Australian new home sales are being dragged down by apartments

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Australian new home sales fell sharply last month, logging the first decline seen since November 2015.

According to the HIA, new home sales fell by 5.3% in February, led by a steep decline in volatile apartment sales.

Sales of apartments slumped by 10.6%, outpacing a drop of 3.9% in unattached housing sales.

“This latest result is a larger than desirable fall,” said Harley Dale, chief economist at the HIA. “New home sales are losing some of their lustre as a downward trend becomes more firmly entrenched.”

“What we need to keep a watchful eye on are the signals that will shortly begin to emerge for 2016/17 from key leading housing indicators like new home sales and building approvals.”

While residential construction is likely to remain strong in the months ahead, momentum is expected to slow in the second half of 2016 given recent weakness in building approvals, a lead indicator for residential construction.

The ABS will release its latest update on building approvals on Monday, April 4.

Recent measures introduced by APRA to slow lending for housing investment, along with continued concern over potential oversupply of high density units in some capital cities, suggests there’ll be plenty of attention on the performance of apartment approvals.

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