Housing affordability crisis 'worsening'

New home sales slipped by 0.8 per cent to 8,321 dwellings in June, a Housing Industry Association (HIA) survey of 100 major residential builders and developers found.

The result was driven by a sharp fall in unit sales, even though more houses were sold in the month.

Multi-unit sales fell 20.1 per cent to 934 dwellings, after posting rises in the previous two months.

Private new detached house sales rose 2.3 per cent to 7,386 following a 6.9 per cent fall in May.

Over the year, new home sales fell 12 per cent during 2006/07.

The HIA said new home sales have now fallen for the past five years, despite strong population growth.

HIA chief economist Harley Dale said record low housing affordability was hurting the building industry.

"New home sales ... shows a considerable

weakening in conditions over 2006/07," Mr Dale said.

"This update is a telling indictment of the impact record low housing affordability is having on the home building industry.

"Addressing the shortfall in supply is critical to alleviating the housing affordability crisis."

Detached houses, which make up the bulk of new home sales, suffered a 13.9 per cent fall in sales during 2006/07.

But the more volatile multi-unit sector posted sales growth of 1.3 per cent in the same period.

HIA managing director Ron Silberberg said infrastructure levies and holding costs paid by developers were to blame for Australia's low housing affordability.

The HIA welcomed federal Labor's $500 million election promise to help reduce infrastructure costs in the building industry, which Opposition Leader Kevin Rudd said would help 50,000 new home buyers.

Dr Silberberg said Labor's plan would reduce the cost of new dwellings and make it easier for first time buyers to afford their own home.

Meanwhile, new homes sales were the worst in Queensland, which experienced an 18.4 per cent fall to 1,952 in June, the worst result in eight months.

The other mainland states enjoyed new homes sales increases in the month, although they also suffered declines during the last financial year.

Sales in NSW rose 16.9 per cent in June and fell by 10.7 per cent in the year.