Home approvals strengthen in Australia but new home sales fall
New home approvals in Australia strengthened during May and remain at high levels, up 2.4% compared to the previous month, the latest data shows.
Multi-unit approvals soared 15.1% but detached house approvals fell by 8.5% with a total of 218,442 approvals recorded in the year to May, a new record for approvals over any 12 month period since records began in 1983.
‘While it is positive to see improved levels of approvals, the distribution of growth was uneven with multi units increasing significantly during the month and detached house approvals falling back,’ said Shane Garrett, the Housing Industry Association’s senior economist.
He pointed out that during 2014, new home building reached an all-time high and the latest figures suggest a solid pipeline of new home building during the second half of 2015.
‘However, the recent strengthening of price pressures in several markets indicates that the supply of new homes will need to stay at elevated levels in order to fully address demand,’ he warned.
‘This onus is very much on policymakers here. They must rectify the bottlenecks in the planning system, redress the excessive fees and charges on new residential developments and ensure that the pipeline of residential land will meet the ongoing community demand for new homes,’ he added.
A breakdown of the figures shows that approvals saw the strongest increase in Victoria with growth of 11%, followed by New South Wales at 8.8%, Queensland at 3.6%, and Western Australia at 0.2%.
Approvals fell significantly in Tasmania with a fall of 32.6% and were down 9.9% in South Australia. In trend terms approvals increased in the Northern Territory by 9.7% and in the ACT by 6% during May.
Meanwhile, the HIA New Home Sales Report, a survey of Australia’s largest volume builders, recorded the first decline for 2015 in May with total seasonally adjusted new home sales falling by 2.3%.
The decline was driven by a 5.1% dip in detached house sales, and this reflected weaker monthly demand in four out of the five states surveyed, according to HIA chief economist Harley Dale.
‘This is a softer result at face value, but delving beneath the surface reveals an aggregate profile of healthy new home building conditions in 2015. The mature stage of the new home building cycle primarily reflects further momentum in the multi-unit sector, together with persistence of healthy conditions in New South Wales and Victoria,’ he pointed out.
The data shows that new sales of multi-units increased by 7.6% to yet a new record level, with sales volumes up by 26.7% over the three months to May. Meanwhile strength in detached houses sales is evident in New South Wales and Victoria, with growth in the May 2015 quarter of 5.2% and 6.2% respectively.
‘Leading indicators such as new home sales and ABS building approvals will provide vital clues in coming months of the sustainability and composition of the upcycle in new home building in 2015/2016,’ said Dale.
A breakdown of the data shows that detached house sales increased by 3.3% in Queensland, but fell by 2.3% in New South Wales, by 9.9% in Victoria, by 5.2% in South Australia, and by 8.1% in Western Australia.
In the three months to May 2015 detached house sales increased by 5.2% in New South Wales, and by 6.2% in Victoria. Sales fell over the three month period by 8.1% in South Australia, by 7.5% in Queensland and by 1.3% in Western Australia.