New home sales have ended the financial year on a positive note, but they’re set to sink as a “tsunami” of housing supply floods the market.
Sales jumped 8.2 per cent in June, following a drop of 4.4 per cent in May, the Housing Industry Association’s data shows.
Detached house sales bounced 7.2 per cent and multi-unit sales were up 11.5 per cent.
“The overall trend is still one of modest decline for New Home Sales, but a bounce of 8.2 per cent in June 2016 highlights the resilience of the national new home building sector,” HIA chief economist Harley Dale said in a statement.
“The overall profile of HIA new home sales is signalling an orderly correction to national new home construction in the short term, as are other leading housing indicators.”
Detached homes sales were up in all five mainland Australian states in June, with Queensland leading with a 14.9 per cent leap.
However, Dr Dale said, there was still a large geographical divergence in sales results.
Detached homes sales plummeted 27.5 per cent in Western Australia and sank by 21.4 per cent in South Australia in the June quarter, compared to the same three-month period in 2015. But they were up 17 per cent in Victoria and 7.1 per cent in Queensland.
HIA’s home sales report comes as market analyst and forecaster BIS Shrapnel warns of a “tsunami” of housing supply coming onto the market in the next 12 months.
BIS Shrapnel associate director Kim Hawtrey said there had been 220,000 housing starts in 2015/16, a record high, and that almost all major housing markets would soon shift into oversupply.
“Low interest rates have unlocked significant pent-up demand and underpinned the current boom in activity, but with population growth slowing and a strong backlog of dwellings due for completion, new supply will outpace demand,” Dr Hawtrey said in a statement.
“This will see the national deficiency of dwellings gradually eroded and most key markets will begin to display signs of fatigue.”