New home sales post unexpected fall

New home sales surprisingly dipped by 10 per cent in Western Australia in May, but turnover of new housing stock remains significantly higher than 12 months ago.

The Housing Industry Association’s New Home Sales report, released today, showed there were just under 1,300 new homes sold in WA in the month of May, down 10.3 per cent on the previous month.

Turnover was 14 per cent higher, however, than sales in May 2012.

“The decline in May is disappointing, however the gains of the last 18 months have not been eroded and we remain of the view that the overall trend of improvement should continue into the medium term,” HIA chief economist Harley Dale said in the report.

“The state’s starting point – a prolonged period of serious under building – combined with the recent acceleration in population growth, certainly necessitates we see a continuation of the overall trend improvement.”

Nationally, sales of new homes rose for the fourth consecutive month to an 18-month high with a 1.6 per cent improvement in May.

Gains occurred in three out of the five states – New South Wales, Victoria and South Australia.

“The key is whether a new home building recovery can be sustained, and at a growth rate sufficient to meaningfully assist the Australian economy with its rebalancing acts,” Dr Dale said.

“We won’t get to that required outcome while policy-makers continue to assume that super low mortgage rates will do the job all on their own.”