After slumping to its lowest level in more than three years in January, the seasonally adjusted value of contracts for sales of new homes throughout Australia edged up by three per cent last month according to the latest data.
More promising still, there was a broad improvement in most areas across Australia, with Victoria a notable exception to the increase.
Despite the improvement, levels of new home sales are still low by historic standards, meaning that while the volume of new residential building work coming in is back on the rise, it is still relatively subdued as the numbers as rising from historically low levels.
After plummeting by 7.3 per cent in January, the seasonally adjusted volume of new home sales throughout Australia edged back up by three per cent in February, according to the latest HIA – JELD-WEN New Home Sales report based on a survey of Australia’s 100 largest builders. Detached house sales rose by 2.2 per cent while multi-unit sales jumped by 10.5 per cent.
Outside of Victoria, which recorded a 7.4 per cent decline, the volume of new detached house sales increased in all states. Western Australia, where new detached sales surged by 12.8 per cent, led the way, followed by New South Wales (up 5.3 per cent) Queensland (up 3.5 per cent), and South Australia (up 0.3 per cent).
Because of the depressed market leading up to February, overall levels of new home sales remain weak by recent historic standards. In the three months to February, the seasonally adjusted value of new home sales was down by 16.8 per cent compared to the same period one year earlier despite Queensland benefiting from the final months of that state’s building grant.
HIA Chief Economist, Dr. Harley Dale says that while the bounce in February’s figures is encouraging, as was the widespread nature of last month’s increase outside Victoria, much work must still be done before home sales return to anything resembling healthy levels.
He says, however, that a sustained recovery in residential construction in coming months is unlikely given tight financial conditions, subdued consumer and business confidence, ‘too high’ interest rate settings and ‘inappropriate’ plans to tighten fiscal policy.
“The beginning of a recovery seems evident in Western Australia (but nowhere else) and the prospect of policy reform in New South Wales and Queensland increases the likelihood of a lift in new home sales volumes in these states through 2012/13,” Dale says.