New home sales in Australia rose 14.3% month-on-month in February, but remain exceptionally low, according to HIA.
HIA research found that sales in the three months to February were 46.8% lower than at the same time the previous year.
HIA’s Chief Economist Tim Reardon said sales of new homes stalled late in 2022, as the adverse impact of the RBA’s rate increases continued 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,” Reardon said.
“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.
“Tighter access to finance and a higher cash rate is seeing many new home buyers withdraw 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.”
Without an improvement in access to finance, or a lowering of rates, the number of new homes commencing construction will slow later this year, according to HIA.
Reardon said the RBA wasn’t going to return the economy to stability by putting the building industry through boom-and-bust cycles.
New home sales in New South Wales were down by 76.6% during the three months to February 2023, compared to the same period the previous year.
Queensland sales were down 51.2%, while sales in Victoria were also 42.3% lower.
New home sales in Western Australia and South Australia were down 14.8% and 6%, respectively.