The Housing Industry Association (HIA) has just released new homes sales data for the month of January, which continued its tentative recovery. Below is the Press Release:
New home sales hit the right note for the new year, posting a fourth consecutive rise in January, said the Housing Industry Association, the voice of Australia’s home building industry.
The HIA New Home Sales report, a survey of Australia’s largest volume builders, showed that total seasonally adjusted new home sales increased by 4.2 per cent in January 2013, reflecting a 4.0 per cent increase in detached house sales and a 4.9 per cent lift in multi-unit sales.
“It is a promising update to see the momentum of late 2012 carrying into the new year,” said HIA Chief Economist, Harley Dale. “Over the three months to January this year new home sales increased by 10.0 per cent, although sales volumes were still 6.4 per cent lower compared to the same period a year earlier.”
“Sales of new detached houses have now increased over three consecutive months, a crucial improvement given the considerable weakness experienced through the majority of last year,” said Harley Dale.
“Even now, the volume of detached house sales is not much more than half the long term average. Consequently there is a long way to go to see evidence that new home building will reach the levels the economy requires as the contribution from resources-related investment wanes.”
In the month of January 2013 detached house sales increased by 9.1 per cent in Victoria, 10.6 per cent in South Australia, and 7.4 per cent in Western Australia. Sales fell by 1.3 per cent in New South Wales and were down by 6.0 per cent in Queensland. Over the three months to January 2013 detached house sales increased by 23.7 per cent in New South Wales, 10.8 per cent in Victoria, 13.2 per cent in South Australia, and 7.6 per cent in Western Australia. Detached house sales fell by 3.1 per cent over this three month period in Queensland.
While the recovery in new home sales is encouraging, it needs to be put into perspective. The below chart shows the sales of new houses and units on a rolling annual basis:
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As you can see, detached house sales remain at record lows, offset by stronger growth in unit sales. Taken together, total annual new home sales are only 0.4% above the record low levels recorded in December 2012.
Given that detached housing is more labour intensive than apartment building, this data suggests that the RBA has a long way to go if it wishes for housing to fill the void left as the mining investment boom unwinds.
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
