Australians seemed to have still been showing enthusiasm in homebuying despite the recent rate increases.
According to the Housing Industry Association (HIA), the sales of new homes across Australia increased for the second month in a row, up 9.4%.
This resulted in the sales over the last three months to grow 4.4% higher than the previous quarter.
HIA senior economist Tom Devitt said despite the increases, it is crucial to note that current sales relative to last year are still at depressed levels.
“Sales in the three months to May 2023 were more than 40% lower than in the year before when interest rates started to increase, and 25% lower than prior to the pandemic,” he said,
“This indicates that the slowdown in home building that is underway will continue for at least the next year.”
On an annual perspective, New South Wales reported the most substantial decline in sales due to the sensitivity of local homebuyers to rate movements.
In fact, new home sales are down 63.6% in New South Wales in May.
Sales of new homes over the period were also down in Queensland (52.9%), Victoria (46.6%), and South Australia (29.5%).
Of all states, only Western Australia saw an increase over the year at 19.4%.
Mr Devitt said rate increases will continue to hold down new sales and cause further cancellations as finance becomes unobtainable for an increasing number of buyers.
“The significant increase in the cost of land and construction across all jurisdictions over the past two years is compounding the impact of higher interest rates,” he said.
“The additional costs of compliance with the National Construction Code, that come into effect this year, will further increase the cost of new home construction and dampen demand further.”
Homebuying intentions rise
CommBank’s latest Household Spending Intentions Index showed a rebound in the sentiment for homebuying in May.
In fact, homebuying intentions rose 14.4% monthly after a large decline in April.
CommBank senior economist Belinda Allen said there was a large lift in home applications in May.
“However broader factors are at play — home prices are rising with strong demand due to rental shortages while new listings and stock on the market are also low leading to an abnormal situation where home prices are rising as interest rates continue to rise,” she said.
“Home prices have now risen for three consecutive months: March, April and May, and we now expect home prices to rise by 3% in 2023 and 5% in 2024.”
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.
| Lender | Home Loan | Interest 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 | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
6.04% p.a. | 6.08% p.a. | $3,011 | Principal & Interest | Variable | $0 | $530 | 90% | 4.6 STAR CUSTOMER RATINGS |
| Promoted | Disclosure | |||||||||
5.99% p.a. | 5.90% p.a. | $2,995 | Principal & Interest | Variable | $0 | $0 | 80% |
| Disclosure | |||||||||||
6.14% p.a. | 6.16% p.a. | $3,043 | Principal & Interest | Variable | $0 | $350 | 60% |
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