New home sales sluggish at the start of 2024

The HIA’s New Home Sales Report, which surveys the largest volume home builders in the largest five states, gives a good indication of how detached home building is tracking across the country.

For the first three months of 2024, the report showed that new home sales were 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.

On a month-by-month level, new home sales increased by 4.9 per cent in March compared to the previous month, which contributed to keeping sales flat in the first three months of 2024 compared to the previous quarter.

HIA senior economist Tom Devitt said that even with some recent gains, “the prospect of a pick-up in home building activity in 2024 is not likely given the low volume of new homes sales in the first three months of 2024”.

Devitt noted that differing economic factors across the states are increasingly determining their detached home building pipeline, with some of the largest markets facing the strongest headwinds.

“Sales in NSW 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,” Devitt noted.

“The higher land costs in NSW and Victoria is the principal reason why sales in these markets are more significantly affected by the rise in the cash rate,” he explained.

And while Victoria fought back during the month of March, with new home sales rising 10.1 per cent, NSW saw further depletion, dropping by 20.6 per cent.

The rest of the country saw some gains in March, with South Australia leading at 14.2 per cent, followed by Western Australia’s 10.3 per cent and Queensland rising 2.3 per cent.

And the figures for 2024 at least mark positive improvement against 2023’s serious decline in activity.

Compared to the previous year, sales in the first quarter of 2024 were up 41 per cent in Queensland, 25.6 per cent in Western Australia, 21.3 per cent in NSW and South Australia, and 4.4 per cent in South Australia, while Victoria remained flat.

Devitt said that until new home building becomes financially more viable for Australians, the figures will still linger below the capacity of recent years – and what’s needed to meet the housing accord targets.

“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,” he said.