While new home sales show low but stable numbers for the past six months, HIA chief economist Tim Reardon believes the market has touched rock bottom.
Referring to the latest HIA New Home Sales report, Reardon said that sales of new homes across Australia rose by 6.8 per cent in April 2023 compared to the previous month. “With sales relatively stable, albeit at extraordinarily low levels for six months, it does appear that the market has reached rock bottom,” he added.
“This sees sales for the three months to April stable compared to the previous three months.” However, the numbers suggest that sales may have levelled out and reached a floor, barely more than half their levels from a year earlier.
“The cancellation rate remains elevated with more than one new home project cancelled for each four new homes sold per month. This is its highest level since the start of the pandemic and is resulting in an accelerated decline in the pool of work sold, but not commenced.
“The RBA’s rate increases last year and this year will continue to hold down new home sales and cause further cancellations as finance becomes unobtainable for an increasing number of buyers.
According to the report, sales of new homes dipped in all states in the three months to April with the exception of Western Australia where sales were higher (+37.1 percent) than in the previous three months.
Over the last year, NSW has seen the largest declines, with sales in the April quarter down by 70.5 percent on the same quarter in the previous year. This was followed by Queensland (-51.7 percent), Victoria (-46.3 percent) and South Australia (-13.7 percent). Western Australia bucked the trend with an increase of 9.8 percent over the same period.
“Of note, sales in Western Australia in the three months to April 2023 were 40.3 per cent higher than at the same time in 2019. This is an encouraging sign that this market may defy the best efforts of the RBA,” concluded Reardon.
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