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Data from an industry body has revealed particularly strong new home sales activity in South Australia and Western Australia.
The Housing Industry Association (HIA) has released data showing the value of new home sales stabilised in September (+0.1 per cent), with sales for the past 12 months 8.6 per cent higher than last year.
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According to the HIA New Home Sales report, a monthly survey of the largest volume of home builders in the five largest states, month-on-month increases in sales in South Australia, Western Australia, and Victoria offset declines measured in NSW and Queensland.
New home sales were up 32.4 per cent in South Australia for September, according to the HIA. However, the industry body acknowledged the impact of changes to the National Construction Code (NCC) on this figure.
From 1 October 2024, newly constructed homes in South Australia need to have a seven-star energy efficiency rating (up from six stars).
HIA economist Maurice Tapang said a similar impact was observed when the NCC changes were rolled out in other states.
“NCC changes took effect from 1 October 2024 and pulled forward sales into September,” Tapang said.
“As was consistent in NSW in September 2023 and Queensland and Victoria in April 2024, this will likely leave a shadow of demand in sales in the months that followed.
“While it remains to be seen, strong demand for housing will likely keep this pull-forward relatively modest, as economic and household conditions improve.”
Month-on-month new home sales also increased in Western Australia (up 7.5 per cent) and Victoria (up 2.0 per cent), offsetting declines recorded in NSW (down 6.6 per cent) and Queensland (down 17.1 per cent).
Tapang said: “Leading indicators of home building activity continue to suggest that the market has already reached its trough sometime in mid-2024, even as NCC changes distort and obscure the data.
“Strong population growth, low unemployment, real wages growth and the prospect of no further increases to interest rates will drive new home building activity out of the downward cycle.”
Broker activity strong in SA and WA
The release of the report comes as ASX-listed aggregator Australian Finance Group (AFG) revealed new record high lodgement volumes in South Australia and Western Australia in its latest Mortgage Index.
In the three months to September, lodgements for brokers in Western Australia surpassed $3 billion for the first time ($3.01 billion), according to AFG, with new record lodgements volumes also set by AFG brokers in South Australia ($1.6 billion).
AFG CEO David Bailey said: “The continued momentum shows home buyers are becoming increasingly confident cash rates are at their peak. This quarter’s results are the highest Q1 on record and as we head into the spring selling season, we expect our brokers will again be seeing a lift in demand as borrowers look to secure competitive finance, so they are ready to make their move in a tight housing market.”
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