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Fall in demand for new properties

2 Jul 14

Real estate agents throughout South Australia could see a rise in interest for established dwellings over the coming months, as new home sales experienced their first drop of 2014.

Sales were down 4.3 per cent month-on-month in May, the Housing Industry Association's (HIA) New Home Sales Report shows, which the group believes indicates the peak of this current growth cycle has been reached.

HIA figures show sales were up 3.8 per cent in the three months leading up to May and were 21 per cent higher than the same period of 2013.

The group's Chief Economist Harley Dale emphasised how detached home building has the potential to grow at an even faster rate over the coming financial year than it did in 2013-14.

However, Dr Dale indicated that supply constraints have the potential to cause further problems for the sector.

"Inadequate land supply is one prominent example of supply side constraints preventing new home construction reaching its full potential, highlighting the need for a focus on housing policy reform," he commented.

South Australia is one part of the country where sales of detached houses have fallen. They were down 5.8 per cent in May, suggesting those with real estate training may see interest in other types of property.

However, this fall was marginal compared to the national decline in multi-unit dwellings, which finished the month 16.1 per cent lower than in April. Furthermore, they were down 6.2 per cent over the three months to May.

This follows earlier observations from BIS Shrapnel, which explained how the South Australian property market looks set to remain relatively flat over the coming months.

This is because dwellings are expected to be in excess as construction starts to pick up pace across the state. This will lead to an increase in availability, which in turn will contribute to a rise in vacancy rates.