New home sales trending down

The Housing Industry Association expects home-building activity to decline next year, despite the large amount of residential construction taking place right now.

Although the number of new home sales in the month of November was 1.2% higher than October, sales in the November quarter were 23.4% lower than the previous quarter, according to the HIA’s monthly survey of large home builders.

HIA economist Tom Devitt said new home buyers have pulled back in response to rising interest rates.

“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,” he said.

“The effect of the latest hike in December will not be fully reflected in building activity until late 2023.”

Generally, a reduction in housing supply leads to increased demand and therefore puts upward pressure on property prices.