Sales of contracts to build new homes lifted following the first cut in interest rates in November, according to the Housing Industry Association. The HIA/JELD-WEN New Home Sales report shows that the seasonally adjusted number of new home sales increased by 6.8 per cent in November 2011, following a revised 2.8 per cent gain in October.
HIA chief economist, Harley Dale, said that while the figures are encouraging, volumes are well below normal levels and are insufficient to meet the on-going shortfall.
“Detached house sales are about 20 per cent down on what you would call healthy levels,” Mr Dale said.
“There is certainly a long way to go to get volumes at a level that is implying we’re going to be building homes in Australia at levels that are commensurate with the demands of our growing population.”
Mr Dale says interest rate cuts alone are not enough to bolster the industry.
He is urging governments to cut land taxes and speed up land release to help the industry.
“Interest rate cuts are helpful in terms of confidence, as well as an actual lowering of borrowing costs, but they are only part of the equation,” he said. “We have a number of structural impediments to new housing supply in Australia that primarily relate to land supply issues, also to the very high rates of taxation.”
The report is based on a survey of Australia’s 100 largest residential builders.
Source: Quartile Research, www.quartileresearch.com.au