By Jacob Robinson

Interest in new housing has hit an all-time record high following the introduction of the federal government’s HomeBuilder scheme, designed to boost the residential construction sector amid the coronavirus crisis.

The $680 million cash injection, announced in early June, is proving to be a welcome shot in the arm for Australia’s new home building industry, with new data from realestate.com.au revealing a 63% jump in enquiries to developers during June, following a 53.9% increase in May.

New realestate.com.au data revealed a surge in enquiries to developers during June following the HomeBuilder announcement. Source: Supplied

New land estates have proved particularly popular, with enquiries rising by 93% across June.

The surge in enquiries was particularly prevalent in Tasmania and Western Australia, which saw jumps of 203.5% and 179%, respectively. The Northern Territory was the only region where enquiry levels dipped in June.

Realestate.com.au’s executive manager of economic research, Cameron Kusher, said the surge in enquiries was on the back of the HomeBuilder scheme announcement but the record level of enquiry cannot be attributed solely to the stimulus measure.

“While HomeBuilder’s announcement has led to a surge in enquiry for new homes, it is interesting to note that in May – before the announcement – enquiry was already surging,” Mr Kusher said.

“Even without HomeBuilder, there has been significant support for housing demand in place in the form of record low interest rates and the fact that the Reserve Bank has stated [the cash rate] is going to remain at its current level for a number of years.”

First home buyers to benefit the most from HomeBuilder

Mr Kusher said that first home buyers have been the main beneficiaries of the HomeBuilder scheme, which is capped to homes valued up to $750,000. He anticipated that with the scheme due to lapse at the end of the year, buyer interest is likely to remain high throughout the rest of 2020.

“I expect to continue seeing high levels of enquiry to developers as buyers look to capitalise on government incentives and historic low borrowing costs that are currently available,” Mr Kusher said.

“First home buyer activity increased 28.5% in June when looking specifically at email enquiry on realestate.com.au, and it’s likely some of this activity was a result of the HomeBuilder stimulus announcement.

“It’s no surprise that land estate new development is benefiting from HomeBuilder, given the package is geared towards new builds; there are restrictions on construction timeframes that inhibit apartment development, and the Australian dream is to own a house.”

Michael Ching, marketing and sales manager at Dahua Group, which is behind Victoria’s most searched house and land estate, Orchard Tarneit, said the surge in enquiry at the project was probably due to its eligibility for HomeBuilder.

“The interest and enquiries on Orchard Tarneit through realestate.com.au have been very strong over the last few months. As a maturing estate, Orchard Tarneit has a variety of land lots to offer including titled lots, which fit perfectly into the HomeBuilder scheme,” Mr Ching said.

“The announcement of the HomeBuilder scheme saw enquiries in Orchard Tarneit increase by 200% in June as compared to enquiries recorded in May. As a result, we have released more land lots to cater to the increased demand.”

Metricon chief executive Mario Biasin said the HomeBuilder scheme had provided a boost to anyone who was thinking of building, with his company’s site experiencing record numbers of visitors. He said it’s not just first home buyers that are active, either.

“We are also seeing upsizers who have been considering building for some time – that had to put their plans on the back burner due to COVID-19 – pull forward purchase decisions in order to take advantage of the scheme,” Mr Biasin said.

“Low interest rates and the fact that banks are lending also combine to create a good situation to buy at the moment.”

Industry not out of the woods yet

Frasers Property’s executive general manager of development, Cameron Leggatt, said that the HomeBuilder announcement had an immediate and significant impact on the market. However, he said the scheme’s $750,000 price cap meant Sydney buyers, in particular, had missed out.

“The price threshold of $750,000 works across most capital city markets with the exception of Sydney, due largely to the price differential,” Mr Leggatt said. “Compounding this is the price of land in the outer suburbs of Sydney, where the median price is approaching half a million dollars. This makes it difficult for most new home buyers to take advantage of the HomeBuilder stimulus.”

There are calls for governments to continue to investigate ways to stimulate the housing sector. Source: Supplied

Mr Leggatt added that new restrictions in Victoria are a reminder that governments need to continue to investigate ways to stimulate the housing sector.

“Currently, the HomeBuilder stimulus ignores the medium and higher density segment, which is a large portion of the market in or near major capital cities in Australia,” Mr Leggatt said.

“It would be ideal to see a similar stimulus applied to this segment of the market, which in turn has the potential to drive the commercial building industry as well.”

Mr Kusher warned that while the scheme has helped stimulate first home buyer enquiry, the sector will face significant challenges ahead from the COVID-19 crisis.

“The challenge is likely to come once the first home buyer pull-forward is exhausted – there is only a finite supply of these buyers, and incentives are only available until the end of 2020 – and assuming international borders remain closed, there are no replacement sources of demand for new homes in 2021,” he said.

Originally published as New home enquiries hit record high on the back of HomeBuilder