Housing sales dive below first lockdown

New home sales are at their lowest ebb since the first national lockdown, according to new figures from Housing Industry Association (HIA).

The peak body has released its latest New Home Sales report, which showed construction of houses was well down on recent data, leading the association to declare the housing boom was at an end.

Quarterly sales to November were 23.4 per cent down on the previous three months and 29.1 per cent from the same quarter in 2021.

Victoria fared better than most other major states: it declined 19.1 per cent, which was a less dramatic fall than those recoded in New South Wales (51.5 per cent), Queensland (38.3 per cent) and Western Australia (30.9 per cent).

South Australia was the only jurisdiction to improve in the three-month period (up 28.1 per cent).

National monthly sales increased 1.2 per cent from a slow October, when sales plummeted to below levels seen during March-May 2020, when the COVID-19 pandemic first gripped Australia.

The recent figures followed a downward trend that has continued since January this year for new home sales across Australia.

The HIA report is a monthly survey of largest volume home builders across Australia and is a lead indicator of future detached home construction.

HIA economist Tom Devitt said the impact of ongoing interest rate rises from Reserve Bank of Australia – which rose 300 basis points this year to 3.1 per cent in December – had “become very clear” in the home sales figures.

“New home sales increased by 1.2 per cent in November from their very weak October performance. This produced the weakest three months of sales since the first national lockdown froze new home sales in early 2020.”

“The RBA delivered its eighth consecutive cash rate hike in December, for a total increase of 3 per cent since May. In terms of steepness, 2022 now officially overtakes the 1994 hiking cycle when the cash rate was lifted by a total of 2.75 per cent.

“It is clear in the New Home Sales Survey that the RBA has brought the housing boom to an end.

“When this hiking cycle began, there was a significant pipeline of home building work under construction, and many more projects yet to even begin construction.

This has created a significant lag in the RBA’s impact on employment across the economy.”

Mr Devitt said the impact of latest rate hikes would continue until the end of 2023, and warned that future rises would cause “deeper and more prolonged troughs in home building activity”.