Major markets see new house sales continue to slip

During May, new house sales overall declined by 4.4 per cent and the five largest markets that the report covers declined, with new house sales falling the most in NSW at 6.8 per cent, which was then followed by Queensland at 5 per cent, then Victoria at 4.6 per cent, Western Australia at 2.4 per cent and South Australia at 0.2 of a percentage point.

The reasoning behind this fall, according to Mr Reardon is the lack of access to finance.

“The availability of credit has tightened over the past 12 months with banks responding to the decline in house prices and the banking royal commission by limiting lending to new home buyers,” Mr Reardon said.

“Australia’s population growth has slowed over the past three quarters in response to tighter visa requirements that have constrained inward migration.”

However, this tightening on finances is predicted to ease over the second half of the year, Mr Reardon predicted.

“In fact, we are expecting detached house starts to rise slightly in 2018 following the 2.8 per cent decline that occurred in 2017,” he said.

“Beyond that temporary lift, we expect the downturn in detached house building to properly take root in 2019 — and house sales appear to be providing a very early indication of this occurring.”

Of particular note was Melbourne’s declining sales, the first time in the current cycle.

“The new home market in Melbourne has been exceptionally strong over a number of years and we are now seeing a very modest slow-down in activity,” Mr Reardon said.

“While market conditions are slowing in Melbourne, building activity will continue to be solid given the very large volume of work still in the pipeline.”