Sales of new homes fell for the fourth consecutive month in August, according to the Housing Industry Association, with representatives saying the industry is at risk if interest rates continue to rise.
The HIA said in a statement sales of new homes fell by 2.6% to 6,887 in August, following a 7.1% decline in July. Since April, sales of new homes have fallen by 19.7%, and since August 2009, sales have fallen 20.5%.
HIA chief economist Harley Dale said in a statement that interest rate increases and the expiration of stimulus has meant new housing demand has dropped off the map, and there are still various “supply side barriers” increasing prices.
“An array of leading housing indicators, including new home sales, is signalling a fall in housing starts in 2011, even if interest rates remain steady,” Dale said. “A premature hiking of interest rates would exacerbate the impending decline in new home building.
“At the same time, renewed weakness in new housing highlights the opportunity to act, rather than an excuse to sit back, when it comes to creating a more flexible and less costly regulatory environment than the one which is currently pushing people away from new housing towards existing property.”
Telco giant Telstra has released an ambitious plan to grow market share and help shore up falling revenue in its fixed-line broadband business.
Chief executive David Thodey told the crowd at the company’s annual investor day the company had designed a new project called “Project New”. Some of the goals of the project including cutting customer complaints 30%, increase wireless broadband share and an aim to get 20% of revenue from media, international and network-based services in between two-three years.
“This company must change,” Thodey said. “It must undergo significant restructuring.”
The company also said the project will involve 27 separate schemes, and that new products such as the T-Box are a significant part of the plan. Thodey also told investors the company is confident of reaching a final agreement regarding the National Broadband Network.
“We are actively working to complete final definitive agreements and I am pleased with the progress we are making,” Thodey said. “This is a day-by-day venture and we are across it all the time.”
ASX chief executive and managing director Robert Elstone has announced he will step down in 2011, with his contract to be amended in order for the company to search for a suitable replacement.
“I believe ASX is well-prepared to meet upcoming challenges and to prosper next year and beyond,” Elstone said in a statement.
The Australian sharemarket has opened slightly higher today following mixed leads from overseas, where stocks in Europe fell but Wall Street closed higher.
The benchmark S&P/ASX200 index was up 11 points or 0.25% to 4681.3 at 12.15 AEST, while the Australian dollar has continued its rise and was at US96.72c.
ANZ lost 0.1% to $24.29, while Commonwealth Bank also lost 0.3% to $52.43. Westpac fell 0.3% to $23.94 as NAB gained 0.6% to $26.29.
Pharmaceuticals group Sigma has maintained its full-year earnings guidance despite posting a half-year loss along with a $220 million write-down.
The company announced a $218.53 million loss for the six months ending 31 July, following a $32 million profit. But the company said it still expects EBIT of between $140-150 million for the full-year ending 31 January 2011.
“This assumes a continuation of normal operating conditions through to January 2011,” the company said in a statement to the ASX.
“However, if the sale of the pharmaceuticals business to Aspen proceeds, the board will consider using part of the proceeds to fund capital management initiatives.”
Prime minister Julia Gillard has attempted to soften suggestions the new climate change committee has already made a decision on carbon prices. The PM responded to comments from independent MP Tony Windsor on ABC Radio, saying it would be a mistake to make a “pre-destined decision”.
“Now Mr Windsor wants to work though those options,” she said. “Obviously having worked through those options, he may conclude that he doesn’t believe any of the options is the way forward.”
US consumer confidence has fallen to a seven-month low, with investors now becoming increasingly worried about the strength of the country’s economic recovery.
The Conference Board’s index of consumer attitudes dropped to 48.5 in September, well below the market forecast of a September reading of 52.5.
The announcement also comes after the Federal Reserve said last week it is prepared to continue propping up the economy with further stimulus.
“With unemployment at a 26 year high, confidence among consumers remains weak. This decline in sentiment will give the Fed a stronger reason to increase stimulus in November,” GFT director of currency research Kathy Lien said in a statement.
Wall Street stocks still closed higher, with the Dow Jones Industrial Average up 0.43% to 10,858.14.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
