The upward momentum of the Perth housing market may not be as strong as previously thought, with new home sales falling for the first time this year, according to the latest report from the Housing Industry Association.
The HIA said new home sales fell by 6.7 per cent in May in Western Australia, following a 6.4 per cent rise in April.
For the three months to the end of May, WA detached home sales were up 5.4 per cent, an increase of 10.9 per cent when compared with the same three-month period last year.
Detached housing approvals compiled by the Australian Bureau of Statistics for April showed a 4.2 per cent decline in WA, the first since September last year.
While the HIA said there was still an upward trend for home sales and building approvals, there were signs that momentum was not as strong as it once was, particularly for sales.
“Results in coming months will bear even closer watching than usual in terms of a possible peaking in the cycle early in 2014-15,” the HIA said.
Nationally, new home sales also recorded a decline in May, falling by 4.3 per cent – the first fall in five months.
HIA chief economist Harley Dale said the overall profile for new home sales was healthy, given it was the first decline in nearly half a year, but further upward momentum may be a challenge.
He said land supply constraints were again being exposed in the current cycle.
“Inadequate land supply is one prominent example of supply side constraints preventing new home construction reaching its full potential, highlighting the need for a focus on housing policy reform,” Dr Dale said.
Over the month of May, detached house sales rose by 3.3 per cent in Victoria and 0.5 per cent in Queensland.
South Australian home sales fell by 5.8 per cent, while in New South Wales home sales were down by 5.4 per cent for the month.