The chance to build a new brand new home thanks to the government’s recently announced HomeBuilder scheme has lured thousands of buyers into the market with developers across the nation reporting skyrocketing sales activity.

Despite initial confusion around eligibility, hundreds of sales were recorded in the first weekend after the stimulus package was announced and sales volumes continue to grow. 

From ‘Lockdown Lows’ to ‘Boom Level Highs’

Land sales are greatly affected by a buyers ability to ‘walk the land’. With most land sales offices closed during lockdown, and with many families opting to self isolate, land sales quickly ground to a halt. In stark contrast, leading land developers in many states are now reporting record sales levels not seen since the previous highs experienced at the peaks of boom time markets in each region. 

Land developers from Perth to Melbourne, and up the east coast to Queensland’s Sunshine Coast, all signalling a dramatic surge in both land sales and further sales enquiries. Thousands of Australians had registered their interest in receiving the HomeBuilder grant within hours of its announcement and numbers have continued to grow with Queensland residents leading the charge, followed by Victoria, NSW and South Australia.

Urban Exodus Post COVID-19

After months in lockdown, an upturn in Australian families is expressing interest in escaping high density, urban lifestyles. This trend has only been accelerated thanks to COVID-19 and the need for many businesses to embrace a remote workforce. Now with many businesses, and employees, expected to resist returning to an office-based business model, remote workers will have more choice around where they purchase homes.

Prior to COVID-19, this trend was already gaining momentum, as families targeted more affordable homes that remained within easy access via daily flights or easy commutes for periodic business requirements. Investors should prepare to see many of our most desirable lifestyle cities, located within easy reach of the state’s capitals, experience a surge of buyer interest.

Land Values To Rise

A sharp rise in land sales activity can only result in one outcome – land prices will rise!

Land Developers are expected to quickly find themselves without the ability to supply residential lots of land to match the buyer demand. Most Developers are sitting on limited supplies and given the reduced buyer enquiry throughout the lockdown period; few Developers were continuing to produce future land sites. Buyer enquires at record levels certainly promises to outstrip the current land supply levels providing the ideal opportunity for land prices to rise.

Investors weighing up the benefits of adding an investment property will need to carefully weigh up the changing ‘risk to reward’ ratio. Forecasts of a possible 20% to 30% fall in Australian home values have now been reduced by the same analysts to under 10%. Every day the property market displays its resilience; these forecasts continue to improve. 

I expect to see land value increase by up to 10% by December 31st when the HomeBuilder grant ends. Investors who plan to build would be wise to carefully consider the impact of not securing land ASAP.