“The RBA will not restore the economy to stable growth by putting the housing industry through boom-and-bust cycles,” stated HIA Chief Economist, Tim Reardon.

 

“Home buyers have exited the new home market rapidly following the first increase in the cash rate in May. The RBA should have paused to observe the impact of the fastest increase in a generation and not continued to raise rates,” added Mr Reardon.

 

“Home building was already set to slow significantly in 2023 and today’s rate rise will exacerbate this downturn.

 

“The number of loans for the construction or purchase of new homes has fallen to its lowest level in over three years. The declines were seen in all market segments, with lending to first home buyers, owner-occupiers and investors continuing to fall in October.

 

“This slowing in housing finance data is consistent with other leading indicators, such as HIA’s New Home Sales Survey, which shows sales have fallen by 37 per cent in the four months to October.

 

“The risks to household and business finances from such an overly aggressive hiking cycle are clear. A deep and prolonged trough in home building activity will jeopardise the return of the economy to stable growth,” concluded Mr Reardon.