Incredibly, Victoria – now labelled an ‘economic basket case’ by the Institute of Public Affairs – showed a 7.1% increase in new home sales last month, while the other four large states all declined.
Additionally, HIA’s home sales report for the three months to August shows that Victoria’s nationwide sales were 6.7% higher compared to the previous quarter and 23.8% greater than the same period a year earlier.
“Strong population growth and tight labour markets across Australia have been bringing home buyers back to the market in a number of states, while shortages of affordable shovel-ready land held back the market in Victoria,” Housing Industry Association senior economist Tom Devitt said.
“Three cuts to the RBA’s cash rate have helped catalyse underlying housing demand in Victoria, with both new home building activity and prices in the established housing market picking up this year.”
“The peak of the coming cycle will be determined by how quickly policymakers can bring shovel-ready land to market, address shortages of skilled labour and reduce tax and regulatory burdens on home builders and buyers.”
Devitt said that first-time home buyers in particular faced significant hurdles in obtaining a mortgage and realising the dream of homeownership. The supply-side stimulus resulting from the federal government’s decision to remove the requirement for mandatory lenders’ mortgage Insurance for first-home buyers would also boost new home sales.
“Reducing the barriers to entry for first home buyers will lead to an increase in housing supply, putting downward pressure on prices beyond the short term and increasing rates of homeownership,” Devitt added.
Victoria’s new home sales increase comes after a devastating economic crunch last year, when more than 350 business shut their doors every single day, according to new data from the Australian Bureau of Statistics.
These new figures show that Victoria has not recovered from the pandemic and remains an economic basket-case,” said Lachlan Clark, research fellow at the Institute of Public Affairs.
New analysis by the IPA shows that Victoria saw more than 129,000 businesses close in 2024, as well as having the second-slowest growth in the number of operating businesses since the pandemic.
“Previous IPA research has shown that Victoria is the worst-performing state in the nation. The tragedy is that it is only getting worse,” Clark said. Victoria needs a new economic path. Raising taxes and incurring even more state debt is clearly not solving the problem, which will only worsen until there is a change in economic management by the state government – or a change in government.
IPA analysis shows that since the end of the Covid-19 lockdowns, the growth in the count of businesses operating in Victoria has remained 2% below the average of all other states – WA +11.5%; Queensland +10%; South Australia +9.9%; NSW+8.8%; Victoria +7.5%; and Tasmania (+6.3%).
“The latest ABS data confirms that Victoria’s economy has failed to recover from the Covid-19 pandemic, and that the state is now well and truly an economic basket case,’’ Clark said.
