Inflationary cost-of-living pressures, coupled with uncertainties surrounding the possibility of one or more future interest rate rises, have seen new home sales remain at rock bottom.

“Sales of new homes across Australia rose by 6.8 per cent in April 2023 compared to the previous month,” stated HIA Chief Economist, Tim Reardon.

The HIA New Home Sales report – a monthly survey of the largest volume home builders in the five largest states – is a leading indicator of future detached home construction.

“With sales relatively stable, albeit at extraordinarily low levels for six months, it does appear that the market has reached rock bottom,” Mr Reardon said. “This sees sales for the three months to April stable compared to the previous three months.”

“This suggests that sales may have levelled out and reached a floor, barely more than half their levels from a year earlier, he said.

The cancellation rate remains elevated, with more than one new home project cancelled for every four new homes sold per month. This is its highest level since the start of the pandemic and is resulting in an accelerated decline in the pool of work sold, but not commenced.

“The RBA’s rate increases last year and this year will continue to hold down new home sales and cause further cancellations as finance becomes unobtainable for an increasing number of buyers,” Mr Reardon added.

“Sales of new homes fell in all states in the three months to April except for Western Australia. Sales in Western Australia were higher in the three months to April (+37.1 per cent) than in the previous three months and year (+9.8 per cent).”

“Of note, sales in Western Australia in the three months to April 2023 were 40.3 per cent higher than at the same time in 2019. This is an encouraging sign that this market may defy the best efforts of the RBA,” Mr Reardon concluded.

Over the last year, NSW has seen the largest declines, with sales in the April quarter down by 70.5 per cent on the same quarter in the previous year. This was followed by Queensland (-51.7 per cent), Victoria (-46.3 per cent) and South Australia (-13.7 per cent). Western Australia saw the only increase over this period of 9.8 per cent.