By Cameron Kusher, Executive Manager, Economic Research
The announcement of HomeBuilder has triggered a land rush, with enquiries for vacant residential land surging over the past two months.
Email enquiries to residential agents on realestate.com.au hit a record high in June, increasing by 11.2 per cent following a 36.6 per cent increase in May. Year-on-year, total email enquiries to agents has doubled.
A closer look at the data shows part of this growth can be attributed to a surging interest in vacant land on the back of the Federal Government’s Homebuilder stimulus announcement.
Even though vacant land enquiries are a very small overall share of total email enquiries, representing just 14.7 per cent in June, the data shows vacant land enquiries have soared to a record high – up 58.8 per cent over the month on June.
In terms of who is leading the land rush, the data overwhelmingly points to first-home buyers, with enquiry from first timers up 177.8 per cent over the month.
Comparatively, enquiry from non-first-home buyer owner occupiers was up 35.4 per cent over the month, while investor enquiries rose 25.8 per cent.
So where are first-home buyers most active?
Interestingly, the monthly increase in New South Wales (55.2%) was relatively muted compared to increases in Victoria (132.1%), Queensland (208.5%), South Australia (215.9%) and Western Australia (616.6%).
However, given the relatively high price of land in Sydney, and the fact that HomeBuilder eligibility requirements mean you need to acquire land and build a house for under $750,000, it’s perhaps not all too surprising NSW has seen the smallest increase in activity.
There’s also evidence that this surge in enquiry is translating into sales.
We measure sales volumes on a weekly basis by counting the number of properties that were listed for sale on realestate.com.au that were shifted by agents, during the same week, to the sold section of the website.
Last week, there were 759 vacant land sales advised on realestate.com.au, which was the highest number of weekly sales any week during 2019 or 2020. Over the six weeks since HomeBuilder was announced there have been 3,854 vacant land sales nationally, which is 62.5 per cent higher than the number of sales over the previous six weeks.
Looking at sales for the six weeks post HomeBuilder’s announcement and comparing it to the six weeks previous across the major states, Western Australia has recorded the largest increase in sales (138.2%), followed by Queensland (70.3%), Victoria (59.5%), South Australia (52.8%) with New South Wales recording the smallest increase at just 43.3 per cent.
The year-on-year changes given a strong indication of ramp-up in vacant land sales, up 117.5 per cent nationally with sales more than doubling in New South Wales (102.0%), Victoria (163.6%) and Western Australia (132.3%) and close to doubling in Queensland (96.4%) and South Australia (96.0%).
Of course, HomeBuilder is a limited-time stimulus for the new housing sector so the expectation is that once these lots are purchased, shortly thereafter the owner will build a new home under the scheme.
There has clearly been strong demand in the aftermath of HomeBuilder’s announcement and the scheme is only operational until the end of 2020. It will be interesting to watch over the coming months whether the surge in enquiry and sales for vacant land can be maintained or whether it slows from here.
Originally published as HomeBuilder triggers land rush led by first-home buyers.