Australian housing demand dropped 5% in May. A survey says that the drop in housing demand is due to rise in the cost of living. It also found that with the rise in interest rates, buyers are sitting back and watching instead of buying houses on loan for a higher rate of interest. The current rate of interest has gone to a high of 7.25 per cent this year 2008. The Housing Industry Association (HIA) says the number of homes sold in May had come down to 5 per cent compared with the month of April. Some of the economists are of the view that this may go worse if the cost of living increases in other sense if the rate of house holds rises. Because of this the building conditions and trading conditions in the house sector are going to be in demand by the end of the year. It is very poor to note that the house sector is declining more.

The cost of living has been more this year in Australia like ever before due to increase in prices of household and basic needs. As already stated, the increase in rates of prices is not the only reason for the drop in the demand of houses but also the interest rates that have gone high like ever before, which has directly reflected on the continent's inflation rate. The Reserve Bank of Australia (RBA), though trying to bring down the rate of interest, is having trouble controlling it. It is disgusting to note that the Central Bank and other banks have also increased their interest rate thus putting a burden on the general public. The drop in the demand of houses should be looked in by the Government and the price hike should be kept under control. The price of basic needs should be reduced and also the government has to interfere with the price rise of the houses and do the needful.

It is viewed that the house price fall in the US will be replicated in Australia too. It is also believed that the house prices will not be pleasing in the forthcoming years and there will be no improvement in the situation of hike in house prices in the near future.

The fall in the demand for houses to 5 per cent in May shall increase more by the end of the year if nothing is done to control the hike in the price of houses. Both the buyers and sellers are put to great hardship due to this. Not only that, as previously stated the auction sales have also come down. This is not only a loss to the general public and the sellers but also to the government. Thus, the Government has to take steps to control the hike of prices of houses to protect the Australian dream of home ownership.