Western Australia gets biggest boost from HomeBuilder while NSW gets limited benefit
Updated: Nov 18, 2022
The federal government’s $25,000 cashback for buyers of new homes stimulated first homebuyer activity in some states but had a muted response in others, new research shows.
First homebuyers in Western Australia have been the big winners from the federal government’s HomeBuilder scheme, but the impact has been muted in the other major states.
Sales data from the Housing Industry Association revealed new home sales over the seven months since the pandemic started were 11.8 per cent higher nationally than over the same period last year. HIA chief economist Tim Reardon said the HomeBuilder scheme did much to drive the increase in new home sales since it was introduced in early June but the impact varied across states.
New home sales in Western Australia over the seven months to September were nearly double the corresponding period in 2019, while in Queensland the increase was about 7 per cent.
NSW sales increased about 3 per cent, while in South Australia it was 0.5 per cent.
Victoria sales were down 10.8 per cent on the same period in 2019.
To qualify, the buyers must enter contracts for the properties by the end of the year and the property value must not exceed $750,000.
The price caps may explain the different levels of uptake in various states, considering there were fewer new homes available for under that price in NSW and Victoria.
The majority of new Sydney homes priced under $750,000 were apartments more than 20km from the CBD or were house and land packages at least 40km from the CBD.
Sydney’s median house price is currently $1 million, while a significant share of the housing in NSW’s other major population centres Wollongong and Newcastle is also above $750,000.
The median price in Perth is substantially cheaper at $445,000, according to CoreLogic.
Slow processing of home loan applications may have been an additional factor in the uptake of the scheme, with new home loans
requiring two months to process, on average, Mr Reardon said.
“Access to finance for new home construction has become exceptionally tight following new regulations introduced in recent years,” he said.
There was also a limited window for first homebuyers to access the scheme considering it ends December 31.
Mr Reardon said the HomeBuilder scheme did nonetheless provide a needed prop for the construction centre during the weak economic environment.
“HomeBuilder has been successful in providing consumer confidence for those customers that had delayed a major investment decision earlier in the year,” he said.
“The program has also brought buyers into the market that would otherwise not been able to purchase their first home for a number of years.
“This increase in sales will support the construction of detached homes in the wake of the COVID recession and pull the rest of the economy forward into 2021.”