Experts predict the housing market is at a tipping point with the end of HomeBuilder looming on March 31 and international border closures stagnating growth.
The hugely popular government stimulus package attracted more than 80,000 applications, generating $18 billion in housing activity, pushing the housing market to new heights.
However, for the first time since World War I, Australia’s population dropped; due to a lack of international arrivals, according to the latest Australian Bureau of Statistics results.
REA group director of economic research Cameron Kusher said they had seen unseasonably strong transaction activity in recent months but this could soon change.
“HomeBuilder has driven an increase in demand from first home buyers while tough rental market conditions due to the closure of international borders has led to relatively low growth in enquiry from investors,” Kusher said.
“With HomeBuilder set to end at the end of March 2021, and investor enquiry rising, it will be interesting to see how these trends evolve over the remainder of this year.”
Annual population growth
^Source: Australian Bureau of Statistics, Annual Population Growth to Sept 2020
Victorian Planning Authority outer Melbourne director Paul Cassidy said the greenfield market was particularly affected by the HomeBuilder scheme.
“We all know that it’s rebounded strongly and running hot at the moment,” Cassidy said at The Urban Developer Pakenham East webinar.
“We don't know where it’s going to head, whether it is steady or a bring forward of demand but it is certainly something to watch.”
National greenfield sales boomed between 2013 to 2018, before dropping markedly, then the HomeBuilder stimulus was announced.
One of Australia's largest private residential developers Satterley Property Group followed this strong growth and they have some confidence moving forward, according to group general manager Jack Hoffman.
“There’s an argument that perhaps there’s some pent up demand from those couple of years of lower volumes,” Hoffman said.
“But undeniably there's been somewhat of a pull forward by the stimulus of the government.
“A lot of the sales made over the past three or four months have not been motivated by government stimulus [as they are ineligible].
“Despite that, we are seeing really strong demand and that gives us some confidence about what will happen after the homebuilder grant ends.”
National greenfield lot sales from 2010 to 2020
^Source: Victoria State Government
Hoffmann said the effects of the lack of international immigration and population growth were bound to have an impact at some time.
The latest Australian Bureau of Statistics results show the country’s population grew by only 0.9 per cent in the year to September 2020 and dropped in the quarter by -0.02 per cent.
The last time a population decline was recorded was the year to December 1916, during World War I, at -1.0 per cent.
“We just hope that the borders can reopen in a safe and responsible way in the not-too-distant future, because we think that once they do, Australia will be more desirable than ever,” Hoffmann said.
Net overseas migration was down by 64.8 per cent driven by a lack of international arrivals, according to the ABS.
