New home sales drop by 2.3% in May

While the Australian property market has been thriving over 2015, new home sales saw a slump over May, according to research by HIA. This is the first time that the HIA New Home Sales Report has found a fall in new home sales over 2015, dropping by 2.3%.

HIA Chief Economist, Harley Dale said that the decline was driven by a 5.1% dip in demand for detached houses, indicating a weaker monthly demand in four out of five of the states surveyed.

While Queensland saw a detached house sales increase of 3.3%, NSW fell by 2.3%, Victoria 9.9%, South Australia 5.2%, and Western Australia 8.1%.

RELATED: Victoria and Tasmania home to Australia’s most affordable suburbs

The May home sales slump comes as a report by BIS Shrapnel showed the surging prices of Sydney and Melbourne will come to an end across the coming three years.

Report author and BIS Shrapnel senior manager Angie Zigomanis told news.com.au “It’s a regular function of the market, it’s economics 101. Market booms, people jump in and start building and market gets oversupplied and corrects.”

However, the HIA New Home Sales Report wasn’t all bad news as it showed new multi unit sales increased by 7.6% over May to a new record level, with sales volumes up by 26.7% over the three months to May.

Dale explained “The mature stage of the new home building cycle primarily reflects further momentum in the ‘multi-unit’ sector, together with persistence of healthy conditions in New South Wales and Victoria.”