The number of new home sales for the three months to October is down by 10 per cent in comparison to the same time last year, as access to finance continues to impair sales.
New home sales have been falling steadily throughout the year, reveals the HIA New Home Sales report, a monthly survey which provides an indication of trends in the residential building industry.
“In the market for established homes the credit squeeze has been reflected in a material drop in transaction volumes and falling prices,” HIA Acting Principal Economist Geordan Murray said.
“In the new home market, we are seeing fewer new builds going ahead. The credit squeeze continues to slow new home building,” he said.
The monthly survey, which covers the largest volume home builders in Australia’s five largest states, showed sales of detached homes fell by 0.8 per cent for the month of October in seasonally adjusted terms, leaving the decline on a year earlier at 13.9 per cent.
The September quarter GDP result is due next week, Murray believes it's likely to show the downturn in home building activity has become a drag on economic growth.
“With the Hayne Royal Commission scheduled to release its findings early next year, there is a risk that there will be further disruption to the lending environment in 2019. Any further tightening in home lending risks becoming a destabilising force in the housing market,” Murray said.
Last week, the Reserve Bank played down the role of a credit crunch in Australia’s housing market, with assistant governor Christopher Kent saying a fall in credit growth was also due to a drop in demand from investors concerned over falling house prices.
The HIA shows private detached house sales for the month of October increased in Victoria by 4.9 per cent and Queensland by 2.5 per cent.
Whereas, new house sales declined in all other mainland states, with sales dropping by 4.9 per cent in New South Wales, 5.6 per cent in South Australia, and 10.7 per cent in Western Australia.