New homes sales fell 9.7 per cent in July, following a jump of 8.2 per cent in June, the Housing Industry Association’s data shows.

“New home construction has been the kingmaker of the Australia economy, but the cycle has peaked,” HIA chief economist Harley Dale said.

“In all likelihood, we will experience sharper falls in new home construction in both 2017 and 2018.”

Detached house sales fell in all five mainland states in July, with the biggest drops being 12.8 per cent in South Australia and 8.7 per cent in Queensland.

Dale said the boom was winding down from unprecedented highs.

“The magnitude of decline in new home construction in coming years will, of course, be exaggerated by where we are coming from – record levels of medium/high-density construction and historically healthy levels of detached/semi-detached dwelling construction,” he said.

-AAP