New home sales in January dropped sharply off the back of strong growth in the previous quarter, as home owners rushed to get ahead of the HomeBuilder deadline, an economist has stated.
The HIA’s new Home Sales Report has reported a 12.1 per cent annual drop in new home sales in January 2021, following a record fourth quarter on the back of the government’s HomeBuilder scheme.
New home sales reached “remarkable” heights in the December quarter, surpassing year-ago figures by 100 per cent, HIA said.
According to HIA’s chief economist, Tim Reardon, the dip recorded in January is a direct result of the end of HomeBuilder.
“The surge in sales at the end of 2020 can be attributed to HomeBuilder as households finalised contracts to build a new home before the end of the 31 December 2020 deadline to access the $25,000 grant,” Mr Reardon said.
“The impact of HomeBuilder is already being observed in record-high housing finance results and approvals data, and this will lead to strong jobs growth in the industry in 2021.”
As a consequence of HomeBuilder drawing forward sales in December, new home sales in January 2021 were just 30 per cent of the number of sales achieved in December 2020.
But Mr Reardon believes that results are encouraging, given the nature of the market in January, which is typically a slow month for sales.
“After drawing forward sales into December, HomeBuilder will also push sales back until the end of March when the reduced $15,000 grant ends,” Mr Reardon explained.
“For this reason, sales are expected to remain flat in February before another surge in March. The March surge will not be of the same quantum as December due to the lower grant offering.”
The economist, however, remains optimistic about the property sector even as the government withdraws stimulus money.
“The relative strength of sales in January is encouraging and indicates that there will remain ongoing demand for new homes beyond the HomeBuilder scheme.
“Low interest rates, rising house prices and a demographic shift in demand towards detached housing and regional areas should ensure ongoing demand for new homes, albeit at a level significantly below that observed in the last quarter of 2020,” concluded Mr Reardon.