Australian new home sales bounced strongly in August after two months of heavy declines, boosted by the introduction of stamp duty concessions for first home buyers in Victoria and New South Wales kicking in at the start of July.
According to Australia’s Housing Industry Association (HIA), sales jumped by 9.1% over the month, partially recovering from the more than 15% fall recorded in July.
The HIA New Home Sales report is a survey of the large home builders in Australia’s five largest states, providing a lead indicator on building approvals and activity in the building industry in the months ahead.
The HIA said that the rebound in August was driven by very strong results in Victoria and Western Australia.
“Results in July and August have been affected by government interventions in New South Wales and Victoria which have seen first home-buyers returning to the new home market,” said HIA principal economist Tim Reardon.
“Victoria has seen record numbers of new building approvals and new home sales are continuing to drive even higher. Strong population growth and employment growth, fortified with enhanced first home buyer incentives, is prolonging the boom in building activity.”
However, despite the solid rebound seen in August, Reardon says that it was not sufficient to “reverse the decline in sales that is evident since early 2016.
The chart below from the HIA tells the story.
“The jump in sales in July confirms our forecast of a slowdown in building activity through until 2018/19,” says Reardon.
“The trend in new home sales continues to provide a strong leading indicator of the trend in residential building approval figures from the ABS.”
Reflecting previous weakness reported in June and July, the HIA said that detached house sales in Victoria and and South Australia jumped by 15.7% and 9.2% respectively in the past three months, masking sharp declines of 7.3%, 15.7% and 17.4% in Queensland, Western Australia and New South Wales over the same period.
The ABS will release building approvals data for August later in today’s session.