Following “lacklustre results” throughout the first four months of 2019, new home sales in May have bounced back to their highest monthly level in more than a year, according to an industry report.
The Housing Industry Association New Home Sales report identified that new home sales jumped in all major states — specifically, up by 54.2 per cent in New South Wales, 34.0 per cent in Western Australia, 26.0 per cent in Queensland, 25.3 per cent in Victoria and 0.9 of a percentage point in South Australia.
This is an upward tick as compared to the subdued new home sales reported in April, showing just a 1.0 per cent national increase across for the month of February and sales easing by around 1.1 per cent in March.
The monthly survey of the largest-volume home builders in the five largest states also provided an early indication of trends in the residential building industry.
Housing Industry Association chief economist Tim Reardon said May’s result confirms the organisation’s expectation that the decline in building activity will begin to level off in the second half of 2019.
Mr Reardon also said the decline in building activity will stabilise at a level below the highs achieved back in 2017.
“The resurgence in home sales was evident across all five states covered by the New Home Sales survey, suggesting a broad-based improvement in housing market sentiment around the country,” he said.
“The slow start to 2019 has seen intense competition amongst home builders. The lift in sales shows that more home buyers are seeing opportunities in this competitive trading environment.”
According to Mr Reardon, uncertainty in the first part of the year was augmented following the federal elections, which he said “always impact market confidence” and the discussion around new tax imposts on investors through an increase in capital gains tax.
“An easing of the credit squeeze, lower interest rates and an expectation that APRA [the Australian Prudential Regulation Authority] will implement reforms to mortgage lending guidelines are also factors supporting the lift in sales activity,” he added.
“Income tax cuts, solid population growth and accelerating wage growth are necessary to ensure that the market does not decline further.”