The market for new home building has bounced back since the announcement of the Commonwealth HomeBuilder program, the latest data shows.

Releasing the latest edition of its New Homes Sales report based on a survey of 100 of Australia’s largest home builders, Housing Industry Association (HIA) says the volume of new homes sold in June and July surged by 64.4 percent compared with the previous two months in April and May.

Largely speaking, the result reflects the Commonwealth announcement on June 4 of its HomeBuilder program which offers grants of up to $25,000 to build newly constructed homes or to substantially renovate existing homes.

“With two months of data since the introduction of the Australian Government’s HomeBuilder scheme it is increasingly clear that HomeBuilder has arrested the decline in New Home Sales and will protect jobs in the sector into 2021,” HIA Chief Economist, Tim Reardon said.

“Housing data has been ricocheting through the COVID-19 period.

“New Home Sales is highly reactive to changes in consumer confidence and collapsed in the three months to May 2020. The announcement of HomeBuilder, together with the easing of restrictions across most jurisdictions, has seen confidence in the market improve.

“In the two months since June, New Home Sales have increased to be 64.4 per cent higher than the preceding two months.

“While we are cautious of over interpreting data from only two months, this is a clear indication that HomeBuilder will help protect jobs in the sector in the second half of 2020 and into 2021. Additional sales data in August will be required before drawing accurate conclusions.”

In its report, HIA said conditions vary across jurisdictions.

In the relatively COVID free stages of Western Australia, Queensland and South Australia, sales of new homes have surged by 170.6 percent, 142.2 percent and 42.2 percent compared with the previous two months.

In New South Wales, by contrast, sales are up only 9.6 percent over the past two months and remain lower compared to levels recorded prior to the pandemic.

Finally, in Victoria, the market has remained resilient notwithstanding current COVID-19 challenges and the reintroduction of restrictions during July.

New home sales are up 39 percent in Victoria over the past two months and are currently running at above pre-COVID levels.

It is important to note, however, that the data predates the introduction of Stage 4 restrictions in Victoria earlier this month.

Going forward, Reardon says new home sales will settle at a more sustainable level but the number of new homes commencing construction will continue to slow for at least the next 12 months.

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