New supply on the decline for third month in a row

HIA senior economist Shane Garrett said that this report showed that, nationally, sales were down more than in the preceding month.

“New detached house sales were down by 2.0 per cent in March, after a 0.7 per cent fall in February,” Mr Garrett said.

Mr Garrett added that tighter lending policies may have contributed to the reduction of sales in the two biggest markets.

“The reduction in new house sales in Sydney and Melbourne is likely to be the result of tighter lending policies for investors being imposed by APRA,” the senior economist said.

Mr Garrett said that two states had seen improvement in sales, as detached housing has always been a massive part of their market.

“Economic recovery is underway in Queensland and WA and these two states were the only ones to see new house sales rise during March. Detached house building has always been of considerable importance in these two markets,” Mr Garrett said.

During March, new sales declined in three out of five markets, with the largest reduction occurring in South Australia at 11.4 per cent, followed by 10.2 per cent in NSW and 7.2 per cent in Victoria.

The two states that rose were Western Australia, with an increase of 26.2 per cent, and Queensland, with a smaller growth of 2.7 per cent.

Mr Garrett said that the HIA index for new house sales was an indicator of activity on the ground and would likely have a flow-on effect.

“Based on today’s results, new house building activity is likely to move lower on a national basis over the next few months,” the senior economist said.