New Home Sales Slump In Queensland

The HIA says it is a disappointing result for Queensland.

Big drops in new home sales in Queensland in November 2008 despite an increase in the first home owners grant and a drop in official interest rates has many home builders worried.

The numbers plunged by just over 10 per cent in November, compared to an overall national decline of one per cent. There are plenty of reasons why Queensland headed the retreat in building numbers, but land prices, migration cuts, interstate migration outflows as WA Mining boom and Victoria comes good, and rising unemployment all factored in the play.

High fuel costs would have played on people's minds leading up to this result, and being told my the State Government to go west into Queensland hot hinterland to build your home, and then fight your way through traffic everyday along the Ipswich Highway would have turned anybody off. Seeing new homes ripped apart by storms in the hinterland last month would not have helped sales much.

The dream in Queensland is a waterfront home with a canal out back to park the boat. The acceptable reality is home near to beaches, schools and work for family fun and life balance, not sweltering in Summer and freezing in Winter in some far flung estate in the back blocks of Queensland.

Whilst it is a disappointing result for Queensland Home Building industry, we have been expecting this for the last 6 months.

The other factor has to be the tempting first homeowners grant has doubled for used homes, but tripled for first home buyers making it more attractive to build then to buy used for first time home buyers, so the pecking order that has evolved over the past seven years has been disrupted.

This is because the grant looked good on paper till you did the sums. Building your first home is a juggling act as opposed to buying a an established home. Buying a used home means you move in in 30 days. Building a new home means you move in maybe 9 months. Maybe 12 months. That's after you have made all the decisions you have to make when you build.

I can imagine the first home buyer dilemma. So where is the rent and construction loan repayments going to come from then? Will I and my partner have a job next year? Will petrol go up $2.00 a litre?

So the first buyers market wasn't sufficiently motivated by these grants to buy. And this means that the second home buyer market where existing home buyers were looking at new homes in the month of November stalled. No buyer for me, no buyer for your new home Mr Builder.

As we move through the early months of 2009, we may well see a stabilisation in home building activity as this change plays out and more new smaller homes will result from the shift in buying trends, with fewer Mc Mansions.