New home sales fell by 8.5 per cent last year but appear to have “stabilised” in the first quarter of 2019, reveals the latest Housing Industry Australia survey which shows trends in residential building.
Three of the five mainland states recorded a welcome increase in new homes sales on the previous month, according to HIA senior economist Geordan Murray, reversing some of the declines experienced in 2018.
“This moderation in the fall in new home sales suggests that the credit squeeze is easing as the market adjusts to the new lending norms,” Murray said.
The survey, which takes in the largest volume home builders in Australia’s five largest states, shows New South Wales, South Australia and Western Australia recorded increases in new home sales compared to the previous month.
New South Wales recorded an increase of 4.8 per cent in March compared with the previous month.
“This improvement offsets some of the declines experienced in 2018 to see sales just 3 per cent lower in the March 2019 quarter compared with the last quarter of 2018,” Murray notes.
Sales for the state remain down by 23.8 per cent compared to the same quarter in 2018.
While South Australia recorded increases of 8.6 per cent in March, the third consecutive month of growth in new house sales.
“Unlike the national trend, South Australia’s sales are up by 13.2 per cent on the previous year.”
And new detached house sales increased by 2.3 per cent in March for the second consecutive month in Western Australia
Queensland recorded a decline, for the fourth consecutive month, of 4.7 per cent, and Victoria was down by 2.9 per cent on the month of February.
Murray expects a quiet period as Australia heads into the federal election, which typically subdues new home sales and approvals as buyers hold off on purchasing decisions until after the election.
Other factors that have hit the residential building industry include restriction to finance.
“The credit squeeze impacted the market at a time when the natural housing cycle was already beginning to cool,” Murray said.
“Banks reduced the amount of money they were willing to lend and the time it took to get a loan approved blew out. The market is now showing signs of adjusting to the new levels of lending.”