 New home sales slump
New home sales contracted 5.7 per cent in May, from April, as demand for new homes stalled.
This is in contrast with the trend in April when home sales increased 0.5 per cent.
Figures from the Housing Industry
Association show overall
sales were still up 15 per cent on their low point in December, thanks
in large part to historically low mortgage rates and government grants
to first-time home buyers.
"I was a little surprised to see a
fall in new home sales,'' said RBC Capital Market senior economist
Su-Lin Ong. ``It's a bit of a reality check.''
"It may be a hint of what's to come later in the year when this stimulus starts to wear off.''
The
HIA says the fall could be due to the ''negative speculation about the federal
budget'' as interest from prospective first home buyers fell thinking the boost to the grant would end. The government instead extended the
boost in full until the end of September, and at half the rate for the
rest of 2009.
''The vast majority of the housing recovery has been at the first-home buyer end of the market. As that segment inevitably slows over the remainder of 2009 it's vitally important that the much larger trade-up and investor segments return to health,'' said HIA Senior Economist, Mr Ben Phillips in a statement.
However, a study of house prices show that property prices rose 0.9 per cent in May, a rise of 4% for the first half of 2009.
Some
economists foresee rising joblessness, tipped to hit 8.5 per cent by
the middle of 2010, to whittle away at home prices, as households
accept lower bids for their properties in order to reduce their debt
levels. The unemployment rate stands at 5.7 per cent.
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