Successive interest rate cuts failed to halt a decline in new home sales in December, a survey shows.
The Housing Industry Association (HIA) on Wednesday said new homes sales fell 4.9 per cent in December, seasonally adjusted, following a 6.8 per cent rise in November.
HIA Chief Economist Harley Dale said new home sales for the quarter were “essentially flat”, rising by just 0.2 per cent in the last three months of calendar 2011.
The Reserve Bank of Australia (RBA) reduced the cash rate by 25 basis points in November and again, by the same amount, in December after keeping rates on hold for a full year.
However, the December rate cut was met with days of uncertainty as major banks decided whether or not to pass on the reduction.
Mr Dale said that delay, plus a number of global factors, had an impact on home sales.
“The intensification of bad news regarding Europe, question marks over labour market prospects in Australia, and avoidable delay and uncertainty as to whether banks were going to pass on the Reserve Bank’s second rate cut conspired to drive a fall in new housing contracts,” he said.
Mr Dale called on the federal government to provide financial stimulus to support the sector.
“Short-term monetary and fiscal policy stimulus together with a revitalised program of longer-term structural reform is required in early 2012.
“Such action would instil confidence in the sector during what is a very good time to build a new dwelling for those who are financially set to take that decision.”
The survey showed detached house sales fell by 7.7 per cent in December but rose by 2.1 per cent over the quarter.
Multi-unit sales jumped 29.4 per cent in the month but were down 15.7 per cent for the quarter.
The volume of detached house sales declined in three out of five mainland states in the December, falling by 4.0 per cent in New South Wales, 10.5 per cent in Victoria, 20.5 per cent in Queensland.
Sales increased by 12.0 per cent in South Australia and 6.8 per cent in Western Australia.