Australian sales of newly built homes slowed in May as interest-rate reductions failed to make an immediate impact on the nation’s property market, a private report showed.
Sales rose 0.7 percent last month to 5,855 from April, when they jumped 6.9 percent, the Canberra-based Housing Industry Association said, citing a survey of the nation’s 100 largest builders. Detached house sales dropped 2 percent, while apartments soared by 21.1 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 the past two meetings 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.
“The impact of interest rate cuts at the end of 2011, together with the announcement of a 50 basis point cut to the official cash rate on May 1 this year, has so far done little to spur new home sales, given the soft outcomes evident for detached houses,” Harley Dale, HIA chief economist, said in a statement.
Australian house prices declined in the three months through March in the longest losing streak in at least a decade. An index measuring prices for established houses in eight major cities dropped 1.1 percent last quarter from the previous three months, when it fell a revised 0.7 percent, the Australian Bureau of Statistics said in a May 1 report.