Weak figures in new home sales have underscored the necessity of this week’s rate cut to stimulate building and construction in Australia, the Housing Industry Association (HIA) says.
In August, the seasonally adjusted volume of sales of new homes throughout the country plummeted by 5.3 per cent to 15-year lows, according to the HIA’s New Home Sales Report.
Sales of detached houses dropped 5.8 per cent while those of multi-units contracted by 2.3 per cent.
Indeed, new home sales fell in every state, with Western Australia (down 9.4 per cent) the worst hit, followed by Victoria (down 8.6 per cent), New South Wales (down seven per cent), Queensland (down 2.9 per cent) and South Australia (down 2.6 per cent).
HIA chief economist Harley Dale says the figures are the latest in a string of soft updates for new housing following a poor year in 2011/12.
Dale says policy settings regarding the economy leading into August were ‘clearly inappropriate’, although recent reductions in interest rates will help ‘rebalance’ the situation provided financial institutions pass on the full extent of the cuts.
“It remains the case, however, that rate cuts won’t single-handedly generate the new home building recovery Australia requires,” Dale says. “Governments have an important role to play in driving reform measures to lower the excessive tax base faced by the sector. In 2012 thatreform process remains too slow and in some quarters is virtually non-existent.”