Housing industry pushes for stimulus as new home sales fall 8% in July

The struggling housing market has been struck yet another blow, with new home sales falling by 8% in July following an 8.7% decline in June, according to the latest figures from the Housing Industry Association.

The result has renewed calls from HIA economist Harley Dale for the Government to boost the industry with stimulus, as building and construction SMEs continue to collapse as consumers hold onto their money and opt to renovate existing properties instead of build new homes.

“I think what we’re seeing here is basically a confirmation of what’s been widely reported for some time now,” Dale says. “It’s been very clear within the industry that we hit a wall in mid-2011.”

“We’ve been hearing that on the ground from late May, early June, but with the lag being as it is, these figures are confirming the experience of what’s happening in the sector.”

Dale says the July result is “particularly concerning”, as it comes after a drop of 8.7% in June.

“It’s a weak result. But it’s unfortunately a weak result that is consistent with a range of indicators regarding the climate of the residential building sector.”

Dale refers to a number of collapses within the industry, specifically for building and construction products providers. Many SMEs are being forced to close as first home buyers opt to save money instead of build.

Dale says the HIA believes “some form of stimulus is appropriate”.

“It would be fair to say that given recent reports in the media regarding job losses, that probably instills a greater sense of urgency into the need to provide some kind of stimulus to the sector.”

“There is a growing risk that the number of housing starts in the short-term falls below the 140,000 mark. That’s not guaranteed, but on current indications that risk is there, and that is when you would see housing at levels last seen during the GFC.”

The HIA data shows detached house sales fell by 9%, with sales of multi-units increasing by 1%. Detached houses sales fell the most in New South Wales, by 11.2%, by 7.8% in Victoria, and by 8.5% in Queensland.

The disappoint results come as the auctions market has also failed to provide any hope of recovery. According to the Real Estate Institute of Victoria, the state recorded a clearance rate of 55%, compared to 70% this time last year.

“Increased stock levels this weekend have resulted in conditions more favourable to buyers, a trend likely to continue into spring,” chief executive Enzo Raimondo said.

In Sydney, the city recorded a clearance rate of 56.6%, while Adelaide and Brisbane recorded clearance rates of 36.4% and 27.8% respectively.