Australia's housing and retail sectors have called on the Reserve Bank to deliver a 50 basis point interest rate cut to boost consumer sentiment, after a survey showed new home sales have fallen to their lowest level in more than a decade.
The Housing Industry Association (HIA), which represents the residential building industry, says new home sales dropped 9.4 per cent, seasonally adjusted, in March 2012, their lowest level in more than 10 years.
Multi-unit sales slumped 6.4 per cent over the same period.
HIA chief economist Harley Dale called on the Reserve Bank of Australia to deliver a 50 basis point interest rate cut at its board meeting tomorrow.
An AAP survey of 16 economists on Friday showed all expected the RBA to cut the cash rate 25 basis points, to 4.00 per cent, this week.
However, Mr Dale said a larger cut was needed to revive the housing sector.
"The bank needs to send a clear signal that it is back on the case of assisting an economy that is clearly weaker than it anticipated in 2012," said Harley Dale.
"It is not too late to turn the situation around and prevent new housing from revisiting a GFC (global financial crisis) low.
"Interest rate cuts, while no panacea, can provide substantial assistance in restoring confidence and activity."
The survey of Australia's 100 largest builders found Queensland suffered the biggest decline with new home sales down 15.3 per cent, followed by Western Australia, down 12 per cent, and New South Wales, down 9.7 per cent.
Meanwhile, a lobby group says the retail sector needs the "shock treatment" of a 50 basis point interest rate cut to help businesses get back on their feet.
The Reserve Bank of Australia is widely expected to cut the official cash rate by 25 basis points at its board meeting tomorrow, after leaving it unchanged at 4.25 per cent at its last monthly meeting.
National Retail Association executive director Gary Black says interest rates need to drop at least 50 basis points to boost consumer spending.
"There's no point sugar-coating the situation," he said in a statement.
"Many retailers - small and large - have already disappeared and more will follow if the RBA doesn't immediately relieve the stress on the retail sector."
Mr Black said the expected cut of 25 points would not go far enough.
"What concerns the NRA is that the markets, commentators and even consumers will have factored this cut into their thinking already, and the official announcement will have little, if any, impact on discretionary spending," he said.
"This is compounded by doubts about whether banks will pass on a small cut in full, or at all.
"If the RBA genuinely wants to stimulate activity in the economy by cutting rates, they should move decisively and cut hard."
Mr Black says household goods, clothing and footwear and department stores are struggling to get out of negative growth and trading conditions remain extremely difficult.
