Modest increase in new home sales

HIA’S New Homes Sales Report, a survey of Australia’s largest home builders, revealed a modest increase in new home sales in April 2017 driven by stronger sales in New South Wales, Victoria and South Australia.

However at this particular point in the home building cycle, the results are unlikely to counter the uncertainty being created by state governments changing policies on residential investment.

HIA senior economist Geordan Murray said increasing taxes on residential building and investment added to the risk of a more rapid and deeper contraction in building activity.

“In terms of the HIA New Home Sales, the housing cycle peaked back in mid-2015,” Mr Murray said.

“The modest increase in new home sales during April will not negate the ongoing downward trend,” he said.

“We are now in a phase of the cycle where sales volumes are gradually retreating from the recent highs.

“HIA’s forecast already projects a decline of around 10 per cent in new home starts in 2017/18.”

Mr Murray said the big question for the industry was whether the broader retreat will gather momentum, and if so, how quickly could it occur and how far could activity drop.

“In the face of the shifting policy environment, anticipating how individual markets will adjust has become an increasingly challenging proposition,” Mr Murray said.

“The Federal Government, state governments, and the financial market regulator have all recently made significant changes to the field of play,” he said.

“Among the myriad of policy announcements affecting housing, there has been a mix of positives and negatives for the housing industry. “Disentangling the net impact of the policy changes in the various markets around the country is almost impossible and more recently is changing on an almost weekly basis.”

In aggregate, reported new home sales increased by 0.8 per cent in April 2017.

The total number of new detached houses sales increased by 2.2% in the month, while multi-unit sales fell 1.2%.

Among the jurisdictions surveyed, New South Wales (+2.2%), Victoria (+14.3%) and South Australia (+7.0%) all posted improving sales figures for private detached houses in April, while both Queensland (-4.7%) and Western Australia (-12.7%) recorded falls.