The Housing Industry Association has released its latest sales report for the month ended in September.
The monthly survey by the Housing Industry Association (HIA) — the HIA New Home Sales report — has found that new home sales have dropped by 15.7 per cent in the three months to September when compared to the previous quarter.
The three months to September 2022 when compared to the previous quarter saw new home sales decline in most states due to rising interest rates.
Leading the declines was Victoria, which saw a 20.8 per cent drop, followed by Queensland with a 17.0 per cent decline, NSW (16.3 per cent) and Western Australia (10.0 per cent).
South Australia was the only state observed to have an increase, which rose by 6.6 per cent in the three months leading to September.
According to HIA chief economist Tim Reardon, the data produced the weakest quarter since June 2020, back when the pandemic lockdowns were in full effect and “drove Australia into its first recession in almost 30 years”.
Mr Reardon attributes the RBA’s “tightening cycle” to home buyer borrowing capacity after new home sales declined in September for the third month in a row by a further 4.2 per cent.
“The RBA increased the cash rate again in October, and this will further accelerate the decline in new home sales,” Mr Reardon stated.
“The RBA’s most acute tightening cycle in almost 30 years is occurring at the same time as the industry is experiencing the fastest increase in home building costs in almost 50 years.
“This month’s data shows that home building is past the pandemic peak and is now set to experience a long COVID slow down.
“Given the longer-than-usual lags in this building cycle, the RBA’s rate hikes to date will similarly take longer than usual to affect the broader economy.”
The latest October rate hike to 2.6 per cent has shown the biggest declines in spending intentions in home buying, as well as health and fitness, household services and transport, according to the Commonwealth Bank’s Household Spending Intentions (HSI) Index.
The home buying intentions index fell by 4.4 per cent in September, partly offsetting some “surprising strength” in August, according to chief economist Stephen Halmarick.
“The effect of rising interest rates is beginning to impact on household budgets and Australian consumer spending is adjusting accordingly,” Mr Halmarick said.
“Households are seeing a noticeable difference to their mortgage repayments and therefore are considering how they can adjust their expenses elsewhere.”