The slump in sales of new homes has ramped up with one state’s sales falling more than 70 per cent, according to new data.
The HIA New Home Sales report showed sales nationally in February were 46.8 per cent lower than for the same time the previous year.
For the three months to February compared to the same period in 2022, sales in NSW were down an eye-watering 76.6 per cent while Queensland’s were down 51.2 per cent and Victoria down 42.3 per cent.
As access to finance becomes significantly tighter and the cash rate increases, new homebuyers were withdrawing from the market, according to HIA chief economist Tim Reardon.
“Sales in February rose by 14.3 per cent compared to the previous month but remain exceptionally low,” Reardon said.
“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.
“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.”
The Council of Financial Regulators discussed high inflation and measures to strengthen the financial sector at its quarterly meeting this month.
According to the council, the high volumes of savings were supporting household finances, with some homeowners struggling to make loan repayments in the face of higher interest rates.
Australian Bureau of Statistics data shows the January 2023 total homes approved dropped 27.6 per cent—private sector houses fell 13.8 per cent, and apartments and townhouses went off a cliff, dropping 40.8 per cent.