Homes sales up in February from low levels: HIA

The Housing Industry Association’s (HIA) latest New Home Sales report has recorded a 5.3 per cent increase in the sale of new homes nationally in the month of February 2024 from “very low levels”.

HIA chief economist Tim Reardon stated despite this increase, sales remain “around the low levels that prevailed in the second half of 2023”.

Reardon attributed the slowdown in sales primarily to the rise in the cash rate that has “eroded the capacity of households to borrow and impaired market confidence”.

“The slowing in sales and building approvals will flow through to a decade-low volume of new houses commencing construction in 2024,” Reardon added.

“The economic impact of this slowdown will become increasingly evident in 2024, as employment in the home building industry falls.

“The higher borrowing costs are compounding the elevated cost of land and construction, drying up the pipeline of new home building work despite the significant pent-up demand for housing.”

According to the report, new home sales saw monthly increases in most large states. The largest increase was recorded in Queensland at 8.4 per cent, followed by NSW (6.5 per cent), Victoria (6.3 per cent), and Western Australia (5 per cent).

However, South Australia recorded a drop in new home sales of 5.5 per cent in February.

Over the three months to February 2024, sales were stronger when compared to the same period in 2023, according to the HIA.

Western Australia was in the lead with an increase of 39.9 per cent, followed by Queensland (20.4 per cent), and NSW (16 per cent), while declines were recorded in Victoria and South Australia of 7.7 per cent and 13.9 per cent, respectively.

“The increase in sales in February was observed in most of the large states. Given the weakness of January data, it is not all too surprising to see an uptick in February,” Reardon concluded.

This data coincided with CoreLogic’s Monthly Housing Chart Pack for March 2024, which revealed that the annual count of national sales grew to 500,580 over the year to February 2024.

This marked the first time national sales surpassed 500,000 since December 2022.

Annual sales activity across the combined capitals increased by 6 per cent compared to the same period a year prior and 8.2 per cent higher than the five-year average.

[RELATED: National sales at highest level since 2022: CoreLogic]