New Home Sales

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New Home Sales were 39.4 per cent higher in the March 2021 quarter than the same time the previous year.

The HIA New Home Sales report – a monthly survey of the largest volume home builders in the five largest states – is a leading indicator of future detached home construction.

“HomeBuilder, combined with low interest rates, changing population dynamics and improving market confidence, led to strong sales through to the end of 2020,” stated HIA’s Economist, Angela Lillicrap.

“In December 2020, there was a near record volume of new home sales as households rushed to finalise contracts to build a new home before the end of the $25,000 grant."

“This same effect can be seen in March as households rushed to get access to the $15,000 grant."

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Over the year to March 2021, sales increased by 42.6 per cent compared to the previous year. This indicates a strong level of building activity will occur in 2021 and into 2022, providing employment to the construction sector and supporting the broader economy.

HomeBuilder has brought forward demand for new homes. As a consequence, sales over the coming months are expected to cool from recent highs.

“Demographic shifts in population towards regional areas will continue to drive demand for new detached homes. Strong house price growth recently has also sparked FOMO in buyers which will also support the industry,” concluded Ms Lillicrap.

Sales in the March 2021 quarter increased across all the five largest jurisdictions compared to the same time the previous year. South Australia was up by 90.6 per cent, followed by Queensland (+54.9 per cent) and Victoria (+41.9 per cent). New South Wales increased by 24.7 per cent and Western Australia is up by 15.2 per cent over the same period.
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New Home Sales were 39.4 per cent higher in the March 2021 quarter than the same time the previous year.

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New home sales spike during March

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New home sales fell in January 2021. They were 12 per cent lower than at January last year, according to the HIA’s chief economist, Tim Reardon who expected a decline given the winding back of the HomeBuilder program on December 31.

The HIA New Home Sales report – a monthly survey of the largest volume home builders in the five largest states – is a leading indicator of future detached home construction.

“New Home Sales reached remarkable heights in the December 2020 quarter, almost 100 per cent higher than at the same time the previous year,” Reardon noted.

The surge in sales at the end of 2020 can be attributed to HomeBuilder as households finalised contracts to access the $25,000 grant.

“As a consequence of HomeBuilder drawing forward sales in December, new home sales in January 2021 were just 30 percent per cent of the number of sales achieved in December 2020.

“This is still an encouraging result given the nature of the market in January, which is typically a slow month for sales. 

“After drawing forward sales into December, HomeBuilder will also push sales back until the end of March when the reduced $15,000 grant ends,” he added.

Sales are expected to remain flat in February before another surge in March.
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The surge in sales at the end of 2020 can be attributed to HomeBuilder as households finalised contracts to access the $25,000 grant

jchancellor

New home sales fall in January

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EXPERT OBSERVATION
New home sales in May bounced back to their highest monthly level in over a year.
The HIA New Home Sales report – a monthly survey of the largest volume home builders in the five largest states – provides an early indication of trends in the residential building industry.
The pickup in sales during May follows lacklustre results throughout the first four months of 2019.
Federal Elections always impact market confidence and the discussion around new tax imposts on investors through an increase in Capital Gains Tax magnified this uncertainty in the first part of the year.
This month’s result confirms our expectation that the decline in building activity will start to level off in the second half of 2019 and stabilise at a level below the highs achieved back in 2017.
<img src="https://www.urban.com.au/images/2019/7/2/New%20Home%20Sales%20June.JPG" alt="">
 
The resurgence in home sales was evident across all five states covered by the New Home Sales survey, suggesting a broad based improvement in housing market sentiment around the country. 
An easing of the credit squeeze, lower interest rates and an expectation that APRA will implement reforms to mortgage lending guidelines are also factors supporting the lift in sales activity.
The slow start to 2019 has seen intense competition amongst home builders. The lift in sales shows that more homebuyers are seeing opportunities in this competitive trading environment.
Income tax cuts, solid population growth and accelerating wage growth are necessary to ensure that the market does not decline further.
New home sales jumped in all four major states, up by 54.2 per cent in New South Wales, by 34.0 per cent in Western Australia, by 26.0 per cent in Queensland, by 25.3 per cent in Victoria and by 0.9 per cent in South Australia.
TIM REARDON is HIA’s Chief Economist
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New home sales bounced back: HIA's Tim Reardon

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EXPERT OBSERVER
After falling by 8.5 per cent in 2018 new home sales appear to have stabilised in the first quarter of 2019.
The HIA New Home Sales report – a monthly survey of the largest volume home builders in the five largest states – provides an early indication of trends in the residential building industry.
Given the rapid decline in new home sales throughout 2018, this moderation in the fall in new home sales suggests that the credit squeeze is easing as the market adjusts to the new lending norms,.
The credit squeeze impacted the market at a time when the natural housing cycle was already beginning to cool.
Banks reduced the amount of money they were willing to lend and the time it took to get a loan approved blew out. The market is now showing signs of adjusting to the new levels of lending.
<img src="https://www.urban.com.au/images/2019/5/2/PNHS%20-%20AUS%20-%20HIA.JPG" alt="">
 
Three of the five mainland states experienced a significant increase in new homes sales on the previous month, reversing some of the declines experienced in 2018.
There is uncertainty surrounding the federal election, which typically subdues new home sales and approvals as investors and owner occupiers put decisions on hold until after the election.
The election result will rectify this uncertainty but the potential for higher taxes on housing means a post-election rebound in sales may not eventuate.
The HIA New Home Sales report for March shows that across the state’s New South Wales (4.8 per cent), South Australia (8.6 per cent) and Western Australia (2.3 per cent) all experienced an increase in new home sales compared to the previous month.
Queensland experience a decrease of 4.7 per cent and Victoria was down by 2.9 per cent on the month of February.
GEORDAN MURRAY is a Senior Economist for HIA
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New home sales show signs of stabilising: HIA's Geordan Murray

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Sales slid in both the detached housing and multi unit market during June according to the latest New Home Sales Report from the Housing industry Association.
According to the HIA, new home sales in Australia’s largest states hit their lowest level since October 2013.
Shane Garrett, HI senior economist said during June, new home sales declined by 6.9 percent compared with the previous month and were 11.9 percent lower than the same period last year.
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“These results support HIA’s latest set of forecasts that new dwelling commencements are set to continue easing until late 2018," he said.
“The reduction in sales of both detached houses and multi-units during the month of June continues the trend underway since sales peaked in early 2015. 
“The fall in sales needs to be considered against the backdrop of residential building coming off a record peak of activity in 2016. We project that residential building will still be operating at a historically high level."
<a href="https://www.propertyobserver.com.au/images/2017/07/31/Screen%20Shot%202017-07-31%20at%2010.41.43%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/07/31/Screen%20Shot%202017-07-31%20at%2010.41.43%20AM.png" alt="">
The reduction in new home sales during June 2017 was made up of a 5.8 percent reduction in new detached house sales and a 10.7 percent fall in new multi-unit sales. 
According to the HIA there were considerable differences in sales in June around the states with new detached house sales rising both in Victoria (+4.1 percent) and Western Australia (+21.1 percent). However, sales fell in New South Wales (-9.7 percent), Queensland (-29.3 percent) and South Australia (-23.7 percent) during the month. 
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New home sales hit lowest level since 2013

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Queensland and New South Wales had robust increases in new house sales occurred during May, with sharp contractions in Victoria and WA according to the Housing Industry Association.
The HIA’s latest New Homes Sales Report found large increases in Queensland and New South Wales drove new home sales higher for the second consecutive month during May 2017, with substantial reductions in new detached house sales occurring in several states during the month.
Shane Garrett, HIA senior economist said the results for May again demonstrate how stark the differences currently are across Australia’s markets. 
“The latest results contained in the HIA New Home Sales Report are consistent with our updated forecasts released in last week’s HIA National Outlook report," he said.
"A modest contraction will continue to occur in detached house starts across Australia up until the end of the decade whilst a much bigger reduction in multi-unit commencements is anticipated to continue over the coming years as activity retreats from the unprecedented levels of recent years.
“Yesterday’s Census results from the ABS underline that the objective of meeting Australia’s housing needs over the long term is becoming increasingly challenging. With new home building set to reduce, it is important that government policies focus on allowing our industry to deliver the requisite supply of new housing in an affordable fashion.
"During the month of May 2017, total new home sales increased by 1.1 percent.
"This was helped by a 2.2 percent increase in new detached house sales although multi-unit sales were down by 2.6 percent during the month. Queensland experienced the largest increase in new detached house sales during the month (+31.1 percent) followed by NSW (+16.8 percent). The largest reduction in sales occurred in South Australia (-15.6 percent). Reductions also affected the markets of Victoria (-14.7 percent) and Western Australia (-3.4 percent)."
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Robust increase in new house sales for Queensland and New South Wales

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The HIA New Home Sales Report, a survey of Australia’s largest volume builders, shows that total new home sales declined in April following a strong rise in March, said the Housing Industry Association.
Total seasonally-adjusted new home sales declined by 4.7 percent in April 2016.
The decline in total sales was reflected in both detached house sales (-3.0 percent) and sales of ‘multi-units’ (-10.8 percent).
<a href="/images/2016/05/30/Screen%20Shot%202016-05-30%20at%2010.58.39%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/05/30/Screen%20Shot%202016-05-30%20at%2010.58.39%20AM.png" alt="">
The monthly decline in detached house sales was widespread, with four out of the five mainland states recording reduced sales in April.
Victoria bucked the trend – monthly sales of detached houses increased by 14.3 percent due to broad-based strength in large volume builder activity in the state during the month.
“The trend in new home sales reiterates that the peak for the cycle has passed, but the descent we’re now observing is very mild,” HIA economist, Diwa Hopkins said.
“This signals the potential for very healthy home construction activity throughout 2016, much as we have been anticipating.
“This overall trajectory of total new home sales is consistent with our long-held expectations for new home building activity.
“Our forecasts reflect an expectation that a modest decline in new home building in 2016 will be largely driven by a decline in multi-unit construction, following the successive record levels that occurred in 2015 and 2014.”
In the month of April 2016 detached house sales declined in four of the five mainland states: Western Australia (-19.8 percent); New South Wales (-8.1 percent); Queensland (-7.8 percent) and South Australia (-1.3 percent). Only in Victoria did detached house sales increase (+14.3 percent). 
 
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Victoria sees more new home construction, but nation in decline: HIA

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GUEST OBSERVER
The latest economic data raises even more questions about the ‘funk’ happening on financial markets, in particular the Australian sharemarket. Consumers are seemingly happy with life while new home sales lifted sharply in the latest month. When viewed together with other recent economic data, it shows that recent falls in the sharemarket don’t have fundamental underpinnings. 
Recent earnings results, including the record result from Commonwealth Bank, further highlight the strong position of the Australian economy.
The lift in consumer confidence appears surprising. But one of the key factors affecting consumer confidence is the Aussie dollar. Late last week the Aussie dollar lifted towards US72 cents from US70 cents. Most consumers see a higher currency as a ‘good’ thing – it means cheaper overseas travel and cheaper overseas goods. At the same time stable interest rates and a lower petrol price are serving to offset global sharemarket volatility and thus support confidence levels.
Why do people perceive that their finances are in stronger shape than a year ago? There are two key factors – the lower petrol price and lower interest rates. At the same time most homeowners would have witnessed their home increasing in value over the year, buoying spirits.
It’s important not to ‘over-think’ consumer confidence. For most punters, the Aussie dollar, interest rates, petrol prices, home prices and the job market are the key factors determining whether someone is positive or negative on supposedly ‘economic’ issues.
What do the figures show?
<a href="/images/2016/02/10/Screen%20Shot%202016-02-10%20at%201.23.37%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/02/10/Screen%20Shot%202016-02-10%20at%201.23.37%20PM.png" alt="">
New home sales
New home sales rose for the first time in four months up by 6.0 per cent in December. Sales of multi-units rose by 21.1 per cent while detached house sales increased by 2.2 per cent.
New home sales previously fell by 2.7 per cent in November, fell 3.0 per cent in October and fell by 4.0 per cent in September. New home sales are now up 2.5 per cent for the year.
The Housing Industry Association reported: “In the month of December 2015 detached house sales increased in three of the five mainland states: Queensland (+5.2 per cent); Western Australia (+5.0 per cent) and Victoria (+1.1 per cent). Sales declined in South Australia (-2.1 per cent) and in New South Wales (-0.1 per cent).”
Further, the HIA noted:  “Key leading indicators of new home building such as HIA-ACI New Home Sales and ABS Building Approvals and new housing finance are consistent with very healthy national construction volumes persisting throughout the first half of 2016. These indicators are also signalling a continuation in 2016 of very large differences in new housing conditions across the states.”
Consumer sentiment:
The Westpac/Melbourne Institute index of consumer confidence surprisingly rose by 4.2 per cent in February to 101.1 after falling by 3.5 per cent in January. The confidence index is up 0.6 per cent on a year ago.
The current conditions index rose by 6.5 per cent while the expectations index rose by 2.5 per cent.
Four of the five components of the index rose in February:
The estimate of family finances compared with a year ago was up by 11.3 per cent;
The estimate of family finances over the next year was up by 3.8 per cent;
Economic conditions over the next 12 months was down by 0.6 per cent;
Economic conditions over the next 5 years was up by 4.0 per cent;
The measure on whether it was a good time to buy a major household item was up by 3.1 per cent to a 6- month high of 124.0.
What is the importance of the economic data?
The Housing Industry Association releases data on the sales of new homes each month. The HIA collects the data each month from a sample of Australia's largest 100 home builders. The survey covers around 14 per cent of the home building industry.
Westpac and the Melbourne Institute release the Index of Consumer Sentiment each month. According to Melbourne Institute: “The survey of consumer sentiment was first undertaken in 1973 and was conducted on a quarterly basis until 1976, a six-weekly basis from 1976 to 1986, and has been conducted monthly ever since.”
Confident consumers may be more inclined to spend, especially on major items.
What are the implications for interest rates and investors?
The latest data supports our view that interest rates are likely to remain stable in coming months.
The good news is that volatility on the sharemarket hasn’t yet spooked consumers. As a result, there are still reasons for optimism amongst retailers. The reading on whether it was a good time to buy a major household item stands at a 6-month high
<a href="/images/2016/02/10/Screen%20Shot%202016-02-10%20at%201.25.34%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/02/10/Screen%20Shot%202016-02-10%20at%201.25.34%20PM.png" alt="" width="780" height="300">
 
Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.
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