New home sales down 20.5% in July across Australia

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The sales of new homes across Australia dropped 20.5% in July compared to the previous month, a report from the Housing Industry Association (HIA) has shown. Despite the drop in July, new home sales still experienced a strong quarter.

The 20.5% drop in new home sales has been partially attributed to lockdowns in New South Wales and Victoria impacting buying activity throughout July, however the last three months have still seen sales up 4.3% Australia-wide against the same time in 2018.

Western Australia was the only state to see an increase in new home sales in July, while New South Wales and Victoria joined WA in increasing their three-month sales against the same period in 2018. Both Queensland and South Australia saw drops month-on-month and against the same period in 2018.

The HIA has attributed major buyer activity following the end of the HomeBuilder scheme to low interest rates and changes in consumer preference for the location of housing. Sales of new homes year-to-date remain strong for new homes despite the dip in July, which the HIA says indicates that the demand for detached housing remains robust.

The HomeBuilder scheme offered $15,000-$25,000 grants to successful applicants, however applications closed earlier this year. With most projects initiated by the HomeBuilder scheme having cleared final regulatory barriers, there are a record number of homes currently in construction around the country.

Reputable housing market forecasters have predicted all sorts of movement in the property sector, however housing prices rose to all time highs in most major Australian markets earlier this year. Now, ANZ projects Sydney and Melbourne will see house prices experience their strongest year since the 1980s with growth at 19% and 16% respectively.

The HIA says sales data over the coming months will indicate if these recent lockdowns have impaired consumer confidence, or if the drop in new home sales over July is an anomaly.

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