New home sales have fallen to a two-year low in July, registering a 9.7% decline in total sales of houses and apartments, according to the latest data from the Housing Industry Association.
There was a 7.4% decline in sales of detached homes and a 17.3% drop in sales of apartments, units, and townhouses. These figures are the lowest recorded since July 2014.
“In all likelihood, we will experience sharper falls in new home construction in both 2017 and 2018,” HIA chief economist Harley Dale told the Australian Financial Review.
“The magnitude of decline in new home construction in coming years will, of course, be exaggerated by where we are coming from–record levels of medium/high-density construction and historically healthy levels of detached/semi-detached dwelling construction.”
The figures are the latest indicator of the slowdown in housing construction, as new building approvals also fell in June to their lowest total in seven months.
The biggest decline came from South Australia with 12.6%, followed by Queensland at 8.7% and Western Australia at 8.2%.
However, Dale was quick to warn against the sensationalising of the results of the report.
“We would do well to remember that this down cycle is following a record high that is some 24% higher than the previous (1994) peak and that there is an unprecedented degree of uncertainty this time around as to how the next few years of new home building unfold,” Dale added.
“Contrary to what we suggested in the June New Home Sales Report, we have yet to see evidence of a bottoming out in any leading new housing indicators.”
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