Sales of new detached houses continue to drop

Sales of new detached houses declined for the second consecutive month in February, although several key markets experienced growth, according to the latest New Home Sales report from the Housing Industry Association (HIA).

“The decline in new house sales during the first two months of 2018 is consistent with our expectation that residential building activity will move lower over the next 12 months,” said Shane Garrett, senior economist at HIA. “Tighter restrictions around investor lending and heavier obstacles to foreign investor participation are contributing to the weaker conditions in new dwelling construction.

“New house sales in NSW saw decent growth during February. There were several favourable changes made by the NSW government relating to first home buyers last year and these have been beneficial to the state’s housing industry.

“Our forecast is that new home sales will trend downwards during 2018 in line with new home building activity. We expect things to bottom out in late 2019 before modest growth resumes.”

Even though the overall volume of sales declined in February, reductions only occurred in two of the five states covered by the report.

“The magnitude of these reductions outweighed the increases which took place elsewhere,” HIA said.

The largest declines in sales were recorded in Queensland (-16.3%) and Western Australia (-9.9%). The biggest increases were recorded in New South Wales (+11.7%), South Australia (+10.3%) and Victoria (+4.8%).

Also read: First home buyer loans swell in New South Wales