Detached house sales rose by 3.6% in November, according to the Housing Industry Association’s (HIA) New Home Sales Report.
The monthly increase was geographically widespread—sales were up in Victoria (7.3%); Queensland (2.1%); South Australia (7.4%); and Western Australia (2.2%). New South Wales was the only state to buck the trend, with sales declining by 3.3%.
“After a string of weak months, it is pleasing to see new home sales finishing the year on a slightly more positive note,” said Geordan Murray, HIA senior economist.
However, Murray also warned that this increase in sales was unlikely to mark the end of the downward trend seen throughout the year, considering the weakening Sydney and Melbourne housing markets, as well as the tight credit environment.
“Despite the monthly rise, the overall level of sales in November is well below the level 12 months previously and also below what had otherwise been typical for most of the period since 2014,” he said.
Murray said that the tighter lending environment was a result of the banks adapting to the more restrictive lending regulations from The Australian Prudential Regulation Authority (APRA) and increased scrutiny from the Hayne Royal Commission.
HIA found that the credit squeeze first started to hurt the investor side of the market in 2017. Recently, the impact of the crunch has reached the owner-occupier market.
“Tighter credit conditions facing owner-occupier borrowers are now weighing on the detached house building market, illustrated clearly by the reduced levels of new home sales and building approvals,” Murray said.
The Royal Commission is set to release recommendations early next year, and HIA believes that that the credit squeeze may continue in 2019. The industry group said that policymakers will need to proceed cautiously when responding to the commission’s recommendations.
