New home sales declined 8.1% in October, more than reversing the sales surge recorded in September caused by regulatory changes in NSW, according to the latest HIA New Home Sales report.
Tom Devitt (pictured above), HIA senior economist, said people rushed to buy homes before new regulations in NSW raised costs, leading to a big increase in September sales. This early buying trend is expected to keep affecting sales in the upcoming months.
“The sales performance in October was consistent with the weakness observed throughout 2023 and will see new house starts continue to decline,” Devitt said in a media release. “Interest rates continue to weigh on confidence, with the industry headed for its weakest year of new house commencements in over a decade.
Devitt said the Reserve Bank’s decision to continue its aggressive monetary policy tightening in November threaten to further deepen and prolong the ongoing slump in home building. This coincides with Australia’s worsening housing crisis, with record population growth and an acute shortage of rental homes, highlighting the urgent need for more new housing.
“Increasing the supply of homes will require policymakers to help lower the cost of building,” Devitt said. “This means reforms to tax, land release and planning, and loosening macro-prudential rules that squeeze out owner-occupiers and investors alike.”
The HIA New Home Sales report, a monthly survey of major home builders in the five largest states, revealed a 5.8% year-on-year decrease in new home sales across Australia for the three months leading up to October.
Regional breakdowns showed significant declines in South Australia (-20.1%), New South Wales (-17.4%), Queensland (-15.0%), and Victoria (-13.8%). Western Australia bucked the trend, experiencing a significant 42.2% increase in sales during the same three-month period in 2022.
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