New home sales tumbled 20.5 per cent in July compared to a month earlier, with declines experienced in almost all major states.
The Housing Industry Association‘s monthly report found only Western Australia recorded an increase in July, rising 8.5 per cent.
There were steep falls elsewhere, with NSW down 14.8 per cent, Queensland 25.4 per cent lower, South Australia declining 29.4 per cent and Victoria falling 32.2 per cent.
“With lockdowns in multiple states restricting trade and eroding confidence, it is not surprising that fewer people were able to visit display homes,” HIA economist Tom Devitt said.
“Sales data over coming months will indicate if recent lockdowns have impaired consumer confidence or if this July result is an anomaly.”
However, new home sales for the three months to the end of July were only marginally lower than at the same time in 2020 and when the first positive impacts of the federal government’s HomeBuilder grants scheme were emerging.
“This solid level of sales following the end of HomeBuilder suggests that demand for detached housing remains robust despite the poor result in July,” Mr Devitt said.
The report surveys the largest home builders in the five biggest states and is a leading indicator of future detached home construction.
The latest Westpac-Melbourne Institute consumer sentiment survey, also released on Wednesday, showed its “time to buy a dwelling” index posted another sharp decline in August, dropping 8.3 per cent to 88.9.
The index has now slumped by nearly a third from its November high of 132 with the August result the second lowest since 2010. The lowest was during last year’s national COVID-19 lockdown.
“The latest month again shows a clear shift in the market that is likely to see owner-occupier activity slow sharply as investor activity strengthens,” Westpac senior economist Matthew Hassan said.
“The steep fall is clear warning that the rapid rise in dwelling prices, and associated deterioration in housing affordability, is starting to weigh heavily on buyer sentiment amongst owner occupiers.”
The survey found over 70 per cent of consumers expect prices to rise further over the next year with 20 per cent expecting double-digit price growth.
By Colin Brinsden, AAP Economics and Business Correspondent in Canberra
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