Sharp decline for new home sales
The pace of decline for new home sales is accelerating.
The Housing Industry Association (HIA) New Home Sales Report has revealed a 9.7% decline for new home sales in July. The drop erased June’s 8.2% increase, and the HIA said the result showed the cycle of new home construction is likely to have peaked.
“The overall trend decline in new home sales is accelerating, signalling a relatively sharp drop (from a record high) in new dwelling commencements from 2017,” HIA chief economist Harley Dale said.
Dale said new home construction, which he called the “kingmaker of the Australian economy”, was likely to continue to decline.
“In all likelihood we will experience sharper falls in new home construction in both 2017 and 2018. The magnitude of the decline in new home construction in coming years will of course be exaggerated by where we are coming from: record levels of medium/high-density construction and historically healthy levels of detached/semi-detached dwelling construction,” he said.
Dale warned against sensationalising negative results for new housing.
“We would do well to remember that this down cycle is following a record high that is some 24% higher than the previous peak, and that there is an unprecedented degree of uncertainty this time around as to how the next few years of new home building unfold,” he said.