Sales of new homes fell in May but remain strong, according to a monthly survey of Australia’s larger home builders.
The latest HIA New Home Sales report shows that new home sales fell by 5.5% in May, compared with the previous month.
HIA Economist Tom Devitt is not surprised at the slower pace, since the month contained ‘both a federal election and an interest rate hike’.
“Despite the decline in May, sales of new homes in the first five months of the year remained very strong”, Devitt said, adding that ongoing increases in interest rates are likely to bring this boom cycle to an end.
“However, the significant volume of work under construction and elevated levels of work approved but not yet commenced, will see a significant lag before the rise in the cash rate adversely impacts on the number of new homes commencing construction.
“The lag from when a rate rise results in a decline in starts can be as short as six months, but in this cycle, it could be more than 12 months before the volume of starts fall”, he concluded.
Queensland and South Australia saw the only increases in new home sales in May, rising 8.8% and 12.0% respectively. Victoria led the declines, down by 12.7%, following by New South Wales (12.2%), and Western Australia (0.8%).
For the three months to May 2022, compared with the same period in 2019, sales in Queensland were up by 44.1%, followed by New South Wales (up 43.2%), Western Australia (21.0%) and Victoria (19.2%). South Australia was the only state that was down over the period, falling by 6.5%.
