We have seen steady growth and sales numbers in the new homes sector in the third quarter of 2020, despite all other economic indicators deflating.

According to the RBA, economic growth has been downgraded further to -6.3% from 1.2% in July. Wage growth has also been downgraded to 1.8%, from 2.1% in July; unemployment rate increased to 7.5% from 7.1% in July and employment growth lowered to -3.2%, an increase from -5.4% in July.

Consumer confidence rebounded since its low in April; up 16.4 to 88.1 in May and further uplift to 93.7 in June. A similar pattern was seen in July and August as consumer confidence fell during these 2 months before bouncing back in September at 93.8.

More specific to our industry, Westpac’s September Bulletin stated:

‘The ‘time to buy a dwelling” index increased by 3.0% in September, also putting this component at a comparable level with June when respondents were being encouraged by the general reopening of the economy. In fact, this index has moved on somewhat from June.

The overall index is 2.7% above June; NSW is 1% above; Victoria is 2.2% above; and Queensland is 8.5% above. While the index nationally is still 6% below the average over the six months prior to COVID-19, it continues to point to stabilising conditions in the housing market.

This negative sentiment is still evident in consumers’ house price expectations. Recall that the Westpac Consumer House Price Expectations Index tumbled 51% in April in the first stages of the national lockdown. In September it lifted by 21.7% to be a solid 10.7% above the level in June but still 37% below the average level in the six months prior to COVID-19. While house price expectations remain subdued, confidence appears to be building steadily despite recent recession announcements’.

Consumer confidence continues to differ from state-to-state however Red23 believe that due to peoples needs changing during COVID-19, there will be an uplift in activity during the later part of the spring season.