Leading indicators of home building activity continue to show that market confidence in new home building is returning, as new home sales stabilise, and house approvals rise. Source: Timberbiz
The HIA New Home Sales report is a monthly survey of the largest volume home builders in the five largest states and is a leading indicator of future detached home construction.
“New home sales in September were unchanged compared to August, which leaves sales over the past twelve months higher by 8.6% compared to the previous year,” HIA Economist Maurice Tapang said.
“The increase in sales in South Australia, Western Australia and Victoria offset the monthly decline in sales in NSW and Queensland in September.
“Consumer confidence is slowly trickling back into the Australian economy, with the most recent Westpac-Melbourne Institute measure showing the best result in over two years,” he said.
“This improvement in consumer confidence will take time to trickle through new home building, as consumers get greater certainty with interest rates and economic conditions.
“Consumers tend to bide their time when it comes to big-ticket purchases, such as buying a new home, especially in a downward cycle.
“Leading indicators of home building activity continue to suggest that the market has already reached its trough sometime in mid-2024, even as NCC changes distort and obscure the data.
“New home sales in South Australia increased by 32.4% compared to August. NCC changes took effect from 1 October 2024 and pulled forward sales into September.
“As was consistent in NSW in September 2023 and Queensland and Victoria in April 2024, this will likely leave a shadow of demand in sales in the months that followed.
“While it remains to be seen, strong demand for housing will likely keep this pull-forward relatively modest, as economic and household conditions improve.
“Strong population growth, low unemployment, real wages growth and the prospect of no further increases to interest rates will drive new home building activity out of the downward cycle,” Mr Tapang said.
New home sales in the September quarter 2024 were 3.9% lower compared to the same time in the previous year, which is distorted by the strong pull forward in sales in NSW in September 2023.
Sales in Queensland in the September quarter 2024 rose by 50.2% compared to the same time in the previous year, the strongest annual increase. This was followed by South Australia (+18.5%). The other states recorded declines in sales, led by NSW (-25.5%), followed by Western Australia (-18.4%) and Victoria (-11.7%).
