The impact of the May 2006 interest rate increase is now being seen, with new home sales figures in June dropping to a 17 month low, according to Australia's builders.
HIA's New Home Sales figures released this week show that the sale of new homes and units among Australia's largest builders and developers fell by 10.5 per cent in June to 7,605 dwellings - the third consecutive monthly decrease.
Building industry body, HIA, said that the weakness confirms recent statements from many medium and large volume builders who have stated that the double whammy of the May rate increase and the relentless increase in petrol prices has had a measurable effect on enquiries and sales.
HIA's Executive Director of Housing and Economics, Simon Tennent said that lags between rate rises and official statistics pose a significant risk for both the economy and housing sector.
"There has been a universal theme from recent discussions with major builders and developers, most of whom are coming to grips with the significant drop off in sales and activity in May, June and July," Mr Tennent said.
"One developer stated that while they typically exchange 60 to 65 contracts each month, this had barely reached 50 over each of the three months to July. Sales teams are reporting a distinct lack of urgency among consumers, all at a time of an apparent rental crisis."
HIA's New Home Sales Survey is compiled from a sample of the largest 100 residential builders in Australia and is a leading indicator on new housing activity.
For the month of May, detached house sales fell by 17.4 per cent in Victoria and were down by 23 per cent in Queensland and 19 per cent in South Australia.
New South Wales and Western Australia bucked the national trend with detached house sales increasing by five per cent and three per cent respectively.
