Members of Australia's largest organization of residential builders--the Housing Industry Association or HIA--had sought the Reserve Bank's policy intervention to slash down benchmark lending rates to spur consumer confidence to spend more and allow more room for the industry to grow.

Citing a 3.5 percent slump in consumer confidence in July, the HIA has argued that an RBA rate cut could provide a catalyst to bolster consumer sentiment.

"Uncertainty and confusion are further damaging falling confidence and will act to aggravate softness in the domestic economy in the absence of interest rate relief," HIA chief economist Harley Dale said.

Dale cited that building approvals have slumped 15.5 percent compared to last year, and 13.5 percent in the first half of the year compared to the first half of 2010. He said land sales had also fallen to a 10-year low.

"New housing hit a wall in mid-2011 and residential building activity was heading towards one of the lowest levels in the last fifteen years - and this is before the latest bout of weakness hit the global economy," Dale said.

Without the relief of a rate cut, Dale added, housing industry growth would soon start falling further than GFC lows.

Australia