New Incentives Required to Boost Activity

The Housing Industry Association survey of the largest 100 residential builders in Australia found that new home sales in November 2008 declined by 1.1 per cent.

The result is disappointing as it was hoped that the increased First Home Owners Grant and decline in interest rates would boost activity and build on the result recorded in October which saw a 3.1 per cent increase in sales volumes.

HIA Chief Executive - Association, Chris Lamont, said activity in the second half of 2008 reflected the general slowing of the economy and difficulties faced in securing finance for new construction projects. 

Sales of new detached houses eased by 0.4 per cent in November following a 5.2 per cent increase in October. The softer result was due mainly to a sharp 10.1 per cent drop in Queensland. The remaining four mainland states enjoyed higher sales volumes in November.

Activity in the multi-unit sector fell once again, down by 5.3 per cent in November following a fall of 8.6 per cent in October 2008.

“A lack of available credit and general economic uncertainty saw investors sitting on the sidelines in the second half of 2008 and this is now showing up in very weak updates for the multi-unit market,” said Chris Lamont.

“Measures to stimulate investment in the multi-unit sector should include a doubling of the depreciation allowance and extending eligibility of the National Rental Affordability Scheme to private investors.  Ensuring availability of credit for new development is also vital in the current environment,” said Chris Lamont.

“The overall profile for new home sales remains weak, although there is early evidence of an improvement in Victoria and a stabilisation in Western Australia,” said Chris Lamont.

For the month of November detached New Home Sales increased by 7.9 per cent in Western Australia and were up by 3.8 per cent in New South Wales, 1.8 per cent in South Australia, and 0.9 per cent in Victoria. Sales fell by 10.1 per cent in Queensland. Detached home sales were down over the three months to November in every state except Victoria.