A combination of factors including a higher cash rate and tighter access to finance have had an impact on property sales.
Housing Industry Association chief economist Tim Reardon said sales in the three months to February were 46.8% lower than at the same time in the previous year.
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% compared to the previous month but remain exceptionally low,” Mr Reardon said. “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.”
Mr Reardon said tighter access to finance for prospective buyers, along with a higher cash rate is behind new home buyers withdrawing 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,” he said. “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%, followed by Queensland (-51.2%), Victoria (-42.3%), Western Australia (-14.8%) and South Australia (-6.0%).
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