New home sales down 5 times in 6 months

Higher interest rates continue to weigh down on new housing demand and supply, according to the Housing Industry Association. New Home Sales figures released today show the number of new homes sold in Australia has fallen for the fifth time in six months.

HIA’s figures show that the sale of new homes and units among Australia’s largest builders and developers fell by 3% in September to 7342 dwellings.

Private detached house sales dropped by 6.2% while sales of multi-units increased by 18.2% following a weak July/August.

According to the HIA, the year ahead is shaping as a subdued one for the new housing market.

HIA’s Executive Director – Economics and Housing, Simon Tennent, said that a combination of negative factors looked set to generate lower housing starts levels across nearly all of Australia in 2006/07.

“Housing affordability is at critically low levels everywhere across Australia and is suffering an additional hit in 2006 because of higher interest rates,” Mr Tennent said.

“On top of the higher rate environment you have skills shortages and a lack of available land which are constraining new home building,” he said.

“Throw these three factors together and a national recovery in residential construction, which is way overdue, is still some distance off.”

“Higher interest rates don’t only hit buyer sentiment, they also worsen an existing housing supply problem. This lack of supply is costing the industry growth and is putting more pressure on rental markets,” Mr Tennent added.

For the month of August, detached house sales fell by 22% in Queensland and were down by 15% in New South Wales, 6% in Western Australia, and 3% in South Australia. Sales in Victoria bucked the trend, jumping by 23% following three very weak months.

Source: www.propertyweb.com.au

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