This article is from the Australian Property Journal archive
NEW home sales have stabilised as confidence in new home building returns to the market, according to the HIA’s latest monthly New Home Sales report, with higher sales in South Australia, Western Australia and Victoria over September.
New home sales in the month of September was unchanged compared to August, leaving sales over the past 12 months higher by 8.6% compared to the previous year.
NSW and Queensland numbers fell in September.
The HIA New Home Sales report is a monthly survey of the largest volume home builders in the five largest states and is a leading indicator of future detached home construction.
“Leading indicators of home building activity continue to show that market confidence in new home building is returning, as new home sales stabilise and house approvals rise,” said HIA economist, Maurice Tapang.
“Consumer confidence is slowly trickling back into the Australian economy, with the most recent Westpac-Melbourne Institute measure showing the best result in over two years.
“This improvement in consumer confidence will take time to trickle through new home building, as consumers get greater certainty with interest rates and economic conditions.”
Australia has recorded its worst 12 months for new home builds in a decade, according to the Australian Bureau of Statistics (ABS), and experts are calling for more action on labour shortages that have drained construction capacity, as the nation embarks on its ambitious National Housing Accord amid an ongoing housing crisis.
Recent data from the ABS suggested that the worst may be over for approvals, but construction capacity constraints are likely to provide a drag on any recovery.
Strong population growth, low unemployment, real wages growth and the prospect of no further increases to interest rates are set to drive new home building activity out of the downward cycle, Tapang said.
“Consumers tend to bide their time when it comes to big-ticket purchases, such as buying a new home, especially in a downward cycle,” he said.
“Leading indicators of home building activity continue to suggest that the market has already reached its trough sometime in mid-2024, even as National Construction Code changes distort and obscure the data.”
New home sales in South Australia increased by 32.4% compared to August, as National Construction Code changes took effect from the beginning of October and pulled forward sales into September. This is consistent with data from NSW in September 2023 and Queensland and Victoria in April this year, and Tapang said this would likely leave a “shadow of demand” in sales in the months that followed.
“While it remains to be seen, strong demand for housing will likely keep this pull-forward relatively modest, as economic and household conditions improve.
New home sales in the September quarter 2024 were 3.9% lower compared to the same time in the previous year, distorted by last year’s strong pull forward in sales in NSW.
Sales in Queensland in the September quarter 2024 rose by 50.2% compared to the same time in the previous year, the strongest annual increase. This was followed by South Australia (up by 18.5%). The other states recorded declines in sales, led by NSW (down 25.5%), followed by Western Australia (down by 18.4%) and Victoria (11.7%).
