First-home buyers are “vacuuming up” available titled land, even blocks that have been sitting on the market for more than two years, in a rush to get the HomeBuilder grant, agents and developers say.
Inquiries have tripled and land sales have gone up by more than 300 per cent since the HomeBuilder scheme was announced on June 4, said Kelly Donaldson, director of First National Margaret River, WA.
“Titled blocks of land around the $160,000 mark have been vacuumed up in the last five weeks,” he said.
“There was a huge run on land estates that qualify for the grant.”
First-home buyers in WA get a total of $55,000 in cash handouts if they qualify – $25,000 from the federal government, $20,000 from the state government and the existing $10,000 first-home-owner grant.
WA Home builder Jaime Challis, of Challis Property, said many builders have been struggling to keep up with the surging inquiries, with some seeing a threefold rise.
“The take-up was phenomenal, considering we were in a COVID-19 lockdown and the WA market has been flat for a long time,” Mr Challis said.
“Before the grant, sales have been incredibly slow, so it’s not unusual for titled blocks of land to sit on the market for around two years.
“Those same lots have been sold within two weeks.”
Stockland Communities chief executive Andrew Whitson said there had been strong levels of inquiry since the announcement of the HomeBuilder stimulus.
“At some of our communities, we’re seeing around three times the 2019 average weekly enquiry level,” Mr Whitson said.
“Those who are in a position to purchase are keen to make the most of the government stimulus, particularly for land that is already titled.”
Victorian land sales specialists Red23, which in April had warned of a crash in lot sales prior to the launch of the HomeBuilder scheme, said there had been a rush for titled lots in the first week in June following the introduction of the $25,000 assistance package.
“We are currently seeing weekly sales volumes 30 per cent up from the beginning of May, similar to pre COVID-19,” said Red23 managing director Terry Portelli.
Monthly lot sales across Greater Melbourne and Geelong fell to 576 in April after topping 1100 in February and 900 in January.
In May, Red23 recorded a 65 per cent rise in lot sales to 952, which the firm attributed to consumer confidence once the lockdown restrictions lifted.
“There was pent-up demand from buyers who had made inquiries prior to COVID-19, but couldn’t finalise the purchase in the way they felt most comfortable with,” Mr Portelli said.
Cost blowout fears
Mr Challis said many builders were already filling their books and some had started to turn away homebuyers.
“Every reputable builder that I know is getting booked up because of the first-home buyer rush,” he said.
“This happened within the first month, so in a month or two down the track, you’ll be struggling to get a builder to sign up to build your home.
“As a builder, we have a ceiling on how many projects we can do. We can’t just go and get other tradies because they will be flat out with someone else.
“This would certainly affect pricing.”
Property developer Cedar Woods’ chief financial officer, Leon Hanrahan, said time frames would potentially get pushed out due to the increased demand for tradies.
“It’s possible that there will be a spike in cost as individual tradies get booked up, but I don’t think there’s going to be a material resetting of pricing because it’s such a short window,” he said.
Mr Hanrahan said the bigger risk was overbuilding by other developers.
“We’re conscious that we’re not building too many stock, too far out that we’ll need to carry for several years,” he said.
“It has taken WA four or five years to absorb the supply that was created in the previous boom, so I think developers will be conscious that they don’t get themselves into that scenario again.”
Article Source: Financial Review
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