New home sales in Australia are improving after a slow middle of the year with the latest figures showing sales increased by 3.4% in October.
The Housing Industry Association New Home Sales report, a survey of Australia’s largest volume builders, showed a substantial 31.4% increase in the sale of multi units last month.
However, detached house sales fell by 2% which the HIA described as a disappointing result which marked the fifth decline in six months.
New detached house sales increased by 4.7% in New South Wales, by 3.2% in South Australia, and by 3.7% in Western Australia. Detached house sales fell by 12.1% in Victoria and were down by 4.3% in Queensland.
‘It is a modest increase but at least it is a move in the right direction. Scratching below the surface, new home sales in October were a mixed bag. Within the weak headline result for detached houses there were modest increases for New South Wales, South Australia, and Western Australia, albeit from very low bases,’ said HIA chief economist Harley Dale.
‘Detached house sales in Victoria were a big drag on the aggregate result in October, slumping by 12.1%. If you take that result out of the mix then detached house sales actually posted a rise of 2.4%,’ he explained.
‘We need to see evidence emerge in coming months of a stronger, broader based recovery for new home building,’ said Dale, adding that a cut in interest rates next week would help to boost the sector.
‘Further action on rates next week would bolster the chances that we see a sustained recovery in new home building in 2013. Right now the jury is still out on that,’ he said.
Meanwhile, preliminary figures from the Australian Bureau of Statistics show that residential construction activity improved modestly in the September quarter of 2012. The aggregate volume of residential building work tick increased 0.6% following five consecutive quarters of decline.
However, despite the quarterly improvement, September still looks like being one of the weakest quarterly results in the last decade as the total volume of work done over the 12 months to September 2012 was 5.7% lower than the same period in 2011.
‘We have long held the view that the second half of 2012 is likely to represent a low point for residential building activity in the current cycle and there are tentative signs of this being the case,’ said HIA economist Geordan Murray.
‘We had hoped by this time in 2012 to see a more balanced use of federally led fiscal reform, planning reform, and monetary policy to set the platform for a residential construction recovery in 2013. To date monetary policy has been the primary macro economic tool in play, and it looks like this situation will persist. It is time to see Federal and state government action occur to a substantially larger extent than is currently evident,’ he pointed out.
In the September 2012 quarter new residential building work done improved by 0.9%. Underlying this result was a 0.5% increase in the volume of work on new detached dwellings and a 1.9% increase in the volume of work done on new multi unit dwellings. The volume of work done on alterations and additions fell by 1.5%.
Combining the volume of building work done on new dwellings with work done on alterations and additions resulted in a 0.6% overall improvement across the industry.