Housing sales continue to plummet, HIA says

The number of new homes being sold across Australia has fallen to its lowest point since 1997, according to figures released by the Housing Industry Association (HIA).

Leaders at the organisation confirmed that property sales were down by 5.3 per cent in August compared to the previous month.

Detached houses were particularly badly affected, as the number of people purchasing this type of dwelling dropped by 5.8 per cent during the month.

This is somewhat surprising, as home loan interest rates have tumbled since the end of 2011 and industry experts had hoped that this would encourage more Aussies to take out a mortgage.

Unfortunately, it seems that people are still reluctant to commit to a home loan while the global economy is so shaky and many would-be house hunters are staying at home with their parents until the market conditions start to become more favourable.

The Reserve Bank of Australia (RBA) has lowered the official cash rate once again this week (October 2nd) – taking it down to just 3.25 per cent – and HIA chief economist Harley Dale is hopeful that the nation's banks will pass these savings on.

"A fresh round of interest rate cuts will help rebalance this situation, although financial institutions obviously need to play their role in cementing this outcome," he remarked.

Even though he welcomed this week's rate reduction, Mr Dale insisted that another cut will be needed before the end of the year.

"There is also a need for a follow-up interest rate cut on Melbourne Cup day and there will be a widespread expectation for that outcome," he continued.

"The Reserve Bank needs to deliver that further relief next month."

With many households struggling to make ends meet at the moment, this interest rate adjustment has the potential to provide a significant amount of relief.

It has come at a good time, as many Aussies will no doubt be turning their attention toward Christmas, which is obviously going to stretch their finances even further.

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