SA Defied the National Trend for New Home Sales While Other States Still in Negative Territory

New homes line a street in the Sydney suburb of Moorebank in Australia on May 26, 2017. (Jason Reed/Reuters)

The latest July HIA (Housing Industry Association) New Home Sale report has foreshadowed a gloomy 2024, but South Australia remains the only state that has defied the national trend with a sizable, recorded increase of new homes despite every other state being in negative territory.

The SA new home sales report described a 35.5 percent jump in July thanks to SA’s new policies in place.

Treasurer for South Australia Stephen Mullighan welcomed the news.

“This is a significant result for South Australia, showing the strength of our building industry and economy. We know new builds are slowing across the country, but SA is defying the downturn.”

The new increase comes weeks after the Malinauskas Government nullified stamp duty for first-home buyers of new homes. This new policy change was established to help first-home buyers get a foothold in the property market earlier, boosting supply to offset additional demand.

Treasurer Stephen Mullighan believes that getting rid of the stamp duty will help the housing industry and first-home buyers.

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“Abolishing stamp duty for first-home buyers purchasing a new home will only help. Heading into an uncertain and potentially volatile period for the building industry, this is welcome news and should inspire confidence for South Australia’s building sector.”

Any eligible first-home buyers who build or buy a new home valued up to $650,000 (US$416,000) will receive almost $30,000 in stamp duty relief plus a First Homeowner Grant payment of $15,000, taking away almost $45,000 in total from the state government relief.

Furthermore, the State Budget has allocated a $474.7 million package to help the delivery of 3,600 new homes over the next five years and lessen the cost of housing for a further 14,000 new homes.

All other states in negative territory

Based on The HIA New Home Sales report this July, which is a monthly survey of the largest volume home builders in the five largest states, Sales of new homes across Australia fell by 2.4 percent and a continuation to “bounce along very low levels” according to HIA Senior Economist Tom Devitt.

Compared to the previous month, sales in July 2023 decreased in most of the large states, led by Queensland (11.6 percent) and followed by Western Australia (9.3 percent), New South Wales (1.6 percent) and Victoria (0.6 percent).

Similarly, Mr Devitt said sales in the three months to July 2023 also declined significantly compared to the same period in 2022 across most of the large states.

“This month’s decline leaves sales in the three months to July 2023 down by 33.4 percent compared to the same period in 2022.”

This decline was led by Queensland (52.3 percent) and followed by New South Wales (48.4 percent), Victoria (37.2 percent) and South Australia (26.0 percent), except for Western Australia, which reported an increase of Sales by 17.3 percent.

Mr Devitt believes that given the unsatisfying new home sales and an elevated number of previous sales being cancelled, Australia will see a decade-low level of home building next year.

He said, “Even a cut to the cash rate now would not produce a recovery in new house commencements until the second half of 2024.”