New home sales clobbered

There may have been a recent surge in building approvals, but it sure ain’t happening in sales. After a brief pop in August, September approvals have slumped to another new cycle low. From the HIA:

New home sales declined in September with detached house sales posting their lowest monthly level since December 2000, said the Housing Industry Association, the voice of Australia’s residential building industry.

The latest HIA – JELD-WEN New Home Sales Report, a survey of Australia’s major residential builders, showed that the number of new homes sold in the month of September fell by 3.5 per cent to be down by 14.0 per cent over the September quarter.

…Detached house sales fell by 3.3 per cent in the month of September 2011 to be down by 15.3 per cent over the September quarter. Sales of multi-units fell by 5.5 per cent in September.

“The volume of detached house sales improved in Queensland with a rise of 5.7 per cent in September, but sales fell in each of the other four mainland states,” said Andrew Harvey. “Victoria posted the largest monthly fall with sales declining by 6.6 per cent in September”.

In terms of the other states, detached house sales fell by 4.7 per cent in New South Wales, 5.9 per cent in South Australia, and 3.5 per cent in Western Australia.

This is a poor result following a string of poor results. I can’t but wonder, too, if it doesn’t indicate that the recent little rays of sunshine appearing over the housing market more broadly in August weren’t false signals and have now disappeared under the ceaseless rain of troubling international news.

2011-09 NHSS National Media Release[1]

David Llewellyn-Smith

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.

He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.

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Comments

  1. I think these low new home sales numbers reflect the relative lack of recent market participation by FHBs and PIs.

    Also it’s also a reflection of the lack of demand for the spike in the newly built Melbourne/VIC properties coming onto the market.

  2. A surge in building approvals, while sales slump?
    CLASSIC. Florida and Ireland all over again.
    Once “planning gains” inflate to obscene levels, the various players start getting interested in the “building of new houses” that SHOULD have happened BEFORE the “planning gains” got out of hand.

  3. And I thought we had an “undersupply” and “unmet demand” for new houses!!
    .
    The September figures highlight the present soft conditions facing new home building and reinforcethe importance that the RBA Board calls it right today by cutting interest rates,” said HIA Acting Chief Economist Andrew Harvey.
    .
    Funny how these people insist there is a great demand for their products and yet demand stimulus from the government/RBA!

    • Yep. Just like my young niece who is convinced she can fly like Supergirl – just so long as her dad keeps balancing her on his feet!

      • Once “planning gains” inflate to obscene levels, the various players start getting interested in the “building of new houses” that SHOULD have happened BEFORE the “planning gains” got out of hand.
        THEN the “bust” is even worse than if there had been a continual under-supply.
        This is what happened in Florida, Ireland, and Spain at least. Probably Arizona, Nevada, and parts of California too.
        Britain, though, is a case of “continual under-supply” and has been this way for nearly 60 years.

      • +1

        Get land prices down, way down, and I’m sure there would be quite an increase in demand for new houses. With the typical new block selling for $250k or more in Sydney for example, you’ve priced most of the workforce out of new home ownership.

        If you could get that price down to $100k (still quite pricey) I’m quite sure you would see an increase in new house building.

        • Something odd i’ve noticed when reviewing past releases is that the HIA new house buying numbers have not even approached the ABS approvals except from Jan 09- May 10. If HIA numbers are a good judge of the total new home sales (when compared with the ABS approval numbers) it could appear that there never was a shortage (as except as mentioned above supply has always exceeded new demand or at least so says this series of data from HIA).

          http://economics.hia.com.au/media/NHSSNov06.pdf

          http://economics.hia.com.au/media/2009-09%20NHSS%20National%20Media%20Release%20Final.pdf

          • Once “planning gains” inflate to obscene levels, the various players start getting interested in the “building of new houses” that SHOULD have happened BEFORE the “planning gains” got out of hand.
            THEN the “bust” is even worse than if there had been a continual under-supply.
            This is what happened in Florida, Ireland, and Spain at least. Probably Arizona, Nevada, and parts of California too.
            Britain, though, is a case of “continual under-supply” and has been this way for nearly 60 years.

          • To add to what Phil is saying, the Australian capitals look to be different, with Melbourne and the Gold Coast more like Ireland, Nevada etc with a belated but significant building response, but Sydney is so screwed up it’s more like the UK with little to no building increase, except maybe in ‘luxury’ apartments.

            If this explanation is correct, one would expect a bigger and sharper correction in Melbourne & SE Qld compared to Sydney, which may have a real shortage, which would slow any falls.

            As a Sydney resident I find all of this depressing.

  4. Jumping jack flash

    Approvals up, sales down.

    More stock coming onto the market?

    What happened to the chronic shortage? What happened to the frenzy of paying any amount for anything with 4 walls and a roof?

  5. Hey check out this headline at BS:

    House prices rise in September: ABS

    House prices slackened off in the last quarter but still gave 110 per cent over the decade.

    Figures from the Australian Bureau of Statistics (ABS) on Tuesday showed the average price of an established house in Australia’s capital cities fell by 1.2 per cent in the September quarter, and by 2.2 per cent over the past year.

    Prices remain relatively high, though, having still risen by 110 per cent over the 10 years to September.

    That beat the 34 per cent rise in the consumer price index (CPI) by a wide margin, leaving housing prices in real terms – measured against the CPI – up by 57 per cent over that time.

    But the recent trend is down.

    Prices are down by an average of 3.3 per cent from their peak last year.

    The latest quarterly numbers from the ABS confirm monthly figures from RP Data on Monday.

    What are they smoking over there at BS?