new home sales

New Home Sales Increase: the Start of New Era

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Have you heard? The Housing Industry Association (HIA) has reported a surprising 28.8% increase in new home sales for May. That’s almost a 29% jump from the lowest new home sales in recent history! But is it really that surprising?

A Whopping 28.8% Increase in New Home Sales!

 

As you can see on the chart, the growth is remarkable, especially coming from months of depressing home sales data that market uncertainty brings, what with Federal elections and Capital Gains Tax discussions.

It is as HIA’s chief economist, Tim Reardon said,

“The pickup in sales during May follows lacklustre results throughout the first four months of 2019.”

He adds, “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.”

But how much of that change in growth can be really attributed to the political climate? And how much was due to public sentiment on easier mortgage requirements for new homes?

Reardon observes the same.

“The resurgence in home sales was evident across all five states covered by the 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.”

So if the new credit scheme is the major part of this boost in new home sales, we can expect to see more consistent growth in sales for low-cost homes—the ones that tend to attract the attention of first-home buyers.

With the government making first-home buying easy, we can only assume lower-priced new homes to continue to fly off the market and that it will be the lower-priced new homes that will be ushering this market into its much-needed recovery.

We don’t know how long this growth will continue: if we will need more new homes as a result, or if that 28.8% increase is really just a blip in the market.

But the increase is real, and the changes that will ripple down the real estate property market and the economy will be as real.

It’s time to get busy!

 

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