HIA December New Home Sales bounce

At last we are seeing some effect from the considerable stimulus thrown at housing in the past year. New home sales had a strong bounce in December from suppressed levels, up 6.2%:

Moreover, the internals are good for employment and growth, with detached houses participating for the first time:

In the month of December 2012 detached house sales increased by 7.1 per cent in New South Wales, 6.0 per cent in Victoria, 3.8 per cent in Queensland, and 12.2 per cent in Western Australia. Sales eased by 1.8 per cent in South Australia, but that followed three consecutive rises. Over the December 2012 quarter detached house sales increased in New South Wales (+14.4 per cent), South Australia (+9.3 per cent), and Western Australia (+2.5 per cent). Sales fell over the December quarter last year in Victoria (- 8.4 per cent) and Queensland (-5.5 per cent).

The state-based shift of FHOG incentives from existing to new homes does not appear to be the driver here. NSW is going better but QLD is lagging. Victoria also lifted FHOG incentives for new homes mid last year yet it’s bounced as well.

Looks like the main driver is interest rates and perhaps developer discounting.

Rate cuts are off for the time being. But let’s not get too excited just yet, there is much more work to do:

2012-12 NHSS National Media Release.pdf

David Llewellyn-Smith
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Comments

  1. Why do ABS SA approvals show such strong volatility in the top chart but are almost flat in the bottom chart?

  2. Great news for the housing market this year, looking very positive. Prices rising according to RPData, Residex and APM, to new record highs in some cities. Home sales up. Sentiment up. Looking very good!

    • Or conversely, one can look at the data and see ‘record highs’ as the bell ringer for future capital destruction, given the previous analysis showing houses bear no sensible relationship to fundamentals (ratio to rents, income etc) and the net yield is absolutely abysmal at around 1 – 2%.

      Further, new home sales being ‘up’ means nothing off that pathetic base. Typical econometrics fudging 101 – never mention the base number and how LOW it is – just mention the % rise (nothing to see here).

      Further, unless ‘sentiment’ translates into lending, all bets are off. Given crappy credit figures, you can take that sentiment and smoke a big toke off it and tell me how it tastes… I’m guessing it’s a little acrid.

      • Well said, the more prices rise, the bigger the crash will be. Rising house prices is ironically the worst possible news for the bulls. The more prices rise, the more the bears will ultimately win when it all collapses in a heap.

  3. I’ll admit to being a little spetical of the economic significance of such a move – when told of how badly mining employment is going in many areas, the vast majority of people I speak to say something like, “Oh…I thought Mining was going really strong?!”

    ….ah, not from most people I associate with…

    And who is buying the houses…?

    hmmm

    Notsure the bounce can be sustained for more than a few months, honestly…

    Stewart