Rate hike hits new home sales

New home sales data points to a renewed decline in residential construction in Australia, the Housing Industry Association (HIA) has said.

According to the latest HIA – Jeld-Wen New Home Sales Report, the number of new homes sold increased by just 2.4 per cent in October 2010 following a downwardly revised 1.7 per cent decline in September.

HIA chief economist Dr Harley Dale said that even before the damaging impact of the November interest rate hikes, a number of housing indicators had pointed towards a renewed home building downturn in 2011.

"We now face a combination of higher interest rates, on-going severe credit constraints, and inadequate progress in addressing perennial supply side obstacles such as a lack of readily available, affordable land. These factors have rendered Australia's new home building recovery unsustainable," said Dr Dale.

Consumers struggling to afford a property in the current climate could choose to compare home loans in search of the best options. The HIA report also showed that over the three months to October 2010, new home sales fell by nine per cent to be 17 per cent lower when compared to the same three month period in 2009.

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