New data has indicated that new home sales have continued their trend of decline through to the end of 2018.
According to Geordan Murray, senior economist at the Housing Industry Association, detached house sales declined by 6.7 per cent in December and were down 14.9 per cent for the quarter compared to last year.
This figure was the result of a steady decline throughout 2018, he said.
NSW was the only state not to experience a monthly sale decline as it saw a rise of 10 per cent. Meanwhile, Victoria declined by 11.8 per cent, Queensland and Western Australia both declined by 9.2 per cent and South Australia declined by 4 per cent.
Mr Murray pinned the blame for the overall decline in new home sales on the tightening market conditions.
“While declining home prices in Sydney and Melbourne have made home buyers in these markets far more cautious, the ongoing challenges accessing finance that face many would-be home buyers across the rest of the country continue weigh on new home sales,” Mr Murray said.
Mr Murray also said there is a large amount of new supply in the pipeline currently under construction due to large numbers of off-the-plan sales from 2016 to early 2018.
“These off-the-plan sales have been flowing through the build process and many are now in the construction phase. This high level of building activity is masking a deterioration looming on the horizon,” he said.
“The slowdown in sales that occurred throughout 2018 shows that the pipeline of new work coming though during 2019 is set to be considerably weaker than we’ve seen in recent years. Home building activity on the ground is set to decline as the year progresses.
“It will be important to watch the trajectory of new home sales during the first half of 2019. This will give us a clear indication of how the contractionary phase of the home building cycle will play out in the second half of 2019 and into 2020,” concluded Mr Murray.