New home sales plunge 6.4% in May

New home sales fell at the sharpest rate for nearly two years in May, new figures show.

Data from the Housing Industry Association (HIA) reveals that the volume of new home sales declined 6.4 per cent in May – a drop of more than 12 percentage points following an April increase of 6.2 per cent.

"There is no sustained upward momentum in new home sales in 2010 because higher interest rates and concerns over the threat of further rate hikes are dampening demand," commented HIA chief economist Dr Harley Dale.

Such uncertainty in the property market may encourage more Aussies to compare home loans as many struggle to secure a property. RP-Data Rismark research also released this week showed that rising interest rates served to put a halt on house price growth in May as values went up by just 0.6 per cent in capital cities.

HIA said new detached home sales rose by 13.6 per cent in New South Wales in the month but fell 8.5 per cent in Victoria, by 12.3 per cent in Queensland and by 10.7 per cent in Western Australia.

The body noted that NSW had benefited from the recent scrapping of new home sales stamp duty and a cap on infrastructure levies.

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