Australian new home sales made back-to-back gains in May, providing further evidence that buyer demand remains strong despite some recent weakness in other housing market indicators.
According to Australia’s Housing Industry Association (HIA), strength in detached housing sales offset weakness in higher-density categories, leading to an increase of 1.1%.
For unattached housing, the HIA said that large gains in Queensland and New South Wales offset weaker results in Australia’s other three mainland states.
Sales in Queensland jumped 31.1%, near double the 16.8% increase recorded in New South Wales. Those in South Australia, Victoria and Western Australia went in the other direction, sliding 15.6%, 14.7% and 3.4% respectively.
Combined, total detached housing sales increased by 2.2%, offsetting weakness in multi-dwelling sales which fell 2.6%.
Shane Garrett, senior economist at the HIA, said the divergence in May was consistent with its updated building starts forecasts released last week.
“A modest contraction will continue to occur in detached house starts across Australia up until the end of the decade whilst a much bigger reduction in multi-unit commencements is anticipated to continue over the coming years as activity retreats from the unprecedented levels of recent years,” he said following the release of today’s report.
The HIA is forecasting that housing starts will bottom out in the 2018/19 financial year at around 177,000 commencements, down from 231,000 in 2015/16, driven by a steep drop in multi-dwelling starts of 41%.