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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.
“The rise in the cash rate over the past year has seen a significant decline in the volume of new homes sales. This will result in the least number of new homes commencing construction for more than a decade in 2024,” added Mr Reardon.
“The last year has seen the impact of a 4 per cent increase in the RBA’s cash rate filter through to the new home market, compounding the impact of soaring construction costs across the industry.
“A significant number of existing projects are also being cancelled, as buyers find themselves unable to obtain finance after interest rates and construction costs continued upwards since they signed the contract.
“This 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.
“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.
“Addressing the shortage of housing requires policymakers to stop increasing the cost of new homes through taxes and regulatory imposts. The more homes are taxed, directly or indirectly, the fewer homes will be built,” concluded Mr Reardon.
Sales of new homes in 2022/23 were down across all large states compared to the previous financial year, led by New South Wales (-56.1 per cent), and followed by Queensland (-38.5 per cent), Victoria (-31.2 per cent), Western Australia (-12.1 per cent) and South Australia (-2.8 per cent).
HIA has been calling loudly on the State Government to release more land for new housing, as it is a fundamental element in delivering new homes and supporting housing affordability.
Are you aware of the first home owners grant has been increased until 2026? Did you know grants are also available for existing homeowners when building new homes? Find out the latest on the HomeGrown Territory grant and FreshStart New Homes grant today.
“Victoria is behind Queensland, Western Australia and South Australia in HIA’s latest Housing Scorecard, reflecting a dramatic change in fortunes over the last five years,” stated HIA Executive Director Victoria, Keith Ryan.
This year’s State Budget has largely missed the opportunity to improve the environment for home building and contains negligible measures to increase housing supply, address housing affordability and lower the costs facing new home builders.