Sales of new homes surged in October, continuing a positive trend across most Australian markets.
According to the Housing Industry Association (HIA) New Home Sales report, new home sales increased by 8.8% compared to September, with significant contributions from New South Wales, Victoria, and Queensland.
Strong Growth Across Key Markets
Maurice Tapang, HIA Economist, noted that the monthly rise in new home sales was driven by strong performance in several key states. “This month’s strong increase in sales comes as unemployment remains at exceptionally low levels, interest rates have remained unchanged for over a year, and prices of home building materials have stabilised,” said Tapang.
This uptick in new home sales is a positive sign for the industry, as it follows a period of cautious recovery after the pandemic-induced market slowdowns. Tapang highlighted that other indicators of future home building activity are also showing a consistent upward trend, suggesting the national new home market has already passed the trough of the current cycle, which is expected to have occurred around mid-2024.
Key Data Points:
New Home Sales Rise: A notable 8.8% increase in new home sales in October compared to the previous month.
Housing Finance Up: Loans issued for new home purchases and construction increased by 14.3% in the September quarter of 2024 compared to the same time last year.
Approvals Data: Detached home approvals rose by 13.1% in the September quarter, further signaling a healthy pipeline for future construction.
State-by-State Performance
The performance of the new home market varies across states, influenced by local economic factors, including the cost of residential land and government policies.
Western Australia was the first to see an uptick in sales back in 2023, which has since flowed through to increased housing approvals and commencements.
Queensland and South Australia have also seen positive sales growth this year, with Queensland showing a remarkable 33.4% increase in sales for the three months to October 2024 compared to the same period last year.
Victoria has experienced a slower recovery but saw the strongest monthly rise in new home sales in October, up by 26.5% compared to September.
New South Wales remains the weakest market, driven by high land costs in Greater Sydney. Despite the rise in sales elsewhere, the market in NSW continues to lag behind.
In South Australia, changes to liveable housing and energy efficiency standards in September led to a temporary pull-forward in sales, followed by an 18.0% drop in October as buyers sought to avoid additional costs from the new provisions.
Looking Ahead
Despite varying performance across states, the national trend for new home sales remains positive, with a year-on-year increase of 8.0%. This momentum is expected to continue, leading to an increase in house commencements from early 2025.
As state-specific conditions evolve, the overall outlook for Australia’s housing market is improving, with key markets showing stronger performance heading into 2025.
