New home sales are on the decline nationwide, according to the latest report from the Housing Industry Association (HIA).
March was the second consecutive month to see a drop in sales activity, according to HIA statistics, with total new home sales falling by 6% − reflecting a 6.3% drop in detached house sales and a 3.5% fall in unit sales.
New house sale figures for the first quarter of this year showed an increase from the first quarter of 2007, but the HIA warns that recent trends tell a different story.
“As a result of a very strong start to the year for detached houses, the March 2008 quarter sales results actually look quite healthy,” says the HIA.
“We have, however, begun to see the level of detached house sales fall away over February and March, while multi-unit sales never really stopped going backwards.”
New South Wales and Queensland saw the biggest declines in detached house sales for March, with Western Australia being the only mainland state to buck the trend and see an increase.
Overall new home sales in Western Australia increased by 4% in March, but the HIA points out that this is a modest increase when compared to a drop of 33% the previous month.
New South Wales showed a 12% increase in new house sales for the first quarter of 2008 when compared to the same quarter in 2007, but HIA figures show that sales dropped by 19.7% in March, prompting it to predict slower trade in the future.
“We expect to see a bounce back in April but the second quarter of this year is likely to be weaker than the first,” says the HIA
Victoria saw a strong 18% rise in new house sales in February but this activity dropped by 0.8% in March, and the HIA expects sales to remain flat over the coming months.
New house sales in Queensland for the first quarter of 2008 dropped 4% from the corresponding 2007 quarter, with both February and March showing a 10% slump in sales activity, and the HIA does not anticipate a pick-up in the near future:
“Sales are expected to hold about steady overall in the coming months rather than move higher.”
South Australia performed strongly on the sales front over the first quarter of this year with new house purchases increasing by 8%, but March sales fell by 5.8% and the HIA expects this trend to continue:
“Through the inevitable ups and downs the level of sales is not expected to mount a sustained recovery over the June 2008 quarter.”
Overall the HIA sees the next few months as a challenging time for the new house market nationwide.
“Taking the substantial increase to mortgage rates in 2007/08 together with significant upward pressure on labour and materials costs, it is very difficult to see a sustained recovery for sales emerging in coming months,” says the HIA.