Sales of new homes continued to decline through December, according to a monthly survey of Australia’s largest volume home builders.
The latest HIA New Home Sales reports that sales of new homes fell by 4.6% in December leaving sales in the final quarter of 2022. This figure is a remarkable 42.0% lower than at the same time in 2021.
HIA Chief Economist Tim Reardon predicts that this slowing in sales will flow though to a slowdown in building activity in the second half of 2023.
“When this hiking cycle began, there was a significant pipeline of home building work under construction, and many more projects yet to even begin construction”, he said.
“The rise in the cash rate has also seen many recent buyers of new homes unable to finance their new project.
“This resulted in one in five recent new home buyers having to cancel their new home building contract as their access to finance was reduced by the rise in the cash rate.
“With one in five customers cancelling their new home building project each month, the pipeline of building work will be eroded quickly.
Reardon expects the full impact of the RBA’s rate increases will become apparent in the second half of 2023.
“The RBA will not restore the economy to stable growth by putting the housing industry through boom-and-bust cycles”, he concluded.
For the three months to December 2022, compared with the same period in 2021, new home sales in New South Wales were down by 66.7%, followed by Queensland (49.9%), Victoria (36.4%), and Western Australia (30.9%). South Australia saw the only increase, up by 13.9%.
