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{{propApi.successMessage}} {{region}} Change locationPolicy uncertainty weighs on new home sales
Policy uncertainty weighs on new home sales
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The HIA New Home Sales report is a monthly survey of the largest volume home builders in the five largest states and is a leading indicator of future detached home construction.
“Sales of new homes fell by 16.7 per cent nationally in May 2026, following two months of strong sales activity. Despite the decline, sales over the three months to May remained 18.9 per cent higher than the same period a year earlier,” added Mr Reardon.
"New home sales have softened as households navigate the cumulative impact of three cash rate increases, heightened geopolitical uncertainty and proposed changes to housing tax policy announced in the Federal Budget.
"Importantly, it is not the Budget measures themselves that have weighed on sales. Rather, it is the uncertainty surrounding the proposed changes.
"Purchasing a home is the largest financial decision most households will make. When households are uncertain about the economic outlook, their employment prospects or future housing policy settings, they often delay that decision until there is greater clarity."
Mr Reardon said Australia had experienced a similar dynamic before.
"During the 2019 Federal Election campaign, uncertainty surrounding proposed changes to negative gearing and capital gains tax contributed to weaker housing activity. Once that uncertainty was removed, confidence and housing demand recovered rapidly.
"The recent moderation in sales should therefore be viewed as a decline in confidence rather than a decline in housing demand.
“This is reinforced by the strong population growth over the past year and sustained low levels of unemployment.
"New South Wales remains Australia's most interest rate sensitive housing market and is particularly exposed to higher borrowing costs and policy uncertainty.
"Despite this, sales in New South Wales increased by 4.2 per cent in May and remain more than 21 per cent higher than a year ago.
“Victoria recorded the largest monthly decline in sales, down 27.4 per cent, although sales remain substantially higher than a year ago.
“Queensland, South Australia and Western Australia continue to benefit from substantial pipelines of homes already sold but yet to commence construction, supporting building activity through 2026.
Mr Reardon said the fundamental drivers of housing demand remain firmly in place.
"Australia's population increased by more than 400,000 people last year, unemployment remains low and household sizes continue to decline. These factors are all generating demand for additional housing.
"At the same time, labour shortages, rising construction costs and limited access to shovel ready land continue to constrain the industry's ability to increase supply.
"Australia remains well short of the number of homes required to meet demand. While confidence has weakened in recent months, the May result appears to be a pause in momentum rather than a reversal in the housing cycle."
By state, New South Wales recorded a monthly increase of 4.2 per cent, followed by Queensland remaining relatively unchanged (+0.3 per cent). Declines were observed in Victoria (-27.4 per cent), Western Australia (-23.6 per cent) and South Australia (-17.0 per cent).
Download our latest HIA New Home Sales Report
Private New House Sales - Australia (seasonally adjusted)
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