New home sales could worsen, says HIA

The struggling new home building industry will be in even worse shape should the RBA decide to raise interest rates this year, the Housing Industry Association has warned.

The warning comes on the back of new home sales increasing by just 0.2% in April, according to the latest HIA – JELD-WEN New Home Sales Report.

Detached house sales increased in NSW (7.8%) and Victoria (2.2%), but fell in Queensland (1.5%), South Australia (0.5%) and Western Australia (10.3%).

The sale of multi-unit buildings posted a third consecutive monthly decline, falling by 2% nationwide.

HIA chief economist Harley Dale says the new home building industry is “struggling under the weight of excessive taxation and regulation, a stalled housing supply reform process, and uncertainty over interest rates".

“That profile is an unfortunate indictment of the weak new home building conditions prevalent in 2011 amidst a growing housing shortage, but it’s nothing compared to what we’ll see if another rate hike bullet is fired,” Dale says.

For the year to April, Dale says new detached house sales are running at a volume 22% lower than the long-term average, and new multi-unit sales are down by more than half.

“An industry kick-start is required together with a reinvigoration of the reform process,” he says.