May sees new home sales jump as record housing construction year seems likely: HIA

Sales of new homes were up 15 per cent higher in May compared with April, even without the HomeBuilder stimulus

May sees new home sales jump as record housing construction year seems likely: HIA
May sees new home sales jump as record housing construction year seems likely: HIA

Sales of new homes bounced back 15 per cent higher in May compared with April, even without the HomeBuilder stimulus.

HIA Economist Tom Devitt noted the solid level of sales in April and May indicated ongoing demand for new detached homes.

“New South Wales has driven the solid result of the last two months more than any other state," he said noting sales in April and May were 36.9 per cent higher in NSW than at the same time in 2019.

Comparing the last two months of April and May to the same months in 2019, New South Wales was followed by Western Australia (+26.0 per cent), Queensland, (+4 per cent), South Australia (-14.2 per cent) and Victoria (-16.1 per cent).

The data suggests a record year of housing construction in Australia is set to be even bigger than initially expected.

The Housing Industry Association now forecasts more than 143,700 new builds this year, up on its February prediction of 130,000 detached homes built in 2021.

The tally is set to be some 20 per cent higher than the 120,000 detached home construction record set in 2018.

Housing Industry Association economist Angela Lillicrap said the challenge for the industry was having sufficient supply of materials, labour and land.

The HomeBuilder scheme attracted 121,000 applications around the nation, 99,000 of them for new homes. It is also facilitated 22,000 renovations.

While applications closed off in March, the timeline to commence construction has been extended from six months to 18 months.

However, the HIA anticipates multi-unit projects will decline during 2021 due to closed international migration.

About 57,100 apartments, townhouses and units are expected to be built nationwide, reflecting a 17 per cent decline from 2020.

The HIA says the return of international migration will be needed to boost 2023 beyond its projected 93,500 new housing starts.

The industry has noted the federal government’s 2021-2022 budget did not include any significant boosts for the new home sector.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

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