New home sales 'rise slightly in May'

The Housing Industry Association (HIA) has revealed that property sales across the country grew by 0.7 per cent in May compared to the previous month.

While it is encouraging to see an upturn, it is only a modest rise and overall activity in the housing sector is still subdued.

This is despite the fact the Reserve Bank of Australia (RBA) has lowered interest rates by 125 points since last November. This included a 50-point reduction in May, but it seems this only had a very limited impact on mortgage uptake.

Chief economist at the organisation Dr Harley Dale suggested more house hunters may take advantage of the 3.5 per cent national cash rate in the second half of the year, but he feels that interest rate cuts alone will not stimulate major activity in the industry.

"Further interest rate reductions are warranted, but rate cuts can't do all the heavy lifting," he remarked, before adding that government investment and reform is required to give the property market a timely boost.

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