New home sales continue to drop
The RBA is being urged to leave rates on hold as new home sales drop for the fourth consecutive month.
According to the latest HIA – Jeld-Wen New Home Sales Report, there was a 2.6 per cent decrease in new home sales across Australia during August.
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Over the last three months to August sales were down by 13 per cent to be 11 per cent lower when compared to the same period in 2009. Building approvals also were down by 6 per cent for the three month period to July.
HIA chief economist Dr Harley Dale said that the new home market was entering a period of softer demand and expects further weakness to come.
“An array of leading housing indicators, including new home sales, is signalling a fall in housing starts in 2011, even if interest rates remain steady,” Dr Dale said.
“A premature hiking of interest rates would exacerbate the impending decline in new home building.
"Previous interest rate hikes and the withdrawal of fiscal stimulus have dampened new housing demand, while there has been insufficient progress made in reducing the supply side barriers that raise the cost of new housing.”
