The impacts of cumulative rate hikes since May have continued to dampen the appetite of potential buyers for new homes.
Housing Industry Association (HIA) New Home Sales report showed that while new home sales improved slightly in November, growing at 1.2%, three-month figures were at the lowest since the first national lockdown froze the market in early 2020.
In fact, sales in the three months to November were down 23.4% over the previous period and 29.1% lower from the same period last year.
During the period, New South Wales recorded the biggest decline at 51.5%, followed by Queensland (38.3%), Western Australia (30.9%), and Victoria 19.1%.
Only South Australia reported an increase during the period at 28.1%.
HIA economist Tom Devitt said sales are likely to dampen further with the 25bps hike this month, which adds to the 275bps increase since May
“In terms of steepness, 2022 now officially overtakes the 1994 hiking cycle when the cash rate was lifted by a total of 275bps,” he said.
“When this hiking cycle began, there was a significant pipeline of home building work under construction, and many more projects yet to even begin construction.
Mr Devitt said this has created a significant lag in the RBA’s impact on employment across the economy.
“The effect of the latest hike in December will not be fully reflected in building activity until late-2023,” he said.
“Further hikes will cause a deeper and more prolonged trough in home building activity.”
Photo by 89Stocker on Canva.