First time home sales decline

While this increase has slowed, the cost of building a new home, as measured by the Australian Bureau of Statistics, has increased by 40.1 per cent and at this point, shows no signs of declining.

To see the impact at a geographic level is difficult given that builders don't have to record how much they sell each individual home. To estimate the cost of new homes relative to an established home, we instead looked at the price being paid for a home that has never sold before and compared it to a home that's a subsequent sale.

The methodology is not perfect. For example, our sales data only extends back to 1975 and therefore some sales may be categorised as new sales even though they have sold previously. However, it does provide us with interesting insights into where the most new homes are being sold and more importantly, how they are priced relative to established homes.

As of June 2024, Australia recorded 51,917 house sales with no prior history of sale, representing 35.4 per cent of all house sales in the country. This figure marks a notable change from three years ago when, for the entirety of 2021, Australia saw 145,949 first sales, accounting for 37.4 per cent of all sales that year.

This trend of decreasing first-time sales is evident across most of the country. For instance, New South Wales has seen a decline in the share of first sales from 37.8 per cent to 35.1 per cent. The Northern Territory experienced the most dramatic drop, with first sales share plummeting from 28.3 per ent to 22.3 per cent, a substantial six per cent decrease.

However, this downward trend is not universal across Australia. Three states have bucked the national trend, showing an increase in their share of first sales: Victoria, Western Australia, and Tasmania. Among these, Victoria stands out with the largest increase, seeing its share of first sales rise by 2.4 percentage points, from 30.7 per cent to 33.1 per cent.

This may or may not come as a surprise given Victoria has consistently been recording the highest number of new dwellings completed for the same time period. According to ABS, Victoria completed 34,926 houses in 2023 followed by New South Wales with 26,916 and Queensland with 23,920.

While the overall share of first sales is decreasing, an interesting counter trend is emerging in the price of new homes and this is consistent with the ABS time series of construction costs relative to the Neoval series of house price growth. Over the last three years, first-sale houses have seen faster price growth at 23.8 per cent, compared to only 21.9 per cent for resold houses. From this, we can infer that although previously it was cheaper to buy a new home, the cost of a new home is now on par with an established home.

This trend of faster price growth for first sales is consistent across all of Australia. In some states, such as South Australia, New South Wales, Tasmania, and the Australian Capital Territory, new homes are now more expensive than established homes. It's noteworthy that the ACT, Tasmania, and NSW are the same territory and states with the largest gap between first sale price growth and resale price growth.

Victoria emerges as a particularly interesting case study, being the fastest-growing state for new home sales. This trend is starkly reflected in the list of top 10 suburbs with the most first sales, where eight out of 10 are located in Melbourne. Tarneit, a Melbourne suburb, stands out with its first sale count being almost double that of Baldivis in Perth, the highest-ranking non-Melbourne suburb on the list.

The Melbourne suburbs in this top 10 list showcase a wide range of first sale shares, reflecting the continued high levels of development in this city, despite high construction costs. Point Cook has the lowest share among the top 10, with 46.9 per cent of all sales in the suburb coming from houses that have never sold before. On the other extreme, Donnybrook appears to be the newest suburb, with an astounding 98.5 per cent of all sales coming from first-time sold houses.

It's also worth noting that only two suburbs in the top 10 list are outside of Melbourne: Baldivis in Perth and Austral in Sydney. Within Melbourne, Donnybrook, Wollert and Mickleham are neighbouring suburbs on the outskirts of Melbourne, whereas Tarneit, Truganina and Point Cook are close together on Melbourne's western side. Clyde North is the only outlying suburb in the top 10 from Melbourne.

Perth's top suburbs for first sales are Baldivis, Alkimos, and Byford. Baldivis matches Melbourne's Truganina with 270 first sales, representing 54 per cent of its total sales. Alkimos and Byford show lower but still significant numbers at 148 and 125 first sales respectively.

Sydney's top three - Austral, Oran Park, and Box Hill - show strong first sale numbers, but not as high as Melbourne's. Austral leads with 207 first sales, making up 83.1 per cent of its total sales. Oran Park and Box Hill follow closely with 156 and 147 first sales respectively, both with around 70 per cent share of first sales.

Considering suburbs within Brisbane's City Council boundaries. Pallara leads with 50 first sales, representing a high 87.7 per cent of its total sales. Rochedale and Bridgeman Downs followed with 31 and 28 first sales respectively.

Adelaide's top performer is Angle Vale with 65 first sales, representing 83.3 per cent of its total sales. Lightsview and Munno Para West follow with 60 and 50 first sales respectively, but with lower shares of total sales.

In Darwin, Zuccoli leads with 98 first sales, making up 85.2 per cent of its total sales. Berrimah follows with only 19 first sales, which represent 82.6 per cent of its total sales. Lyons has the lowest count with nine first sales, representing 64.3 per cent of its sales.

Canberra shows varied results. Taylor leads with 63 first sales, representing a high 90 per cent of its total sales. Crace follows with 21 first sales at 53.8 per ecnt of total sales. Bonner has 16 first sales, but these only represent 28.1 per cent of total sales, indicating it's a more established suburb with some new development.

Hobart shows the lowest activity among the capital cities presented. Kingston leads with just 14 first sales, representing 45.2 per cent of its total sales. Howrah and Sandy Bay both have seven first sales each, but with different shares of total sales (25.9 per cent and 31.8 per cent respectively).