* James Glynn * From: Dow Jones Newswires * November 29, 2010 11:26AM
NEW home sales rose in October, but not enough to lift the gloom that has settled over the industry in Australia.
Rising interest rates have stifled demand and the weakness is expected to continue through 2011, according to an industry report released today.
The Housing Industry Association/Jeld-Wen survey of the country's largest builders showed new home sales rose a seasonally adjusted 2.4 per cent in October from September.
But over the three months to October, new homes sales fell 9 per cent, and were down 17 per cent from the same quarter a year ago.
Sales of private multi-unit dwellings such as apartments fell 2.6 per cent in October, the report said.
Housing demand has softened this year as the Reserve Bank of Australia raised interest rates to head off an expected acceleration in inflation next year fuelled by soaring commodity prices and an upswing in investment.
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HIA is forecasting a decline of 9 per cent in total new housing starts in 2011.
"We do, however, recognise that anecdotal evidence currently suggests that this forecast looks optimistic," HIA said in a statement.
The withdrawal of government stimulus to support housing through the global financial crisis is also denting demand for housing, deepening concerns that housing supply will continue to lag well behind the demands generated by strong population growth
House prices, widely viewed as unsustainably high, have also fallen over recent months, creating a further deterrent to investment in housing.
In New South Wales, sales were down 6.1 per cent in October, marking the fourth decline in six months, the report said. But further south, sales in Victoria rose 5.9 per cent over the month.
