RTTNews - New home sales in Australia dropped 5.7% month-on-month in May, partly due to negative speculation about the federal budget brought out in the month, the Housing Industry Association said Tuesday.

The HIA noted that a sustained recovery in home building cannot rely solely on the first home buyer activity, because a slowdown in the segment is inevitable over the rest of the year. Therefore, it is vitally important that the much larger trade-up and investor segments return to health, the HIA said.

At the same time, the HIA's Senior Economist, Ben Phillips said, The combination of low interest rates and the NZ$21,000 First Home Boost have lifted prospects for the housing industry, which is expected to convert to a recovery in home building activity from the June quarter of 2009.

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