New home sales see “modest decline” Down Under

Elizabeth Bay, Sydney Photo: Wrumsby

Sales of new homes saw a “modest decline” in Australia in March, with transactions dipping 1.1 per cent.

The HIA New Homes Sales Report – a survey of Australia’s largest home builders – shows that overall sales fell 1.1 per cent month-on-month, with a decline of 1.4 per cent among detached homes. Sales of ‘multi-units’ eased by only 0.1 per cent in the month.

“With residential building activity having peaked at a record level in 2016, industry spectators are watching leading indicators closely to assess where activity may be headed in the next phase of the cycle,” says HIA Economist Geordan Murray. “In particular, there has been a high degree of speculation about the trajectory of activity in the multi-unit market given the unprecedentedly large role it has played throughout the upside of the cycle. The new home sales survey shows that sales have been sustained at a relatively high level though to March this year.”

“Similarly, detached house sales are indicating only a slight downward trend. This is consistent with other data on building approvals and dwelling commencements,” concludes Murray.


Western Australia props up new home sales in Australia

7th April 2017

Sales of new homes Down Under remained flat in February, but Western Australia and Victoria saw positive results, according to new figures from the Housing Industry Association.

“The HIA New Homes Sales Report – a survey of Australia’s largest home builders – reveals a bare movement of only +0.2 per cent in February 2017,” says HIA Chief Economist, Dr Harley Dale. “There was also very little movement in the two sub series with detached house sales ticking down by 0.1 per cent in February and the sales of ‘multi-units’ growing by 1.0 per cent.”

In the case of detached house sales, over the three months to February this year the volume fell by 2.2 per cent to a level 5.2 per cent lower than achieved over the three months to February last year.

“The updates that we are receiving for these two key leading indicators of new home building activity are consistent with a modest reduction in national new detached house commencements in 2016/17,” adds Dale.

Detached house sales increased in two out of five mainland states in February 2017 – Western Australia and Victoria. Detached house sales in WA increased by 11.3 per cent in February 2017 following a rise of 12.1 per cent in January. These rates of growth, however, are exaggerated by the extremely low base for detached house sales. Detached house sales in Victoria posted a monthly gain of 5.1 per cent in February. Elsewhere for the mainland states, in February detached house sales fell by 12.6 per cent in New South Wales and were down by 5.7 per cent in Queensland and 0.2 per cent in South Australia.

In 2017, the HIA forecast the profile for leading indicators such as detached house sales to slowly improve for Western Australia and South Australia. At the same time the volume of detached house sales on the eastern seaboard is expected to trend lower.

“We are forecasting a decline of 2 per cent in detached house commencements in Australia in 2016/17 following a similar-sized fall of 1 per cent in 2015/16.”


A softer start to the year for new Australian home sales

28th February 2017

Sales of new homes saw a soft start to 2017 in Australia, according to new figures.

The latest survey of Australia’s largest home builders from the Housing Industry Association shows that sales declined 2.2 per cent in January 2017. The weaker update follows a strong run for new home sales.

“Given that Australia is tailing off from the largest and longest new home building cycle in history, both the total and sub-component profiles for new home sales are still in very good shape,” says Harley Dale, HIA Chief Economist.

“There aren’t many sectors punching above their weight in the nation’s economy right now, so the
profile for new home sales is also good news for Australia as a whole. HIA’s latest forecasts for new dwelling commencements will be released on Thursday and they will paint a healthy short term picture for residential construction. There is nothing to be seen in this latest update for new home sales or from any other recent leading indicator results to deter us from this outlook.”


New home sales bounce back in Australia

20th January 2017

New home sales bounced back in Australia at the end of 2016, according to the Housing Industry Association.

The November update for the HIA’s monthly New Home Sales survey shows a 6.1 per cent bounce in seasonally-adjusted new home sales. Over the three months to November 2016 the total number of new home sales fell by 0.7 per cent to be down by only 0.2 per cent when compared to the same three month period in 2015.

“Following a dip to a two-year low in October 2016, the November bounce in new home sales is a reminder that the national new home construction sector remains in strong shape,” says HIA Chief Economist, Dr Harley Dale. “The sector may have just passed its peak, but the short term outlook is a healthy one, a conclusion supported by other leading indicators such as the ABS measures of Building Approvals and Housing Finance.”

This is already the largest and longest national new home construction cycle in history, with new home construction enjoying a healthy outlook for the first half of 2017, although the year ahead is expected to see a gradual slowdown in activity.

“Without the boost from housing over the last five years the domestic economy would have at some point slipped into recession,” adds Dale.


New home sales slide in Australia

1st December 2016

New home sales have fallen to a two-year low in Australia, as the country’s new-build sector moves past its peak.

The latest figures from the Housing Industry Association show that sales of new homes fell by some 8.5 per cent during October 2016 – “the lowest volume of sales since July 2014”, according to HIA Senior Economist Shane Garrett.

“Sales on both sides of the market saw sizeable reductions during October,” explains Garrett.

Indeed, detached house sales were down 8.2 per cent month-on-month, while multi-unit sales dropped 9.2 per cent.

“The reduction in the volume of new home sales is not unexpected, given that Australia is coming to the end of its longest and strongest new home building upturn,” comments Garrett.

Detached house sales fell in three of the five mainland states covered by the HIA report. The largest reduction in sales volumes during the month was in Victoria (down 20.4 per cent), with new detached house sales also falling in Western Australia (5.6 per cent) and New South Wales (2.8 per cent). New detached house sales rose, however, by 4.5 per cent in Queensland during October, with a slight increase of 0.8 per cent in South Australia.

“October’s new home sales results are consistent with HIA’s latest forecasts for new home building starts which foresee a reasonably marked reduction in activity over the next couple of years,” adds Garrett. “Even so, activity is projected to fall to a low point of around 172,000 new dwellings starts during 2018/19, about the same as the average of the past decade.”


New home sales take new year dip in Australia

1st September 2016

New home sales in Australia took a new year dip, according to new figures from the Housing Industry Association.

The survey of the country’s largest builders suggests the industry is off to a weak start for the 2016/2017 year, despite 2016’s calendar year being a record year for housing starts. Indeed, total seaonally adjusted new home sales fell 9.7 per cent in July, reversing an 8.2 per cent increase in June.

“The overall trend decline in new home sales is accelerating, signalling a relatively sharp drop (from a record high) in new dwelling commencements from 2017,” comments HIA Chief Economist, Dr Harley Dale.

“New home construction has been the kingmaker of the Australia economy, but the cycle has peaked,” adds Dale. “In all likelihood we will experience sharper falls in new home construction in both 2017 and 2018. The magnitude of decline in new home construction in coming years will of course be exaggerated by where we are coming from – record levels of medium/high density construction and historically healthy levels of detached/semi-detached dwelling construction.”

In the month of July 2016, detached house sales fell in all five mainland states, after rising everywhere in June. Sales dropped by 12.6 per cent in South Australia and were down by 8.7 per cent in Queensland, 8.2 per cent in Western Australia, 6.2 per cent in NSW, and 6 per cent in Victoria.

“There will no doubt be a tendency to sensationalise any negative results for new housing as the trajectory of the down cycle unfolds. We would do well to remember that this down cycle is following a record high that is some 24 per cent higher than the previous (1994) peak and that there is an unprecedented degree of uncertainty this time around as to how the next few years of new home building unfold.”

Sales of new Australian homes bounce back

9th August 2016

Sales of new homes in Australia bounced back in June.

Figures from the Housing Industry Association forecast a decline for the construction sector in 2016, with new home sales falling in May for the second month in a row. The housebuilding industry, though, is proving resilient, with sales up 8.2 per cent in June 2016, ending the year on a high note.

The survey of Australia’s largest volume builders, though, still predicts a “modest decline” in the coming months.

“The overall profile of HIA New Home Sales is signalling an orderly correction to national new home construction in the short term, as are other leading housing indicators,” comments HIA Chief Economist Dr Harley Dale. “Below the national surface, the large geographical divergences between state housing markets have been a prominent feature of the current cycle – that will continue.”

Comparing the June quarter this year to the same period last year, detached house sales are down very sharply in South Australia (-21.4 per cent) and in Western Australia (-27.5 per cent), yet sales are up by 17 per cent in Victoria and by 7.1 per cent in Queensland. New South Wales rounds off the detached house coverage provided by the New Home Sales report and sales are down by 7.3 per cent on an annual basis. The sale of detached houses bounced back by 7.2 per cent in the month of June 2016. Multi-unit sales continued their recent recovery, growing by 11.5 per cent after a lift of 4.9 per cent in May.

Australia anticipates cyclical downturn in construction

29th June 2016

Australia anticipates a cyclical downturn in construction this year, following a second fall in new home sales.

The Housing Industry Association’s latest New Home Sales report shows that sales fell for a second consecutive month in May 2016.

Total seasonally-adjusted new home sales declined by 4.4 per cent in May 2016 following a 4.7 per cent fall in April 2016. The sale of detached houses fell by 6.7 per cent in the month. Detached house sales declined in three of the five mainland states: New South Wales (11.5 per cent); Victoria (8.2 per cent); and Queensland (11 per cent). Multi-unit sales recorded a bounce of 4.9 per cent and are again trending higher, albeit to a smaller extent compared to the equivalent building approvals profile.

“There is nothing alarming to a reversal in the trend for New Home Sales,” says HIA Chief Economist, Dr Harley Dale. “There is a cyclical downturn ahead for new residential construction activity, as new home sales signal, but the early pull-back will be mild by historical standards.”

“We remain of the view that a decline in new dwelling commencements will gather momentum in 2016/17 and 2017/18, following four years of growth which has delivered enormous benefits to the broader Australian economy,” Dale adds.

Australia’s new home sales “past their peak”

1st June 2016

New home sales in Australia are “past their peak” for the cycle, according to the Housing Industry Association.

The survey of Australia’s largest volume builders shows that total new home sales declined in April following a strong rise in March. 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 (down 3 per cent) and sales of ‘multi-units’ (down 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,” comments 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.”

The HIA forecasts a “modest decline in new home building in 2016, driven by a decline in multi-unit construction.

Oz new home sales down, but far from out

31st March 2016

New home sales in Australia are down, but far from out, according to new figures.

The latest New Home Sales Report from the Housing Industry Association, which surveys the country’s largest volume builders, shows a “relatively sharp” decline in homes of 5.3 per cent in February 2016.

HIA Chief Economist Dr Harley Dale says the result is “larger than desirable”, noting that sales are “losing some of their lustre, as a downward trend becomes more firmly entrenched”.

However, the HIA insists there is “no need to ring alarm builds”, with new homes “down, but far from out”.

Indeed, over the three months to February 2016, the sale of detached houses increased by 1.8 per cent, while the sale of multi-units eged up by 0.8 per cent over the same period.

“What we need to keep a watchful eye on are the signals that will shortly begin to emerge for 2016/17 from key leading housing indicators like new home sales and building approvals,” concludes Dale. “Stage one of a down cycle in new home building will be moderate, but signs of a sharper contraction in subsequent stages may emerge as the year progresses.”

Sales of new Australian homes rise for second month

15th March 2016

Sales of new Australian homes rose for a second month in a row at the start of 2016.

The latest HIA New Home Sales Report, a survey of Australia’s largest volume builders, saw sales climb 3.1 per cent in January.

Detached house sales were up by 5.8 per cent while the sale of ‘multi-units’ dropped by the same magnitude. In the month of January 2016, detached house sales increased in each of the five mainland states: Queensland (+7.9 per cent); Western Australia (+7.3 per cent); Victoria (+5.5 per cent); New South
Wales (+4.2 per cent); and South Australia (+1.3 per cent).

“Contrary to yesterday’s ABS building approvals release, the HIA New Home Sales Report for January 2016 showed further strength,” says HIA Chief Economist, Dr Harley Dale. “The overall trend evident across both leading indicators is very similar – signalling that once the current (record) pipeline is exhausted, new home construction activity will soften.”

“This year will be another healthy one for detached house and ‘multi-unit’ construction, but we won’t surpass the heights of 2015.”

New home sales point to healthy year for construction Down Under

8th September 2015

Sales of new homes in Australia are pointing to a healthy year for the industry, as construction activity rebounds into growth.

A survey of Australia’s largest volume builders by the Housing Industry Association showed a modest decline in July 2015. Transactions dipped 1.8 per cent in July 2015, but HIA Chief Economist Harley Dale says that they remain in “strong shape”, with the cyclical peak for total new home sales occurring in April and the subsequent downward trend considered “very mild”.

“Key leading indicators of home building, including HIA New Home Sales, suggest little prospect for further growth in new home construction in 2015/16,” Dale adds. “However, following three consecutive years of strong growth which has propped up the domestic economy considerably, [HIA New Home Sales] signal another healthy year for new home construction in 2015/16.”

The positive outlook is echoed by the figures from the Australian Industry Group’s Performance of Construction Index, which shows that the national construction industry expanded in August after declining or remaining stable over the previous nine months.

Apartment building was the strongest performer, if at a slower pace than
July’s 11-month high (down 3.3 points). House building also expanded (up 4.4 points) after stabilising in July, while commercial construction expanded solidly (up 9.4 points) after nine months in contraction. In contrast, engineering construction remained in negative territory for a 14th month (up 2.9 points) amid the ongoing decline in mining-related investment.

Ai Group Head of Policy, Peter Burn, comments: “Continued strength in the residential sub-sectors and a lift in conditions in commercial construction underwrote the welcome return to expansion in the national construction sector during August. The positive news from these sub-sectors was sufficiently strong to outweigh the entrenched contraction in engineering construction associated with the winding-down in mining-related projects.”

“Conditions in commercial construction are likely to be critical to the strength of the overall construction industry in coming months,” he adds, with residential building already at high levels and weakness in engineering construction “likely to continue for some time”.