According to the HIA, New Homes Sales Report – a survey of Australia’s largest home builders – there has been a fall in the number of new homes sold in 2017. New home sales were 6 per cent lower in the year to November 2017 than in the same period last year. Building approvals are also down over this time frame by 2.1 per cent for the year.
The HIA expects that the market will continue to cool as subdued wage pressures, lower economic growth and constraints on investors result in the new building activity transitioning back to more sustainable levels by the end of 2018.
This is a smaller down-turn than we anticipated and bodes well in terms of the likelihood of a modest and orderly reduction in new house building.
The story is not consistent across all of the states with Western Australia and Victoria providing the book ends on five very different stories.
In the middle of the year it looked like Western Australia had turned the corner after a significant decline in activity over three years, but the new financial year brought even lower results as more restrictive first home buyer policies were implemented.
At the other end of the market in Victoria, the expected slowdown in building activity has not yet materialised. Sales of new houses increased by 6.3% for the 12 months to November 2017 and approvals rose by a further 8.7 per cent in the three months to November compared with the same period in 2016.
