New house sales slumped for two months in a row in Australia. There has been a great decline in the sales of new houses in Australia this year, one of the latest reports of the Housing Industry Association (HIA) says. By the end of March it is said that there was a drop of 6 per cent of the total sales of new homes. Independent houses sales dropped to nearly 6.3 per cent and the unit sales to 3.5 per cent.

However, a survey says that the sales of new house were high in the beginning of the year but it gradually dropped down. Especially the sales of separate houses in Australia showed a good result till the end of March but it started to fall down by the next month. Sale figures for the first quarter of this year showed an increase from the first quarter of 2007, but the HIA warns that recent trends tell a different story. The major decline of separate houses was seen in the city of New South Wales and Queensland in the end of March. However, in Western Australia the sale was steady and saw some increase. On the whole, the sales of home in Western Australia increased up to 4 per cent compared to the fall of 33 per cent last year. New South Wales had a 12 per cent increase in new house sales at the beginning of this year compared to the previous year. But the HIA figures show that sales dropped by 19.7 per cent in March, prompting it to forecast trade in the future. In Victoria there was 18 per cent rise in new house sales in February but this dropped by 0.8 per cent in March. The HIA says that this will remain the same in Victoria till the end of this year.

South Australia had a good beginning with 8 per cent increase in sales but had a fall in the month of March by 5.8 per cent. This situation will continue as per the HIA.
The decline in the sales of new houses for the past two months may be due to the reflection of the increase in the rate of interests and the inflation rate which has made the people to sit back to see if the rate would decrease. The HIA says that the sales of houses in Australia would further weaken by the end of the year and it also gives a contrary view that the sales would remain the same over the coming months and may not go higher. The fluctuation in sales of houses in Australia may take time to recover mostly by the end of the year. On the whole, it is a good time for the new house market country wide. Taking into account the increase in the mortgage rates in the years 2007 and 2008 with the important pressure on labor and material costs, it is hard to recover the sales in the coming months according to the HIA.

Therefore, the overall analysis shows that the decline in the sales of new houses in Australia may be same and steady for the forthcoming years and would recover by the end of the year. If the interest rates and inflation comes down surely the sales of new separate houses and units may increase to an unexpected level.