- The national decline in new home sales is being compounded by an uptick in project cancellations
- The national decline is revealed in the latest HIA New Home Sales report
- Contrasting the national trend, Western Australia experienced an increase of 22.5%
Sales of new homes across Australia declined a further 7.2% in March, while Western Australia bucked the national trend with sales improving since the new year, according to data from the Housing Industry Association (HIA) New Home Sales report.
HIA Senior Economist, Tom Devitt says the falling national sales come as the rise in the cash rate over the past year continues to impede sales.
“The latest decline leaves sales in the first three months of the year down by 45.9% compared to the same quarter last year,” says Devitt.
He explains the national decline in new home sales is being compounded by an uptick in project cancellations.
“The cancellation rate increased in March to 30.5%,” he says.
“This means for every three new building contracts that are signed, one sale from a previous month is cancelled.”
Tom Devitt, HIA Senior Economist
“Many builders have reported ‘negative sales’ over recent months. The last time the rate was near this high was at the start of the pandemic.”
Devitt says prolonged interest rate increases will continue to hold down new sales and cause further cancellations.
State by state
The New Home Sales report is a monthly survey of the largest volume of home builders in the five largest states and a leading indicator of future detached home construction.
Compared to the previous month, the states of Victoria and South Australia recorded the biggest declines in sales for March, down 23.4% and 22.4%, respectively.
Queensland followed with a decrease of 2.2%, while New South Wales and Western Australia experienced increases of 1.7% and 22.5%, respectively.
Private New House Sales – Australia (seasonally adjusted)
In the past year, the state of New South Wales has been the main driver of the sales declines. The first quarter of 2023 witnessed a 75.9% decrease compared to the same period last year. Following this was Queensland with a decline of 54.3%, Victoria with a decline of 43.4%, and South Australia with a decline of 13.7%.
Meanwhile, Western Australia was the only major state that recorded an increase in sales over the past year, with a rise of 1.0%.
Western Australia bucks the national trend
HIA Executive Director Michael McGowan says that the growth in WA’s new home sales is especially remarkable given the challenges faced by the new home building market such as labour shortages and interest rate hikes.
He says new home sales are being boosted by investor activity both locally and at an interstate level.
“Investors are recognising WA as an attractive market due to the relative affordability of homes, strong economic outlook, and tight rental market.”
“The results highlight that WA’s main challenge remains in the supply of new housing and not the demand for housing.”
Michael McGowan, HIA Executive Director
“It is important that WA maintains a healthy home building market for the benefit of all Western Australians and all aspects of the Western Australian economy,” said McGowan.
