New home sales have fallen nationally after the draw forward in sales in April, according to HIA chief economist Tim Reardon.

The HIA New Home Sales report is a monthly survey of the largest volume of home builders in the five largest states and is a leading indicator of future detached home construction.

Falling 12.6% in May, Tim says the shift in new house sales is due to regulatory changes with increases in costs associated with National Construction Code (NCC) 2022.

“The changes to the NCC 2022 came into effect in Victoria and Queensland for any new home building contract signed from 1 May 2024. This is a repeat of the experience of New South Wales in September when it introduced its energy efficiency standards and sales in the months after falling as a result of this pull-forward,” he says.

“The increase in the cost of construction driven by increased regulatory requirements and higher interest rates will further impede the goal of increasing the supply of housing and place more pressure on public housing requirements.”

Tim says governments need to stop making new homes more expensive if they wish to increase the supply of houses.

“Lowering the cost of delivering new homes to market is essential to achieving the Australian Government’s target of 1.2 million new homes over the next five years and improving housing affordability across the country,” he says.

Sales in May increased by 15.1% in New South Wales, followed by Western Australia (+14.6%) and South Australia (+3.2%). The other states recorded monthly declines in sales, led by Victoria (-41.0%) followed by Queensland (-10.3%).