HIA: New home sales have peaked

By Leith van Onselen

The Housing Industry Association (HIA) has today released its new home sales data for May, which registered its first fall in five months, with total new home sales declining by 4.3% over the month, driven by falls in both the detached house (-2.2%) and unit (-16.1%) segments:

“Further upward momentum may be a challenge and it is a distinct possibility that new home sales have peaked for the cycle,” noted Harley Dale…

“Detached house construction has the potential to grow faster in 2014/15 than in 2013/14, but land supply constraints are again being exposed in this current upcycle, including a shortage of titled land in Sydney and Perth,” Harley Dale said. “Inadequate land supply is one prominent example of supply side constraints preventing new home construction reaching its full potential, highlighting the need for a focus on housing policy reform”…

In the month of May 2014, private detached house sales increased by 3.3 per cent in Victoria and inched up by 0.5 per cent in Queensland. Monthly sales of detached houses fell by 6.7 per cent in Western Australia and were down by 5.8 per cent in South Australia and by 5.4 per cent in New South Wales.

New unit sales have topped:

And new house sales look peaky:

All states have flattened out.

Certainly, a quick glance at the ABS dwelling approvals data support the notion that new home sales might have peaked, with approvals appearing to have topped-out in the first quarter on 2014, driven by particular weakness in the unit & apartment segment (see next chart).

Moreover, the recent slump in consumer sentiment is a concern, and points to further weakness in approvals and ultimately new home sales (see next chart).

All of which is potentially bad news for anyone pinning their hopes on housing filling the void left as the mining investment boom unwinds.

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