- Australian new home sales rose by 2% last month, the first increase seen in 2018.
- There was a solid increase in NSW, offsetting softer outcomes elsewhere, including Victoria.
- Over the 2017/18 financial year, new housing sales fell 5.3%.
For the first time this year, Australian new home sales have increased.
According to Australia’s Housing Industry Association (HIA), sales of newly completed detached houses rose 2% in June in seasonally adjusted terms, bouncing modestly after falling to the lowest level since early 2013 in May.
Despite the increase, total sales over the financial year fell by 5.3% compared to the levels seen in 2016/17.
“The increase in sales in June is small in comparison with the fall in sales that has occurred throughout 2018,” said Tim Reardon, Principal Economist at the HIA.
“New home sales for the first six months of this year are 2.9% lower than in the last six months of 2017.”
So much of the weakness has occurred in the past six months, something Reardon put down to a shift in housing market conditions.
“The availability of credit has tightened over the past 12 months with banks responding to the decline in house prices and the Banking Royal Commission,” he said.
Reflecting the uptick in the national measure, the HIA said sales rose in all mainland states except Victoria last month, led by a strong increase in New South Wales.
“Sales in New South Wales rose by 8.3%, giving a positive end to an underwhelming year,” Reardon said, noting that sales in Australia’s most populous state fell by 13.3% over the 2017/18 financial year.
“Across the other markets, new home sales also rose in Queensland (2.7%), Western Australia (1.5%) and South Australia (0.2%).”
Despite the improvement recorded in June, Reardon says recent weakness points to the likelihood that housing approvals will weaken further in the second half of the year.
“ABS data shows approvals for private sector detached houses fell dramatically in May,” he said.
“Approvals data typically trails the new home sales data by three to six months and the dramatic fall in approvals in May is likely to be reflected in the June data.”
Markets will find out the answer to that question soon enough with the ABS set to release Australian building approvals data for June on Tuesday, July 31.
After plunging 3.2% in May, led by a 8.6% decline in private sector housing approvals, economists are looking for an increase in June of 1%.
The HIA report is a survey of the largest home builders in Australia’s mainland states, and provides an early indication of trends in the residential building industry. In June, it said the survey captured 17% of Australia’s new detached home building sector.