Sales of new homes faltered in November, falling 0.2 per cent amidst fears over rising interest rates, but Western Australia managed to buck the trend.
New home sales grew in the state by 1.5 per cent during November, behind New South Wales which had a bumper month with a 6.2 per cent increase.
Sales of detached homes fell more sharply, shedding 1.1 per cent but sales of multi-units increased markedly, up 8.1 per cent for the month.
New home sales have now fallen by over 16 per cent in the seven months to June.
Housing Industry Association chief economist Harley Dale said that building conditions had weakened throughout the second half of 2010, and an interest rate hike in Novemeber hadn't helped the situation.
"New home building activity looks set to decline across all states and territories in 2011," Mr Dale said.
"The risk of a sharp contraction in new home building in 2011 is exacerbated by the negative impact on households and small businesses of increases in borrowing costs and by the persistent lack of available credit for small and medium sized new home projects."
CommSec economist Savanth Sebastian said that the data shows the housing market has stabilised at a level well below historical averages.
"Looking forward it is likely that housing activity will remain subdued, especially given that the November interest rate hike by the Reserve Bank and the additional increase by the banks is yet to be fully absorbed and factored in
by households," Mr Sebastian said.
"The increase in borrowing costs for potential home buyers and even property developers will result in more hesitancy by both parties to commit, and as such the housing sector is likely to see further consolidation in coming months."
Mr Sebastian does see the situation picking up in the latter half of the year, as the rental and labour markets remaining tights.
Yesterday, Satterley Property Group announced a joint venture with 17 of the state's largest builders to kickstart the housing market by offering low cost house and land packages.
