The first half of 2018 saw a continuous drop in new house sales across major cities, including Melbourne, the strongest in the new home market.
According to HIA’s (Housing Industry Association) New Home Sales report, sales in all five markets fell by 4.4 % in May and are currently down 12.8% from the last industry high, which came in December of 2017.
The largest decline was recorded in New South Wales (-6.8%) followed by Queensland (-5.0%), Victoria (-4.6%), Western Australia (-2.4%) and South Australia (-0.2%).
Melbourne, which has had exceptionally strong new house sales in the past years, was not immune to this downturn, as new homes struggled to find buyers.
“For the first time in this cycle we are seeing sales declining in Melbourne,” said Tim Reardon, HIA’s Principal Economist.
Reardon revealed that access to finance is a one potential reason for the cooling market. “The availability of credit has tightened over the past 12 months with banks responding to the decline in house prices and the Banking Royal Commission by limiting lending to new home buyers,“ he said.
Another possible reason is the slowdown in Australia’s population over the past three quarters, as tighter visa requirements have restricted inward migration.
As experts continue to monitor sales trends, HIAA pointed out some silver linings in the market. First, although market conditions are slowing in Melbourne, building activity will remain solid given the very large volume of work underway. Second, sales for detached house expected to go up this year – after its 2.8% drop in 2017 – as the effects of financial constraints ease.
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