Latest data released by the Australian Bureau of Statistics (ABS) on Monday had revealed that the number of new home loans in Australia grew just a pinch in October, which was well below industry expectations.
According to the ABS, the number of loans allowed to build or buy houses and apartments improved a measly 0.1 per cent from September. Economists had forecast approvals to rise 3 per cent given the interest-rate reductions earlier made by the central bank in order to stimulate the Australian economy as well as advance the country's housing market.
The development, according to Tom Kennedy, JP Morgan economist, would only mean that the Reserve Bank of Australia (RBA) needs to further slash the prevailing cash rate.
"The data today just reaffirms that there are numerous headwinds out there," he said.
"That's another reason that really supports further rate cuts."
The RBA, at its December board meeting last week, had actually slashed the cash rate to three per cent.
"This data is a lot more spotty than we had expected," Richard Gibbs, Macquarie chief economist, said, pointing out the figures implied potential homeowners' continued lack of confidence and fear.
"While the value of lending commitments is up, the number of loans remains weak, reflecting a wider lack of consumer confidence in Australia."
ABS reported the number of home loans approved for owner-occupiers jumped to 46,477, seasonally adjusted.
Harley Dale, the Housing Industry Association's chief economist, said that in spite of the measly jump, the figures still translate to a modest improvement since mid-2012, although still weak to think that a home building recovery in Australia is underway.
"Some signs of recovery are better than none and that is what the housing finance figures are showing," he noted in a statement on the data.