According to the HIA’s New Home Sales Report for October, there was a 3% decline in the total number of new homes sold over the month, with detached house sales falling 4.1%, while sales in the multi-unit sector increased by 1%.
With the HIA having long said the peak of the current construction cycle has passed, the October figures have not come as any surprise.
“New home sales are not far below their historically high peak, consistent with only a moderate decline in dwelling commencements in the short term," HIA chief economist Harley Dale said.
“Within the aggregate profile, detached house sales are up over the three months to October in all three eastern seaboard states,” Dr Dale said.
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Source: Housing INdustry Association
Despite the industry being on the other side of its peak, the housing sector is likely to continue to perform strongly over the coming year.
"New dwelling commencements have increased over three consecutive years to a record high. Leading indicators like new home sales and ABS building approvals suggest a fourth healthy year in 2015/16," Dr Dale said.
"That's an impressive outlook which will remain of considerable value for the wider Australian economy, given that a peak in new housing tends to be immediately followed by a sharp decline.”
While 2015/16 is predicted to be another strong year for the industry, there are indicators that an accelerated slowdown could be seen in the sector after that.
“The risk will emerge ahead of 2016/17,” Dale said.
“The lagged effect of slowing population growth and the unprecedented uncertainty around higher rise construction is unfortunately being exacerbated by higher variable mortgage costs and a broader reach for investor credit rationing than required.”
