New home sales build hope for housing sector
The positive result follows hard on the heels of recent data showing house prices across Australia rose 2.1 per in 2012, reversing much of the steep declines seen the year before.
Fairfax-owned Australian Property Monitors released figures on Thursday showing solid growth in the December quarter of 1.9 per cent drove a rebound at the end of the year.
Some of those gains were spurred by new home sales in December which rose a seasonally-adjusted 6.2 per cent, the latest Housing Industry Association data shows.
Over the December quarter sales were up by 3.3 per cent, the HIA said.
"The promising headline rise last December was driven by both detached house and multi-unit sales," HIA economist Geordan Murray said.
Compared with 2011, detached house sales were weak through much of 2012, down by 22.7 per cent over the year, Mr Murray said.
But while initially underperforming, in December they bounced back.
In the last three months of the year detached house sales were up in New South Wales (+14.4 per cent), South Australia (+9.3 per cent) and Western Australia (+2.5 per cent).
They fell, however, in Victoria (-8.4 per cent) and Queensland (-5.5 per cent).
Multi-units sales outperformed in 2012, recovering from record low levels the year before to rise 24.1 per cent over the year, the HIA said.
The better outlook has prompted property professionals to predict mild house price gains over the next two years, according the NAB's quarterly residential property survey.
Expectations for capital gains were highest in Western Australia and weakest in South Australia and the Northern Territory, the survey reveals.
Owner occupiers were the biggest players in the new property market, the survey suggests.
First home buyers were also more active, especially in WA. Overseas buyers were active, with Chinese buyers reportedly the fastest growing segment, NAB said.
In line with the HIA's assessment, demand for new property improved, but property insiders assessed the gains as"fair" only, according to the NAB's quarterly property survey.
"Survey respondents cited tight credit conditions as the most "significant" constraint for new housing development," the survey said.
Concerns over housing affordability are falling slowly as interest rates fall but are still "significant", it said.
Frequently Asked Questions about this Article…
According to Housing Industry Association (HIA) data, new home sales rose a seasonally adjusted 6.2% in December, helping drive a third consecutive monthly increase. HIA economist Geordan Murray said the headline rise was driven by both detached house and multi‑unit sales, and Fairfax‑owned Australian Property Monitors reported a 1.9% rebound in the December quarter that supported broader housing sector improvement.
House prices across Australia rose 2.1% in 2012, reversing much of the steep declines from the prior year. For everyday investors, that suggests the market was starting to stabilise by year‑end, although gains were modest and varied by region — so local market conditions still matter.
Detached house sales were down 22.7% over the year compared with 2011 but showed a bounce in December. In the last three months of the year detached sales rose fastest in New South Wales (+14.4%), South Australia (+9.3%) and Western Australia (+2.5%), while they fell in Victoria (-8.4%) and Queensland (-5.5%).
Multi‑unit sales recovered strongly in 2012, rising 24.1% over the year after record low levels the previous year. For investors, a strong multi‑unit recovery can signal renewed demand for higher‑density housing and opportunities in apartment markets, but local supply and credit conditions should still be considered.
The NAB quarterly residential property survey found property professionals predict mild house price gains over the next two years. Expectations for capital gains were highest in Western Australia and weakest in South Australia and the Northern Territory, suggesting regional differences in near‑term outlooks.
The NAB survey indicated owner‑occupiers were the biggest players in the new property market. First home buyers were also more active — especially in Western Australia — and overseas buyers were notable, with Chinese buyers reportedly the fastest growing segment.
Survey respondents cited tight credit conditions as the most significant constraint on new housing development, according to NAB. While interest rates falling has eased some affordability concerns, those concerns remain 'significant' and access to finance can limit building activity and supply.
The December lift in new home sales, a modest 2.1% rise in house prices for 2012, and improved demand noted by HIA and NAB point to a cautious, modest recovery rather than a boom. Investors should see this as hopeful evidence of stabilisation, but also consider regional variations, credit conditions and affordability issues before making decisions.
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