The HIA New Home Sales report, a survey of Australia's largest volume builders, showed that total seasonally adjusted new home sales increased by 4.2% in March, taking sales back to volumes comparable to 12 months ago.
In the month of March new detached house sales increased by 3.9% following a 4% fall in February. Sales of multi units rose by 5.6% in March after dropping by 11% in February.
On a regional basis detached house sales increased by 16.3% in New South Wales, 7.3% in Victoria, 3.2% in Queensland, and 5.7% in South Australia. Detached house sales fell by 5.6% in Western Australia, but that result followed three consecutive rises.
‘A bounce back in March after a disappointing result for February is a good result to see. It was important we saw a rise, even one that didn’t completely eradicate the February decline,’ said HIA chief economist Harley Dale.
‘However, the overall trend of recovery since November last year means sales volumes are now at low rather than record low levels. The key will be whether a recovery can gather legs from here in an environment where the tax and regulatory costs on new housing remain excessive and are borne by the final home buyer and where many new home building contracts continue to fall over because a final finance approval is declined,’ he explained.
He believes that the Federal government has the opportunity to boost new housing supply through economic reform, which will boost productivity and revenue.
‘It is vital that in Australia's deteriorating budgetary environment there is a keen focus on spending constraint, although a myopic attack on current legislated policies which are making a positive economic contribution should be avoided,’ said Dale.
‘However, there is also an urgent need to identify sources of revenue growth. The residential construction sector can deliver such growth in spades if the government is bold enough to talk reform as well as budgetary crisis, the latter of which is damaging to business and consumer confidence,’ he pointed out.
‘Economic reform directed at residential construction boosts new housing supply, economic activity and employment, and installs a vital cog in the wheel of fiscal recovery, namely revenue growth. To use just one example, a 1% reduction in red tape can generate $5.10 of additional GDP per increased dollar of residential activity. That’s a $1.15 billion per annum boost to economic activity,’ he added.
