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Fewer homes being built, but tide might be turning
Home building activity has staged a revival after experiencing signs of decline in late 2016 and early 2017.
New home sales in Australia’s five largest states rose 1.1 per cent in May, according to a monthly survey of the nation’s largest volume home builders by the Housing Industry Association (HIA).
Sales also grew 0.8 per cent during April, although they fell 3.2 per cent over the year.
The HIA said new home sales peaked in mid-2015, but have been easing back from this level.
| New home sales | 3 months to May 2017 | Quarterly change | Annual change |
|---|---|---|---|
| Private houses | 16,948 | 0.3% | -5.6% |
| Multi-units | 5,184 | -4.2% | 5.3% |
| Total | 22,133 | -0.8% | -3.2% |
Falling supply across the country
New home sales fell across Australia between the May quarters of 2016 and 2017.
| Region | 3 months to May 2017 | Quarterly change | Annual change |
|---|---|---|---|
| New South Wales | 3,447 | 5.3% | -8.0% |
| Victoria | 5,606 | -4.5% | -9.1% |
| Queensland | 3,720 | -3.7% | -5.4% |
| Western Australia | 3,009 | -0.6% | -5.4% |
| South Australia | 845 | -3.1% | -8.8% |
The HIA has forecast that sales of new private houses will experience a “modest contraction” across Australia until 2020.
There will also be “a much bigger reduction” in sales of new multi-units “as activity retreats from the unprecedented levels of recent years”.
Detached house sales across the states
New South Wales had reason to smile in May, with detached house sales up 16.8 per cent over the month. This was not only the state’s best result for detached house sales since March 2016, but also marked the third straight month of growth.
Victoria, by contrast, experienced a 14.7 per cent month-on-month drop in detached house sales. “It is likely that detached house building activity in Victoria peaked last year and will continue to decline over the coming months,” according to the HIA.
In Queensland, detached house sales jumped 31.1 per cent over the month. This was the state’s best result since November 2016, and came after five straight months of declining sales.
The slumping Western Australian market saw a 3.4 per cent fall in detached house sales. “Sales peaked at the end of 2014 and have since declined by about 36 per cent. Data for recent months suggest that activity may have bottomed out and that we could be in the early stages of recovery,” the HIA said.
South Australia experienced a 15.6 per cent month-on-month decline in detached house sales. “The broader trajectory of both approvals and sales of detached houses in SA indicates that reductions in actual building activity can be expected, at least over the short term.”
Disclaimer
This article is over two years old, last updated on June 30, 2017. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.
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