New home sales fell by 1.6% in August after the 13.1% decline seen in July. 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. Source: Timberbiz
July and August represent the weakest pair of months for new home sales since the lockdowns in 2021.
“Sales of new homes over the past two months are reflective of a slowing in the market as the impact of the rise in the cash rate hits households,” HIA Economist Tom Devitt said.
“This rise in borrowing costs compounds the impact of the rise in the cost of construction.
“The full impact of recent and future rate increases will continue to flow through as an adverse impact on the sale of new homes in coming months,” he said.
There remains a significant volume of work under construction and approved-but-not-yet-commenced that will provide a buffer for the industry and ensure building activity and demand for skilled trades remains exceptionally strong through the rest of 2022 and into 2023.
“The concern remains that that the adverse impact of rising rates on the wider economy will be obscured by this volume of ongoing work and that the RBA goes too far, too soon,” Mr Devitt said.
Victoria drove the declines in sales in August, down by 15.2%, followed by Queensland (-1.8%). The other states saw Increases, including South Australia (+18.2%), New South Wales (+14.2%) and Western Australia (+7.5%).
