Despite a slight uptick in October, new home sales are significantly lower than this time last year.
According to the latest data from the Australian Bureau of Statistics, new home sales fell by 9 per cent in the three months to October to be 17 per cent lower than 2009.
In addition, detached house sales also fell 10 per cent in the three months to October, while the sale of multi-units was up by 1 per cent.
HIA chief economist Harley Dale said that ahead of the damaging impact being felt from the November interest rate hikes, a raft of leading housing indicators provided compelling evidence of a renewed new home building downturn in 2011.
"Fiscal stimulus has all but run its course. We now face a combination of higher interest rates, on-going severe credit constraints, and inadequate progress in addressing perennial supply side obstacles such as a lack of readily available, affordable land. These factors have rendered Australia's new home building recovery unsustainable," Mr Dale said.
"The lack of available credit for small and medium sized development continues to impose a massive additional constraint on Australia's new home building industry."
"Viable measures are required to ensure greater competition in our banking system and they need to take into account the obstacle that a lack of credit presents to boosting Australia's housing supply."
In the month of October 2010, detached new house sales increased by 5.9 per cent in Victoria, 7.4 per cent in Queensland, and 0.9 per cent in Western Australia. Meanwhile both NSW and South Australia recorded a drop in sales activity.