Interest Rate Cuts Have Modest Effect So Far

While the consecutive interest rate cuts of May and June were welcomed by the property industry, the impact of the Reserve Bank of Australia's decision has yet to have a significant effect on home sales.

The Housing Industry Association (HIA) JELD-WEN New Home Sales report conveyed only a modest rise in May 2012, thanks to a 21.1 per cent jump in multi-unit sales.

The survey of Australia's largest volume builders showed that detached house sales fell by two per cent, with total home sales climbing just 0.7 per cent last month. 

"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," said HIA chief economist Harley Dale on June 28.

"It is encouraging to see a second consecutive increase in the sale of multi-units, a result which saw a lift of 11.6 per cent over the May 2012 quarter," he added.