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The Housing Industry Association’s (HIA) New Home Sales Report for May 2024 has recorded a decline of 12.6 per cent in national new home sales.
This followed a spike in new home sales during April of 22.1 per cent, largely driven by home buyers evading the changes to the National Construction Code (NCC) 2022, which came into effect on 1 May 2024 for any new home building contract in Victoria and Queensland.
According to the HIA, the increased government regulations were expected to add an estimated $25,000 to the cost of building a new home.
HIA chief economist Tim Reardon said Victoria and Queensland have seen a decline in sales during may as a result of the pull-forward in April to get ahead of the increased costs.
“This was a repeat of the experience of New South Wales in September when it introduced its energy efficiency standards. Sales in the months thereafter fell as a result of this pull-forward,” he said.
“The draw forward in sales distorts the new home sales dataset, which makes it difficult to ascertain the market trends.”
Reardon added that the goal of increasing housing supply will be further impeded by the increase in construction costs being driven by increased regulatory requirements and higher interest rates, while also placing more pressure on public housing requirements.
“If governments want to increase the supply of homes, they need to, at the very least, stop making new homes more expensive,” Reardon said.
“Lowering the cost of delivering new homes to market is essential to achieving the Australian Government’s target of 1.2 million new homes over the next five years, and improving housing affordability across the country.”
May sales increased by 15.1 per cent in NSW, followed by Western Australia (14.6 per cent) and South Australia (3.2 per cent).
Meanwhile, the other states recorded monthly declines in sales, led by Victoria (41.0 per cent) followed by Queensland (10.3 per cent).
Commenting on Western Australia’s home sales growth, HIA executive director – Western Australia, Michael McGowan, said the 14.6 per cent month-on-month growth was primarily driven by the state’s continued population growth and the “current state of the established housing and rental market”.
“The lack of established housing availability is driving people to make the decision to build their own new home,” McGowan said.
“The housing industry is no different to any other industry in that consistency is the key to delivering housing supply. We are now seeing that consistency and the month-on-month growth is important as we head towards building 20,000 homes per year.
“While the industry in WA has had its challenges over the last three years, the reality is we are now delivering 50 per cent more houses than we were pre-pandemic.”
[RELATED: Home sales surge prior to building code changes: HIA]
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