DETACHED MULTI-UNIT APPROVALS

Transcription

1 HIA New Home Sales DETACHED MULTI-UNIT APPROVALS SALES MULTI-UNIT DETACHED A monthly update on the sales of new homes September 214

2 MULTI-UNIT SALES REACH New Cyclical Peak The HIA New Home Sales Report recorded a flat result in September 214, masking a strong lift in the multi-unit sales component. Disclaimer: This publication is produced by HIA Economics Group based on information available at the time of publishing. All opinions, conclusions or recommendations are reasonably held or made as at the time of its compilation, but no warranty is made as to accuracy, reliability or completeness. Neither HIA nor any of its subsidiaries accept liability to any person for loss or damage arising from the use of this report. Total seasonally adjusted new home sales went sideways in the latest update, for September 214. The flat result follows a modest increase (of 3.3 per cent) in August and a reasonably significant drop (of 5.7 per cent) in July. As we noted in the August report, a downward trend is in place for new home sales. This downward trend is clearly evident for detached house sales. On the other hand, multi-units sales have gained a second wind since June this year. The result for September reinforced these trends. Seasonally adjusted detached house sales fell by 2.3 per cent in September 214 and were down by 6.5 per cent over the September 214 quarter. Multi-unit sales had a second strong monthly gain in September, rising by 11. per cent to post quarterly growth of 8.7 per cent. This second consecutive month of strength for multi-unit sales took them to a fresh cyclical peak which was 8.7 per cent higher than the previous peak recorded in November last year. In the second half of 214 a clear upward trend has re-emerged for multi-unit building approvals as well as the equivalent new home sales segment the former was back at a level in August only 11.4 per cent off the September 213 peak, which itself was a record. Much of this renewed strength is driven by apartments, but semidetached/townhouse style product is also making a contribution. At the same time, a downward trend in detached house sales is becoming increasingly evident, although admittedly the decline is shallower for ABS building approvals. In the month of September 214 detached house sales fell by 2.3 per cent to be down by 6.5 per cent for the quarter. There was a monthly decline in all the mainland states except Queensland, while in the September 214 quarter detached house sales fell in every state except New South Wales. This situation may represent the beginning of a third stage to the new home building recovery (although the jury is still out). Stage one was driven by multi-unit dwellings, primarily apartments. In the second stage growth in detached housing out-paced multi-units, although obviously activity for the latter continued at very elevated levels. Now, evidence is accumulating that the detached housing sector has (in terms of leading indicators at least) peaked as signs of a positive turnaround intensify for multi-units. Analysis of the September and (in due course) December 214 quarters for ABS building approvals by product type, HIA new home sales, and the distinct new housing finance components of construction versus new purchase will provide an important guide to the profile of new home building in 215. P2 HIA NEW HOMES SALES 9.214

3 9.214 HIGHLIGHTS PRIVATE NEW DWELLING SALES - AUSTRALIA (SEASONALLY ADJUSTED) 8, 2, % 18, 7,5 16, 7, 14, National sales of new houses and units were flat in September 214. Private detached house sales fell by 2.3 per cent in September ,5 6, 12, 1, 8, Private multi-unit sales increased by 11. per cent in September ,5 5, 4,5 HIA New Home Sales (LHS) ABS Seasonally Adjusted Approvals - Private Sector (RHS) 6, 4, 2, ABS private dwelling approvals increased by 2.9 per cent in August 214. This month's sample size captures 11.5 per cent of Australia's new home building sector. New South Wales s private detached house sales fell by 9.9 per cent in the month of September this year, just about undoing the previous month s strong rise of 11.1 per cent. Nevertheless, sales activity during the first quarter of the new financial year was 2.6 per cent higher than in the previous quarter and 7.5 per cent higher than 12 months previously. This pattern is broadly replicated in NSW s private detached house approvals. Following a strong uplift in July 214, the number of these approvals dropped back by 1.8 per cent in August. In the three months to August, activity in this component of approvals increased by 8.7 per cent to a level that is 2.6 per cent higher than 12 months previously. The broader profile of both private detached house sales and approvals has roughly been tracking sideways throughout 214 thus far, following a period of momentum throughout 213. The recent loss of momentum appears to have emerged in the state s actual detached house building activity. Recently released ABS data show that commencements during the June 214 quarter declined from the previous March 214 quarter, when commencements reached a decade high. The trajectory of sales and approvals provide an encouraging indication, however, that actual activity over the medium term should be sustained around recent levels, with broader conditions (very low and steady lending rates alongside rising house prices and years of unrealised demand) supportive of this occurring. NEW SOUTH WALES 2,5 2, 1,5 1, 5 HIA New Home Sales (17 PER CENT SAMPLE COVERAGE) PRIVATE NEW HOUSE SALES - NEW SOUTH WALES (SEASONALLY ADJUSTED) ABS Seasonally Adjusted Approvals - Private Sector -9.9% HIA NEW HOMES SALES P

4 Jan-1 In the first full quarter of the 214/15 financial year, Victoria s private new house sales show a picture of decline. In the month of September, the number of sales declined for a fifth consecutive month, by 2.4 per cent. Sales activity during the September quarter was 15.1 per cent lower than in the previous quarter and also 15.7 per cent lower than in the September 213 quarter. 3, PRIVATE NEW HOUSE SALES - VICTORIA (SEASONALLY ADJUSTED) Meanwhile, private detached house approvals have also declined from their recent peak (which occurred in January 214). While the number of these approvals increased by 2.3 per cent in the month of August this year, during the three months to August, the level of approvals was 2.9 per cent lower than in the previous three months. Nevertheless, this level is still 19.1 per cent higher than in the same period a year earlier. 2,5 2, 1,5 1, 5-2.4% ABS data released in mid-october show that actual detached house building activity in the June 214 quarter largely consolidated the previous quarter s level of activity a quarter which saw an emphatic end to the previous decline that had spanned just over four years. Detached house starts were restored to a level typical of broader history. As we ve noted before, there are the makings of a continuation in these broadly healthy levels of detached house building activity, notwithstanding the latest developments in sales and approvals in particular; low and steady lending rates alongside rising house prices in a time that follows a prolonged period of decline in detached house building activity. HIA New Home Sales ABS Seasonally Adjusted Approvals - Private Sector (2 PER CENT SAMPLE COVERAGE) VICTORIA PRIVATE NEW HOUSE SALES - QUEENSLAND (SEASONALLY ADJUSTED) 2, 1,8 1,6 1, % 1,2 1, HIA New Home Sales ABS Seasonally Adjusted Approvals - Private Sector (1 PER CENT SAMPLE COVERAGE) QUEENSLAND After a false start to the new financial year (with benign, if not disappointing results in July and August) private detached house sales in Queensland posted a strong 13.4 per cent gain in the month of September 214. These overall developments saw sales activity during this first quarter of the new financial year ease by 1.5 per cent to a level that is 41.8 per cent higher than the near-record lows experienced in the same period in 213. ABS private sector detached house approvals lifted by 7.7 per cent during the month of August 214. This latest level of approvals is just higher than what has been typical throughout 214 thus far. The broader profile of both private detached house sales and approvals shows that the momentum of late 213 lost steam in 214, with levels largely tracking sideways in the year thus far. This loss of momentum has been evident in Queensland s actual detached house building activity, with the level of building in the first two quarters of the 214 calendar year on par with, if not just shy of, the level in the December quarter of 213. Nevertheless, we are of the view that these developments will pan out to be just an extended pause to a broader recovery that should resume momentum in late 214. As we ve noted before, the protracted very low levels of building means there is much potential for growth. Furthermore, record low and stable lending rates should provide impetus for this potential second-round recovery to actually come to fruition. P4 HIA NEW HOMES SALES 9.214

5 Jan-1 SOUTH AUSTRALIA HIA New Home Sales (19 PER CENT SAMPLE COVERAGE) PRIVATE NEW HOUSE SALES - SOUTH AUSTRALIA (SEASONALLY ADJUSTED) ABS Seasonally Adjusted Approvals - Private Sector -3% Private detached house sales in South Australia declined again in the month of September, down by 3. per cent following the previous month s fall of 6.8 per cent. The number of sales during the September quarter also declined, down by 2.8 per cent compared with the level in the previous quarter. These developments represent a continuation in the overall trend decline, which commenced at the beginning of 214. ABS private sector detached house approvals are showing a similar pattern of decline, which has largely spanned throughout 214 thus far. In the month of August 214, these approvals declined by 3.4 per cent, taking the level of approvals activity during the three months to August to a level that is 13.4 per cent lower than in the previous three months. Approvals and sales activity in South Australia are two particular indicators providing a fairly strong indication that actual detached house building activity in SA may decline over the medium term. Such a development would follow a decent firstround recovery whereby the state s detached house starts increased for five consecutive quarters up to and including in the June 214 quarter. Policy makers need to be cognisant of the risk (particularly given the broader economic headwinds facing the state) that what needs to only be a pause in the recovery of the state s new home building sector doesn t deteriorate to a protracted and sharp down cycle akin to what occurred during the period late-21 to mid-212. The state is still recovering from that earlier episode. Western Australia s private detached house sales declined by 5.6 per cent in September this year, a result that sees the trend decline, which commenced midway through this year, continue. Looking at the quarterly profile of sales, the level in the September 214 quarter was 8.5 per cent lower than in the June 214 quarter, which is now looking increasingly like the quarter where sales activity peaked. ABS private sector detached house approvals have exhibited broadly similar developments, with the number of approvals during the month of August declining by 3.7 per cent. While the data for the full September quarter is not yet available, a quarterly decline looks likely. Recently released ABS data on actual WA detached house commencements show that activity reached a record high in the June 214 quarter. The state s new house sales and approvals are among a suite of leading indicators suggesting that this June 214 quarter result in detached house building activity will be the cyclical peak. Beyond this peak, the key question is whether WA will be able to avoid the severe volatility that the residential construction sector has had to withstand in the past. The current trajectory of sales and approvals is encouraging on that front, suggesting a soft landing. Furthermore, broader conditions low lending rates, continued house price growth and still a backlog of pent-up underlying demand are supportive of new house building activity remaining healthy in 214/15. WESTERN AUSTRALIA (34 PER CENT SAMPLE COVERAGE) 2,1 1,9 1,7 1,5 1,3 1, PRIVATE NEW HOUSE SALES - WESTERN AUSTRALIA (SEASONALLY ADJUSTED) HIA New Home Sales ABS Seasonally Adjusted Approvals - Private Sector -5.6% HIA NEW HOMES SALES P

6 The first full quarter of total seasonally adjusted private house sales in the 214/15 financial year has consolidated a trend of decline. In the month of September this year, detached house sales fell by 2.3 per cent. The volume of sales during the September 214 quarter was 6.5 per cent lower than in the quarter hosting the cyclical high, the preceding June quarter. ABS private sector detached house approvals have shown some similar developments, with the number of approvals during the month of August declining by 1.8 per cent. Over the three months to August, the number of approvals was about on par with the previous three months (down by.2 per cent). Sales and approvals are both indicating (at a minimum) that the momentum in detached house building has run out of some steam. In line with our expectations, actual detached house building activity declined fairly modestly during the June 214 quarter. While we expect we have passed the cyclical high, we also expect there to be a soft landing from here. Indeed latest sales and approvals activity provide an encouraging indication for this to actually transpire over the medium term. PRIVATE HOUSE SALES HIA New Home Sales (LHS) (18 PER CENT SAMPLE COVERAGE) PRIVATE NEW HOUSE SALES - AUSTRALIA (SEASONALLY ADJUSTED) -2.3% ABS Seasonally Adjusted Approvals - Private Sector (RHS) MULTI-UNIT SALES 1,6 1,4 1,2 1, (2 PER CENT SAMPLE COVERAGE) PRIVATE NEW MULTI-UNIT SALES - AUSTRALIA (SEASONALLY ADJUSTED) HIA New Home Sales (LHS) +11% ABS Seasonally Adjusted Approvals - Private Sector (RHS) Multi-unit sales posted an unexpected rise in the month of September 214, up by 11. per cent to reach a decade high. This result follows August s double-digit jump of 19.8 per cent and seemingly resurrects an upwards trend in this segment of new home sales. During the September 214 quarter, the volume of multi-unit sales was 8.7 per cent higher than in the previous quarter and 37.5 per cent higher than in the September 213 quarter, when multi-unit sales activity had reached the end of a relatively short-lived downturn. ABS approvals have shown similar developments. During the month of August 214, the number of private sector multi-unit approvals increased by 9.6 per cent. This saw the volume of these approvals during the three months to August reach a level that is 8.2 per cent higher than in the previous three months and 16.6 per cent higher than in the same period in 213. While the latest ABS data show that actual multi-unit building activity declined during the June 214 quarter, the more recent developments in both sales and approvals provide some indication that further growth in actual starts could yet occur during 214. Nevertheless, as we ve noted previously, this segment of the market is notoriously volatile and further updates would provide a clearer indication of where multi-unit building activity sits in the current cycle. P6 HIA NEW HOMES SALES 9.214

7 NEW HOME SALES: PERCENTAGE CHANGE Private Houses Multi-Units Total NSW VIC QLD SA WA AUS AUS AUS 3 months to Sep 13 3,845 5,875 2,345 1,29 3,988 17,82 2,614 19,696 3 months to Jun 13 4,27 5,839 3,374 1,59 4,528 19,278 3,37 22,584 3 months to Sep 14 4,133 4,956 3,324 1,468 4,143 18,23 3,596 21,619 % change on previous 3 months 2.6% -15.1% -1.5% -2.8% -8.5% -6.5% 8.7% -4.3% % change on same 3 months of previous year 7.5% -15.7% 41.8% 42.6% 3.9% 5.5% 37.5% 9.8% Note: All comments and percentage movements relating to Net Sales refer to data that have been calculated after allowing for seasonal influences. PRIVATE HOUSES AND UNITS: SALES AND APPROVALS (a) NSW VIC QLD SA WA Total(b) Total(b) Total(b) Private House Sales (Seasonally Adjusted) Unit Sales (c) Total Sales (c) ,236 29,23 18,633 8,145 12,159 91,235 33,51 1, ,54 36,259 23,632 8,697 16, ,477 38, , ,355 28,842 26,658 7,678 18, ,633 22, , ,622 27,3 26,79 8,51 15,46 19,984 17, , ,175 22,728 25,989 5,584 21,619 98,228 12,751 11, ,141 25,642 26,421 5,888 21,678 94,841 12,33 17, ,634 23,424 25,814 4,777 15,237 81,842 12,461 94, ,682 27,145 24,516 6,52 15,96 88,254 11,113 99, ,259 27,776 18,2 5,483 14,293 79,17 9,795 88, ,537 32,18 2,66 5,688 14,51 87,417 9,31 96, ,924 31,768 14,686 5,58 12,726 78,31 8,782 86, ,81 23,173 13,28 3,698 12,892 65,153 8,241 73, ,795 17,911 9,67 3,662 15,436 58,53 11,726 7, ,863 22,638 11,518 5,739 16,948 72,76 12,654 85, Jul 1,234 1, ,236 5, ,284 Aug 1,325 1, ,362 5, ,498 Sep 1,286 2, ,39 5, ,914 Oct 1,227 1, ,374 5, ,654 Nov 1,337 1, ,35 5,93 1,248 7,151 Dec 1,415 1, ,41 5,959 1,166 7,124 Jan 1,324 1, ,374 5,975 1,184 7,159 Feb 1,35 1,922 1, ,52 6,386 1,14 7,489 Mar 1,338 1,921 1, ,475 6,426 1,76 7,51 Apr 1,48 1,931 1, ,569 6,543 1,176 7,719 May 1,331 1,996 1, ,463 6, ,388 June 1,288 1,912 1, ,496 6,334 1,144 7, /15 Jul 1,328 1,735 1, ,389 6,35 1,19 7,54 Aug 1,476 1,63 1, ,416 6,62 1,221 7,283 Sep 1,329 1,591 1, ,338 5,926 1,356 7,281 Private House Approvals (Seasonally Adjusted) Unit Approvals Total Private Dwelling Approvals ,997 24,233 15,569 5,544 11,762 76,15 35, , ,6 36,744 25,762 8,924 16, ,979 48,91 119, ,319 33,224 25,337 8,224 17,351 18,455 57, , ,6 34,326 29,82 8,595 23, ,494 58,453 18, ,21 31,77 24,829 7,942 18,97 15,695 52,18 157, ,114 28,53 25,46 7,838 2,99 12,721 44, , ,666 28,615 28,781 8,125 19,133 14,647 45, , ,66 31,311 29,91 1,65 16,66 17,651 5, , ,349 3,328 19,471 8,882 15,445 91,999 35, , ,888 38,578 22,342 8,821 19, ,413 44,84 156, ,315 35,31 17,541 7,567 16,621 97,781 6, , ,447 29,62 18,53 6,457 15,132 89,737 57, , ,59 27,55 17,876 6,545 18,35 92,14 64, , ,56 3,153 19,699 8,74 23,118 17,331 83,659 19, Jul 1,661 2,91 1, ,95 8,258 6,269 14,527 Aug 1,717 2,261 1, ,849 8,231 6,255 14,486 Sep 1,738 2,342 1, ,823 8,381 8,291 16,672 Oct 1,694 2,353 1, ,846 8,361 8,163 16,524 Nov 1,9 2,547 1, ,873 8,939 7,333 16,271 Dec 1,856 2,57 1, ,935 8,842 7,373 16,215 Jan 1,978 2,81 1, ,953 9,61 7,871 17,481 Feb 1,936 2,646 1, ,996 9,425 7,21 16,447 Mar 1,922 2,598 1, ,23 9,318 6,414 15,731 Apr 1,91 2,673 1, ,974 9,278 5,532 14,89 May 1,788 2,694 1, ,968 9,381 6,945 16,325 June 1,899 2,637 1, ,982 9,278 6,393 15, July 2,219 2,518 1, ,969 9,4 6,74 16,14 August 1,979 2,576 1, ,897 9,231 7,348 16,579 Notes: (a) New information on state market shares had led to an upward revision to sales levels, but has not substantially altered the new home sales cycle. Survey results have been obtained from State-wide estimates using weights based on financial year market shares of private dwelling commencements. Due to different weighting, state totals may not necessarily add to the national figure. (b) Does not include Tasmania, ACT or the Northern Territory. (c) The survey sample includes multi-unit builders who only sell direct. na: insufficient sample size HIA NEW HOMES SALES P

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