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New build sales stay cool
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.
New build sales stay cool
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.
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.
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.
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