While the Australian housing market reported the year's first new home sales improvement at 2.2% in June, the increase was not sufficient enough to cover the decline seen over the past few months.
Housing Industry Association (HIA) principal economist Tim Reardon used one word to describe June’s improvement: paltry. He may have a point: new home sales for the first six months of 2018 are 2.9% lower than the last sixth months of 2017.
"The deterioration of sales over the financial year reflects the shifts in housing market conditions. The availability of credit has tightened over the past 12 months with banks responding to the decline in house prices and the Banking Royal Commission," Reardon said.
Amongst all states, only Victoria reported a decline, continuing a slump which began in February.
Sales were healthy elsewhere, with New South Wales reporting an 8.3% sales increase and new home sales also improving in Queensland (2.7%), Western Australia (1.5%), and South Australia (0.2%).
One factor affecting new homes sales is population growth, which has slowed over the past three quarters due to tighter visa requirements.
However, Reardon pointed out that weakening housing approvals could potentially dampen the sales activity.
"ABS data shows approvals for private sector detached houses fell dramatically in May. Approvals data typically trails the new home sales data by three to six months and the dramatic fall in approvals in May is likely to be reflected in the June data," Reardon said.
Collections: Mortgage News
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