New Home Sales Past Their Peak For The Cycle

The Housing Industry Association New Home Sales Report, a survey of Australia’s largest volume builders, shows that total new home sales declined in April following a strong rise in March.

According to the HIA total seasonally-adjusted new home sales declined by 4.7 per cent in April 2016. The decline in total sales was reflected in both detached house sales (-3.0 per cent) and sales of ‘multi-units’ (-10.8 per cent).

The monthly decline in detached house sales was widespread, with four out of the five mainland states recording reduced sales in April. Victoria bucked the trend – monthly sales of detached houses increased by 14.3 per cent due to broad-based strength in large volume builder activity in the state during the month.

“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,” commented HIA Economist, Diwa Hopkins. “This signals the potential for very healthy home construction activity throughout 2016, much as we have been anticipating.

“This overall trajectory of total new home sales is consistent with our long-held expectations for new home building activity.

“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.”

In the month of April 2016 detached house sales declined in four of the five mainland states: Western Australia (-19.8 per cent); New South Wales (-8.1 per cent); Queensland (-7.8 per cent) and South Australia (-1.3 per cent). Only in Victoria did detached house sales increase (+14.3 per cent).