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The HIA New Home Sales report – a monthly survey of the largest volume home builders in the five largest states – is a leading indicator of future detached home construction.
“Sales in the month of February rose by 14.3 per cent compared to the previous month but remain exceptionally low,” added Mr Reardon.
“Sales of new homes stalled late in 2022 as the adverse impact of the RBA’s rate increases continue to erode market confidence.
“When the cash rate started to rise in May 2022 there was a very large pool of work to commence construction. This pool of work yet to commence is shrinking quickly as new sales remain very low and the number of new projects entering the pipeline falls.
“Tighter access to finance and a higher cash rate is seeing many new home buyers withdraw from the market. Customers that received approval to build a new home early in 2022 are cancelling these projects as the cost-of-living bites and banks withdraw financing.
“Without an improvement in access to finance, or a lowering of rates, the number of new homes commencing construction will slow later this year.
“The RBA isn’t going to return the economy to stability by putting the building industry through boom-and-bust cycles,” concluded HIA’s Chief Economist, Tim Reardon.
For the three months to February 2023, compared to the same period the previous year, new home sales in New South Wales were down by 76.6 per cent, followed by Queensland (-51.2 per cent), Victoria (-42.3 per cent), Western Australia (-14.8 per cent) and South Australia (-6.0 per cent).
“Australia’s population reached 27.4 million by the end of 2024, up by 445,900 people, or 1.7 per cent for the year,” stated HIA Senior Economist, Tom Devitt.
The Tasmanian election that no-one wanted to have is in full swing, and while the limited campaign period is unlikely to provide the usual platform to promote key policies and reforms, HIA is calling on both major parties to prioritise housing policies given the significant challenges across the state.
“Our dated and complex planning system is littered with speed bumps that could easily be removed”, said Brad Armitage, HIA NSW Executive Director.
“The Victorian government’s proposal to update home building contract laws to make them fit for use in the 21st century is welcomed by HIA,” stated HIA Executive Director, Keith Ryan.