Like Australian building approvals data released by the ABS, new home sales figures from the Housing Industry Association (HIA) have been all over the place in recent months, thanks largely to the increasing dominance of apartments in Australia’s housing market.
That trend continued in August.
According to the group, new home sales jumped by 6.1% following a 9.7% decline in July, a swing as wild as any that you’ll see at the local amusement park.
“The number of seasonally-adjusted detached house sales increased by 2.9 per cent in August 2016, following a decline of 7.4 per cent in July,” said the HIA. “However, ‘multi-unit’ sales dropped by 17.3 per cent in July before recovering by 17.8 per cent in August.”
There’s your explanation as to the wildness in the headline figure — apartment sales.
Looking at unattached dwelling sales specifically, the HIA note that all mainland states bar Victoria saw sales lift in August.
“In August 2016 sales increased by 12.1 per cent in South Australia; 8.7 per cent in New South Wales; 7.8 per cent in Western Australia; and by 4.2 per cent in Queensland,” it said. “Detached house sales fell by 5.0 per cent in Victoria during the month.”
Looking through the volatility, Harley Dale, chief economist at the HIA, suggested that while the rebound of August was not enough to offset the decline seen in July, the result was “a long way from a downbeat story”.
“Sales of new detached houses and ‘multi-units’ didn’t rebound sufficiently in August to offset the decline in July. These latest new home sales figures therefore don’t paint a stellar picture of an August recovery – following as they do a big drop in July, but unless you’re a pessimist looking for a large black hole then this latest update is a long way from a downbeat story,” he said.
“Despite being at the mature stage of this cycle we still face a situation where key leading indicators such as new home sales point to healthy levels of construction ahead, even if volumes will be down on the 2015/16 record high.”
Here’s how new home sales have been tracking in recent years, comparing the level of sales to private sector building approvals from the ABS.
The chart comes courtesy of the HIA.
The ABS will release updated building approvals figures for August on Tuesday, October 4.
In July, approvals jumped by 11.3% to 20,987 in seasonally adjusted terms, the largest percentage increase seen since September 2013.
While an impressive headline figure, it was entirely driven by a surge in high density housing approvals, doing little to disperse growing concerns of an apartment glut forming in some parts of Australia’s largest cities.
Private sector dwelling approvals ex-houses — namely apartments — surged by 23% to 11,393, leaving them up 15.7% on the levels of a year earlier.
It was the largest monthly total since May last year.