Australian new home sales surged in November, especially for units

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Australian new home sales bounced strongly in November after hitting a two-year low in October, adding to a growing list of indicators that suggests property demand remains as resilient as ever.

Sales bounced by 6.1% over the month in seasonally adjusted terms, according to Australia’s Housing Industry Association (HIA), trimming the decline in volumes over the quarter to just 0.7%.

Indicative of continued strong demand, sales volumes during the quarter were down only 0.2% on the same period in 2015.

Sales of detached hosing and multi-units both increased in November, logging hefty gains of 5.2% and 9.3% respectively.

The HIA said that sales of detached houses increased in four of Australia’s five mainland states, with a steep drop in New South Wales more than offset by hefty increases in smaller markets, particularly in Queensland.

“Detached house sales increased by 17.9% in Queensland, 4.7% in Victoria, 4.2% in Western Australia and 4.0% in South Australia,” the HIA said.

Harley Dale, chief economist at the HIA, said that the “bounce in new home sales is a reminder that the national new home construction sector remains in strong shape”.

“The sector may have just passed its peak, but the short term outlook is a healthy one, a conclusion supported by other leading indicators such as the ABS measures of building approvals and housing finance,” he said.

While he believes the November result points to a healthy outlook for new home construction in the first half of 2017, Dale expects the trend in sales volumes to slow over the longer term.

“Looking further out, the declines in construction activity will inevitably become chunkier,” he said, an outlook that fits with the recent moderation in Australian building approvals figures after record-breaking run in the preceding two years.

The rebound in new home sales volumes in November fits with continued strength in other Australian housing indicators that have been released in recent months.

According to data from CoreLogic, Australian capital city house prices jumped by the most since 2009 last year, an outcome that corresponded with a lift in investor housing finance after a regulator-induced slowdown that began in mid-2015.

Continued strength in auction clearance rates, along with data released this week showing residential building activity remained near record levels during the September quarter last year, all point to continued strength in the housing market, both from a supply and demand perspective.

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