Current cycle peak concerns as new home sales down for first time in 2014: HIA
New home sales fell 4.3% in May, according to the Housing Industry Association (HIA).
The decline, recorded in HIA’s New Home Sales Report, which surveys Australia’s largest volume builders, is the first recorded this year.
According to Harley Dale, HIA’s chief economist, new home sales may have reached their peak for the current cycle.
“The overall profile for new home sales is a healthy one, given that May marks the first decline in new home sales this year,” said Dale.
“Sales grew by 3.8% over the three months to May 2014 to be up by 21.0% compared to the same period in 2013.
“Further upward momentum may be a challenge and it is a distinct possibility that new home sales have peaked for the cycle,” he said.
“The volume of new home sales nevertheless remains consistent with further growth in detached house building and the continuation of historically elevated levels of multi-unit construction in 2014/15.
“Detached house construction has the potential to grow faster in 2014/15 than in 2013/14, but land supply constraints are again being exposed in this current upcycle, including a shortage of titled land in Sydney and Perth,” noted Dale.
“Inadequate land supply is one prominent example of supply side constraints preventing new home construction reaching its full potential, highlighting the need for a focus on housing policy reform.”
Sales for detached new houses decreased by 2.2% nationally over May, but were up by 5.7% for the quarter to May. Multi-unit sales also fell for the month, by 16.1%. For the three months to May, multi-unit sales were down 6.2%.
In Victoria, detached house sales were up by 3.3%, and 0.5% in Queensland for May. On a monthly basis, detached house sales were down 6.7% in Western Australia, 5.8% in South Australia and 5.4% in New South Wales.
