A steep 12.1% drop in new detached house sales in Victoria in October has highlighted the challenges facing residential developers in the state.
In contrast NSW new detached home sales increased by 4.7% over October to lead a modest 3.4% national rise over the month, according to the Housing Industry Association monthly survey of Australia’s largest home builders.
Detached new home sales increased by 3.2% in South Australia, and 3.7% in Western Australia, but were down by 4.3% in Queensland.
Excluding the fall in Victoria, detached sales would have posted a rise over the month of 2.4%
HIA chief economist Harley Dale called the October result “modest” but “a move in the right direction”.
The pick-up in home sales follows a 0.9% rise in residential construction activity over the September quarter as recorded by the ABS, which Westpac and CommSec said pointed to an upswing in the sector.
Most of the monthly increase was the result of an increase in the sales of apartments.
The HIA New Home Sales report showed a substantial 31.4% increase in the sale of multi-units in October while detached house sales fell by 2% in October, the fifth decline in six months.
“Scratching below the surface, new home sales in October were a mixed bag. Within the weak headline result for detached houses there were modest increases for New South Wales, South Australia, and Western Australia, albeit from very low bases,” says Dale.
“Detached house sales in Victoria were a big drag on the aggregate result in October, slumping by 12.1%. If you take that result out of the mix then detached house sales actually posted a rise of 2.4%.”
“We need to see evidence emerge in coming months of a stronger, broader based recovery for new home building.
“The fact we don’t have that evidence now is precisely why the Reserve Bank of Australia should cut interest rates next Tuesday.”
“Further action on rates next week would bolster the chances that we see a sustained recovery in new home building in 2013. Right now the jury is still out on that,” he says.