New home sales signal downturn in building to continue in 2019

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“HIA New Home Sales are among a string of housing indicators signalling the national downturn in new home building will continue in 2019,” commented HIA Economist, Diwa Hopkins.

The HIA New Home Sales report – a monthly survey of the largest volume home builders in the five largest states – provides an early indication of trends in the residential building industry.

“The developments in various housing indicators are affirming our view on new home building activity for 2019,” added Ms Hopkins.

“We are forecasting a 10.6 per cent decline in home building in 2019, which would leave new home starts at the still historically high level of 193,600 homes.

“Current measures of the various housing market indicators are still healthy relative to historical averages given the record highs from which they are descending. The pace of the declines so far have also been relatively modest.

“For new detached house sales, while the latest level is a non-trivial 27.1 per cent lower than the April 2014 peak, this translates into a very modest average rate of decline during the intervening period of just 0.5 per cent per month.

“Housing market conditions of course are not synchronised across the country. Western Australia is showing an encouraging (though very nascent) trend of improvement in conditions.

“There are signs particularly from ABS approvals and HIA new house sales that a return to growth in new home building is imminent. For new house sales in particular, WA saw a 3.8 per cent lift in August 2018,” said Ms Hopkins.

Across the mainland states, private detached house sales in the month of August 2018 increase by 6.1 per cent in South Australia, by 3.8 per cent in Western Australia and by 0.7 per cent in Queensland. Private detached house sales declined by 7.3 per cent in New South Wales and by 7.1 per cent in Victoria.

Source: HIA