29/08/2008 - 09:30

WA new home sales plunge 25%

29/08/2008 - 09:30

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Western Australia has recorded the largest fall in new home sales for the July month as the property market across the country continues to struggle with high interest rates and a slowing economy.


Western Australia has recorded the largest fall in new home sales for the July month as the property market across the country continues to struggle with high interest rates and a slowing economy.

Data released from the Housing Industry Association survey found new home sales declined 7.2 per cent in July in Australia, with WA leading the charge, dropping 24.5 per cent.

New South Wales posted an 11.7 per cent fall, South Australia was down 11.2 per cent and Victoria declined 7.2 per cent.

The one bright spot was Queensland, where sales rose 13.4 per cent, the first increase in six months.

Nationally, sales of detached houses dipped 7.5 per cent, while multi-unit sales slipped 5.2 per cent.

HIA said in a statement that declining residential construction activity highlighted the "absolute need" for the Reserve Bank of Australia to lower interest rates.

"There can be no further delay in respect to a drop in the official cash rate," it said today.

"The weak result reflects a final bout of mortgage rate increases clashing with sharply higher fuel and food bills."

The RBA board is expected to deliver the first interest rate cut since December 2001 when it meets next Tuesday.

Most economists are forecasting a 25 basis point cut to the cash rate, which sits at a 12-year high of 7.25 per cent.

HIA chief economist Harley Dale said continued weakness in new home sales would result in job losses.

"Budgeted sales levels are well down on expectations and that runs the clear risk of the next step being a shedding of labour in the industry," Mr Dale said in a statement.

"The imminent move to lower interest rates is a welcome first step to a much needed home building recovery, but the delay to a tangible boost to construction activity will be significant."

The survey was compiled from a sample of the 100 largest residential builders in Australia.

 

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