Sales of new homes across Australia increased in May for the second month in a row, builders have reported.
The latest HIA New Home Sales report shows that new home sales rose by 9.4% in the month of May 2023 compared with the previous month. Over the last three months, sales were higher by 4.4% on the previous quarter.
Compared with the same time last year, figures are still down in most states, led by New South Wales (down 63.6%), and followed by Queensland (52.9%), Victoria (46.6%) and South Australia (29.5%). Western Australia saw the only increase over the year, up by 19.4%.
HIA Senior Economist Tom Devitt noted that transactions nevertheless remain at low levels.
“Sales in the three months to May 2023 were more than 40% lower than in the year before interest rates started to increase, and 25% lower than prior to the pandemic”, Devitt said.
“The most significant contraction in sales is in New South Wales where customers are more sensitive to rises in the cash rate.”
Cancellations also remain elevated at a rate of 25% in the last quarter, he added.
“This means, for every four new projects a builder is recording, a previous project is being cancelled.
“The significant increase in the cost of land and construction across all jurisdictions over the past two years is compounding the impact of higher interest rates. The additional costs of compliance with the National Construction Code, that come into effect this year, will further increase the cost of new home construction and dampen demand further.
“This combination of factors will see home building continuing to contract for at least the next 12 months to its lowest level in more than a decade”, Devitt concluded.
