A surge in new home sales after the Reserve Bank's November rate cut shows that more cuts are needed to support the fragile housing market, the HIA says.
Property buyers appear to be waiting for the central bank to make a move before taking the plunge after new data shows that new home sales jumped 6.8% in November after the first interest rate cut in two and a half years.
HIA chief economist Harley Dale said the boost was welcomed but that there was still room for improvement.
“There is a long way to go to restore new home sales volumes to acceptable levels," Dale said. "At present, sales volumes are running at least 20% below what you could conservatively call healthy."
Dale called on the RBA to continue to cut rates to provide a catalyst for a sustained and strong recovery in the housing market.
The HIA - JELD-WEN New Home Sales report, based on a survey of Australia’s 100 largest builders, showed a significant bounce for sales in November 2011. The jump followed a growth of just 2.8% in October.
Buyers are shirking units in favour of detached houses with sales of the latter increasing by almost 10%. This was driven primarily by a stronger showing in New South Wales and Victoria. However, this was offset somewhat by multi-unit sales falling 17.0%.