower than levels prior to the pandemic.

“The Victorian market has remained resilient despite the state’s COVID-19 challenges and the re-introduction of restrictions during July. 

“The data, however, pre-dates the introduction of stage four restrictions which occurred at the beginning of August.

“Nationally, we expect that new home sales will settle in the coming months to a more sustainable level but the number of new homes commencing construction will continue to slow for at least the next 12 months.”

Meanwhile, a new survey by the Urban Development Institute of Australia’s WA division and Urbis showed homebuyer sentiment had turned overwhelmingly positive despite the economic impacts of COVID-19.

The survey showed 48 per cent of respondents were positive about purchasing in the current market, with state and federal grants again identified as a confidence booster.

In WA, homebuyers are eligible for a $20,000 grant in addition to the $25,000 HomeBuilder grants if they build a new house.

"The outcomes of this sentiment survey reflect the ongoing faith that Western Australians have in the resilience of the WA property market and the importance of continuing to support buyers in securing a home that meets their needs,” UDIA WA chief executive Tanya Steinbeck said.

“The property industry can continue to play a key role in the economic recovery for WA and people are obviously still keen to find opportunities to enter the market and secure a property.”

Ms Steinbeck said nearly 60 per cent of respondents expected property prices to increase in WA over the next 18 months, following a potential dip over the next half-year.

“Those expectations clearly reflect people’s understanding that property is a longer-term prospect when it comes to growth in investment,” Ms Steinbeck said.


500 people surveyed in July 2020

Overall market sentiment:

  • 48% people surveyed are positive about purchasing in the current market
  • 58% of people purchasing for owner occupation purposes are positive about the market
  • 59% of people aged 21 – 34 are positive

Demographic share:

  • 32% singles person households very positive sentiment
  • 26% couple households very positive
  • 25% family households very positive

Price sentiment:

  • 57% say prices will increase in next 18 months
  • 65% of single person households believe prices will in increase in 18 months

What they want to buy:

  • 74% want a free-standing home
  • 42% of people aged 64-75 want medium or high-density housing

Where they want to buy top 10 rankings:

  1. South Perth 
  2. North Perth 
  3. Fremantle
  4. Mount Lawley 
  5. Applecross
  6. Scarborough 
  7. East Perth 
  8. Hillarys
  9. Victoria Park 
  10. Yokine 

Top 10 'Sticky Suburbs' – where they want to live is the same as where they live currently:

  1. Canning Vale 
  2. South Perth 
  3. Willetton
  4. Claremont
  5. Gosnells 
  6. Yokine
  7. Rivervale 
  8. North Perth 
  9. Alkimos 
  10. Applecross

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