Victorian new home sales decline 8.7 per cent in January

Victoria recorded a decline in new home sales for January 2025, bucking the national trend as the only major state to experience a downturn.

New home sales in Victoria fell by 8.7 per cent during January, according to the latest HIA New Home Sales report.

“Victoria started the year disappointingly with an 8.7 per cent fall in new home sales in the month of January 2025,” said HIA Executive Director Victoria, Keith Ryan.

The report, a monthly survey of the largest volume home builders across the five largest states, serves as a leading indicator of future detached home construction.

Victorian sales figures showed continued weakness, with the three-month period to January 2025 down 6.6 per cent compared to the previous quarter.

“Victoria was the only one of the five largest states to have seen a fall in new home sales in the month, which left the three months to January 2025 down by 6.6 per cent compared to the previous quarterly period,” Mr Ryan said.

Year-on-year performance remained stagnant, with sales figures virtually unchanged compared to the previous year.

“When compared to the previous year, new home sales in Victoria have remained virtually unchanged, falling by 0.5 per cent. This makes Victoria the only one of the five largest states to have not seen an improvement in sales from this cycle’s trough,” Mr Ryan said.

The flat performance is also reflected in other construction indicators, with house approvals for the 2024 calendar year showing only minimal growth of 1.5 per cent compared to 2023.

Industry forecasts suggest modest improvement in the coming financial year, with HIA projecting a 3.2 per cent increase in detached home building starts for 2024/25, albeit from a low base.

While the Reserve Bank’s February interest rate cut is expected to stimulate some activity in the housing market, Mr Ryan pointed to state-specific factors affecting Victoria’s performance.

“It is becoming clearer that Victoria’s excessive tax burden is a major cause of the poor performance of the home building industry. If Victoria continues to lag behind other states in coming months it will be harder to blame interest rates for reduced consumer demand,” he said.

Mr Ryan called for policy reforms to address construction costs if the state is to meet its housing targets.

“If the Victorian government wants to achieve its housing targets and address the housing crisis, policy reforms are needed to reduce the costs of land and construction,” he said.