October 2011 has brought with it a minor recover in the number of new home sales in Australia. This was at least a small improvement from the lowest result in more than a decade.
The latest HIA – JELD-WEN New Home Sales Report found the number of new homes sold in the month of October 2011 increased by 5.5 per cent, although sales remained down by 8.0 per cent over the quarter to October.
A lift in demand for new home sales, no matter how small is positive news for the Australian Construction industry.
“The recent drop in the cost of fixed rate home loans as well as decline in variable rates, in conjunction with a competitive building market, and a greater availability of skilled trades makes now one of the best times in history to build a new home.
Despite the quarterly increase, we are still in a very week property market. In October 2011 the volume of detached house sales was 29 per cent below the average of the last fifteen years. Many first home buyers and investors are choosing to purchase off the plan apartments rather than house and land packages. These allow the purchase the flexibility of having a property close to the CBD which provides a desired lifestyle and is easier to rent.
“There is a compelling case for another, larger interest rate cut next week, while any logic behind achieving a swift return to budget surplus in 2012/13 is spurious given current global economic conditions.” It is not clear whether lenders will choose to pass the full interest rate deduction to holders of home loans, as their own cost of funding is increasing due to debt problems in Europe and the US.
Detached house sales increased by 5.1 per cent in October 2011 following a 3.3 per cent decline in September. Sales of multi-units rose by 9.0 per cent in October following a 5.5 per cent dip in September.