Today’s new home sales data for October, released by the Housing Industry Association (HIA), was superficially disappointing, with new home sales retracing by 3.8% nationally, driven by a 4.6% decline in houses partly offset by a 1.4% rise in units.
At the state level, house sales fell sharply in Victoria (-13.2%), were down solidly in New South Wales (-4.6%), and fell slightly in Western Australia (-1.2%). By contrast, sales rose strongly in South Australia (17.4%) and solidly in Queensland (+3.3%).
As always, it’s the trend that matters, and on this count the recovery appears to be on track, with total sales up by 24.1% year-on-year, driven by a 33.6% lift in house sales (albeit from a very low base):
The picture at the state level is mostly positive with New South Wales, Victoria, Western Australia, and South Australia experiencing solid rebounds, whereas new house sales in Queensland are trending down (see below chart).
Looking ahead, the outlook is for a continued recovery. New housing finance commitments have risen strongly over the past year, although they have experienced minimal growth over the past six months:
Dwelling approvals have also posted a solid rebound, led by units and apartments:
That said, as argued many times previously, the pick-up in residential activity is unlikely to be anywhere near enough to fill the void left as the mining investment boom unwinds, with the residential construction roughly 40% of the value of engineering construction (a proxy for mining investment), according to figures released yesterday by the ABS.
