New home sales fell for the first time in five months in July 2013, said the Housing Industry Association, the voice of Australia’s residential building industry.
“There has been strong upward momentum to new home sales since the record lows plumbed in 2012. One monthly fall, while disappointing, does not really change the story,” said HIA Chief Economist, Dr Harley Dale. “That having been said, the re-emergence of a sustained decline for new home sales over the second half of the year would obviously be a negative signal for residential construction and the wider Australian economy.”
The HIA New Home Sales report, a survey of Australia’s largest volume builders, showed that total seasonally adjusted new home sales fell by 4.7 per cent in July 2013. This was the first decline in total sales since a drop of 5.3 per cent back in February. Detached house sales fell by 6.4 per cent in July, which was also the first decline since February (when detached house sales slipped by 4.0 per cent).
Conversely, sales of multi-units posted a monthly rise of 7.2 per cent following a sharp fall of 17.5 per cent in June.
“What we need to observe over the remainder of this year is strong growth in new home sales volumes,” commented Harley Dale. “To date, what we have seen is a recovery from a very low base which takes sales volumes back to levels that are reasonable, but still well short of healthy. It remains the case that detached house sales are running well below long term average levels in four out of five mainland states. The aggregate multi-unit sales measure is in a similar position of under-performance.”
“To be confident that actual new home construction will grow in 2013/14, we need to see clear and consistent evidence of further upward momentum in leading indicators such as new home sales,” added Harley Dale.
In the month of July 2013 detached house sales fell by 4.2 per cent in New South Wales, 10.5 per cent in Victoria, 9.6 per cent in South Australia, and 10.8 per cent in Western Australia. Detached house sales increased by 12.6 per cent in Queensland in July following three consecutive months of decline.
OK, one month does not a trend make but it’s hardly encouraging either.
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.
