The announcement of the HomeBuilder package has led to a surge in first home buyers enquiring about vacant residential land.
Data from REA Insights has revealed that enquiries for vacant residential land has surged over the past two months.
Following the announcement of the federal government’s HomeBuilder stimulus package, which provides grants for those purchasing land to build on, there was an 11.2 per cent increase in enquiries in June 2020, which followed a 36.6 per cent increase in May.
Total email enquiries to agents has doubled year-on-year.
Even though vacant land enquiries made up a small overall share of total email enquiries (14.7 per cent in June), the data shows that vacant land enquiries soared to a record high – up 58.8 per cent over the month on June.
The data overwhelmingly pointed to first home buyers (FHB) as the segment leading the rush in enquiries for land, up 177.8 per cent over the month.
In comparison, enquiry from non-FHB owner-occupiers was up 35.4 per cent over the month, while investor enquiries rose 25.8 per cent.
Cameron Kusher, REA Group’s executive manager, economic research, said the HomeBuilder package had clearly led to strong demand.
Under the package, a $25,000 grant will be available to owner-occupiers “substantially renovating” or building a new home from 4 June to 31 December.
In terms of location, FHBs were most active in Western Australia, which saw a whopping 616.6 per cent rise in enquiries. This was followed by South Australia (215.9 per cent), Queensland (208.5 per cent), Victoria (132.1 per cent) and NSW, which saw a relatively subdued 55.2 per cent increase.
Mr Kusher said the NSW figures were unsurprising considering the relatively high price of land in Sydney, and the eligibility criteria stipulated in the HomeBuilder package. (A national price cap of $750,000 has been set for new home builds, and a renovation price range of $150,000 to $750,000 will apply to renovating an existing home with a current value of no more than $1.5 million.)
Land sale volumes surge
Mr Kusher said there was also evidence that the surge in enquiry has translated into sales.
“We measure sales volumes on a weekly basis by counting the number of properties that were listed for sale on realestate.com.au that were shifted by agents, during the same week, to the sold section of the website,” he said.
The data showed that, in the week ending 19 July, there were 759 vacant land sales advised on the website, which was the highest number of weekly sales any week during 2019 or 2020.
In the six weeks after the HomeBuilder package was announced, there were 3,854 vacant land sales nationally, which is 62.5 per cent higher than the number of sales over the previous six weeks.
Year-on-year, vacant land sales have gone up 117.5 per cent nationally, with sales more than doubling in NSW (102.0 per cent), Victoria (163.6 per cent) and Western Australia (132.3 per cent), and close to doubling in Queensland (96.4 per cent) and South Australia (96.0 per cent).
“Of course, HomeBuilder is a limited-time stimulus for the new housing sector, so the expectation is that once these lots are purchased, shortly thereafter the owner will build a new home under the scheme,” Mr Kusher said.
With the scheme only operational until the end of 2020, Mr Kusher said enquiry numbers could change.
“It will be interesting to watch over the coming months whether the surge in enquiry and sales for vacant land can be maintained or whether it slows from here,” he said.