HIA Industry Update - October 2020
The recent release of the July building approval figures by the ABS has confirmed that the Hunter region remains on a stable course for the near future, with dwelling approvals increasing by 9 per cent in the year to July compared to the same period the year prior.
During this period detached dwellings, which made up 59 per cent of total dwelling approvals, fell slightly (down 2 per cent), while multi-unit approvals increased (up 32 per cent). This later group, which tends to be more volatile, has as HIA forecast fallen away by 33 per cent in the last quarter compared to the same period a year earlier. In comparison stand-alone detached dwellings have pleasingly increased 9 per cent.
While we watch to see what impact COVID-19 will have on approvals in the future, the good news is that the steady continuation of approvals will have benefits in the second half of the year and into 2021.
The Federal Government’s HomeBuilder Scheme was launched in June and it too will have an impact. Early indications are that the scheme has generated significant interest in new home building and renovations for the industry locally, despite the delayed release of the online portal.
It was also pleasing to see the NSW Government provide a further boost to our sector by increasing the threshold above which stamp duty will be charged on new homes for first home buyers. This exemption will increase to $800,000 with a sliding scale for homes up to $1 million for the next 12 months. The changes to the stamp duty thresholds for land are also critical in providing a full stamp duty exemption for the purchase of vacant land up to $400,000 and concessions on vacant land up to $500,000.
After the September quarter, when JobKeeper rules are tightened, we should see downward pressure on employment. The question is, will an improvement in economic activity offset the reduced stimulus provided by JobKeeper? In the case of the residential building industry, the leading indicators suggest that new home starts will remain solid in the December quarter.
Across the rest of the economy, a decline in employment is likely as businesses adjust to a more accurate picture of how COVID-19 is affecting their underlying situation. We would expect employment and wages to fall from the end of September, unless the tourism and hospitality sectors recover in October.
For further economics data regarding the performance of the industry visit https://hia.com.au/business-information/economic-information or call the HIA on 1300 650 620.
Craig Jennion
HIA Executive Director – Hunter