The Housing Industry Association’s New Home Sales July Report showed a slow start to the financial year. HIA Chief Economist Dr Harley Dale said that this slump is more apparent after a strong 2013/2014 year of growth.
“The 2013/14 fiscal year saw the recovery in new home sales gather strong momentum. The 2014/15 year, however, has started with confirmation of a downward trend emerging. Nevertheless, we still expect this year to record a reasonably healthy level of sales activity,” Dr Dale said.
Total seasonally adjusted new home sales posted a fall of 5.7 per cent in the month of July 2014, while over the three months to July total sales declined by 3.5 per cent. The monthly decline was reflected in both detached house and multi-unit sales, the former falling by 4.7 per cent, while the latter was down by 10.9 per cent.
“In terms of actual new home building activity, 2013/14 was a very strong year, although less timely information than used to be available means ABS data is not yet able to complete the fiscal year story,” he said.
“In terms of forward indications, new home sales and building approvals may have peaked for the cycle, but their levels remain historically elevated. This situation, together with longer lag times and a repositioning of geographical momentum at this stage of the current cycle, combine to mean that 2014/15 will be another healthy year for new home construction.
“A serious focus on addressing conspicuous impediments to new housing supply, such as large and costly planning delays and a significant lack of titled land would of course extend the recovery, to the benefit of economic growth, labour market outcomes, and housing affordability.
“Alas, as with many cycles before it, we find ourselves in a situation where there is generally a lack of serious policy reform.”
In the month of July 2014 detached house sales increased by 4.1 per cent in South Australia and by 3.1 per cent in New South Wales. Detached house sales fell by 9.3 per cent in Victoria, 7.1 per cent in Western Australia and 6.5 per cent in Queensland. Over the three months to July 2014 detached house sales declined in each of the surveyed states, albeit to varying degrees. Sales fell by 5.4 per cent in SA, 4.4 per cent in WA, 3.6 per cent in NSW, 2.3 per cent in Victoria, and by 0.7 per cent in Queensland.