Home building activity is unlikely to pick up this year given the volume of new home sales is also languishing, according to the Housing Industry Association (HIA).
HIA Senior Economist Tom Devitt said the HIA New Home Sales report showed that while new home sales had increased in March, they remained well below the same time three years ago.
“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,” Mr Devitt said.
“New home sales increased by 4.9 per cent in March compared to the previous month.
“This increase kept sales flat in the first three months of 2024 compared to the previous quarter.
“Concerningly, sales in the first three months of this year remain 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.”
Mr Devitt said there was an increasing divergence at state level, with those markets with higher land prices enduring a larger downturn in home sales.
New home sales in March declined 21.6 per cent in NSW, but the rest of the large states saw monthly increases, led by South Australia (14.2 per cent), followed by Western Australia (10.3 per cent), Victoria (10.1 per cent) and Queensland (2.3 per cent).
Sales in the three months to March 2024 increased compared to the previous year in Queensland (41 per cent), Western Australia (25.6 per cent), New South Wales (21.3 per cent) and South Australia (4.4 per cent).
Victoria was flat (down 0.2 per cent) over the same period.
“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,” Mr Devitt said.
“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.
“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.”
