This article is from the Australian Property Journal archive
A sustained recovery is some way off for the new housing market with grave fears that another rate rise before the end of the year could make conditions even worse.
According to the Housing Industry of Australia, the already gloomy winter months are even gloomier as storm clouds hover above the new house market.
Releasing the winter edition of the HIA Market Snapshot Report, chief economist, Harley Dale said that land supply shortages and council delays and regulations were adding to the pain, however, most believe that the worst has passed provided rates remain on hold.
Dale said fortunately most builders have enough work on their books to keep their sales staff and contractors busy.
“Nevertheless, the pressure is at its greatest in NSW where display home traffic and general enquiries remain 30 per cent down on last year,” Dale said.
One NSW builder told the HIA recently that the interest rate rise had a dampening effect. Most builders believe conditions are expected to remain much the same as there is no reason to expect it to improve at this stage.
“Outside of NSW, a further deterioration in activity is viewed as unlikely. However, this view is predicated on interest rates remaining where they are,” Dale said.
“A clear negative impact of the recent rate rise on the Sydney housing market highlights the risk to other markets should another hike come to pass. Outside of the Sydney market there is no sense of alarm or heightened concern over housing conditions.”
Dale said a ‘steady as she goes’ outlook coupled with some modest recovery best sums up the state of play for Victoria, South Australia, and Queensland.
He said New South Wales is weaker while conditions in Western Australia are “set to remain very strong.”
“Land availability is an on-going issue, especially in New South Wales, and is rapidly becoming a problem in Western Australia. Given housing affordability is at very low levels now it is imperative to ensure adequate land supply everywhere across Australia so as to avoid further significant deterioration in affordability.”
By Kathryn O’Meara
