Confidence in new home building is returning, new data has revealed this week.
While the latest HIA New Home Sales report shows that the number of sales in September remained unchanged from the previous month, sales over the past twelve months are higher by 8.6 per cent than last year.
Around the country, an increase in sales in South Australia, Western Australia and Victoria offset a decline in NSW and Queensland in September.
HIA Economist Maurice Tapang says leading indicators are showing that market confidence is lifting, as new home sales stabilise and house approvals rise.
“Consumer confidence is slowly trickling back into the Australian economy, with the most recent Westpac-Melbourne Institute measure showing the best result in over two years”, Tapang noted, adding that this improvement will take time to trickle through new home building, as consumers get greater certainty with interest rates and economic conditions.
“Consumers tend to bide their time when it comes to big-ticket purchases, such as buying a new home, especially in a downward cycle.
“Leading indicators of home building activity continue to suggest that the market has already reached its trough sometime in mid-2024, even as NCC (National Construction Code) changes distort and obscure the data.
“New home sales in South Australia increased by 32.4 per cent compared with August. NCC changes took effect from 1 October 2024 and pulled forward sales into September.
“As was consistent in NSW in September 2023 and Queensland and Victoria in April 2024, this will likely leave a shadow of demand in sales in the months that followed.
“While it remains to be seen, strong demand for housing will likely keep this pull-forward relatively modest, as economic and household conditions improve.
“Strong population growth, low unemployment, real wages growth and the prospect of no further increases to interest rates will drive new home building activity out of the downward cycle”, Tapang concluded.
Sales in Queensland in the September quarter 2024 rose by 50.2 per cent compared to the same time in the previous year, the strongest annual increase. This was followed by South Australia (up 18.5 per cent). The other states recorded falling sales, led by NSW (down 25.5 per cent), followed by Western Australia (18.4 per cent) and Victoria (11.7 per cent).