Outlook grim for residential property

And, thanks to low consumer confidence, we are unlikely to see improvements in the residential sector any time soon.

Data from the Australian Bureau of Statistics found new home lending fell 0.4 per cent in June and 13.7 per cent in the first six months of 2011.

In addition, building approvals fell 3.5 per cent in June – a two-year low.

And while building approvals slumped, so too did new home sales.

In fact, according to the latest HIA – JELD-WEN New Home Sales Report, new home sales suffered their heaviest monthly decline in five years in June.

The report showed the number of new homes sold in June 2011 dropped by 8.7 per cent, the sharpest monthly decline since May 2006.

“There has been widespread anecdotal evidence for some time that new home demand hit a wall in mid-2011, and today’s new home sales figures unfortunately confirm that situation,” Housing Industry Association chief economist Harley Dale says.

“Evidence is mounting that weakness in the new home sector is accelerating even with interest rates on hold.”

Mr Dale says it is now crucial for the government to step in, take action and reduce the excessive costs of new housing.

If the government does nothing, Mr Dale says, property prices are likely to fall further.

In July, the national median house price fell 0.6 per cent to $546,121, while the median price for units fell 0.8 per cent to $404,753.

While Sydney and Melbourne managed to push through the month relatively unscathed, with both capital cities recording no change in house prices, the Brisbane and Canberra markets were not quite as lucky.

Brisbane house and unit prices fell for the second consecutive quarter, resulting in a yearly fall of 4.9 per cent for houses and 3.9 per cent for units.

Australian Property Monitors senior economist Andrew Wilson says the news isn’t all bad.

“There is evidence to suggest we will see increased buyer activity emerge through the spring selling season.”