Sales of new homes tumbled in June, according to a monthly survey of Australia’s largest home builders.
The latest HIA New Home Sales report shows that sales of new homes across Australia fell 4.8% in June.
Over the financial year, sales were down across most states compared to the previous financial year, led by New South Wales (down 56.1%), and followed by Queensland (38.5%), Victoria (31.2%), Western Australia (12.1%) and South Australia (2.8%).
HIA Chief Economist Tim Reardon said that the June result leaves sales in the 2022/23 financial year down by 33.2% compared with the previous year.
“The rise in the cash rate over the past year has seen a significant decline in the volume of new homes sales”, Reardon added.
“This will result in the least number of new homes commencing construction for more than a decade in 2024.”
But it’s not just about interest rates. Reardon also attributes the fall to soaring construction costs and a significant number of existing projects being cancelled, as buyers find themselves unable to obtain finance after interest rates and construction costs continued upwards since they signed the contract.
“The lack of new work entering the pipeline will result in fewer projects being commenced, and the volume of work under construction shrinking rapidly from late this year”, he said.
“This will occur at the same time that Australia has a pre-existing shortage of housing, and overseas workers and students return to Australia in record numbers.”
Sales in New South Wales have fallen more significantly than other regions, as the higher price of a house and land package means this market is more sensitive to changes in the cost of finance. At the other end of the spectrum, sales in South Australia and Western Australia continue to hold up despite the rise in the cash rate.
