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.
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“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.