Sales of new homes in Australia plummeted in May as the market stalled ahead of the May 21 federal election, following the first rate hike in more than a decade.
The Housing Industry Association, an umbrella association for housing construction companies, said new home sales fell 5.5 percent in May from April.
The slowdown in the housing market came as no surprise in a month that included federal elections and rising interest rates.
Despite the fall in May, sales of new homes in the first five months of the year were very strong.
“Continued interest rate hikes are expected to bring this boom cycle to an end. Households’ ability to borrow will begin to decline as interest rates rise further,” said economist Tom Devitt.
The weakness in new home sales comes as the Bank of Australia raised interest rates in May by 25 basis points.
The central bank also raised interest rates by 50 basis points in June, while hinting that further interest rate hikes are expected.
Source: Capital
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