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The latest data reveals that July and August have seen the biggest decline in new house sales since last year’s lockdowns.
Housing Industry Association (HIA) economist Tom Devitt has reported that “new home sales decreased by 1.6 per cent in August, following a 13.1 per cent drop in July”.
The monthly survey of the major volume home builders in the five largest states provides a leading indicator of future detached home construction, according to the HIA New Home Sales report.
The HIA indicated that sales of new homes over the past two months suggest a market slowdown as households feel the effects of the recent increases in the cash rate.
This increase in borrowing costs amplifies the impact of the increase in building expenses.
Forecasting that the full impact of current and anticipated rate hikes will continue to have a negative effect on the selling of new houses over the coming months, the HIA did note that a substantial amount of work under development and approved-but-not-yet-begun will serve as a buffer for the sector.
This will hopefully ensure that building activity and demand for skilled trades remain unusually robust through the remainder of 2022 and into 2023.
The reduction in sales in August was led by the state of Victoria, which had a 15.2 per cent drop, followed by Queensland (-1.8 per cent).
Despite the overall decline, the other states used for the analysis experienced growth, notably South Australia (+18.2 per cent), NSW (+14.2 per cent), and Western Australia (+7.5 per cent).
In conclusion, Mr Devitt stated: “The concern remains 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.”
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