- HomeBuilder is set to end this month
- Fear negative buying sentiment
- Lack of demand for apartments could see prices drop
RPM Real Estate Group is considered about the last instalment of HomeBuilder ceasing, which is due later this month, according to a Q4 report released by the group.
Specifically, RPM is considered about sales activity after April 2021 when government programs end such as Homebuilder and JobKeeper and the removal of the coronavirus supplement component of JobSeeker.
They believe the void for the new house market cannot be filled and this could potential create negative buyer sentiment. This in part is made worse by the decline in population growth due to virtually no overseas migration occurring until at least next year.
Luke Kelly, Director of RPM, says HomeBuilder has been successful especially for first home buyers and has helped the Victorian recovery.
“Metropolitan Melbourne jumped an impressive 9.5% over December quarter, while Regional Victoria responded similarly, shielded from the worst of COVID-19 and effecting societal change as buyers moved out of Melbourne and favoured larger builds over smaller spaces closer to their place of work,” said Mr Kelly.
However, Mr Kelly fears an abrupt halt could occur if sales activity declines due to stimulus ending.
Therefore, the group calls for an extension of the HomeBuilder program along with stretching the criteria for construction to commence post-contract signing from six to twelve months.
According to RPM, when Homebuilder was extended from December 2020 to the end of this month, about 900 extra unsold lots become eligible on top of 1800 unsold lots that were titled or near titled. They believe this resulted in strong enquiry and sales activity at the beginning of January 2021.
By extending the building criteria, the group says this would address concerns surrounding builder capacity which subsequently could boost confidence amongst buyers.
Additionally, RPM Research Manager, Michael Staedler said whilst apartment prices were higher than expected in mid-2020, he says the lack of demand for off-the-plan developments could play a part in apartment prices falling over the next 12 months.
The absence of migration and overseas students could also influence this.
“Our projections into overseas migration reveal a dramatic net inflow decrease over the next two years, which will continue to affect vacancy rates and oversupply before population growth is anticipated to return to normal levels by 2023,” said Mr Staedler
In conclusion, the group remains optimistic about the national and Victorian economies respective outputs but acknowledge factors apart from government stimulus such as border closures, future lockdowns and the rollout of vaccinations could have a major impact on this outlook