New home sales double in June: report

July 18, 2020English

New home sales double in June: report

July 18, 2020
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As well as a rush on land last month, WA purchasers were busy buying new homes, with sales for new builds doubling according to the HIA.

New home sales rose across the country in June following the announcement of the Federal Government’s HomeBuilder program at the start of the month, and WA recorded the biggest increase, up 211.2 per cent, although chief economist Tim Reardon said it was from an exceptionally low base.

“This is not surprising given the State Government’s ‘Building Bonus’ program, which if combined with the first home buyer scheme (and HomeBuilder) can provide support exceeding $50,000,” he said.

Part of June’s buying frenzy would have been spurred by the three-month timeframe HomeBuilder gives purchasers to start construction after the contract is signed.

It has been criticised as being too short, with many factors likely to make the deadline difficult to achieve, but WA buyers have been given a reprieve.

Speaking to HIA WA executive director Cath Hart during the HIA Economic Outlook earlier this month, Housing Minister Peter Tinley said where there were aspects outside the control of the purchaser for the commencement of works, the WA Office of State Revenue had the capacity to provide a three month extension.

This would give purchasers up to six months to get a slab down, the same timeframe as the Building Bonus.

Mr Tinley said the delays had to be no fault of the purchaser and could include problems with finance or shire approval and the supply of titled lots.

Ms Hart said the extension would be done by application and while they were waiting on more details on how to access the application forms and how they would be submitted, it was a real win.

Nationally, new home sales rose 77.6 per cent in June from a record low in May.

South Australia was the second best performer, increasing by 157.1 per cent, followed by Victoria (47.8 per cent), Queensland (43.3 per cent) and New South Wales (12.6 per cent).

The South Perth skyline view from Kings Park.
The South Perth skyline view from Kings Park. Credit: tupungato/Getty Images/iStockphoto

Mr Reardon said while June’s results were a clear indication that Homebuilder was working, to various degrees in each state, the rebound in new home sales did not fully offset the dismal results of the preceding three months and he was cautious of over interpreting data from a single month.

“New home sales fell to their lowest level on record in March and continued to fall in April and May,” he said.

“Additional sales data from July and August will be necessary before drawing accurate estimates on the impact of HomeBuilder on employment in the sector.

“New home sales data is highly responsive to changes in consumer confidence.

The percentage of sales cancelled dropped during the month to 23 per cent from a peak of 30 per cent in April.

“This suggests that there are still many households that have made the decision not to proceed with a previous new home purchase in light of the changed economic conditions,” Mr Reardon said.

Source: Perth Now