This year is proving to be a disappointing one for the housing industry, as new home sales have continued to fall for the first half of 2018.
Housing Industry Association (HIA) principal economist Tim Reardon said new home sales declined by 4.4% in May and is now 12.8% lower than the most recent cyclical peak in December last year.
"Access to finance has become the barrier to ongoing growth in home sales. 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 by limiting lending to new home buyers," he said.
This has affected home sales in most areas even in Melbourne, which saw its sales decline for the first time this cycle.
"The new home market in Melbourne has been exceptionally strong over a number of years and we are now seeing a very modest slow-down in activity. While market conditions are slowing in Melbourne, building activity will continue to be solid given the very large volume of work still in the pipeline," Reardon said.
However, this downturn should be alleviated once the impact of tighter lending eases. Reardon said sales of detached homes will rise slightly this year from 2.8% decline last year.
The largest reduction decline in home sales was recorded in New South Wales at 6.8%, followed by Queensland (5%), Victoria (4.6%), Western Australia (2.4%), and South Australia (0.2%).
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