New home sales in Australia increased by 2% in June, the first time that values have risen this year, adding to the feeling that the residential market is resilient.
However sales were still down 5.3% in the 2017/2018 financial year compared to the same previous period, according to the new home sales report from the Housing Industry Association (HIA) which is a monthly survey of the largest volume home builders in the five largest states.
It is regarded as providing an early indication of trends in the residential building industry but it also shows that sales for the first six months of this year were 2.9% lower than the last six months of 2017.
Tim Reardon, HIA’s principal economist, explained that the increase in sales in June is small in comparison with the fall in sales that has occurred throughout 2018 and that the deterioration of sales over the financial year reflects the shifts in housing market conditions.
He pointed out that the availability of credit has tightened over the past 12 months with Banks responding to the decline in house prices and the Banking Royal Commission. ‘Even after this slowdown, overall building activity remains elevated when compared with building levels over the past decade,’ he added.
New home sales rose in all states except Victoria, which have been in decline since February 2018 and fell a further a 0.4% in June. ‘Activity in the Victorian market has reached record levels over recent years and has remained elevated well above historical trends and well in excess of growth in other states. The decline in sales in Victoria is well overdue,’ said Reardon.
There was a pickup in new home sales in the other states, particularly New South Wales where they were 13.3% lower in 2017/2018 than in the previous year but they picked up in June by 8.3% month on month.
New home sales also increased in Queensland by 2.7%, in Western Australia by 1.5% and in South Australia by 0.2%.
‘Australia’s population growth has slowed over the past three quarters in response to tighter visa requirements that have constrained inward migration. The Sydney and Melbourne markets have seen a decline in their rates of population growth since July 2017,’ Reardon said.
He also pointed out that data from the Australian Bureau of Statistics (ABS) show that approvals for private sector detached houses fell dramatically in May 2018. ‘Approvals data typically trails the new home sales data by three to six months and the dramatic fall in approvals in May is likely to be reflected in the June data,’ he added.
