Sales of new homes increased by 0.6% in September, breaking four consecutive months of declines, according to the latest results from the Housing Industry Association.
However, the figures show sales have fallen 14% for the three months ending 30 September, and sales are still 15% lower when compared with the same period in 2009.
HIA chief economist Harvey Dale said in a statement the Reserve Bank should keep interest rates on hold next week, saying such a decision would be more appropriate.
“Heightened speculation about increased interest rates has been damaging to housing sentiment and activity,” Dale said.
“Warnings from the banks of pending increases in mortgage rates outside of changes in monetary policy have been unhelpful to buyer confidence and are causing potential buyers to stay on the side-lines.”
Dale also added that he doesn’t believe banks have any reason to raise interest rates above the official cash rate.
“As it stands, the lack of available credit from Australian banks to small and medium sized residential developers is contributing to the renewed weakness in new home building conditions that has become evident over the course of 2010,” he said.
Also in the housing market, the International Monetary Fund has warned that housing prices in Australia could be overvalued by about 15%. Mission chief for Australia Ray Brooks told Fairfax that a report is soon coming regarding housing prices in Australia over the past 20 years.
“There is a risk that a decline in house prices, if it were particularly sharp, could have some impact on household spending and could lead to some households reducing their high levels of debt,” he said.
Meanwhile, Macquarie Group has reaffirmed its guidance for the 2011 financial year, with the company recording a net profit of $403 million for the six months to 30 September. However, this figure is down 16% from the previous corresponding period.
“While market conditions in September and October have shown some signs of improvement, activity continues to track below normal levels,” managing director Nicholas Moore said in a statement.
“Subject to market conditions continuing to return to more normal levels, Macquarie currently expects its FY11 result to be broadly in line with the prior year.
Telstra has said it will cut over 900 jobs to cut costs, with executive and middle management workers most likely to be affected.
“Telstra will now be organised as a sales and marketing company that is faster to market and more focused on our customers,” Telstra chief David Thodey said in a statement.
“Telstra’s simpler new operating model will shift decision-making from head office to local managers and allow our frontline employees to get results more quickly, with fewer steps and approvals.”
The job cuts come as the company is attempting to restructure its business and improve customer satisfaction.
Shares flat after mixed overseas leads
The Australian share market has opened flat today following mixed leads from overseas markets, including European markets and Wall Street.
The benchmark S&P/ASX200 index was down 20 points or 0.44% to 4664.1 at 12.00 AEST, while the Australian dollar remained steady at US97c.
ANZ shares gained 0.8% to $24.92, while Commonwealth Bank dropped 0.2% to $49.21. Telstra lost 0.4% to $2.70 as Westpac also fell 0.4% to $22.86.
As reported by The Australian Financial Review, papers from the Henry Tax Review reveal the Government considered returning up to $18 billion from the original 40% mining tax to resource-rich states.
The report comes after opposition treasury spokesman Joe Hockey pressured the Government to release the papers in order to reveal more information about alternative tax plans.
Mining group Whitehaven Coal has said it is in talks with third parties regarding a possible takeover.
“In view of the ongoing interest being shown in the company, the directors of Whitehaven have decided to undertake a formal process to determine whether a proposal is available for the company at a price and on terms that are in the best interests of all shareholders,” Whitehaven said in a statement.
Managing director Tony Haggarty said the company has “significant strategic value”, and that it is one of the remaining independent coal producers.
IMF urges action on currency
The International Monetary Fund has warned that emerging economies with trade surpluses must “begin in earnest” to allow their currencies to appreciate in value to build demand.
“In the absence of policies targeting the elimination of underlying distortions, global imbalances will continue to widen, threatening growth prospects in both advanced and emerging economies,” the IMF said in a statement.
The IMF also said that the Chinese Yuan remains substantially undervalued, and that the US dollar remains on the “strong side”.
Investors were given a shot of optimism yesterday when jobless claims declined, but Wall Street stocks remained timid due to expected action from the Fed. The Dow Jones Industrial Average fell 12.33 points or 0.11% to 11,113.95.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
