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Australia new home sales down on rate hikes in November

CANBERRA: New home sales in Australia faltered in November 2010 amidst rising interest rates, according to the Housing Industry Association (HIA) in a statement on Wednesday, Jan 5.

The latest HIA/JELD-WEN New Home Sales survey of Australia's major residential builders, showed the number of new homes sold had eased by 0.2% in November 2010 with detached house sales declining by 1.1%. Sales of multi-units however, increased by 8.1%.

HIA chief economist Dr Harley Dale said new home building conditions weakened considerably over the second half of 2010 and the November rate hikes added "further salt to the wound".

Over the three months to November 2010 new home sales fell by 2% to be 11% lower when compared to the same three month period in 2009.

In the month of November 2010, detached new house sales increased by 6.2% in New South Wales and by 1.5% in Western Australia. Sales fell by 0.2% in Victoria, 10.4% in Queensland, and 0.8% in South Australia.

"New home building activity looks set to decline across all states and territories in 2011," added Dale.

"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," he said.

"It would be a shot in the arm for confidence and activity in the residential sector to see the New Year kicked off by a re-engagement of housing policy reform by the Federal Government to address a range of supply side constraints including the credit squeeze.

"Furthermore, given that new housing is one of the most heavily and inequitably taxed industries in Australia, it is essential that the upcoming taxation summit delivers bold and effective policy reform," Dale added.

The wooden framework of a new house is seen in suburban Melbourne. Dale said new home building conditions weakened considerably over the second half of 2010. Photo: Reuters
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