New home sales stabilise as consumer confidence improves
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New home sales in Australia remained steady in September, according to the latest HIA New Home Sales report.
The report, a monthly survey of the largest volume home builders in the five largest states, is considered a leading indicator of future detached home construction.
HIA Economist Maurice Tapang said the data showed signs of returning market confidence in new home building.
“New home sales in the month of September was unchanged compared to August, which leaves sales over the past twelve months higher by 8.6 per cent compared to the previous year,” Tapang said.
Increases in sales in South Australia, Western Australia and Victoria offset monthly declines in NSW and Queensland in September.
Tapang noted that consumer confidence was slowly improving across the Australian economy.
“This improvement in consumer confidence will take time to trickle through new home building, as consumers get greater certainty with interest rates and economic conditions,” he said.
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The economist suggested that leading indicators pointed to the market having reached its trough in mid-2024, despite distortions caused by National Construction Code (NCC) changes.
South Australia saw a significant increase in new home sales, rising by 32.4 per cent compared to August.
“NCC changes took effect from 1 October 2024 and pulled forward sales into September,” Tapang explained.
He warned this could lead to reduced demand in the months following, as seen previously in other states.
However, Tapang remained optimistic about the sector’s outlook.
“Strong population growth, low unemployment, real wages growth and the prospect of no further increases to interest rates will drive new home building activity out of the downward cycle,” he said.
The report showed mixed results across states for the September quarter 2024 compared to the same period in the previous year.
Queensland recorded the strongest annual increase at 50.2 per cent, followed by South Australia at 18.5 per cent.
NSW, Western Australia and Victoria all experienced declines in sales, with NSW showing the largest drop at 25.5 per cent.
Overall, new home sales in the September quarter 2024 were 3.9 per cent lower compared to the same time in the previous year, a figure distorted by strong pull-forward sales in NSW in September 2023.