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The end of HomeBuilder has resulted in a downturn in new home sales figures, but that isn’t cause for concern for the greenfield residential market, according to industry experts.
HIA economist Angela Lillicrap said new home sales figures fell last month to 54.4 per cent lower than March as the HomeBuilder incentive program ended.
“A cooling in sales is to be expected as the grants available through the HomeBuilder program came to an end,” she said.
“Despite being well below recent peaks, sales in April 2021 are only 2.7 per cent lower than the average month prior to the Covid-19 shock.
“There is an unprecedented volume of building starts set to happen in 2021. HomeBuilder and lower interest rates have facilitated a surge in demand for detached homes that will ensure a record number of new detached homes will be built this year and into 2022.”
“We don’t see it as a problem, we’ve been forward selling for the past six months,” he said.
“I would actually enjoy a bit of a lull so things come back to a sensible level.”
Costelloe said supply chain issues and a shortage of labour were causing a crunch at the delivery end, and said the market needed to adjust to a post-HomeBuilder economy.
“Our sales are coming back to normal … last year in April we were down to what our sales should have been, but we were back to about 80 per cent by May or June.
“The last few months have been unprecedented … our weekly sales are now back to pre-Covid levels.”
Costelloe said he was confident that the regional migration that underpinned strong demand for greenfield development was a long-term demographic change.
He said the group was now looking to include co-working spaces in its communities for those working remotely.
The key problem for the sector moving forward was the supply of land, and the glacial pace of planning approvals, Costelloe said.
Corelogic research director Tim Lawless said while construction costs had only risen marginally in the last quarter, it was likely that they would go up significantly in the near future.
“Construction costs were up 0.8 per cent over the March quarter, slightly below the decade average rate of growth and with little in the way of variation across the states,” he said.
“Although construction costs rose at a slightly slower-than-average pace last quarter, it’s likely future quarters will record a more substantial lift in construction costs as shortages of both materials and labour add some upwards pressure on prices.”