 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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