Home sales weak again in July

28 Aug 2012, 11:24 am   -   Source: AAP

An industry indicator has shown a return to weakness for new home sales in July after repeated months of strength.

New home sales in Australia have fallen back into weak territory, reversing much of the strength gained at the end of the 2011/2012 financial year, according to a monthly study.

The Housing Industry Association (HIA) said on Tuesday that new home sales fell 5.6 per cent in July, after three consecutive months of rises, including an increase of 2.8 per cent in June.

The detached housing sector - which is traditionally weak - fell 5.5 per cent in July, after a rise of 0.7 per cent in June, while there was a fall of 6.4 per cent in July's multi-unit sales, after they rose by 15.7 per cent in June.

HIA chief economist Harley Dale said Australia's housing sector continued to suffer, despite rate cuts from the Reserve Bank of Australia.

"Now is a good time to build a home - interest rates are lower, it's a very competitive market, and there is less pressure on skilled labour availability," he said.

"However, consistently weak consumer (and business) confidence is weighing very heavily on new housing investment, far more so than is the case for retail expenditure.

"Combine that low confidence with very tight credit conditions and excessive taxation, and you have the unpalatable recipe for the recessionary conditions facing new housing."

Dr Dale predicated continued weakness in the new financial year.

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