Rate Cuts are still not encouraging new home sales Down Under, according to the Housing industry Association.

Sales of new property in Australia crept up by 0.7 per Cent in May, the HIA reports, suggesting that Interest Rate Cuts are yet to a widespread impact upon the market.

The HIA - JELD-WEN New Home Sales report, a survey of Australia's largest volume builders, registered the slight rise in May 2012 due to a 21.1 per cent jump in the sales of multi-units. In a disappointing result, Detached House Sales fell by 2.0 per cent.

"The impact of Interest Rate cuts at the end of 2011, together with the announcement of a 50 basis point cut to the Official Cash Rate on May 1 this year, has so far done little to spur new home sales, given the soft outcomes evident for detached houses," said HIA Chief Economist, Dr Harley Dale.

"It is encouraging to see a second consecutive increase in the sale of multi-units, a result which saw a lift of 11.6 per cent over the May 2012 ‘quarter'. However, detached House Sales fell in four of five mainland states in May this year. The exception, Victoria, experienced a second consecutive (modest) rise in sales ahead of the ending of the First Home Bonus on June 30th."

"We expect that through the second half of 2012 the aggregate impact of interest rate cuts in late 2011 and then mid-2012 will at the very least put a floor under new home sales, and other leading housing indicators which also remain very weak," Harley Dale said.

"Further interest rate reductions are warranted, but rate cuts can't do all the heavy lifting," added Harley Dale. "Government investment and reform is required to complement the helping hand that lower borrowing costs should provide new home building in the second half of 2012, and the Federal government should be leading from the front."

In May 2012 the number of seasonally adjusted new detached house sales increased by 3.9 per cent in Victoria. Detached House Sales Fell by 6.3 per cent in Queensland and were down by 5.5 per cent in New South Wales, 4.7 per cent in Western Australia, and 1.5 per cent in South Australia.