The Urban Developer
AdvertiseEventsWebinarsUrbanity
Industry Excellence
Urban Leader
Sign In
Membership
Latest
Menu
Location
Sector
Category
Content
Type
Newsletters
Urban Leader Awards Logos RGB White
NOMINATIONS CLOSE SEPTEMBER 12 RECOGNISING THE INDIVIDUALS BEHIND THE PROJECTS
NOMINATIONS CLOSING SEPTEMBER 12 URBAN LEADER AWARDS
LEARN MOREDETAILS
TheUrbanDeveloper
Follow
About
About Us
Membership
Awards
Events
Webinars
Listings
Resources
Terms & Conditions
Commenting Policy
Privacy Policy
Republishing Guidelines
Editorial Charter
Complaints Handling Policy
Contact
General Enquiries
Advertise
Contribution Enquiry
Project Submission
Membership Enquiry
Newsletter
Stay up to date and with the latest news, projects, deals and features.
Subscribe
ADVERTISEMENT
SHARE
2
print
Print
ConstructionMarisa WikramanayakeFri 12 Aug 22

Rate Increase Will End Home Sales Boom: HIA

The HIA has recorded a 13.1 per cent decrease in new home sales for July 2022 with the impact of rising interest rates.

New home sales have slumped and interest rates are squarely to blame, according to peak property group, the HIA.

HIA chief economist Tim Reardon said the rate rises meant the end of the home sales boom was nigh.

“New home sales fell by 13.1 per cent in July, highlighting the impact of the recent increases in the cash rate,” Reardon said.

“If this decline in sales continues, which is expected, then the 1.75 per cent increase in the cash rate so far will have brought this pandemic building boom to an end.”

The result for July was reported in HIA’s New Home Sales report, which surveys the largest volume home builders in NSW, Queensland, Victoria, South Australia and Western Australia each month. It is considered a leading indicator of the future of detached home sales.

All the states showed a decline in sales across the month with Queensland down by 15.5 per cent, New South Wales down 15.3 per cent, Western Australia by 13.5 per cent, Victoria 11.1 per cent and South Australia down by 9.7 per cent.

The report does not have data for Tasmania, the Northern Territory or the Australian Capital Territory.

Changes in new home sales 

StateChange in July 2022 (%)Change compared to July 2019 (%)
Queensland-15.5+34
New South Wales-15.3+12.8
Victoria-11.1+17.8
Western Australia-13.5+8.2
South Australia-9.7-9.9

Source: HIA New Homes Sales Report, July 2022 


Reardon said that while supply chain issues were increasing building costs, the interest rate rise ahd increased borrowing costs.

“The rise in the cost of borrowing will compound the impact of the rapid increase in the cost of building a new home due to constraints on global supply chains,” he said.

“The full impact of the rate increases will continue to flow through as an adverse impact on the sale of new homes for at least the next few months.

“This slowdown is consistent with reports from builders over recent months who have seen the number of people visiting display sites and making enquiries slowing since the first increase in the cash rate in May.”

However, compared to July 2019, many states had higher sales figures.

Queensland was up by 34 per cent compared to July 2019, as was Victoria by 17.8 per cent, New South Wales by 12.8 per cent and Western Australia by 8.2 per cent.

Only South Australia’s figures for July 2022 were lower than pre-pandemic levels—down by 9.9 per cent.

The highest sales volume for new homes in a month in recent times was in December 2020 when the HIA recorded sale numbers passing the 13,000 mark. 

The HIA report suggeated that there was a buffer effect for the industry as well.

“There remains a significant volume of work under construction and approved-but-not-yet-commenced work that 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,” Reardon said.

“There remains a risk, however, 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.”

ResidentialAustraliaSector
AUTHOR
Marisa Wikramanayake
The Urban Developer
More articles by this author
ADVERTISEMENT
TOP STORIES
Stockland bumps up its apartment pipeline in melbourne and sydney
Exclusive

Stockland Re-Enters Density in $5bn Apartment Play

Renee McKeown
4 Min
Woolloongabba Precinct Vulture St
Exclusive

Brisbane Developer in Cross River Rail Compensation Tussle

Clare Burnett
4 Min
The Mondrian Gold Coast hotel's food and beverage is driving profits
Exclusive

Touch, Taste, Theatre: What’s Driving Mondrian’s Success

Renee McKeown
6 Min
Fortis’ display suites are designed as brand environments first, with tactile details and curated design to build buyer confidence before project specifics.
Exclusive

Relevant or Redundant: Will Tech Kill Display Suites?

Vanessa Croll
7 Min
Exclusive

Missing Heart: Why The Gold Coast Needs a CBD

Phil Bartsch
7 Min
View All >
Aerial view of Caboolture and Bruce highway to Brisbane with Bribie Island Road crossing, Queensland, Australia
Policy

Queensland’s $2bn Push Opens New Housing Front

Vanessa Croll
South Melbourne social housing precinct
Affordable & Social Housing

South Melbourne Housing Precinct Revamp Takes Next Step

Leon Della Bosca
The Adelaide purpose built student accommodation market is about to increase by 1058 beds with the State Commission Assessment Panel supporting two towers in the making.
Student Housing

Highrise Approvals Add 1000-Plus PBSA Beds in Adelaide

Renee McKeown
The two towers, of 35 and 34 storeys, help cement the SA capital’s growing status as the best place in Australia for the…
LATEST
Aerial view of Caboolture and Bruce highway to Brisbane with Bribie Island Road crossing, Queensland, Australia
Policy

Queensland’s $2bn Push Opens New Housing Front

Vanessa Croll
2 Min
South Melbourne social housing precinct
Affordable & Social Housing

South Melbourne Housing Precinct Revamp Takes Next Step

Leon Della Bosca
2 Min
The Adelaide purpose built student accommodation market is about to increase by 1058 beds with the State Commission Assessment Panel supporting two towers in the making.
Student Housing

Highrise Approvals Add 1000-Plus PBSA Beds in Adelaide

Renee McKeown
3 Min
JQZ Parramatta EDM
Residential

JQZ Plots 10-Storey Addition to Parramatta ‘Auto Alley’ Plans

Clare Burnett
3 Min
View All >
ADVERTISEMENT
Article originally posted at: https://www.theurbandeveloper.com/articles/rate-increase-end-house-sales-boom-hia