WA’S beleaguered building industry may get the boost it has been hoping for with new home sales up 34 per cent in May according to the HIA.
Chief economist Tim Reardon said nationally, sales bounced back to their highest monthly level in over a year.
“The pickup in sales during May follows lacklustre results throughout the first four months of 2019,” he said.
“Federal elections always impact market confidence and the discussion around new tax imposts on investors through an increase in Capital Gains Tax magnified this uncertainty in the first part of the year.
“This month’s result confirms our expectation that the (national) decline in building activity will start to level off in the second half of 2019 and stabilise at a level below the highs achieved back in 2017.”
The resurgence in home sales was evident across all five states covered by the HIA’s New Home Sales survey, suggesting a broad-based improvement in housing market sentiment around the country.
“An easing of the credit squeeze, lower interest rates and an expectation that APRA will implement reforms to mortgage lending guidelines are also factors supporting the lift in sales activity,” Mr Reardon said.
“The slow start to 2019 has seen intense competition amongst home builders.
“The lift in sales shows that more home buyers are seeing opportunities in this competitive trading environment.
“Income tax cuts, solid population growth and accelerating wage growth are necessary to ensure that the market does not decline further.
New home sales rose by 54.2 per cent in NSW, 26 per cent in Queensland, 25.3 per cent in Victoria and 0.9 per cent in South Australia.
With changes to Keystart coming into effect on July 1, the WA building industry hopes to see more market improvement.
HIA WA executive director Cath Hart said following the announcement in May that the income limits for eligibility for a Keystart loan would be increased there had been a significant upsurge in interest from potential home buyers and she looked forward to seeing the benefits of the changes flow through to the industry.
Master Builders also welcomed the changes and the RBA’s decision to cut interest rates to a record low of 1 per cent on July 2.
Executive director Jon Gelavis said it came at the perfect time to take effect alongside the changes to Keystart income levels and called on the major banks to pass on the rate cut fully and immediately.
“The opportunity to get the WA housing market moving again has never been greater,” he said.
“Keystart provides low-deposit home loans to West Australians who can’t meet the requirements of mainstream lenders and their policy is to use the average of the standard variable home loan rates of the four major banks so today’s reduction will go a long way to assist, as long as banks pass on the cut.”