New home sales slumped in July after recording impressive growth just a few short months ago.
According to new research by the Housing Industry Association (HIA), new home sales fell by 5.6 per cent in July 2012, reflecting a fall of 5.5 per cent in the persistently weak detached housing segment and a 6.4 per cent drop in the multi-unit market.
"New home building is the weakest sector of the Australian economy. Despite interest rate cuts in 2011/12, the two updates for this financial year – new home sales and the Australian Industry Group- HIA Performance of Construction Index - both point to deteriorating conditions in July," HIA chief economist Harley Dale said.
“Now is a good time to build a home. Interest rates are lower, it’s a very competitive market, and there is less pressure on skilled labour availability.
"However, consistently weak consumer confidence is weighing very heavily on new housing investment, far more so than is the case for retail expenditure.
“Combine that low confidence with very tight credit conditions and excessive taxation, and you have the unpalatable recipe for the recessionary conditions facing new housing.
“Leading indicators suggest this situation will persist well into 2012/13.”