Bloomberg News

Australia New-Home Sales Rise 2.8% as Rate Cuts Spur Apartments

July 29, 2012

Australian sales of newly built homes rose in June for a third straight month as interest-rate reductions helped spur apartment purchases, a private report showed.

Sales increased 2.8 percent to 6,021 last month from May, when they gained 0.7 percent, the Canberra-based Housing Industry Association said, citing a survey of the nation’s largest builders. Detached house sales rose 0.7 percent, while apartments soared 15.7 percent, it said.

The Reserve Bank of Australia cut the benchmark rate by 50 basis points late last year and a further 75 points in May and June as inflation remained contained and the savings rate stayed above 9 percent. At 3.5 percent, the overnight cash rate target is still the highest among major developed economies.

“Lower interest rates will assist new housing in 2012/13, but the large gap between the cash rate and variable mortgage rates will blunt their positive impact,” Harley Dale, HIA chief economist, said in a statement.

Australian house prices probably declined in the three months through June, extending the longest losing streak in at least a decade. An index measuring prices for established houses in eight major cities likely dropped 0.5 percent last quarter from the previous three months, and were down 4.2 percent from a year earlier, a survey of economists showed before an Aug. 1 government report.

To contact the reporter on this story: Michael Heath in Sydney at mheath1@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net


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