AUSTRALIA'S home-building approvals fell in July, reinforcing central bank Governor Glenn Stevens' decision to cut borrowing costs for the first time in almost seven years yesterday.

The number of permits granted to build or renovate houses and apartments dropped 2.3 percent to 12,620 from June, when they gained a revised 2.2 percent, the Bureau of Statistics said in Sydney yesterday, Bloomberg News reported.

The slide in home approvals adds to evidence the nation's US$1 trillion economy is cooling because of the highest borrowing costs in 12 years. Stevens cut the benchmark interest rate yesterday by a quarter point to 7 percent, saying it's "more likely" that economic growth will slow "over the period ahead."

"Investor demand for housing is still very low," said Rob Henderson, chief markets economist at National Australia Bank Ltd in Sydney. "This is more evidence of a slowing economy."

Stevens last raised borrowing costs in March, adding to increases in February, November and August 2007.

Home buyers have also been paying more for homes after the nation's five biggest lenders increased mortgage rates by an average of 105 basis points since the start of this year amid rising credit costs. The central bank boosted its benchmark by 50 basis points in that time.