HIA welcomes cash rate cut

The Housing Industry Association has welcomed the October interest rate cut by a quarter of a per cent, saying that it will help boost the sales of new homes.

But HIA chief economist Harley Dale said that in conjunction with lowering interest rates, government policy needs to play its part in stimulating the sector.

"A fresh round of interest rate cuts will help rebalance this situation, although financial institutions obviously need to play their role in cementing this outcome.

"It remains the case, however, that rate cuts won't single-handedly generate the new home building recovery Australia requires. Governments have an important role to play in driving reform measures to lower the excessive tax base faced by the sector," he said.

It comes as the Real Estate Institute of Victoria report into the state of the market shows that the share of approvals for house building has risen more than ten per cent between June and September this year.

The report also shows that 2012 has a clearance rate of 60.4 per cent in Melbourne with three months left to go in the year which is 0.1 per cent above last year's total sales.