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Australia’s rising cash rate continues to have a substantial impact on housing markets, particularly on sales of new homes.

Figures from Housing Industry Association (HIA) found that the sales of new homes declined 4.8% in June, leaving sales for the financial year 2022-2023 down 33.2% from the previous period.

HIA chief economist Tim Reardon said the rise in the cash rate over the past year has been compounding the impact of soaring construction costs across the industry.

“The rise in the cash rate over the past year has seen a significant decline in the volume of new homes sales — this will result in the least number of new homes commencing construction for more than a decade in 2024,” he said.

Over the financial year, sales of new homes were down across all large states, with New South Wales leading the decline at 56.1%, followed by Queensland (38.5%), Victoria (31.2%), Western Australia (12.1%), and South Australia (2.8%).

“Sales in New South Wales have fallen more significantly than other regions, as the higher price of a house and land package means this market is more sensitive to changes in the cost of finance,” Mr Reardon said.

Mr Reardon said rising construction costs is also impacting overall building activity, with a significant number of existing projects being cancelled.

“Buyers find themselves unable to obtain finance after interest rates and construction costs continued upwards since they signed the contract,” he said.

“This lack of new work entering the pipeline will result in fewer projects being commenced, and the volume of work under construction shrinking rapidly from late this year.”

Mr Reardon said this will occur while Australia has a pre-existing shortage of housing, and overseas workers and students return to Australia in record numbers.

“Addressing the shortage of housing requires policymakers to stop increasing the cost of new homes through taxes and regulatory imposts. The more homes are taxed, directly or indirectly, the fewer homes will be built,” he said.

Homeowners risking up to $60,000 by selling off-market

A separate report from PropTrack analysed sale prices for homes sold off-market and has found that on average, they sell for less.

On average, houses sold off-market achieved sales prices that were 4.3% lower than those listed.

In Greater Sydney, this difference translates to an estimated average loss of over $60,000, while in Greater Melbourne, it amounts to nearly $30,000.

Meanwhile, units sold off-market achieved sales prices that were 1.2% lower than those listed.

However, in certain cities, sellers experienced even greater losses — in Greater Sydney, units were sold for 2.8% less compared to their listed counterparts.

PropTrack senior economist Paul Ryan said deciding to sell off-market might come at a significant cost to sellers.

“While some sellers might try to save money by not advertising online, this analysis shows the potential earnings lost in the final sale price far outweighs the initial cost of advertising,” he said.

“These results are based on sales in 2022, when home price growth slowed in many regions, reflecting the potential costs of selling off-market in current conditions, where strong buyer demand and limited supply is pushing prices up in most markets.”

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

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LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees Max LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkComparePromoted ProductDisclosure
6.04% p.a.
6.06% p.a.
$3,011
Principal & Interest
Variable
$0
$530
90%
4.6 STAR CUSTOMER RATINGS
  • Available for purchase or refinance, min10% deposit needed to qualify.
  • No application, ongoing monthly or annual fees.
  • Dedicated loan specialist throughout the loan application.
 Disclosure
5.99% p.a.
5.90% p.a.
$2,995
Principal & Interest
Variable
$0
$0
80%
  • A low-rate variable home loan from a 100% online lender.
  • Backed by the Commonwealth Bank.
 Disclosure
6.14% p.a.
6.16% p.a.
$3,043
Principal & Interest
Variable
$0
$350
60%
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of .

Important Information and Comparison Rate Warning

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Photo by @andydeanphotography on Canva.

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