New home sales and approvals falling in Australia

New home sales in Australia fell by 8.5% in October to a two year low but the slum is not unexpected as the housing market is coming to the end of its longest and strongest building upturn.

The figures from the Housing Industry Association (HIA) report show that detached house sales fell by 8.2% and apartment sales were down by 9.2%.

‘The new home sales results are consistent with HIA’s latest forecasts for new home building starts which foresee a reasonably marked reduction in activity over the next couple of years,’ said remarked HIA senior economist, Shane Garrett..

‘Even so, activity is projected to fall to a low point of around 172,000 new dwellings starts during 2018/2019, about the same as the average of the past decade,’ he added.

A breakdown of the figures show that detached house sales fell in three of the five mainland states covered by the report. The largest reduction in sales volumes during the month was in Victoria with a fall of 20.4%, sales fell by 5.6% Western Australia and by 2.8% in New South Wales. But they increased by 4.5% in Queensland and by 0.8% in South Australia.

At the same time approvals for new homes are also falling. A separate set of figures from the Australian Bureau of Statistics show that they fell by 12.6% in October, down for a third month in a row. 23.5% and detached homes down by just 2.5%.

Garrett pointed out that the figures are consistent with the latest HIA new homes sales report which showed how the turnover of new dwellings in October fell to the lowest in over two years.

The ABS building approvals data are also consistent with HIA’s recent forecasts which foresee substantial reductions in new dwelling commencements during 2017 and 2018, particularly on the high density side, Garrett explained.

‘Despite this, we anticipate that new dwelling starts will bottom out at a pretty respectable level of about 170,000 per year before starting to grow again,’ he added.

The largest reduction in seasonally-adjusted dwelling approvals was in New South Wales with a fall of 15.7%, followed by Western Australia down 14.3, Queensland down 9.8%, South Australia down 8.4%, Tasmania down 3.2% and Victoria down 2.7%. In trend terms, approvals were unchanged in the Northern Territories but grew by 4.6% in the ACT.