New home sales show signs of stabilising: HIA's Geordan Murray

EXPERT OBSERVER

After falling by 8.5 per cent in 2018 new home sales appear to have stabilised in the first quarter of 2019.

The HIA New Home Sales report – a monthly survey of the largest volume home builders in the five largest states – provides an early indication of trends in the residential building industry.

Given the rapid decline in new home sales throughout 2018, this moderation in the fall in new home sales suggests that the credit squeeze is easing as the market adjusts to the new lending norms,.

The credit squeeze impacted the market at a time when the natural housing cycle was already beginning to cool.

Banks reduced the amount of money they were willing to lend and the time it took to get a loan approved blew out. The market is now showing signs of adjusting to the new levels of lending.

Three of the five mainland states experienced a significant increase in new homes sales on the previous month, reversing some of the declines experienced in 2018.

There is uncertainty surrounding the federal election, which typically subdues new home sales and approvals as investors and owner occupiers put decisions on hold until after the election.

The election result will rectify this uncertainty but the potential for higher taxes on housing means a post-election rebound in sales may not eventuate.

The HIA New Home Sales report for March shows that across the state’s New South Wales (4.8 per cent), South Australia (8.6 per cent) and Western Australia (2.3 per cent) all experienced an increase in new home sales compared to the previous month.

Queensland experience a decrease of 4.7 per cent and Victoria was down by 2.9 per cent on the month of February.

GEORDAN MURRAY is a Senior Economist for HIA