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New home sales below a year ago after four straight months of declines following the Albanese government’s May budget changes to investor tax benefits. Australia’s housing crisis is set to get worse, with new data recording a fourth straight month of slowing new home sales across the country in August. Housing Industry Association figures show that the number of new homes sold fell by 10 per cent in the past month, and is now 7.7 per cent below the same time a year ago.
They have tallied close to 3651 new home sales in August in their latest home sales index, the lowest level since early 2025 — when there was an abnormally soft month in March. RELATED: National housing target falters as home approvals fall across Australia $100bn blow out: Albo under fire over tradies Iran War hits home construction prices with largest spike in almost four years The fall comes despite a May federal budget tax reform stopping property investors from accessing the most preferential capital gains tax discounts or negative gearing unless they buy a new home, with separate Australian Bureau of Statistics data showing that investor loans have also slumped in the months following the change by the Albanese government. It’s expected to put significant constraints on the capacity for the nation to reach the Albanese government’s 1.2 million new homes goal by June 30, 2029, under the five-year National Housing Accord that commenced a little over two years ago.
The HIA New Home Sales index for August, 2026, shows a decline that has put the market on a par with late 2023 when half a dozen interest rate hikes had smashed the market. HIA chief economist Tim Reardon said the August dip effectively ensured a continued new home market slowdown in 2027, which could have significant ramifications to future home prices and the nation’s tradie workforces at a time when both were facing critical issues. Mr Reardon noted that apprentice numbers typically followed the trend of new home starts, and a decline in the latter would usually lead to fewer opportunities for young tradies to learn their craft.
“And we still have a shortage of trades across the market ... we are alert to the possibility that Sydney and Melbourne are seeing the greatest slowdown in this cycle and are likely to be the last markets to recover, which could start pushing workers out to other jurisdictions,” Mr Reardon said. “And it will remain a capacity constraint on reaching 1.2 million homes.” ABS data in September revealed the nation’s housing approvals had faltered in July, falling backwards and if the trajectory of the first 25 months of the Accord is continued, showed the nation would come up at least 213,000 builds short — failing to even reach a million new homes by 2029. HIA chief economist Tim Reardon believes the shortfall in new home sales will have knock on effects to building work that would usually support apprentices.
Picture: Leighton Smith. HIA are now calling for a national awareness campaign for tradie jobs, with greater emphasis on careers on the tools in guidance programs at schools, government funding to help establish and retain apprentices, and further support for strategic skilled migration for trades facing acute shortages. The need for additional tradies could rise fairly quickly, with HIA anticipating a rise in new home starts late next year after established home prices begin to recover.
“Our expectation is that we will see established home prices rising from 2027, and that will see new home builds stack up from a valuation perspective and we will see new home building commencements pick up from late next year,” Mr Reardon said. Mr Reardon pointed the finger for the four-month decline in new home sales to recent tax changes and rising interest rates. The National Housing Accord set out to boost the nation’s supply of new homes in a bid to remedy surging house prices.
“This is a tangible and significant deterioration in market conditions and confirms that the recovery in new home building that was underway at the start of the year, has been interrupted,” he said. “The tax increases announced in the federal budget have weakened market confidence at the same time that three interest rate increases have reduced household borrowing capacity and increased mortgage repayments.” Noting that the decline had been recorded across all five states covered by their survey, including Victoria, NSW, Queensland, South Australia and Western Australia, Mr Reardon said the government and economic pressures had combined with falling established home prices and rising construction costs to make new home sales particularly challenging. The National Housing Accord has limped through its first two years, with far fewer builds started than needed to reach its 2029 goal.
“Investors and households are retreating from the new home market and the pipeline of homes progressing towards construction is contracting,” Mr Reardon said. “Builders are also reporting weaker traffic through display sites, fewer inquiries and declining preliminary commitments, while cancellation rates are rising.” Warning that the decline would start to hit the nation’s new home pipeline in the new year, the economist said with population growth continuing and unemployment low there would be heightened housing demand in the year ahead. However, he warned any further rate rise this year could worsen the situation.
“This is not the time for another rate rise,” Mr Reardon said. Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox.
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Source: realestate.com.au
