Sales of new homes rose in October, continuing a trend that is increasingly evident in most markets across Australia, the Housing Industry Association (HIA) announced this week.
New home sales rose by 8.8% in October, driven by increasing activity in New South Wales, Victoria and Queensland.
HIA Economist Maurice Tapang said that the rebound comes as unemployment remained at exceptionally low levels, interest rates were unchanged for over a year and prices of materials stabilised.
“Other indicators of future home building activity show a consistent story, suggesting that the new home market nationally has already reached the trough in this cycle sometime in mid-2024”, Tapang added.
“Housing finance data shows the number of loans issued for new home purchase and construction in the September quarter 2024 increased by 14.3% compared to the previous year and approvals data shows the number of detached homes approved in the September quarter 2024 rose by 13.1% compared to the previous year.
“As anticipated however, the synchronisation of building cycles across all states and territories through the pandemic is no longer evident, with state government policies increasingly determining the length and depth of market downturns.”
According to Tapang, the depth of the trough and subsequent rise in new home sales varies across the different states, affected by factors including the cost of residential land.
“Queensland and South Australia have started to see an increase in sales this year, which is flowing through to approvals data”, he said, adding that sales in Victoria appear to be slowly increasing, albeit off a very low base.
“This month, Victoria saw the strongest monthly rise in new home sales, up by 26.5% compared to the previous month.
“If this trend continues, New South Wales will be the only laggard market for home building activity. This is driven by the high cost of residential land, particularly in Greater Sydney.”
Tapang noted that South Australia implemented changes to liveable housing and energy efficiency provisions in September, which led to a pull-forward in sales as households sought to avoid the additional cost. In the month of October, sales in South Australia fell by 18.0% as a result.
“New home sales nationally are showing an upward trend, with sales in the last twelve months 8.0% higher compared to the previous year”, he said.
“The rise in new home sales will see an increase in house commencements from early 2025”, Tapang concluded.
Sales in Queensland in the three months to October 2024 rose by 33.4% compared to the same time in the previous year. This was followed by South Australia (up 20.4%). The other states recorded declines in sales over the same period, led by Western Australia (down 27.8%), followed by New South Wales (19.7%) and Victoria (6.0%).
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