New home sales fall in March as coronavirus forces buyers to sit on the sidelines
New home sales fell by almost a quarter in March as COVID-19 shook buyer confidence.
New home sales fell by almost a quarter through March as buyers choose to wait out the coronavirus pandemic.
Data released on Wednesday by the Housing Industry Association shows the momentum that had been growing in the home building sector was suddenly halted through March, causing sales to fall 23.2 per cent month-on-month.
HIA chief economist, Tim Reardon, said that while monthly fluctuations are usually less important than overall trends, the stark difference in the results is telling.
“The only dynamic that’s changed affecting new home sales at the moment is consumer confidence,” Mr Reardon said.
“We saw a similar consumer sentiment shock during the 2019 federal election, where concerns about an increase in taxation on housing resulted in consumers pausing. Then, right after the election, the market continued as it was.
“So, if that were to occur at this stage, then it’s an interesting blip in new sales data. But, if it is sustained over multiple months then it starts to become a concern.”
Sales through the March quarter were up 1.4 per cent nationally compared to the final three months of 2019.
Mr Reardon said the drop-off was likely in large part from first home buyers who were more cautious about making such a large financial decision and are more affected by employment instability and house price changes.
Until the COVID-19 pandemic hit, confidence in the housing market looked to be strengthening, with strong price growth being complemented by improvements in new home sales, building approvals and housing finance data.
Mr Reardon said it was too early to call the depth of the downturn, with April data to be a stronger indicator of what is to come.
Victoria recorded the strongest monthly result, with a decline through March of 16.9 per cent. It was the state’s lowest first quarter result since 2014. The recovering Western Australian which is more susceptible to strains on confidence was the worst hit last month, reporting a 31.6 per cent decline in new home sales.
New South Wales and Queensland reported falls of 26.1 per cent and 24.1 per cent respectively, while South Australia sales dropped by 21.1 per cent.
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