Following on from Houses & Holes’ earlier post today summarising the Housing Industry Association’s (HIA) new home sales data for the month of July, which recorded a 4.7% fall over the month, below are a series of charts plotting the series since its inception in the mid-1990s.
First, the below chart shows monthly sales, split-out by detached houses and units. In the month of July, new detached house sales recorded a 6.4% fall, whereas units rose by 7.1%:
You can see from above that new home sales have been in an uptrend since sales bottomed in September 2012, with overall sales 21% higher in July, driven by a surge in sales of detached houses. That said, July’s sales were the second worst monthly result in the series’ history, suggesting the new home market is still fragile.
The fragility of the market is shown more clearly by the next chart, which plots the same data on a rolling annual basis:
Rolling annual sales in July were only 4.1% above their December lows, suggesting the recovery remains tepid.
Looking at the mainland states, where data is only provided on detached houses, you can see that new house sales have picked-up most strongly in New South Wales and Victoria, where sales in July were 63% and 57% respectively off their respective October 2012 lows:
The recovery in New South Wales and Victoria is less impressive when viewed on a rolling annual basis, whereas sales in Queensland continue to set new lows, despite first home buyer (FHB) grants recently been directed towards new builds:
Overall, it’s hard to view this data in an optimistic light. Despite mortgage rates near record lows, new home sales remain weak. However, with most states and territories having now changed FHB subsidies to favour new builds, there is the prospect of a pick-up from here.
Ultimately, a sustainable acceleration in new home sales and construction will require reforms to land supply, planning, taxation and infrastructure investment, which looks unlikely at this point in time.
