New home sales across the majority of Australia have been slowing down for consecutive months from September 2015. The projected over supply of housing projects created from foreign buyers and increased investor activity is said to be the primary cause for the slow down. Sydney is however the only exception to this at present with a decline in house prices not yet being seen.
The reason behind the slowdown in new home sales is due to “a confluence of factors”, as described by the HIA chief economist Harley Dale, “The lagged effect of slowing population growth, an uptick in variable mortgage costs, over-reach on the part of APRA’s credit controls, and an easing in property price growth in Sydney and Melbourne are all in play.”
Having said that, the housing prices are not yet being affected in Sydney but declining in Melbourne, Brisbane and Perth. Based on the figures from Australia Bureau of Statistics, there were more than 55,000 new dwelling commencements in the September 2015 quarter and recorded 15% increase in the year to September. Therefore, the new dwelling commencement level is expected to remain at high level in the first half of 2016.
To add to this there is also a slump in the number of apartment approvals. However, Westpac senior economist Mr Smirk believed that home building will continue to contribute to economic growth in 2016. “In terms of adding to growth, their growth will be peaking around the end of this year, so it’s an ongoing positive growth story for this year but it does suggest that we’ll see dwelling construction activity be a little bit more of a drag for growth as we move into 2017,” he said.
On March 10 & 11th construction professionals from across New South Wales along with local and national government will meet for the Sydney Build Exhibition at the Australian Technology Park. The exhibition will cover all the recent developments in Sydney’s construction industry and will provide complimentary conferences, CPD accredited workshops and networking sessions.