HIA
SALES of new homes have fallen for a second consecutive month, with the nation’s peak residential building body warning that recent Federal Budget decisions could significantly slow home construction.
The latest Housing Industry Association (HIA) New Home Sales Report shows sales declined by 4.6 per cent in June, as rising interest rates and policy uncertainty continued to weigh on consumer confidence.
HIA Chief Economist Tim Reardon said the slowdown reflected growing caution among prospective homebuyers rather than a lack of demand for housing.
“Despite the decline since the Federal Budget, sales in the June quarter remain 4.6 per cent higher than the same period last year, while sales across the 2025-26 financial year are still up 18.4 per cent,” Mr Reardon said.
“Households continue to face the cumulative impact of three interest rate increases this year, while uncertainty surrounding recent housing policy changes has encouraged many prospective purchasers to delay or cancel major financial decisions.”
The HIA warned that more than 80 per cent of builders now expect new home commencements to fall by at least five per cent, with half anticipating declines of more than 10 per cent.
Mr Reardon said one of the biggest concerns was the Federal Government’s decision to prohibit borrowing through some self-managed superannuation funds (SMSFs) to build new homes.
“The prohibition of borrowing to build a new home by some superannuation funds is estimated to reduce detached housing commencements by around 3.5 to 5 per cent, while the impact on apartment construction is likely to be even greater,” he said.
The report also found cancellations of new home contracts surged by 50 per cent in June compared with the previous month, largely driven by rising interest rates reducing borrowing capacity and finance approvals being withdrawn.
Builders also expect a further 2500 contracts signed through SMSFs to be cancelled once the Budget legislation takes effect.
Mr Reardon said policies that reduce the ability of Australians to finance new housing would make it increasingly difficult for governments to achieve their target of delivering 1.2 million new homes.
“The coming months will show whether recent weakness in sales reflects a temporary loss of confidence or a more prolonged period of reduced investment among new home buyers,” he said.
Queensland recorded a 3.0 per cent fall in new home sales during June, while New South Wales experienced the largest monthly decline at 12.5 per cent, followed by Victoria at 9.2 per cent. Western Australia bucked the trend with an 8.1 per cent increase, while South Australia remained steady.
