A modest improvement in housing finance was not enough to shake off the deteriorating outlook for new home building.
According to the latest data from the Australian Bureau of Statistics, the number of loans for the construction of new homes was flat in October, while loans for the purchase of new homes increased by 9.4 per cent.
Lending for construction has now been trending down for 12 months and over the three months to October 2010 loans for construction/purchase of a new dwelling declined by 1.6 per cent to be 29 per cent lower when compared to the three months to October last year.
"There is a renewed weakening in new home building conditions underway. This situation was readily apparent before the interest rate hikes of early November, but these hikes have exerted a considerable negative impact on sentiment and activity in the housing industry," Housing Industry Association chief economist Harley Dale said.
"A period of interest rate stability, as indicated in the Reserve Bank statement, is certainly an appropriate stance and we hope the Board sticks by that message it has conveyed."