New home sales plummet to 17-year low
Calls for interest rate relief are growing. Photo: Frances Mocnik
NEW home sales have sunk to their lowest level in 17 years in the latest sign Australia's housing sector is struggling.
The number of contracts signed for new homes fell in March to 5443, down 9.4 per cent from the previous month, a figure only slightly ahead of a similar period in 1995, when then-governor of the Reserve Bank Bernie Fraser raised interest rates across the country.
In the same month last year, new home sales were in excess of 7500, a Housing Industry Association survey of the country's largest 100 builders shows.
Multi-unit sales also slumped, down 6.4 per cent in March.
The figures will add to calls for the RBA to boost the housing market by cutting interest rates up to 50 basis points today, and will increase pressure from falling tax revenue on the Victorian government's budget.
In New South Wales, sales tumbled 9.7 per cent in March.
In Victoria, they were down 4.6 per cent, in Western Australia 12 per cent, and in Queensland they fell 15.3 per cent, the HIA-
Jeld-Wen survey shows.
The plunge in new home sales was reinforcing what a range of housing indicators had been saying for some time, said HIA economist Harley Dale.
Home and land sales were at decade-lows and there was a clear downward trend in local government building approvals, he said.
''NSW and Queensland continue to be very weak markets at the same time as Victoria, which was previously propping everyone else up, is falling from its record highs,'' Mr Dale said.
''You've got this synchronised downturn on the eastern seaboard,'' he said.
''All indicators are pointing to weakness in new home building activity in 2012.''
The mixed signals about the property market are likely to reinforce uncertainty among prospective home buyers.
Property analysts recently released conflicting trends on house prices for the March quarter.
Australian Property Monitors last week said values rose 0.9 per cent in the first three months of this year, but rival RP Data recorded a flat overall trend while another data source, Residex, had prices falling 0.7 per cent.
Australian Bureau of Statistics house prices figures, out today, are likely to show similar trends.
Auction clearance rates - another indicator of the market's health - remain subdued.
In Sydney, they fell to 48.8 per cent last weekend, Melbourne's were 60 per cent.
Any interest rate cut would help support the housing sector, HSBC chief economist Paul Bloxham said.
''The response to last year's RBA cuts has been fairly muted so more rate cuts look likely,'' he said.