Property Australia

Roundup of residential research

Karen Jamal Karen Jamal April 13, 2021

Now that the HomeBuilder grant has wound up, what’s on the horizon for the residential sector? Here’s a roundup of research and data from the last week.

 

  1. HomeBuilder was our economic workhorse in 2020

HomeBuilder wound up on 31 March after supporting hundreds of thousands of jobs, generating tens of billions of dollars in economic activity and helping more Australians into their home. More than 93,400 households applied for the federal government’s grant, with around 80 per cent for new homes and the remaining 20 per cent for extensive renovations and rebuilds. Treasury estimates HomeBuilder supported $18 billion worth of residential construction projects in 2020 alone.

 

  1. Dwelling approvals and home lending remain strong

The Australian Bureau of Statistics recorded a strong rise in dwelling approvals in February, up 21.6 per cent on the previous month. Private house approvals have risen by almost 70 per cent since June 2020. New home loan commitments also remain at near record levels. A small 0.4 per cent drop in February – the first fall since May 2020 – was off the back of exceptional growth in recent months.

 

  1. Home value index rises like a rocket

CoreLogic’s national home value index has risen at its fastest pace in 32 years. CoreLogic recorded a 2.8 per cent rise in March, the fastest rate of appreciation since October 1988, when house prices grew by 3.2 per cent. CoreLogic says the “exceptionally strong growth conditions” are broad-based, with values rising by at least 1.4 per cent across each of the capital cities and ‘rest-of-state’ areas over the month. Sydney and Melbourne have now staged a full recovery from earlier downturns, and the larger capitals have started to outpace many of the smaller cities that were previously leading the charge in growth.

 

  1. First home buyers look beyond their own backyard

One in five first home buyers are searching for their first property in a different state to where they currently reside, according to research by comparison site Finder. The survey of 1,028 first home buyers found that first home buyers from New South Wales (24%) are more likely to consider buying a property in another state than those living in Queensland (19%) or Victoria (17%).

 

  1. It’s been a decade since a rate rise

The Reserve Bank left the cash rate unchanged at 0.10 per cent on 6 April. It has now been more than a decade since the RBA increased official rates, with the last hike in November 2010. Since then, the RBA has cut the cash rate 18 times by 4.65 percentage points. RBA Governor Philip Lowe says the RBA board will not increase the cash rate until inflation is sustainably within the two to three percent target range. “For this to occur, wages growth will have to be materially higher than it is currently. This will require significant gains in employment and a return to a tight labour market.” While Lowe says the RBA board does not expect these conditions to be met until 2024 at the earliest, this means a rate hike is on the horizon at the same time many first home owners will be coming off a three-year fixed rate.

 

For more information on values, rents, associated costs and construction activity, check out the Property Council's Data Room.