House sales in NSW crashed 9.6 percent in April according to the Housing Industry Association (HIA), with buyers reacting strongly to successive interest rate increases from the RBA.
This data comes as a warning to the Reserve Bank of Australia, which is due to meet for it’s monthly board meeting to discuss interest rates tomorrow, which are tipped to remain unchanged at 4.5 percent. Countering NSW’s result, the HIA’s figures show new home building in Victoria has continued to surge higher thanks to the Victorian Government’s first home buyer top-up grant for new dwellings.
HIA Chief Economist, Dr Harley Dale, said that Victoria has the stand-out new home building market due to more favourable affordability conditions for new dwellings.
“The strong response by first home buyers to the new home grant underlines how effective the Victorian stimulus has been in lifting residential building activity. However, there are some warning signs, with buoyant demand eating into the availability of serviced land,” said Harley Dale.
“Without Victoria, detached house sales at the national level would have been lower in April. Interest rates are blunting new home sales activity.
“There is increasing evidence that higher interest rates have started to take a significant bite out of housing demand over the last two months.
“Having pushed up interest rates aggressively, the Reserve Bank should allow the dust to settle, particularly in light of recent adverse developments in Europe and on stock markets,” said Harley Dale.
Across Australia, private sector detached house sales increased by 6 per cent in April. Multi-unit sales increased by 8 per cent following two soft months in February and March.
Over the three months to April 2010, new detached house sales were up highest in Victoria (+19 percent) and only slightly in South Australia (+1 percent), and were negative in New South Wales (-6 percent), Queensland (-4 percent), and Western Australia (-2 percent).
In the month of April 2010 detached new home sales increased by 27.6 percent in Victoria and by 4.3 percent in South Australia. Detached house sales fell by 9.6 percent in New South Wales, 4.5 percent in Queensland, and 8.2 percent in Western Australia.
