Ten per cent in a single month. That is how far sales of new homes in Australia fell in August, and it left the Housing Industry Association with a hard message for builders and for the Reserve Bank.
Over the three months to August, sales were 19.3 per cent below the previous quarter and 7.7 per cent below the same period a year earlier. It was the fourth straight monthly fall, taking sales to their lowest level in more than a year. The HIA’s New Home Sales report, a monthly survey of the largest volume builders in the five biggest states, is treated as a leading indicator of detached home construction.
No state escaped. Victoria fared worst, down 27.0 per cent on the previous quarter. Queensland fell 20.2 per cent, New South Wales 17.5 per cent, South Australia 10.8 per cent and Western Australia 8.2 per cent.
Taxes, rates and a stalled recovery
HIA chief economist Tim Reardon called it “a tangible and significant deterioration in market conditions” and said the recovery in new home building that had been under way at the start of the year had been interrupted. He pointed to two causes. Tax increases in the Federal Budget have shaken market confidence, he said, while three interest rate rises have cut what households can borrow and lifted their repayments.
Falling prices for established homes and rising construction costs follow from those same pressures, Reardon said, and they are making new projects harder to finance. He would not put a figure on the split. It is not possible, he said, to isolate how much of the damage comes from rates, taxes or wider economic uncertainty.
Builders describe it on the ground. Fewer people are walking through display homes, enquiries are down, preliminary commitments are slipping and cancellations are rising.
A delayed hit
Housing starts will not feel it yet. Plenty of work was already in the pipeline when the squeeze began, Reardon said, so commencements are unlikely to suffer this year. “But today’s new home sales are tomorrow’s housing commencements,” he said, and the weak middle of 2026 will mean fewer homes started in 2027.
The need has not gone away. Population growth, low unemployment and the existing shortage of homes will keep demand for housing high.
Reardon’s warning to the central bank was blunt: the new home market cannot absorb further rate rises on top of the Budget’s tax increases, and the full impact of both is still to come. “This is not the time for another rate rise,” he said.
