New home sales continued to decline throughout most of 2018, and the numbers eventually dropped to their lowest level since late 2012 in December, according to Housing Industry Association (HIA).
HIA’s New Home Sales Report revealed that detached house sales slid by 6.7% in December, and sales during the final quarter of 2018 were down by 14.9% year over year.
“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 to weigh on new home sales,” said Geordan Murray, HIA senior economist.
Victoria (-11.8%), Queensland (-9.2%), South Australia (-4%), Western Australia (9.2%) all posted declines in sales during the period. Only New South Wales bucked the trend, up by 10% in December.
HIA found that there is still a large amount of ongoing residential building work because of residential developments that proceeded with large numbers of off-the-plan sales during 2016, 2017 and early 2018. These off-the-plan sales were flowing through the build process and many are now being constructed. This high level of building activity is concealing a forthcoming downturn, said HIA.
Murray said that that the pipeline of new work entering in 2019 will be weaker than what was recorded in recent years, considering the decline in sales during 2018. In addition, home-building activity is set to dip 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,” said Murray.