Victoria, WA and NSW lead April new home sales rise to highest level since December: HIA

Momentum is building in the residential construction sector with new home sales rising to their highest level since December 2011.

New home sales rose 3.9% over April to be well above 6,000 sales, according to the Housing Industry Association's latest survey of Australia's largest volume builders.

It follows a similar strong rise in March of 4.2%.

Detached house sales increased by 9.1% in Victoria, 9% in Western Australia, 8.1% in New South Wales, and 2.7% in South Australia. Detached house sales fell by 1.8% in Queensland.

The last time sales were this high was in December 2011 as the graph below shows:


The rise in April was driven by a 6.7% lift in detached house sales, which was experienced across all states covered by the survey, bar Queensland.

In contrast, multi-unit sales fell by 9.4%.

“Overall, recent developments in new home sales are encouraging. In particular, the important detached house segment of the market continues to climb out recent record lows, and this improvement has largely been broad-based across the states,” says HIA senior economist, Shane Garrett.

“While multi-unit sales have softened over recent months, the gains made over the course of 2012 have not been eroded. A broader look at the situation shows that the volume of sales in the three months to April this year is still 51.7% higher than trough experienced a year earlier.

“We do, however, need to be considering the longer term prospects of a recovery in residential construction beyond 2013.

“The economy is amidst a transition away from growth driven by mining and related investment and the consensus aspiration is for residential dwelling investment to fill the ensuing hold. While we share this aspiration, we don’t have strong evidence that this will actually be achieved.

“There are still major obstacles to recent improvements in residential construction developing into a sustained recovery. Households remain cautious and are still using lower interest rates to hasten debt repayment rather than engage in spending. On the other side of the housing ledger, home builders and residential developers are facing tight credit conditions, hampering the number of projects that proceed to sale and building commencement.

“For a recovery to be of the duration and magnitude required not only by the economy, but by Australia’s housing needs, governments of all levels, led by the federal government, need to take decisive policy action to address these obstacles,” he says.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer


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