While the Reserve Bank is generally expected to keep the cash rate on hold when it meets next week, new housing data has provided the Board with a reason to cut rates.
According to the latest HIA JELD-WEN New Home Sales Report, new home sales dropped 7.2 per cent in January – a disappointing result given there was also a drop in December.
“A sharp decline of 19.6 per cent in detached house sales in Victoria weighed on the overall January result,” Housing Industry Association chief economist Harley Dale said.
“Nevertheless, there were also declines in detached house sales in New South Wales and South Australia in the first month of 2012 so the overall update is a weak one.”
“Clearly the interest rate cuts of late 2011 were insufficient to generate a sustained improvement in new home building conditions. That is a concerning outcome given new home building is a key barometer of the health of the domestic economy and it further highlights the inappropriateness of the rise in interest rates we endured earlier this month.”
Detached house sales fell by 7.4 per cent in January 2012 and eased by 0.5 per cent over the January 2012 ‘quarter’.
When compared to the three months to January 2011, detached house sales dropped by 11.9 per cent. Multi-unit sales partially reversed their big jump of December 2011, falling by 6.3 per cent in January this year. Multi-unit sales fell by 14.1 over the quarter to be down by a substantial 25.1 per cent when compared to the three months to January 2011.
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