Following results proving the HomeBuilder stimulus was a lifeline for the Melbourne real estate, an industry expert is calling for the package to be extended until June next year as the state battles its second lockdown.
RPM Real Estate Group’s Q2 Residential Market Review showed consumer confidence crashed in April, with prices following, prior to a boost in June thanks to the government’s handout.
The June figures, topping out at 2,043 lots, reflected the strongest monthly sales result since November 2017 — in contrast to the mere 654 lot sales recorded in April, the weakest result since the bottom of the market in April 2019.
“So, effectively in one quarter alone, we saw sales equivalent to the equal highest and equal lowest results of the last cycle,” said RPM CEO Kevin Brown.
Mr Brown said HomeBuilder had made a marked difference to sentiment, and he welcomed the recent blanket extension of the grant across Victoria by three months, meaning that applicants now have six months from the time of signing an eligible contract to commence construction.
However, he warned a sudden drop-away in activity loomed large without further government intervention and suggested that a minimum six-month extension of the grant’s current contract and build timelines would help even out demand through the remainder of 2020 and into 2021.
“An extension would temper the pull-forward effect of the grant, while also giving buyers impacted by job security concerns more time to weigh up their options post-lockdown, and enabling developers to get more eligible stock onto the market to continue the momentum,” Mr Brown said.
“A minimum six-month extension would also allow for a more realistic delivery of new builds through 2021 and into 2022, keeping the construction workforce in continued employment and protecting the industry’s vast economic multiplier effect on the economy.”
Despite calling for an extension into the HomeBuilder scheme, the property expert pointed to signs of life in the Victorian market.
International buyers have re-emerged following the return of economic growth in China, with foreign buyers accounting for a near three-year high (19 per cent) of new dwellings purchased.
“However, limits on migration will continue to impact the industry heavily, and without an indication of timing on border openings, it is extremely difficult to project how the recovery of the industry — particularly the investment and rental markets — will pan out,” Mr Brown said.
Supporting this view, Daniel Gradwell, associate director for property at ANZ, said while the fundamental housing picture was still relatively weak, the most recent quarterly data provided some light at the end of the tunnel.
“Even though Melbourne appears to be one of the hardest hit capital cities, we’re only seeing housing prices fall one to one and a half per cent monthly at the moment — far from the extreme predictions many were making early in the COVID-19 crisis,” Mr Gradwell said.
“The property industry will be challenged by the lack of migration, but there are some emerging trends, and associated opportunities, that remain strong.
“A growth area to watch will be owner-occupiers looking to downsize. This market has long-term potential given the number of Baby Boomers entering retirement, looking for smaller, quality properties with less maintenance.”