Australia’s market for new home construction continues to surge as buyers rush to capitalise on the Commonwealth HomeBuilder scheme.

Releasing its latest data, the Australian Bureau of Statistics says the number of loans which were made to owner occupiers to finance construction of new homes rose by 20.3 percent on a seasonally adjusted basis to go from 8,192 in December to 9,858 in January.

At this level, the number of housing construction loans is sitting at its highest level on record and is more than two-and-a-half times its level twelve months ago in January last year.

Over the three months to January, meanwhile, the number of seasonally adjusted housing construction loans made to owner occupiers has risen by 46 percent compared with the three months to October last year.

Compared with the three months to January 2020 – a period which was impacted by bushfires but which predates the worst of COVID-19 – the number of construction loans has risen by more than 120 percent.

Meanwhile, the number of loans made to owner occupiers to purchase newly built dwellings also broke a new monthly record in January to reach 2,888 – up by 29 percent over the past year.

Also on the rise is the buying up of vacant residential land along with lending activity for existing home renovations and repairs.

Year-on-year, the number of lots of vacant residential land which has been purchased by owner-occupiers over the three months to January is up compared with the previous corresponding period to January 2020 to the tune of 74.7 percent (not seasonally adjusted).

On home renovations, meanwhile, the number of loans which have been made to finance the renovation and repair of existing homes rose by 7.5 percent (not seasonally adjusted) on a year-on-year basis between the three months to January 2020 and the three months to January just passed.

Housing Industry Association Economist Angela Lillicrap said the market was being driven by the Commonwealth HomeBuilder program.

Lillicrap said multiple factors were likely to spur stronger home building conditions into the new year.

“Confidence in the housing market has been improving since the announcement of HomeBuilder in June 2020,” Lillicrap said.

“The increase in lending in January coincides with the surge that was seen in HIA’s New Home Sales in December. Households rushed to finalise contracts to build a new home before the end of the 31 December 2020 deadline to access the $25,000 grant.

“Low interest rates, rising house prices, higher savings and a demographic shift in demand towards detached housing and regional areas should ensure ongoing demand for new homes into 2021.”

In addition to owner occupiers, Lillicrap also noted robust levels of activity among investors – albeit with activity in this segment of the market being geared more heavily toward established rather than new homes.