Sales of new homes in Western Australia were down 10.7 per cent in May, as rising interest rates continue to dampen demand for housing, a peak residential building body says.
Overall sales slid to a three-month low at a seasonally adjusted 6.4 per cent to 8,024 units in May following a 6.2 per cent rise the month before, the Housing Industry Association (HIA) said.
It was the lowest number of new homes sales since February 2010.
Private house sales fell 5.9 per cent in the month while sales of multi-units slid 11.6 per cent.
HIA chief economist Harley Dale said new home sales had flattened recently as interest rate rises started to crimp demand.
The Reserve Bank of Australia (RBA) lifted the cash interest rate by a quarter of a percentage point to 4.5 per cent in May, its sixth increase in seven months.
“There is no sustained upward momentum in new home sales in 2010 because higher interest rates and concerns over the threat of further rate hikes are dampening demand,” Dr Dale said in a statement.
“Meanwhile, supply side obstacles, including a lack of affordable land and tight credit availability for residential development, are weighing down considerably on the new home building sector.”
Dr Dale said the rebound in the building of new residences was set to stall by the middle of 2011.
“It is appropriate at this juncture that the Reserve Bank hold fire on further rate hikes not only next week, but through the remainder of 2010,” he said.
“At the same time, it is vital that more rapid progress is made in addressing the supply side obstacles related to land, planning, skilled labour, taxation, regulation, and finance.
“Obstacles in these areas are the primary culprit behind signs Australia’s current new home building recovery will peter out.”
NSW had the largest rise in sales of detached new homes in May, up 13.6 per cent, while South Australia rose 2.1 per cent.
Queensland had the largest decline in sales, down 12.3 per cent and Victoria fell 8.5 per cent.
30-June-10 by AAP