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Housing sales weak
Released 18 March 2011

The new home building sector is running considerably slower than that required to meet the nation's housing needs, according to the HIA.   

“ABS figures released this week confirm the weak state of the new home building sector, providing a very soft update for the number of owner occupier loans for new housing,” HIA Chief Economist Harley Dale said.

The number of loans for construction fell by 9.4% in January 2011 to reach the lowest level since December 2008. Loans for the purchase of new dwellings dropped by 13.5% in January 2011, which was also the weakest level since December 2008.

“Much of the improvement in new home lending seen in the December 2010 quarter has now been wiped out. “

Dale said an unequivocally weak update on housing finance for January 2011 reinforces the appropriateness of a steady interest rate environment.

“It is important the Reserve Bank maintains a clear message of stable rates. Housing, like the majority of non-resource sectors, is performing below par in 2011.

“Even if it turns out there is a larger than usual amount of noise in this January update for housing finance, leading indicators have still been signaling for a long time now that new dwelling starts will decline once more in 2011.

Dales said this means there will have been only two years in the last ten, 2002 and 2010, when starts have risen.

“The long term trend decline in new home building in Australia is an appalling blight on the housing affordability landscape, especially for prospective entry level buyers and renters.”