HIA New Home Sales - April 2023

NewHomeSales

NEW HOME SALES REMAIN AT ROCK BOTTOM

Sales of new homes appear to be stabilising at very low levels

Sales of new homes in April 2023 increased by 6.8 per cent compared to the previous month. This sees sales for the three months to April stable compared to the previous three months (down 0.4 per cent) and down by 42.8 per cent compared to the same time the previous year.

This does suggest that sales may have levelled out and reached a floor. The RBA’s rate increases last year and this year will continue to hold down new sales and cause further cancellations as finance becomes unobtainable for an increasing number of buyers.

The cancellation rate remains elevated in the three months to April. These cancellations are occurring typically because the client is no longer able to gain access to finance given the higher cash rate and extraordinary macro-prudential restrictions.

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High levels of cancellations continue to indicate the financial strain the RBA’s relentless monetary tightening is placing on households.

The low volume of sales, combined with elevated cancelations, is eroding the pipeline of work rapidly and will see the volume of homes commencing construction continue to slow through 2023 and into 2024.

On a state-by-state basis, monthly sales rose in NSW and South Australia, with an increase of 19.9 per cent and 17.1 per cent respectively on March figures. Given the historically low volume of sales, some monthly volatility should be expected.

There are also encouraging signs that Western Australia is again set to buck national trends with sales in the three months to April higher than the previous three months to be 37.1 per cent higher than at the same time the previous year. Of note, sales in Western Australia in the three months to April 2023 were 40.3 per cent higher than at the same time in 2019.

This is largely a reflection of the depth of the home building trough in Western Australia prior to the pandemic and also indicates that home building in Western Australia will not return to the ‘bust’ conditions of 2019 given ongoing economic improvements.

In the three months to April compared to the previous three months, all other states (except WA) recorded a further decline in sales

Methodology: Each month HIA surveys the largest 100 home builders in Australia on their sales (contract to build) volume for the previous month. These builders account for 44 per cent (2020/21) of all houses built in Australia. This sample is used to extrapolate results for the rest of the market including a seasonal adjustment.

Each October the sample surveys are recalibrated to reflect changes in the market share of each of the 100 largest builders. This can affect the comparison between September and October results.

 New home sales across Australia rose by 6.8 per cent in April 2023 compared to the previous month

 New Home sales for the three months to April remain stable compared to the previous three months to be 42.8 per cent below the same time the previous year.

 With sales relatively stable, albeit at extraordinarily low levels for 6 months, it does appear that the market has reached rock bottom

 This month's sample captures 22 per cent of Australia's new detached home building sector.

NEW SOUTH WALES

New Home Sales in NSW increased by 19.9 per cent in April 2023. This uptick is due to numbers increasing from a very low base from the previous month. The numbers for this quarter are down by 4.2 per cent compared to the previous quarter. Compared to the same quarter in the previous year, new home sales are down by 70.5 per cent.

The latest building approvals data from the ABS indicates that building approvals in NSW have declined by 14.8 per cent in the March Quarter 2023. Compared to the same quarter in the previous year, building approvals have declined by 18.9 per cent

New Home Sales in Victoria have increased by 0.3 per cent in April 2023. It appears that these monthly numbers remain stable but are lower than longerterm periods. To the quarter, new home sales are down by 6.4 per cent. Compared to the same quarter in the previous year, numbers are down by 46.3 per cent.

The latest building approvals data from the ABS indicates that building approvals in Victoria have declined by 7.4 per cent in the March Quarter 2023. Compared to the same quarter in the previous year, building approvals have declined by 7.7 per cent.

New Home Sales in Queensland have increased by 3.2 per cent in April 2023. These numbers are still 10.9 per cent lower than the previous quarter. New home sales remain down by more than half compared to the same quarter in the previous year.

According to the latest ABS data on building approvals data in Queensland, numbers were down by just 11.6 per cent in the three months to February compared to a year earlier, indicating there are still a significant number of previous sales yet to reach the point of approval. As these sold projects progress, approvals numbers are expected to continue declining in Queensland.

(24 PER CENT SAMPLE COVERAGE)

New home sales in WA have increased by 8.6 per cent in the month of April 2023. WA is unique compared to the other states in that the monthly rise in numbers is consistent with longer-term trends, as opposed to rising off relatively lower numbers. WA has seen an increase of 37.1 per cent in new home sales compared to the previous quarter to be 9.8 per cent higher than the same quarter in the previous year. If WA continues to see this upwards trend, it may be on track to see the best recovery out of all the jurisdictions across Australia.

The latest data provided by the ABS on building approvals in WA show an 8.7 per cent increase in March 2023. Compared to the previous quarter, approvals are down by 12.9 per cent to be 24.5 per cent lower than the same time the previous year

New Home Sales in SA rose by 17.1 per cent in the month of April 2023. This is partly due to a pickup from below average numbers the previous month. The numbers have fallen through the quarter by 24.3 per cent. Compared to the same quarter in the previous year, new home sales are down by 13.7 per cent.

The latest approvals data from the ABS shows that building approvals have decreased by 7.5 per cent in the March Quarter 2023 to be 3.1 per cent lower than the same quarter in the previous year

NEW HOME SALES: PERCENTAGE CHANGE

Note: All comments and percentage movements relating to Net Sales refer to data that have been calculated after allowing for seasonal influences.

PRIVATE HOUSES AND UNITS: SALES AND APPROVALS (a)

Notes:

(a) New information on state market shares had led to an upward revision to sales levels, but has not substantially altered the new home sales cycle. Survey results have been obtained from State-wide estimates using weights based on financial year market shares of private dwelling commencements. Due to different weighting, state totals may not necessarily add to the national figure.

(b) Does not include Tasmania, ACT or the Northern Territory.

(c) The survey sample includes multi-unit builders who only sell direct. na: insufficient sample size