December 2015 was a good month for new single family home sales in Australia, and an even better month for new multi-unit sales. According to the latest report from the Housing Industry Association, the number of new detached houses that sold rose from 5,798 during the previous month to 5,926 in December, a gain of 2.2 percent. The number of residential multi-units sold in December rose by a far greater percentage however, achieving an increase of about 21 percent to bring the total number to 1,778.
Taking into account the number of apartments sold as well, the end figures indicate a total rise of 6 percent in combined new dwelling sales for the month. According to Harley Dale, the HIA Chief Economist, this is very positive news for the industry. “Key leading indicators of new home building are consistent with very healthy national construction volumes persisting throughout the first half of 2016.” said Dale. But will the trend continue as we go further into 2016? Or will sales start to stagnate over the course of the coming year? No one knows for sure, and there are no crystal balls to look into for the real estate market. With that being said, most experts and the report itself make clear that they do expect things to start cooling down.
According to the HIA New Home Sales Report, “The roller-coaster ride of multi-unit sales at the end of 2015 is somewhat emblematic of the year more broadly. The first half of the year saw a prodigious rise in monthly sales levels, which was then followed by a trend decline, although the pace of this has been more modest in comparison. Looking to 2016, conditions will be less favorable and the risks lie to the downside.” With the large number of new sales in 2015, and a record number of 232,078 being hit for housing approvals for the year, it’s only natural to assume that the pace will not hold steady for 2016. In fact we are already starting to see the slowdown beginning.
Looking at the Housing Industry Association numbers for the past six months, you can see that the sales of new single family homes and multi-units in the last three months of the year is significantly lower than the numbers for the previous three months, with 1,113 more sales occurring during the last three months. November was by far the worst month for sales, with only 7,265 new homes being sold. October was slightly better, with a number of 7,463 being reached. But over the course of the last six months, the largest number of sales came in August, with a grand total of 8014 new dwellings being sold.
This ever evolving housing market is being watched closely by the HIA’s Dr. Harley Dale. “The updates we receive for leading indicators in coming months will be closely watched to determine the magnitude of any risk that the second half of 2016 is materially weaker for new home building than the first half of the year,” said Dale. In summary, it appears we can expect an overall general trend towards slower growth in the new housing sector for 2016, with the decline looking to be a slow and gradual one.