After posting the largest monthly increase in over six years in March, Australian new home sales fell heavily in April.
According to data released by Australia’s Housing Industry Association (HIA) on Monday, new home sales fell by 4.7% in seasonally adjusted terms last month, partially offsetting the 8.9% increase seen in March which was the largest in percentage terms since January 2010.
By category, sales of unattached housing fell by 3.0%, overshadowed by an enormous 10.8% decline in sales of high density units.
In terms of unattached housing, the HIA notes that the monthly decline was due to widespread sales slipping in four out of the five mainland states surveyed.
Sales in Western Australia dropped by 19.8%, outpacing declines of 8.1%, 7.8% and 1.3% in New South Wales, Queensland and South Australia respectively.
Victoria was the one exception, recording an increase in sales of 14.3%.
The HIA put the increase down to “broad-based strength in large volume builder activity in the state during the month”.
Although a disappointing result, as the chart below reveals from the HIA, monthly sales volumes remain at elevated levels.
“The trend in new home sales reiterates that the peak for the cycle has passed, but the descent we’re now observing is very mild,” said Diwa Hopkins, an economist at the HIA, following the release of April report. “This signals the potential for very healthy home construction activity throughout 2016, much as we have been anticipating.”
“Our forecasts reflect an expectation that a modest decline in new home building in 2016 will be largely driven by a decline in multi-unit construction, following the successive record levels that occurred in 2015 and 2014,” she said.
According to the Australian Bureau of Statistics, private sector building approvals excluding houses came in at 9,395 in April, down 11.5% from the levels of a year earlier.
Private house approvals were slightly higher at 9,771, almost flat on the levels seen in April 2015.
Building approvals are regarded as lead indicators for future levels of Australian construction activity, and as a consequence, new home sales.