Low volume of new home sales in Q1 2024 suggests unlikely pick-up in home building activity
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The prospect of a pick-up in home building activity in 2024 is unlikely given the low volume of new home sales in the first three months of the year, according to HIA Senior Economist Tom Devitt.
The HIA New Home Sales report, a monthly survey of the largest volume home builders in the five largest states and a leading indicator of future detached home construction, showed a 4.9 per cent increase in new home sales in March compared to the previous month.
This increase kept sales flat in the first three months of 2024 compared to the previous quarter.
“Concerningly, sales in the first three months of this year remain 41.3 per cent below the same quarter in 2021, 18.2 per cent below the same quarter in 2020, and 18.9 per cent below the same quarter in 2019,” Devitt said.
There is an increasing divergence at a state level, as those markets with higher land prices endure a larger downturn in home sales.
Sales in New South Wales and Victoria in the first three months of 2024 remain down significantly compared to recent years, including sales falling by 48.7 per cent and 32.7 per cent respectively, compared to the same quarter in 2019.
“The higher land costs in New South Wales and Victoria is the principal reason why sales in these markets are more significantly affected by the rise in the cash rate,” Devitt said.
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“Lowering the cost of delivering new homes to market is essential to achieving the Australian government’s target of 1.2 million new homes over the next five years.”
New home sales in the month of March declined only in New South Wales (-21.6 per cent), while the rest of the large states saw monthly increases, led by South Australia (+14.2 per cent), followed by Western Australia (+10.3 per cent), Victoria (+10.1 per cent) and Queensland (+2.3 per cent).
Sales in the three months to March 2024 increased compared to the previous year in Queensland (+41.0 per cent), Western Australia (+25.6 per cent), New South Wales (+21.3 per cent) and South Australia (+4.4 per cent), while Victoria was flat (-0.2 per cent) over the same period.