Home loan approvals in February declined anew, according to the new data issued on Wednesday by the Australian Bureau of Statistics (ABS), highlighting a slump in housing sector that started in the first month of 2012.

The latest ABS report showed that total mortgage approvals amounted only to $20.3 billion by the second month of the current year, registering a fall of 1.3 percent in the previous month.

Also, bank approvals for loan applications that were intended to finance the purchases or construction of new house or apartment retreated by 2.5 percent in the same month, which market experts said reflected the biggest slide in the sector over the past 12 months.

Analysts noted too that the number of first home buyers in the month significantly dwindled, which the ABS data showed only comprised 17.2 percent of all the housing construction or purchases that were financed in February.

In January, first home buyers represented 20.3 percent of all house financing that were recorded in the month, a worrying signal according to Bloomberg as the numbers pointed to the sector's deepest retrench over the past 10 years.

Following the housing crunch that characterise the last financial downturn in late 2008, the housing sector slowly recovered and by 2011 it registered considerable pick ups as shown by the rise is mortgage approvals from April through December.

The then the figures crumbled a bit, by 1.1 percent, in January, which proved as the start of two straight months of retreat in the sector.

The new ABS data came out as Bloomberg reported that consumer confidence again shrunk in the same month, the eighth consecutive month that the indicator had plunged, prompting economists to lament that the policy rates imposed by the Reserve Bank of Australia (RBA) since the start of the year failed to hit the mark, that is to spur growth.

According to Su-Lin Ong of RBC Capital Markets, the ABS report confirmed "a pretty soft underbelly in terms of the Australian household sector: they're cautious, they're not feeling so great, they're not borrowing."

The RBA sustained this month its hold on the cash rate, keeping it at 4.25 percent, which has been the level since the last reduction in December last year, the same month that home loan approvals last surged.

The roar has died down, Ong told Bloomberg, which appeared to coincide with RBA decision to hold back on further cutbacks.

She added that whatever traction that was gained last year "seems to be fading and the data is consistent with that."

"At the margins, it adds to the case to further easing by the RBA," the RBC analyst told Bloomberg.

And her position appears to be in synch with the general sentiments of Australian business leaders, which on Wednesday called on the RBA to slash the cash rate next month, a move that could reverse the alarming trend seemingly in effect over the domestic situation.

According to Australian Chamber of Commerce and Industry (ACCI) chief executive Peter Anderson, the RBA board needs to step up its effort and aggressively intervene, which he said should boost consumer confidence, give businesses some breathing room and encourage competition.

"History shows that delays or timidity in adjusting monetary policy when structural changes like the high dollar and lower competitiveness are embedding themselves in our economy have costly repercussions for business viability and jobs," Anderson said in a statement.