The affordability constraints arising from the recent surge in house prices have translated to slowing demand from homebuyers, with sales of new detached homes declining in April.
According to the Housing Industry Association (HIA)’s latest report, sales of new detached homes fell by 1.2% in April.
Over the month, only Western Australia and Victoria reported healthy gains in new home sales, up by 8.8% and 4.0% respectively.
New South Wales, on the other hand, recorded the steepest decline at 9.4%, followed by Queensland at 9%.
However, HIA economist Tim Devitt said despite this drop, the cumulative sales over the first four months of 2022 were stronger than the previous year.
“The strong demand for new homes indicates the depth of the shortage of housing and the significant change in household formation rates, due to the pandemic,” he said.
For instance, New South Wales dominated the sales for new detached homes, reporting an 11.1% growth over the three months ending in April.
“These strong sales are ensuring that the volume of home building and demand for skilled workers will remain strong at least until the end of 2023.”
A separate report from PropTrack showed a decline in new listings over the month, driven by the public holidays.
New listings across Australia declined by 20.5% monthly, prompting a 2.5% drop in overall for-sale listings.
Even regional areas reported a decrease in new listings at 17.4%. However, new listings in the regions are still 1.5% higher compared to the same month last year.
PropTrack economist Angus Moore said this slowdown in listings was expected, given that the Easter public holidays fell in the middle of April, whereas last year it was at the start of April.
“That means the impact of the Easter weekend was likely felt almost entirely in April this year, compared to last year, when its impact was likely spread across both March and April,” he said.
Furthermore, Mr Moore said it is crucial to note that the decline came off the back of a strong quarter during the first three months of the year, where capital cities posted the highest number of new listings since 2014.
“After an extremely strong late 2021 and early 2022, selling conditions look to be tempering and we are starting to see an increasingly healthy balance between supply and demand,” he said.
Mr Moore said buyers remained active in the market despite the monthly drop in sales.
“The solid levels of new supply coming to market over the past six months has helped to give buyers more choice and ease competition,” he said.
“Conditions are likely to remain solid for the next few months, but may continue to soften as we head into the typically quieter winter season.”
Photo by @florianschmid on Unsplash
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