The end of the Federal Government’s HomeBuilder scheme in March has led to a marked decline in new home enquiry across the nation.
REA has released their Insights New Homes Snapshot for June, which shows a drop in new home enquiry of -2.9 per cent in May. Impressively, it was still the sixth-highest month on record for enquiry.
The number of project profiles was down for the month as well, with -0.2 per cent fewer profiles on the market.
“With HomeBuilder having ended we have seen some weakening of the volume of enquiry which in reality was to [be] expected given the massive boost to demand that stimulus provided,” REA Group Executive Manager of Economic Research Cameron Kusher said.
Across the nation, enquiry for apartments fell by -3.8 per cent, land estates fell by 0.5 per cent and retirement saw the steepest decline of -23.4 per cent over the month.
REA found an uptick of 1.6 per cent in apartment project profiles, while profiles for land estates and retirement declined by -2.7 per cent and -0.6 per cent respectively.
When comparing the figures against May last year, enquiry saw a rise of 67 per cent nationwide, while listed project profiles rose by 19.5 per cent.
Kusher said it shows, “significant growth in enquiry over the past year, well in excess of the addition of projects.”
Land estate enquiry is up 69.5 per cent from the same period as last year, while profiles dropped by -6.6 per cent. Apartment project enquiry is 64.5 per cent higher, while profiles are up 43.5 per cent, and retirement enquiry is up 59.1 per cent, with projects up 29.2 per cent.
Performance across the states
The HomeBuilder program combined with low borrowing costs has bolstered new home enquiries since the beginning of the pandemic, while the closure of international borders has also had an influence on the market.
Australia-wide enquiry saw year-on-year increases across all states and territories, doubling in Queensland, Australian Capital Territory, Tasmania and Northern Territory.
Despite national enquiry levels being down in May, three states were unhindered by the stimulus cut. Victoria, Australian Capital Territory and Northern Territory all continued to experience a rise in enquiries across the month.
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The REA report hinted at a correlation between enquiries and an upswing in the number of project profiles on-site, which all three states had.
In the apartment category, a dip in enquiries was noted in May, nationwide except for Victoria, Australian Capital Territory and South Australia.
Land enquiry suffered declines in New South Wales and South Australia driving the national results downward.
Retirement enquiry fell in all states except for South Australia where it saw a rise, while Tasmania and Australian Capital Territory fell year-on-year.
Kusher also noted that while Queensland, South Australia and Australian Capital Territory apartment enquiry more than doubled year on year, not a single state saw land estate or retirement enquiry double over the course of the year.
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Popular suburbs for new developments across the states
REA data provided a glimpse of the most popular developments across the states in May, ranked by enquiries. Here are the top results:
The most popular suburb for apartments by the number of enquiries in May was Edmondson Park, while house and land developments in Box Hill consistently ranked the highest.
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The suburb of Melbourne was the most popular for apartment enquiries, while house and land developments in Donnybrook got the most attention, and the suburbs of Clyde attracted a lot of interest.
Apartment projects in the Gold Coast consistently had high enquiries, with Buddina in the Sunshine Coast getting the most attention. Griffin was the most popular suburb for house and land development enquiries.
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The suburb of Adelaide received the most apartment enquiry, while Woodforde house and land developments ranked the highest for enquiry.
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South Perth apartment developments ranked highest, while Willagee was the choice for house and land enquiries.
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Campbell received the most enquiries for apartments.
Zuccoli was popular with house and land enquiries.
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How will new homes be affected now that HomeBuilder has ended
The HomeBuilder Scheme effectively stimulated the property market throughout the global pandemic recession. Following the end of the program, logically the expectation was that there would be a lag in the volume of enquiry, as we have seen.
“There is less stimulus in the market for new housing and the expectation is that demand from first home buyers will wane from here on. Given that, I would expect further declines in enquiry over the coming months, keeping in mind they remain high on a historic basis,” Kusher said.
International borders remain closed creating further challenges for the economy. Despite this, historically low borrowing costs have helped to bolster the property market.
While first home buyers may become deterred, there are signs investors are returning, which will likely bring developers back into the game. REA suggests investor activity will be slanted toward regional and outer capital city areas, a change from the typical inner-city locations investors usually prefer.
New projects in the apartment sector have taken off over the past year, however REA data found it will likely be geared toward owner-occupiers with smaller-scale projects in the works, compared to in the past.
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Words by Katy Holliday
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