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New home sales down by a fifth: HIA

New home sales fell by 20.5 per cent in July, but time will tell if ongoing lockdowns have tainted consumer sentiment, according to a housing body.

A report on new home sales from the Housing Industry Association (HIA) has revealed results from an ongoing monthly survey of high volume home builders in the five largest states.

Western Australia was the only state to see a monthly increase in new home sales during July, up by 8.5 per cent.

Meanwhile, NSW saw a decline of 14.8 per cent, Queensland’s sales diminished by a quarter (25.4 per cent), South Australia was down by 29.4 per cent and Victoria’s sales shrunk by 32.2 per cent.

HIA economist Tom Devitt said sales data in coming months will indicate if the lockdowns have impaired consumer confidence, or if the July results were an anomaly.

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“With lockdowns in multiple states restricting trade and eroding confidence, it is not surprising that fewer people were able to visit display homes,” HIA economist Tom Devitt said.

“Low interest rates and changes in consumer preference for location of housing have been the major drivers for activity following the end of HomeBuilder.”

He added ABS housing finance and approvals data showed the bulk of projects initiated by HomeBuilder cleared the final regulatory hurdles, with there now being high number of properties under construction across the country.

But the report from the HIA also noted some states performed better when comparing the three months to July against the same period in 2018. Western Australia saw its sales boosted by 34 per cent, followed by NSW (up 12.5 per cent) and Victoria (10.9 per cent).

South Australia, on the other hand, had seen an 11.5 per cent drop over the three years, while Queensland was down by 30.2 per cent.

Recent Australian Bureau of Statistics data has showed housing construction approvals have continued to decline in the months after HomeBuilder and other stimulus packages wrapped up.

Approvals fell by 6.7 per cent in June, after a 7.1 per cent drop in May and an 8.6 per cent decline during April.

A fall in house construction dragged the overall total in June, while other dwellings, such as apartments and townhouses, stayed steady.

Daniel Rossi, ABS director of construction statistics, commented: “Since the unwinding of stimulus measures, approvals for private houses have fallen 20.9 per cent from the record high in April.”

However, the total approvals have been higher than in the same periods in 2020, with June seeing 44.3 per cent more approvals for building year-on-year.

Meanwhile, new loan settlements dipped across four states in July, according to PEXA.

[Related: RBA watching lending for year ahead]

New home sales down by a fifth: HIA
New home sales down by a fifth: HIA
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