WA house building will ‘defy’ RBA efforts: HIA

The latest Housing Industry Association (HIA) New Home Sales report has found that sales of new homes nationally remained low throughout the year that will lead to the volume of house construction commencements continue to shrink into 2024.

However, HIA chief economist Tim Reardon said that Western Australia is the “only exception to this low volume of sales” where it appears that “house building will defy the efforts of the Reserve Bank”.

The report found that the volume of new sales in Western Australia increased since a trough early this year, resulting in sales in the three months to the end of November, sitting 49.1 per cent higher than the same period in 2022.

“The strength of sales in Western Australia is now flowing through to a modest rise in approvals. This is likely to see a steady flow of new home starts for Western Australia in 2024,” Mr Reardon said.

“Unfortunately, the ongoing acute shortage of skilled tradespeople in Western Australia will cap the growth in starts.

“This is a very unique outcome and will see Western Australia remain out of cycle with the rest of the country.”

New home sales nationally fell 7 per cent during November, sitting at low volumes as the Reserve Bank of Australia’s (RBA) slew of interest rate hikes continued to impact house building.

“This will see the volume of homes commencing construction continue to contract in 2024 resulting in the lowest number of new house commencements since 2012,” Mr Reardon added.

In the three months to November, new home sales nationally decreased by 0.1 per cent on the same period in 2022.

Looking at the states for the same three-month period compared to 2022, South Australia recorded a fall in new sales of 26.1 per cent, Victoria down by 14.2 per cent, and NSW fell by 9.4 per cent.

Along with Western Australia’s increase, sales in Queensland also rose by 6.3 per cent when compared to the same period last year.

CBA Home Buying Index drops

Meanwhile, the Commonwealth Bank of Australia’s (CBA) Home Buying Index fell another 4.6 per cent in November, following a 0.7 per cent drop in October.

Annually, the Home Buying Index has fallen 9.9 per cent in November, from 8.1 per cent in October.

According to the major bank, the fall in the index in November is likely the result of the November rate hike by the Reserve Bank of Australia (RBA), which saw the official cash rate rise from 4.1 per cent to 4.35 per cent, following four consecutive months of rate holds.

However, CBA noted that the November rate hike will not impact the cost of mortgage repayments until early 2024.

[RELATED: CBA Home Buying Index down in November]