New home sales bumped up in April

New home sales in Australia increased by 6.8 per cent in April 2023 compared to the previous month, according to the HIA New Home Sales report.

HIA chief economist Tim Reardon said with sales relatively stable albeit at extraordinarily low levels for six months, it appears that the market has reached rock bottom.

“This sees sales for the three months to April stable compared to the previous three months,” Mr Reardon said.

“This suggests that sales may have levelled out and reached a floor, barely more than half their levels from a year earlier.”

Despite the stability in sales, the report revealed an elevated cancellation rate, with more than one new home project cancelled for every four new homes sold per month.

This cancellation rate is the highest observed since the start of the pandemic, leading to a decline in the pool of work sold but not yet commenced, Mr Reardon explained.

He also noted that the Reserve Bank of Australia’s interest rate increases in the past year and the current year continue to impede new home sales and contribute to further cancellations as financing becomes increasingly unattainable for prospective buyers.

Western Australia bucks trend

Analysing sales trends across states in the three months to April, the report showed a decline in new home sales in all states except for Western Australia.

Sales in Western Australia during this period experienced a significant increase of 37.1 percent compared to the previous three months and 9.8 percent compared to the same period last 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,” Mr Reardon said.

“This is an encouraging sign that this market may defy the best efforts of the RBA.”

In terms of year-on-year declines, NSW saw the largest decrease, with sales in the April quarter down by 70.5 percent compared to the same quarter in the previous year.

Queensland followed with a decline of 51.7 percent, while Victoria and South Australia recorded decreases of 46.3 percent and 13.7 percent, respectively.

Western Australia stood out as the only state to experience growth during this period, with sales increasing by 9.8 percent.

It follows home values data from CoreLogic, which showed house values in Western Australia’s Bunbury region increased by 4.8 per cent to a median value of $523,479.

[Related: Regional property values show sign of recovery]