New home sales have lagged across the country as homeowners are increasingly choosing to renovate rather than relocate.
This shift is renovation loans reflects how Australians are adapting to rising property prices and increasing stamp duty costs by opting to improve their current home.
According to the latest HIA New Home Sales report, “New home sales nationally fell by 1.3 per cent in the month of August. This leaves sales in the three months to August 2024 higher by 4.6 per cent compared to the previous year,” said HIA Economist, Maurice Tapang.
However, increasing activity Queensland counteracting weak new home sales in the two largest markets of NSW and Victoria.
“New home sales in Queensland increased by a further 3.8 per cent in the month of August, after recording a strong 15.6 per cent increase in July,” Mr Tapang said.
“This leaves new home sales in Queensland over the three months to August 2024 higher by 53.5 per cent compared to the same period in the previous year.
“Strong population growth, particularly from those moving from other states into Queensland, are supporting demand for new homes.”
Despite what is happening in Queensland, another trend is gaining momentum: home renovation loans.
Data by Money.com.au reveals that loans for renovations are now the fastest-growing segment of new loans, increasing by 43% monthly and 7% annually.
Mansour Soltani, Home Loans Expert at Money.com.au said rising property prices are providing homeowners with increased equity, allowing them to cash out and fund renovations or other major expenses without needing to sell their existing homes.
“We’re seeing a strong trend of homeowners choosing to renovate rather than relocate. This allows them to adapt their homes to their evolving needs – whether downsizing, upsizing, or building a granny flat – while avoiding the financial and logistical stress of buying in a competitive market.”
Western Australia led the charge with a 78% growth in alteration loans, followed by Victoria (44%) and Queensland (43%), when comparing July 2024 to July 2023.
This shift towards renovation over relocation reflects a pragmatic response to current market conditions.
“As property values rise, so does the cost of stamp duty. Since transfer duty is calculated based on the dutiable value of a property, homeowners are seeing a significant increase in these costs as property prices climb,” said Mr Soltani.
