Market still awaits impact of last rate cut
New home sales in Australia saw little change in February compared to the previous month, according to the latest data from the Housing Industry Association (HIA).
The HIA New Home Sales report, which surveys the largest volume home builders across the five biggest states, serves as a key indicator of future detached home construction.
HIA economist Maurice Tapang (pictured above) noted that the Reserve Bank of Australia’s (RBA) recent interest rate cut has yet to significantly impact the market. “The RBA delivered its first rate cut in four years on the 19th of February,” he said. “It may take a few more months to see the effects of this rate cut on the market.”
Tapang highlighted that sales growth in early 2025 has been supported by stable economic conditions. “Australia’s economy continues to grow, while unemployment remains very low, inflation is easing, and wages are growing in real terms,” he said. Despite a slowdown in population growth, he emphasised that strong population levels will continue to drive underlying demand for housing.
“While Australia’s population growth is moderating, it is doing so off very high levels,” Tapang said. “This strong population growth will only ensure underlying demand for housing remains solid.”
However, the economist pointed out that regional variations will play a significant role in determining future home building activity. States and regions that reduce the cost of and increase access to shovel-ready land are likely to experience stronger growth.
“On the other hand, in capital cities and regions where the tax and regulatory imposts on land and new home building is high, the volume of new home starts will remain constrained,” he said.
Sales trends over the three months to February 2025 reflected these regional differences. New South Wales recorded the strongest growth, with sales increasing by 55.4% year-on-year, albeit from a low base. South Australia followed with an 18.9% rise, while Queensland saw a 14.6% increase. Victoria experienced a 4.3% decline, and Western Australia recorded a 20.3% drop from a previously high base.
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