New home sales fall by 5.1% in June as stimulus continues to fade

New home sales fell by 5.1% in June to their lowest point since early 2009, in yet another development suggesting the Reserve Bank will hold off on another interest rate rise when it meets tomorrow.

The new data form the Housing Industry Association comes just days after new figures from RP Data revealed housing prices actually fell by 0.7% in June, the first decline in over 17 months, as the heat begins to seep out of the property market.

The new HIA-Jeld-Wen New Home Sales Report reveals new home sales fell by 5.1%, with stimulus measures such as the First Home Owner’s Grant no longer supporting buyers. The figure is the lowest since the February 2009 quarter.

While prices have flattened over the past quarter, HIA economist Harley Dale says high-cost regulation is now keeping buyers down.

“Lack of readily available land and hefty infrastructure charges have combined with a chronic lack of development finance to put the brakes on sales and development activity,” he said in a statement.

The survey reveals detached house sales fell by 6.6% during June, with sales in the multi-unit sector increasing by 10.3%.

The fall was most badly felt in Victoria, which suffered a 10% decline, followed by 5.2% in Western Australia and 5.1% in Queensland. South Australia recorded a 4.2% fall, with New South Wales trailing at just 2.2%.

Dale says more needs to be done to help new buyers into the market, with many put off by excessive regulation and high costs.

“Concerted action is required to reduce the impact of regulation, development charging, and excessive taxation on the cost of new housing supply. Inaction means that Australia’s dwelling shortage will continue to increase, pushing up existing house prices and disadvantaging households seeking to purchase or rent a dwelling.”

Meanwhile, auction results nationwide have continued to remain relatively steady, with demand now down considerably from the first half the year when prices remained high and buyers were out in force.

However, new results from the Real Estate Industry of Victoria show a slight increase in demand, with the city’s clearance rate moving to 70% from last week’s 66%. Real Estate Industry of Victoria chief executive Enzo Raimondo said in a statement sellers’ confidence is high.

“This result will provide encouragement and confidence to vendors with homes listed for auction between now and the federal election. An interest rate increase next week would reduce that confidence.”

Just over 560 auctions were reported over the weekend, with 393 sold and 168 passed in. Total sales at auction reached just $272.9 million, with another 520 auctions expected next weekend.

In Sydney, the city reached a 63% clearance rate with 133 properties sold out of 194 on the market, with total sales reaching $105 million.

In Brisbane, the city recorded a woeful rate of 6%, with just one property sold out of the 16 on the market, while in Adelaide a clearance rate of 38% was recorded with five properties sold, totalling $2.5 million.