Ongoing demand for new houses has shored up the construction pipeline for home builders into 2022, according to new home sales data for last month.
The HIA New Home Sales report showed the number of sales had jumped 15.3 per cent despite the end of the Home Builder program earlier this year.
HIA economist Angela Lillicrap said market confidence and low interest rates were underpinning owner-occupier demand for detached dwellings.
“The strength of new home sales nationally suggests that there will be a significant number of new homes entering the pipeline post-HomeBuilder, which will ensure activity remains elevated into 2022,” Lillicrap said.
“Sales in the June 2021 quarter are below the levels experienced during the nine months of the HomeBuilder program but are stronger than the same quarter in 2019.
“Sales are also on par with the June 2018 quarter, which was a strong year for detached home building.”
Private new house sales: Australia
Lillicrap said strong house price growth was also a contributing factor to the ongoing market confidence.
“This strong volume of sales will continue to pull the national economy forward,” she said.
“New home sales in New South Wales and Western Australia were over a third higher in the June 2021 quarter compared to the same time in 2019.
“Sales in Queensland were 4.4 per cent higher compared to the June 2019 quarter, while Victoria is flat (down by 0.1 per cent).
“South Australia had the strongest response to HomeBuilder, but sales since the end of the program remain lower by 14.4 per cent compared to the June 2019 quarter.”
But a KPMG report on The Impact of Covid on Australia’s Residential Property Market has warned of a “tempering” of property prices over the next two to three years.
The research assessed the impact of Covid-19 on Australia’s property prices and found that house prices were between 4 and 12 per cent higher, and units were up to 13 per cent higher than without the global pandemic.
KPMG chief economist Dr Brendan Rynne wrote the report and said stimulus measures introduced in response to the Covid-19 economic downturn had impacted Australia’s property market bth directly and indirectly.
“While our analysis shows that the decline in mortgage interest rates has contributed to the strong property price increases observed over the past year, there is an expectation that house price growth will moderate in the next few years as mortgage interest rates start to rise and the impact of lower than anticipated population growth starts to bite,” Dr Rynne said.
“Our analysis suggests that the recent spike has moved house prices further away from the estimated equilibrium price levels.
“Our expectation is that this disequilibrium will start to contract … over the next two to three years this will place downward pressure on prices and eventually outweigh the positive impacts on prices of the shorter term factors, which are expected to weaken over time.”