June quarter sees 15.7% increase in new home sales
The June quarter has seen a substantial increase in new home purchases, in what is being described as a sustained sales recovery.
This increase puts the June quarter’s new home sales 20.4 per cent higher than the same period in 2023. The increases, according to the Housing Industry Association (HIA), are being driven by strong economic conditions.
“Sales of new homes nationally increased by 15.7 per cent in the June quarter 2024 compared to the March quarter indicating that the number of homes commencing construction is set to increase later this year,” said HIA economist Maurice Tapang.
“This increase in sales was first observed in Western Australia in the second half of 2023 when sales in that market started to increase. This year, sales in Queensland and South Australia have also observed a sustained increase in recent months.
“These three markets have seen demand for new homes increase due to strong employment opportunities and relatively affordable land, driving local population growth.”
Tapang noted that sales recovery in these markets is sustained, with an increase in detached house constriction driving much of the data.
“Market confidence is returning as the impact of rate increases dissipates and the shortage of housing stock makes new home building increasingly attractive,” he said.
While Western Australia, Queensland and South Australia are leading the charge, NSW and Victoria are reportedly lagging behind.
“At the same time, new home sales in New South Wales and Victoria remain weak despite similar growth in demand. The adverse impact of rate rises is more significant here due to the higher cost of residential land in Sydney and Melbourne,” explained Tapang.
“Sales in New South Wales and Victoria have also been constrained by the introduction of additional regulatory costs through the National Construction Code which has distorted sales data. As a result, there is not the significant or sustained increase in sales required to expect an increase in home building in either of these markets.”
It’s simply too expensive for many in these areas: “The higher cost of delivering a new house and land package, due to higher taxes, fees and charges in these markets, is impairing the recovery of detached home building.”
Alongside the HIA release, the Australian Bureau of Statistics announced the building activity for the March quarter.
In these three months, total dwelling commencements climbed 0.5 per cent, reaching a total of 39,175. Meanwhile, new private sector house commencements rose 4.8 per cent to 25,072 dwellings, and new private sector other residential commencements fell 3.1 per cent to 14,071 dwellings.
Despite these increases, the total value of building work fell 3.5 per cent, hitting $33.4 billion.
Tapang continued: “There were 39,720 dwellings that commenced construction in the March quarter 2024. This is 0.5 per cent higher compared to the previous quarter, but 13.5 per cent below compared to the same quarter in the previous year.
“Australia completed 41,330 dwellings in the March quarter 2024, which is 9.5 per cent lower than the previous quarter and 8.1 per cent lower compared to the previous year. There were 25,600 detached homes that were completed in the March quarter 2024, down by 16.8 per cent compared to the previous quarter and down by 8.9 per cent compared to the previous year.”
“The volume of residential dwellings under construction rose marginally in the quarter but remained lower than at the same time in the previous year. This suggests that home building will not continue to drag on GDP growth,” he concluded.