Falling consumer confidence in March due to concerns over the COVID-19 epidemic resulted in lower sales of new homes, according to the latest Market Update from the Housing Industry Association (HIA).
During the month, sales of new homes fell 23.2%. Despite the sharp drop, new home sales for the quarter ending in March were only 0.9% lower than the same quarter in 2019. This indicates that transactions were solid in the first two months of the year, only driven by sales in March.
"Prior to March, the housing market was growing and new home sales were improving. Leading indicators, including building approvals, housing prices and housing data financing, have all shown that the market is entering the new decade with vigor, "said Tim Reardon. , chief economist at HIA.
The decline is apparent in all states, with Western Australia recording the largest decline at 31.6% and Victoria recording 16.9%.
New South Wales and Victoria reported a decline in quarterly sales in March, recording declines of 1% and 0.1%, respectively. In contrast, sales of single-family homes remained slightly higher in Western Australia, Queensland and South Australia than in the previous quarter.
Reardon said that consumer confidence dictates the intentions of Australians to buy a house. Given the economic impact of the COVID-19 epidemic, concerns about employment have resurfaced, leading to consumer confidence.
"Consumer confidence, overseas migration and population growth are at the heart of the outlook for the residential construction industry. As long as there is not of certainty as to when the economy will be "rebounded", including the return of foreign students, it is difficult to predict the extent of a decline in residential construction activity "said Reardon.
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