In a somewhat encouraging sign for residential construction in Australia, sales of new homes bounced back in April but remain at low levels compared with recent historic numbers, the latest report shows.
Following a 9.4% drop in March, when sales volumes hit ten year lows, the seasonally adjusted number of new homes sold throughout the country increased by 6.9 per cent last month, according to the HIA – JELD-WEN New Home Sales report based on a survey of Australia’s 100 largest builders.
Detached house sales rose by 6.4 per cent while multi-unit sales were up 10.3 per cent.
Despite this, however, volumes of new home sales and building approvals remain low in the context of levels seen over the past three years (see chart), indicating that the pace at which new work is coming in for homebuilders in Australia remains subdued.
“Even with this latest improvement, the aggregate volume of both new home sales and local government building approvals imply that in the absence of a rapid and sustained recovery, national new home building is heading to a recessionary level in 2012” Housing Industry Association Chief Economist Harley Dale says.
Dale repeated long standing calls for further interest rate cuts and more housing sector reform, including a reduction in the tax burden and an immediate injection of investment and funding.
“We keep hearing that Australia is one of the world’s strongest economies in aggregate” he says.
“That’s a redundant concept if people on the ground aren’t feeling and experiencing that, and they haven’t been for quite some time”.
In terms of states, Victoria led the way, recording a seasonally adjusted increase in new detached home sale numbers to the tune of 17.2% ahead of the removal of the First Home Bonus. Detached house sales were also up 9.8% in Western Australia and 1.8% in New South Wales, but fell by 5.5% in Queensland and 5.9% in South Australia.
Despite its strong showing in April, questions remain as to how well Victoria’s housing construction sector will hold up after the removal of the home-owners’ bonus.
In Queensland, the fall in home sales was somewhat surprising given that April was the last month of the bonus scheme there – though possibly this fall may partially reflect home buying activity coming off earlier month highs as end of the bonus approached.
Possible housing industry impacts following the end of home bonus schemes these two states, however, could be partially offset by May’s cut in official interest rates – the impact of which is not reflected in the above figures given that these figures refer t
o April and thus pre-date May’s RBA movements.