Despite a decline in new home sales in November, forecasts indicate that 2024 will see higher sales figures than those recorded in 2023, according to the Housing Industry Association (HIA).
Sales Decline in November
HIA Economist Maurice Tapang highlighted that national new home sales experienced a 10.1 per cent decline in November, following an 8.8 per cent increase in October. “Nationally, new home sales fell by 10.1 per cent in the month of November, offsetting the strong 8.8 per cent rise in sales in October,” said Mr Tapang.
2024 Market Confidence and Growth Prospects
Indicators suggest that 2024 will bring increased market confidence and a potential improvement in construction activity. “All indicators show an improvement in market confidence through the course of 2024. It is now more than twelve months since the last rate rise and leading indicators of building activity, including new home sales, suggest a modest improvement in the volume of new homes commencing construction is likely to emerge in 2025,” Mr Tapang explained.
Sales for the 12 months to November 2024 were 8.2 per cent higher than in the previous year. While this growth is from a low base, it signals a positive trend.
Mr Tapang attributed this stabilisation to a combination of factors, including consistent home building material costs, normalised construction timeframes, low unemployment, and the absence of cash rate increases. “Stabilising home building materials costs, a return to normal build timeframes, low unemployment and unchanged cash rate settings have provided the certainty that new home buyers need,” he said.
Regional Disparities in Sales Performance
Sales growth has been geographically uneven, with some regions experiencing significant gains and others showing a decline.
“The rise in sales has been geographically dispersed, with markets such as Queensland, South Australia and Western Australia faring better than the two largest states,” Mr Tapang noted.
Interstate migration remains a key factor in driving demand, particularly in Queensland and Western Australia, which continue to experience stronger-than-average population growth. This trend is reflected in housing approvals, particularly in Western Australia, where sales growth became evident in late 2023 and early 2024.
State-by-State Breakdown
Sales in South Australia for the three months to November 2024 rose by an impressive 31.8 per cent compared to the same period in 2023. Queensland followed with a 19.7 per cent increase, while Victoria saw a marginal 0.8 per cent rise. Conversely, Western Australia and New South Wales experienced declines, with sales falling by 29.1 per cent and 7.3 per cent, respectively, over the same period.
Outlook for the New Home Market
With an ongoing shortage of established homes available for purchase or rent, buyers are gradually returning to the new home market. “As the volume of established homes available for purchase and rent remains inadequate to service growing demand, buyers are increasingly returning to the new home market,” Mr Tapang stated.
While the November sales decline may raise short-term concerns, the broader outlook for 2024 remains optimistic. The combination of stable economic conditions, supportive cash rate settings, and population growth in key regions positions the sector for a stronger performance in the coming year.
