The number of new houses sold from May to July were 2 percent lower than the figures for the same period last year.

Based on data from the Housing Industry Association (HIA), new home sales decreased by 7 percent in July. The drop is the third in three consecutive months.

The HIA report revealed that in the month of July alone, detached new home sales dropped by “12.9 percent in Victoria, 7.6 percent in Queensland, 3.1 percent in New South Wales, and 2 percent in Western Australia.” On the contrary, sales rose by 4 percent in South Australia.

HIA Chief Economist Harley Dale claims the decline in new home sales to be severe. Dale said the figures call for government intervention.

The chief economist explained efforts are needed “to reduce the impact of regulation, development charging, and excessive taxation on the cost of new housing supply. This action needs to include considerable federal level engagement, without which Australia’s dwelling shortage will continue to increase, placing avoidable upward pressure on existing home prices and disadvantaging households seeking to purchase or rent a dwelling.”

The interest rates have also been eyed as a compounding factor to the slump. The Reserve Bank of Australia (RBA) raised interest rates to 4.5 percent from 3 percent in late 2009.