New home sales plunge, putting Albanese’s budget promise in doubt
New home sales in Queensland fell 32 per cent for the three months to the end of October as the industry warned that the promise in the federal Budget of 1 million new homes in five years was disappearing.
Property prices have risen an average of 30 per cent since Covid. Photo: ABC
Nationally, the Housing Industry Association chief economist Tim Reardon said sales were down sharply in October. It coincided with data showing every city except Adelaide recorded a decline in selling prices for all homes.
The HIA said sales of new homes had already fallen 15.8 per cent nationally in the three months to the end of September, due to the seven increases in the cash rate since May.
“The increase in interest rates is compounding the rise in the cost of new home construction and further reducing the capacity of borrowers to finance the build of a new home,” Reardon said.
“Despite the fall in sales over the past four months, there remains a significant volume of home building under way, and many homes still to commence construction. This will ensure that work on the ground remains strong through 2023.
“But it is very clear, even before the October and November increase in the cash rate start to impact on sales, that this building boom is coming to an end.
“The full effect of the November 2022 increase in the cash rate is not likely to flow through to new home sales fully, until June 2023.
“The consequence of the fastest increase in the cash rate in almost 30 years will see detached home building activity slow to its lowest level in a decade by 2024.
“If the RBA doesn’t ease the cash rate in 2023, the Government’s goal of building 1 million homes in five years will be very difficult.”
It is also unlikely to help alleviate the housing crisis in Queensland. Rental vacancies remain below 1 per cent in much of south east Queensland and that has forced up the cost of rents.
There is some hope on the horizon. The Commonwealth Bank has a forecast that the Reserve Bank will pause its increases in the cash rate after a final rise in December. It could them cut rates in the second half of 2023.
CoreLogic data showed Brisbane house prices were down another 2 per cent for October and it was now falling faster than any of the other capital.
In regional Queensland, the fall in October was 1 per cent.
“Since values peaked in June (in Brisbane) the market is down 6.2 per cent,” CoreLogic’s Tim Lawless said.
That was equivalent to $48,300 based on the city’s median value.
