The number of loans for the construction of a new dwelling surged by 27.1% over the month of September 2020 – the highest result since the Australian Bureau of Statistics (ABS) started collecting the data in 2002.
Further, ABS building approvals data revealed the month was the third strongest in terms of approvals for detached houses evidenced in the past 16 years.
“Today’s ABS data confirms the surge in building work entering the pipeline and is consistent with the results from HIA’s New Home Sales over recent months,” said Housing Industry Association (HIA) chief economist Tim Reardon.
“We do not expect this to be the peak of the cycle.”
Reardon explained that, based on the strength of new home sales in September, the HIA expects finance approvals and building approvals to continue to be strong into next month; however, at that point, it seems inevitable the positive impact of HomeBuilder will start to slow.
“These high volumes of sales, loans and approvals following the announcement of HomeBuilder will be relatively short lived,” said Reardon.
“HomeBuilder was designed to provide consumers with confidence to return to the detached housing market. It has been very effective at achieving this goal.”
The new work entering the pipeline should help to offset the “significant declines” seen from March as restrictions were announced, helping to ensure a stable supply of new building projects over the next nine months; meaning, because they are tempered by the June quarter results, the record volume of loans and approvals in the September ABS data will not lead to a record number of new home commencements.
“Approvals for detached houses are identical in the year to September 2020 compared with the previous 12 months. This is a very good outcome considering the speed and extent of the downturn in new detached housing observed in the first half of the year,” Reardon said.
“The improvement in detached building approvals was seen across all jurisdictions during the month of September 2020.”
Across the states, the number of loans to owner-occupiers in September for the construction of a new dwelling saw the biggest increase in Western Australia (+40.6%), Queensland (+34.9%), Victoria (+31.6%) South Australia (+26.2%), and New South Wales (+25.5%). They also increased in Tasmania (+18.0%), the Northern Territory (+15.2%) and the Australian Capital Territory (+6.2%).
“In other good news, the number of loans to first home buyers reached the highest number in over a decade. First home buyers accounted for 40% of the total number of owner occupier loans issued in September,” Reardon added.
“It is evident in today’s data that HomeBuilder has been successful in creating work on the ground in the December quarter. This will protect jobs in the construction industry and the wider economy.”
