New figures from the Housing Industry Association reveal new homes sales increased by just 0.9% during March, a disappointing result following a 5.2% decline in February.
But while activity in new home sales has continued to deliver disappointing results, the auction market has remained strong with a record May expected in Melbourne, the nation’s strongest market.
New figures from the HIA New Home Sales report reveal Australia’s large volume residential builders recorded a 0.9% increase in sales during March, after a 5.2% decline in February.
But while the increase is a solid sign for the industry, Dale said there isn’t too much cause for excitement with rising interest rates continuing to exacerbate problems with land supply.
“There also continues to be considerable constraints on the availability of finance for residential development,” Dale said. “This is a weighty confluence of factors for the new home building sector to overcome so that it can continue growing in a post-stimulus environment.”
Dale said that in the first few months of 2010, the HIA has noted a range of housing updates with highlights a risk of a “long overdue recovery… coming to a premature end”. As a result, he said, there must be more reform in the area of land zoning regulation reform.
“The recent CoAG endorsement of a housing supply and affordability reform agenda is a very welcome development as the urgency for on-going reform is growing by the day,” he said.
The figures show private sector detached house sales grew by 1.9% in March, with multi-unit sales falling by 8.7%. Dale said uncertainty regarding future rate rises are “weighing heavily on the prospects for a sustained new home building recovery”.
But despite the slightly disappointing figures, auctions have continued to perform solidly with the market set for a record month. Real Estate Institute of Victoria chief executive Enzo Raimondo said in a statement this May is set to be the busiest on record.
“In the past four years Melbourne has averaged around 560 auctions a weekend in May compared to 800 this year. The auction market has recorded a reasonably strong result from the 812 auctions held this weekend with a clearance rate of 81% being recorded.”
Last year on this weekend, there were just 388 auctions at a clearance rate of 77%. This year, that figure has increased to 812 auctions with 840 scheduled for next weekend.
In Sydney, a total of 350 properties were put on the market with 264 selling, resulting in a clearance rate of 72% with total value reaching $205 million.
In Brisbane, only four properties were sold out of 21 on the market, representing a clearance rate of 17%. In Adelaide, 25 properties were sold out of 36 on the market, indicating a clearance rate of 68% and a total value of $13.5 million.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
