New home sales in Australia began 2012 on a weak note, a disappointing outcome given there was also a fall in December last year, according to the Housing Industry Association, the voice of Australia's residential building industry.
The HIA-JELD-WEN New Home Sales report, based on a survey of Australia's 100 largest builders, showed a decline of 7.3% in total seasonally adjusted new home sales in January 2012.
'A sharp decline of 19.6% in detached house sales in Victoria weighed on the overall January result,' said HIA chief economist Harley Dale.
'Nevertheless, there were also declines in detached house sales in New South Wales and South Australia in the first month of 2012 so the overall update is a weak one,' he added.
'Clearly the interest rate cuts of late 2011 were insufficient to generate a sustained improvement in new home building conditions. That is a concerning outcome given new home building is a key barometer of the health of the domestic economy and it further highlights the inappropriateness of the rise in interest rates we endured earlier this month,' Dale explained.
Detached house sales fell by 7.4% in January 2012 and eased by 0.5% over the January 2012 quarter. When compared to the three months to January 2011, detached house sales dropped by 11.9%. Multi unit sales partially reversed their big jump of December 2011, falling by 6.3% in January this year. Multi unit sales fell by 14.1% over the quarter to be down by a substantial 25.1% when compared to the three months to January 2011.
'Victoria for a long time propped up new home building in Australia and now the reverse is occurring. New home sales, along with other leading housing indicators, are showing that other large markets in Australia are not filling the void in 2011/12,' said Dale.
'However, there is an upside given the current weak new home building environment. Now is a very good time to be building a new home for those who are financially set to take such a decision,' he noted.
'Given the weak state of new home building and the sector's substantial multiplier impact through to the wider Australian economy, now is the time for federal and state governments to embark on policy reform to reduce the excessive and inefficient taxation of the new home building sector. Such reform would embolden households to engage in building a home while enhancing economic activity, efficiency, and productivity. It's a no brainer,' he added.
RESOURCE HIA
