Sales of new homes nationally increased by 15.7% in the June quarter 2024 compared with the March quarter indicating that the number of homes commencing construction is set to increase later this year. 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.
HIA Economist Maurice Tapang said that this increase in sales was first observed in Western Australia in the second half of 2023 when sales in that market started to increase.
“This year, sales in Queensland and South Australia have also observed a sustained increase in recent months,” Mr Tapang said.
“Driven by this increase in sales in these three states, new home sales in the June quarter 2024 were 20.4% higher compared to the same period in the previous year.
“With the sales recovery in these markets now sustained, an increase in the number of new detached houses commencing construction will be observed in the second half of this year, albeit from a low base,” he said.
Market confidence was returning as the impact of rate increases dissipated and the shortage of housing stock made new home building increasingly attractive.
“These three markets have seen demand for new homes increase due to strong employment opportunities and relatively affordable land, driving local population growth,” Mr Tapang said.
“At the same time, new home sales in New South Wales and Victoria remain weak despite simi-lar growth in demand. The adverse impact of rate rises is more significant here due to the higher cost of residential land in Sydney and Melbourne.”
Sales in New South Wales and Victoria had also been constrained by the introduction of addi-tional regulatory costs, through the National Construction Code which had distorted sales data.
“As a result, there is not the significant or sustained increase in sales required to expect an in-crease in home building in either of these markets,” Mr Tapang said.
“The higher cost of delivering a new house and land package, due to higher taxes, fees and charges in these markets, is impairing the recovery of detached home building.”
The ABS also released its Building Activity data today for the March quarter 2024. This data pro-vides estimates of the value of building work and number of dwellings commenced, completed and under construction across Australia and its states and territories.
“There were 39,720 dwellings that commenced construction in the March quarter 2024. This is 0.5% higher compared to the previous quarter, but 13.5% below compared to the same quarter in the previous year,” Mr Tapang said.
“Australia completed 41,330 dwellings in the March quarter 2024, which is 9.5% lower than the previous quarter and 8.1% lower compared to the previous year.
“There were 25,600 detached homes that were completed in the March quarter 2024, down by 16.8% compared to the previous quarter and down by 8.9% compared to the previous year,” he said.
“The volume of residential dwellings under construction rose marginally in the quarter but remained lower than at the same time in the previous year. This suggest that home building will not continue to drag on GDP growth.”
New home sales saw the largest increase in the June quarter 2024 in New South Wales, up by 32.8% compared to the March quarter, followed by South Australia (+29.3%), Queensland (+19.5%), Victoria (+10.3%), and Western Australia (+7.8%).
New home sales in the financial year 2023/24 increased by 25.4% in Western Australia, followed by Queensland (+10.6%) and South Australia (+2.3%). The two other states recorded a decline in 2023/24, with Victoria down by 7.6% and New South Wales down by 7.5%.
Dwelling commencements in the March quarter 2024 increased by 24.9% in Western Australia compared to the same quarter in the previous year, followed by the Australian Capital Territory (+24.7%). The other jurisdictions recorded a decline in commencements, led by the Northern Territory (-41.2%) followed by Tasmania (-37.0%), New South Wales (-29.7%), Victoria (-13.8%), Queensland (-9.5%), and South Australia (-4.8%).
