New home sales up 2.5% in Jan: HIA

The number of new homes sold across Australia has risen for the first time in three months, amid signs of growing confidence in New South Wales, a survey shows.
(03/03/2011)
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The latest HIA-JELD-WEN New Home Sales Report shows the number of new homes sold increased by 2.5 per cent in January - the first gain in three months.

The survey also found that multi-units sold up by five per cent, while detached house sales rose by 2.2 per cent.

HIA chief economist Harley Dale said the modest increase in new home sales was encouraging.

"The new home building sector was buffeted in 2010 by rising interest rates and a lack of policy reform to wind back the impact of the dead hand of regulation on new housing costs," Dr Dale said in a statement.

While new dwelling starts were expected to be lower this year, signs that the cash rate may be staying on hold for some time may help the sector, he said.

The Reserve Bank of Australia (RBA) on Tuesday opted to leave the cash rate at 4.75 per cent, where it has been since November.

In a statement that accompanied the interest rate decision, RBA governor Glenn Stevens cited low inflation, a pick-up in private investment and ongoing consumer spending as reasons for holding off the rate rise button.

HIA also found that new house sales increased by 10.3 per cent in NSW, 9.6 per cent in Victoria and 6.3 per cent in Western Australia.

The figures for NSW indicated a brighter future ahead for the state, HIA said.

"Given the perennial under-achievement of housing construction in NSW over the course of the last decade, it's still too early to call a sustained new home building recovery.

"However, signs are emerging that suggest the market is slowly regathering some confidence."

Sales fell by 2.6 per cent in Queensland, a result likely to have been influenced by the floods, HIA said.

South Australia continued to under-perform, with sales falling by 6.3 per cent in January.

Rising home loans could tip recovery

by AAP December 10, 2008 12:45pm
THE number of home loans rose 1.3 per cent in October, to the highest level all year, and economists say it could signal the start of a recovery.

The number home loans for owner-occupied housing rose 1.3 per cent in October, to 48,299, according to Australian Bureau of Statistics data.

The loans were worth a total of $17.7 billion, up 1.9 per cent in October, and above economists expectations of a 1.5 per cent increase.

Westpac economists said in a research note that the rise housing finance in October signalled the start of a recovery for the housing market.

"While it was only a modest rise in October, we see it as the beginning of a recovery,'' Westpac said.

"This will act to support house prices and trigger a recovery in new dwelling construction.''

Westpac said the RBA's decision to slash interest rates by 300 basis points since September, and the federal government's stimulus package for first home buyers, would breathe life back into the housing market.

"However, rising unemployment and tighter lending standards in response to the credit crisis will act to crimp the pace of recovery."
Related Coverage

* Buyers beware as housing market stallsNEWS.com.au, 27 Oct 2008
* House prices down 10 per cent in 2008NEWS.com.au, 14 Oct 2008
* Rates bite at home loan numbersNEWS.com.au, 14 Apr 2008
* Mortgage battlers told to get out nowNEWS.com.au, 1 Jul 2008
* First-time buyers storm marketNEWS.com.au, 16 Oct 2008



The rise in housing finance commitments came after a 29 per cent fall during the previous 8 months.

JPMorgan economist Helen Kevans said the prospect of more interest rate cuts would bring more buyers to the housing market.

"Many first home buyers should, however, be attracted to the property market by further interest rate cuts,'' said Ms Kevans.

JP Morgan forecasts the RBA will lower the cash rate by 50 basis points at their next meeting in February, and by another 25 basis points in March to a 3.5 per cent rate.

The cash rate has not been at 3.5 per cent since early in 1965.