New home sales plunge to 5-year low

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Excessive costs are being blamed for the worst result in new home sales in five years.

The latest HIA - JELD-WEN New Home Sales Report, a survey of Australia’s major residential builders, showed that the number of new homes sold in June 2011 dropped by 8.7 per cent, the sharpest monthly decline since May 2006.

“In terms of government action, reducing the excessive costs of new housing is an important area of the domestic economy to focus on,” said Housing Industry Association (HIA) chief economist, Dr Harley Dale.

“The upcoming Tax Forum in early October offers a golden opportunity to reduce the high and inefficient taxation of a basic necessity, shelter, and therefore boost new housing supply.”

The HIA reported that in the month of June 2011, detached house sales fell by 8.8 per cent, the second consecutive fall. Detached new house sales fell by 1.8 per cent in NSW, 10 per cent in Victoria, 17.1 per cent in Queensland, and 6.3 per cent in Western Australia. Sales were flat in South Australia.

The units sector fell by 8.1 per cent in June following a jump of 23.3 per cent in May.

"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,” said Dr Dale.

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

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