There was a 4% drop in the number of new homes built around Australia in the June 2007 quarter, following a fall in building approvals earlier in the year. Economists had expected a 0.5% fall.

Over the 12 months ending June 2077, new home building was down 3.4%, a weaker-than-expected result.

Economists believe the August interest rate rise will keep dwelling starts low for the rest of this year and that it won't be until 2008 that we see an upswing in home building.

This suggests that the low vacancy rates for residential property around the nation are likely to remain well into next year.