HIA’s New Homes Sales Report – a survey of Australia’s largest home builders – revealed a modest increase in new home sales in April 2017 driven by stronger sales in New South Wales, Victoria and South Australia. However at this particular point in the home building cycle, today’s results are unlikely to counter the uncertainty being created by state governments changing policies on residential investment.
“Increasing taxes on residential building and investment add to the risk of a more rapid and deeper contraction in building activity,” cautioned HIA senior economist Geordan Murray.
“In terms of the HIA New Home Sales, the housing cycle peaked back in mid-2015. The modest increase in new home sales during April will not negate the ongoing downward trend.
“We are now in a phase of the cycle where sales volumes are gradually retreating from the recent highs.
“HIA’s forecast already projects a decline of around 10 per cent in new home starts in 2017/18. The big question for the industry is whether the broader retreat will gather momentum. And if so, how quickly could it occur and how far could activity drop.
“In the face of the shifting policy environment, anticipating how individual markets will adjust has become an increasingly challenging proposition. The federal government, state governments, and the financial market regulator have all recently made significant changes to the field of play.
“Amongst the myriad of policy announcements affecting housing, there has been a mix of positives and negatives for the housing industry. Disentangling the net impact of the policy changes in the various markets around the country is almost impossible and more recently is changing on an almost weekly basis.
“Housing policy measures announced by the NSW government yesterday are expected to have a detrimental impact on investment in new home building in the state. The affordability challenges in the state can only be remedied by a strategy to maintain the healthy level of new housing supply over the long term. In this regard, the policies announced yesterday miss the mark.
“In order to ensure that an appropriate level of new housing can be supplied, the housing industry and new home buyers need the confidence inspired by a stable policy environment,” concluded Geordan Murray.
In aggregate, reported new home sales increased by 0.8 per cent in April 2017. The total number of new detached houses sales increased by 2.2 per cent in the month, while multi-unit sales fell 1.2 per cent. Amongst the jurisdictions surveyed, New South Wales (+2.2 per cent), Victoria (+14.3 per cent) and South Australia (+7.0 per cent) all posted improving sales figures for private detached houses in April, while both Queensland (-4.7 per cent) and Western Australia (-12.7 per cent) recorded falls.