New dwelling construction loans surpassed records in early 2021, according to an economist at the Housing Industry Association.
There was an influx of new construction loans that saw December levels peak as consumers looked to their contracts sorted before the HomeBuilder grant deadline passed at the end of the year.
Over the whole quarter through to January 2021, lending increased by 45.8% on the previous quarter and saw them rise to as much as twice the levels that they were at the end of 2019.
Certain regional areas did even better: that rate was more than triple in Western Australia and up almost 150% in Queensland, the Northern Territory and Tasmania.
“What we’ve seen is that since HomeBuilder was announced in June last year, confidence in the housing market improved greatly,” said Angela Lillicrap, economist at the Housing Industry Association. “This was further helped by low interest rates and improved house prices.”
With growth continuing across the sector rapidly, it is clear that the current pace cannot stand indefinitely.
Lillicrap said: “What we expect based of HIA’s new home sales is that lending and building approvals and all the things that we’ve seen reach record levels will decline to more sustainable levels once the HomeBuilder scheme finishes, but low interest rates and house price growth will continue to support the market beyond that.”
She put part of the growth down to the pandemic and a change in consumer behaviour that has resulted from both lack of opportunities and realignment of priorities that have gone hand in hand with the move towards more people working from home and thus requiring more space.
“What we’ve seen is that there’s a demographic in demand from multi-unit construction towards detached construction in regional areas, and we’ve seen a lot of people spend money that would have been spent on international travel and entertainment and things that they haven’t been able to do, on renovating their homes.”
