New home sales picked up 2 per cent for the month of June ending an underwhelming year for the sector on a positive note.
New home sales throughout the 17-18 financial year were 5.3 per cent lower than the previous financial year, according to the Housing Industry Association.
The welcomed 2 per cent rise marks the first increase for the year.
The June uptick comes after a slow first half to 2018, with sales for new homes 2.9 per cent lower than in the last six months of 2017.
The APRA-led crackdown on lending continues to impact related property sectors. Just this month, building market analyst and forecaster BIS Oxford Economics revealed it expects a 23 per cent drop in residential building starts in the next two years, primarily thanks to falling investor demand.
BIS forecast the fall in building activity might be the sharpest decline since the GFC, with dwelling commencements to drop around 170,000 by the end of the 2019-20 financial year.
Related: Value of Apartment Construction Work Set to Fall 16% in 2019
HIA principal economist Tim Reardon says the fall of sales over the financial year reflects current housing market fundamentals.
“The availability of credit has tightened over the past 12 months with banks responding to the decline in house prices and the Banking Royal Commission,” Reardon said.
Even after this slow-down, overall building activity remains elevated when compared with building levels over the past decade.
--HIA Principal Economist Tim Reardon.
In good news, new home sales increased in all states but Victoria, experiencing a decline of 0.4 per cent in June.
Reardon notes the decline in sales for the garden state is well overdue.
"Activity in the Victorian market has reached record levels over recent years and has remained elevated well above historical trends and well in excess of growth in other states.”
Sales in NSW increased by 8.3 per cent for the month of June. However NSW sales were 13.3 per cent lower in 2017-18 than the previous financial year.
Queensland saw new home sales rise 2.7 per cent. WA picked up 1.5 per cent and SA experienced a modest 0.2 per cent increase.
