New home building activity has been hampered by recent credit restrictions, according to a peak industry body.
A decline in new home sales during September was reflected in both the detached and non-detached segments of the market, according to the Housing Industry Association (HIA).
The HIA's most recent New Home Sales Report showed that sales declined by four per cent for the month, with the level of activity down 5.2 per cent from the April peak.
HIA economist Diwa Hopkins noted that a record level of building activity could have been achieved this financial year – and could have been of strong benefit to the broader domestic economy – but increasingly restrictive credit conditions are likely to curtail the boom in new home building.
“The deterioration in credit conditions is likely to weigh more heavily on new home building activity beyond 2015-16,” she said.
“We have therefore pared back our forecasts for activity over our forecast horizon beyond the end of the current financial year.”
The report also found that detached house sales declined in four out of the five mainland states during September.
South Australia saw the biggest drop (19.8 per cent), followed by Western Australia (8.6 per cent), Queensland (5.9 per cent) and NSW (0.5 per cent). Detached house sales increased by 3.1 per cent during the month in Victoria.