New home sales appear to have stabilised in the first quarter of 2019, after dropping by 8.5% last year, according to the Housing Industry Association (HIA).

The HIA New Home Sales report for March shows that across the state’s New South Wales (4.8%), South Australia (8.6%) and Western Australia (2.3%) all recorded an increase in new home sales compared to the previous month. Queensland posted a decrease of 4.7%, and Victoria was down by 2.9% in February.

“Given the rapid decline in new home sales throughout 2018, this moderation in the fall in new home sales suggests that the credit squeeze is easing as the market adjusts to the new lending norms,” said Geordan Murray, HIA senior economist.

HIA reported that the credit squeeze affected the market at a time when the natural housing cycle was already beginning to cool. Banks cut the amount of money they were willing to lend, and the time it took to get a loan approved worsened. The market, though, is now showing signs of adjusting to the new levels of lending.

“There is uncertainty surrounding the federal election, which typically subdues new home sales and

approvals as investors and owner occupiers put decisions on hold until after the election. The election result will rectify this uncertainty but the potential for higher taxes on housing means a post-election rebound in sales may not eventuate,” said Murray.