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Soft end for new home sales in 2010

NEW HOME sales eased for a second consecutive month in December 2010, says the Housing Industry Association, the voice of Australia’s residential building industry.
The latest HIA – JELD-WEN New Home Sales Report, a survey of Australia’s major residential builders, showed that the number of new homes sold eased by 0.6% in December 2010. Detached house sales inched up by 0.3% while the sale of multi-units dropped by 7.3%.
HIA Chief Economist Dr Harley Dale, said new home sales confirmed that 2010/11 would be a weaker financial year for housing starts.
“New home sales fell by 4.4% in calendar year 2010 and were down by 11% over the second half of last year. New home sales grew in the December 2010 quarter (up 3.6%) thanks to a strong month in October, but the November rate hikes put a swift closure to any prospect of a sustained improvement,” Dr Dale said.
“The trajectory of interest rates and rate expectations in 2011 will be a key driver of new home sales activity this year. In that regard indications yesterday from the Reserve Bank that we are in for a period of interest rate stability are welcome. Let’s hope they can stick to the script.
“Meanwhile, supply side obstacles, including an on-going credit squeeze, continue to plague the new home sector. The policy backdrop unfortunately appears to be tilting away from support for new home building. The latest announcements, including the capping of the NRAS program, signal unfavourable policy directions in terms of boosting new housing supply,” added Dr Dale.
In the month of December 2010, detached new house sales increased by 3 % in New South Wales, 5.8% in Queensland, and 4.2% in Western Australia. Sales fell by 3.7% in Victoria and 6.6% in South Australia.
Total detached house sales increased by 3.6% in the December 2010 quarter but remained down by 8.3% compared to the December 2009 quarter.