New home sales fell by 1.6% in August after the 13.1% decline seen in July, according to the HIA New Home Sales report.
The report, a monthly survey of the largest-volume home builders in the five largest states, said that 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,” said Tom Devitt, HIA economist. “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.”
Devitt said the remaining significant volume of work under construction and approved-but-not-yet commenced “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 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,” he said.
Leading the decline in sales in August was Victoria, which was down by 15.2%. This was followed by Queensland with -1.8%. The other states, meanwhile, reported increases, including South Australia with +18.2%, New South Wales with +14.2%, and Western Australia with +7.5%.
