New home sales in Australia reached their highest monthly level in more than a year during May, according to a new report from the Housing Industry Association.

The HIA New Home Sales report provides an early indication of trends in the residential building industry through surveying the largest volume home builders in the five largest states.

The report showed that new home sales jumped in all four major states, with New South Wales experiencing the biggest increase at 52 per cent, followed by Western Australia (34 per cent), Queensland (26 per cent), Victoria (25.3 per cent) and South Australia (0.9 per cent).

At a glance:

• The Housing Industry Association has released its New Home Sales report for May, showing an increase in the four major states.
• New South Wales had the biggest increase at 52 per cent, followed by Western Australia (34 per cent), Queensland (26 per cent), Victoria (25.3 per cent) and South Australia (0.9 per cent).
• HIA Chief Economist Tim Reardon said the association expected the decline in building activity to level off in the second half of the year.

The pickup in sales during May follows lacklustre results throughout the first four months of 2019, during which the federal election discussion around new tax imposts on investors impacted market confidence.

HIA Chief Economist Tim Reardon said the May data confirmed the association's expectation that the decline in building activity will start to level off in the second half of 2019 and stabilise at a level below the highs achieved back in 2017.

“The resurgence in home sales was evident across all five states covered by the New Home Sales survey, suggesting a broad-based improvement in housing market sentiment around the country," he said.

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Source: HIA

“An easing of the credit squeeze, lower interest rates and an expectation that APRA will implement reforms to mortgage lending guidelines are also factors supporting the lift in sales activity. 

“The lift in sales shows that more homebuyers are seeing opportunities in this competitive trading environment. 

“Income tax cuts, solid population growth and accelerating wage growth are necessary to ensure that the market does not decline further,” concluded Mr Reardon. 

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