Sales of new homes in Australia have hit 33 month highs as low interest rates and pent up demand buoys all segments of the market and evidence gathers of a broadening in the recovery in residential construction.
On a seasonally adjusted basis, the overall number of new homes sold throughout Australia rose 4.6 percent in Feburary to come in at almost 7,500 as a 6.8 percent drop in multi-unit sales from a high base was offset by a 6.9 percent rise in the detached house segment of the market.
Housing Industry Association Chief Economist Harley Dale welcomed the latest results, which he said reflected momentum in both low and high density segments of the market notwithstanding last month’s drop in multi-residential sales as well as broadening of the geographical base of the recovery, which is now seeing higher levels of activity in previously weaker states such as South Australia and Queensland – the former of which has seen a 32.5 percent surge in new home sales over the past three months and the latter of which saw a 19.8 percent increase over the same period.
“Both sales and building approvals for detached housing are signalling faster momentum ahead for this component of new dwelling construction compared to what was evident in the first phase of the recovery” Dale said.
“New home sales and building approvals are also pointing to a greater geographical breadth to the second phase of the new home building recovery. The initial phase was heavily dominated by two jurisdictions – New South Wales and Western Australia.”
The latest figures follow Friday’s release of the latest housing affordability statistics which showed that affordability remained higher than at any other time since at least prior to the GFC and was 8.4 percent above levels recorded twelve months earlier notwithstanding a slight contraction over the past quarter – albeit with Dale saying affordability was likely to drop back in 2014 as house prices rose and household earnings growth remained subdued.
All other things being equal, higher levels of affordability indicate greater capacity on the part of consumers to finance the purchase of housing and are therefore conducive to higher levels of demand for new housing.
The figures also come follow the latest ABS estimates showing a solid 1.8 percent rise in the national population to 23.236 billion as of September last year. Again, all other things being equal, population growth is conducive to long-term demand for housing.
Outside of the surge in Queensland and South Australia referred to above, the seasonally adjusted number of new homes sold (detached houses only) was up 6.2 percent in New South Wales and 5.1 percent in Western Australia over the past three months but dropped 10.3 percent in Victoria.