Has the new homes sales cycle passed post-COVID trough?
Low unemployment, interest rates on hold for more than a year and the price of materials stabilising suggests a building boom is on the cards.
MOST markets are seeing an increase in the sales of new homes, according to a new survey.
They rose 8.8 per cent in October compared to the previous month, according to HIA Economist Maurice Tapang.
The strong sales come as unemployment remains at exceptionally low levels, interest rates remained unchanged for over a year and prices of home building materials stabilised.
“Other indicators of future home building activity show a consistent story, suggesting that the new home market nationally has already reached the trough in this cycle sometime in mid-2024,” said Mr Tapang.
Data shows the number of loans issued for new home purchase and construction in the September quarter 2024 increased by 14.3 per cent compared to the previous year.
Approvals data shows the number of detached homes approved in the September quarter 2024 rose by 13.1 per cent compared to the previous year.
“As anticipated however, the synchronisation of building cycles across all states and territories that was evident through the pandemic is no longer evident, with state government policies increasingly determining the length and depth of market downturns,” Mr Tapang said.
“The depth of the trough in and subsequent rise in new home sales varies across the different states, affected by factors including the cost of residential land.
“Western Australia was the first market to see an increase in sales in 2023, which has continued to flow through to new housing approvals and commencements.
“Queensland and South Australia have started to see an increase in sales this year, which is flowing through to approvals data.
“Sales in Victoria appear to be slowly increasing, albeit off a very low base. This month, Victoria saw the strongest monthly rise in new home sales, up by 26.5 per cent compared to the previous month.
“If this trend continues, New South Wales will be the only laggard market for home building activity.
“This is driven by the high cost of residential land, particularly in Greater Sydney.
“South Australia implemented changes to liveable housing and energy efficiency provisions in September, which led to a pull-forward in sales as households sought to avoid the additional cost.
“In October, sales in South Australia fell by 18.0 per cent as a result.
“New home sales nationally are showing an upward trend, with sales in the last twelve months 8.0 per cent higher compared to the previous year.”
