Home sales fall in Feb: HIA report

NEW home sales fell in February, raising concerns about the sustainability of the housing recovery, amid the prospect of further interest rate rises.

The Housing Industry Association (HIA) New Home Sales report showed a 5.2 per cent dip in sales to around 7000 dwellings in February.

The fall follows a 9.5 per cent rise to 8,444 new home sales in January.

The HIA said the February fall raised fresh concerns regarding the sustainability of a recovery in residential construction and that deterrents to building new homes such as land shortages would push potential buyers towards existing homes.

HIA chief economist Harley Dale said residential construction was still relatively strong, reflecting the monetary and fiscal policy stimulus of last year.

"This stimulus has been highly successful in driving the first stage new home building recovery but that stimulus will soon start to fade, Dr Dale said in a statement on Monday.

"Land and labour shortages, frustrating planning delays and the inequitable level of taxation and regulation on new housing are all deterrents to households entering the new home market as opposed to existing property.

"All these supply-side obstacles require urgent attention or Australia's chronic housing shortage will worsen and we will, perversely, see more upward pressure on interest rates than would otherwise be the case.

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