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New build sales stay cool

  • September 03 2019
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Invest

New build sales stay cool

By Cameron Micallef
September 03 2019

New home sales have remained weak for 12 months now, with a report showing that new build sales are down 12.8 per cent for the year ending July 2019 compared to July 2018.

House in construction

New build sales stay cool

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  • September 03 2019
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New home sales have remained weak for 12 months now, with a report showing that new build sales are down 12.8 per cent for the year ending July 2019 compared to July 2018.

House in construction

According to the latest Housing Industry Association (HIA) report, while the 12 month average is pessimistic, figures have been buoyed of late with a 6.1 per cent increase noted in the past three months alone.

HIA chief economist Tim Reardon commented that “the small improvement in sales in the three months to July suggests that the decline in new home sales that has been underway for more than a year has started to slow; however, this is not an indication that the market is at the bottom of this cycle”.

Around the states, new home sales rose in the three months to July 2019 compared to the previous quarter in NSW (+12.7 per cent), Victoria (+5.4 per cent), Queensland (+4.1 per cent) and Western Australia (+9.5 per cent).

South Australia, noted as managing to withstand the majority of the declines experienced across the other states, is now down by 4.5 per cent in the three months to July 2019 in comparison to the three months prior.

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However, the figure is still 10.1 per cent higher than it was this time last year.

Nest Egg has previously looked reports of stress fractures in new buildings being the beginning of a serious problem for Australian real estate.

Approvals falling for new properties

The decline in new housing has in turn impacted on approval rates for new houses and apartments, with HIA economist Tom Devitt highlighting a 10.5 per cent reduction in such rates.

“Despite the rapid contraction in approvals for multi-units, there remains a large volume of apartments under construction. Developers are delaying seeking approval for apartments at this phase in the cycle, until the record number of apartments that are currently under construction are completed,” Mr Devitt stated.

He noted this as a further indication that Australia has not yet reached the bottom of this market cycle, with the economist considering stimulation from interest and tax cuts as yet to have the desired market affect.

“The two interest rate cuts, a tax cut and the repeal of regulatory restrictions are still expected to encourage increased activity in the home building market,” Mr Devitt said.

New build sales stay cool
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About the author

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Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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