A leading private survey shows new home sales dipped last month, suggesting more housing shortages and price increases.
The Housing Industry Association’s new home sales report shows a 5.2 per cent decline in sales of newly constructed dwellings in February which largely offset a strong gain in January.
The survey reflects sales of the country’s largest residential home builders and is a barometer of how many new dwellings are being built.
The association’s chief economist, Harley Dale, says last month’s fall is a sign the home building recovery is losing steam as interest rates rise and the effects of Federal Government’s First Home Owners Boost pass.
He also says the Reserve Bank’s moves to counter a house price bubble by raising rates may backfire if government policy does not change to support more new home building.
“The higher interest rates go, then, perversely, the more difficult it’s actually going to be to boost new home building sustainably and remove some of that pressure on existing home values,” he said.
Dr Dale says one of the biggest factors pushing up home prices and preventing more new housing supply is the taxation bias towards existing dwellings.
“We need to look at the taxation of new home building which is far higher than taxation on existing properties, so we’re perversely pushing people away from new home building and putting more pressure on the existing housing stock,” he said.
The biggest decline in February came in unit and townhouse sales which slid 9.4 per cent compared to a 4.7 per cent decline in sales of detached houses.
Detached home sales fell the most in New South Wales (down 9 per cent), while Victoria recorded the only gain (a rise of 16.1 per cent).