Leading industry economist says residential construction activity in Australia has peaked
Housing Industry Association chief economist Harley Dale says there is “little prospect” for further growth in new home construction over the coming financial year, with the sector having passed its cyclical peak.
According to the HIA’s new home sales report, the number of new homes sales declined modestly in July, dropping 0.4 per cent over the month.
“It appears that the cyclical peak for total new home sales occurred in April, but the subsequent downward trend is very mild,” Dr Dale said.
“The annual peak for detached house sales has passed,” he said, with sales increasing only 0.7 per cent in the month.
Over the three months to July this year detached house sales fell by 2.8 per cent to be 3.4 per cent lower when compared to the corresponding period in 2014.
Meanwhile, apartment sales fell 4.2 per cent in July following a 2.9 per cent dip in June.
“Over the three months to July this year multi-unit sales increased by 8.3 per cent, but it was the strength of the May result that drove the quarterly outcome,” Dr Dale said.
But Dr Dale was upbeat on the outlook for the industry over the year.
“Following three consecutive years of strong growth which has propped up the domestic economy considerably, both HIA new home sales and ABS building approvals signal another healthy year for new home construction,” he said.
Meanwhile the pace of growth in housing prices across the mainland state capitals has slowed, according to preliminary figures from CoreLogic RP Data.
The analytics firm, which will release detailed figures tomorrow, says the numbers so far point to a 0.5 per cent gain in August, after rises of 2.8 per cent in July and 2.1 per cent in June.
After prices rose 1.1 per cent in August last year, the latest monthly rise suggests annual growth slowed to about 10.5 per cent in the year to August, from 11.1 per cent over the year to July. CoreLogic RP Data head of research Tim Lawless said the monthly growth slowdown was most evident in Melbourne, where prices were relatively flat, up only about 0.1 per cent on average in the first four weeks of August compared with the July average.
Sydney prices were up about one per cent.