New home sales plummet

New home sales plummet

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The number of new home sales waned in December 2009 as the number of first home buyers in the market continued to drop.

According to figures from the Australian Bureau of Statistics, new home sales fell by 4.6 per cent in December 2009.

The Housing Industry Association’s chief economist Harley Dale said that while a lift in new home sales in calendar year 2009 signalled a first round recovery in residential construction, there remained a big question mark over whether such a recovery could be sustained beyond 2010.

“New detached home sales increased by 7 per cent in 2009 with that recovery driven in large part by first time buyer-related activity. After seven years of trend decline we will finally see an increase in housing starts in 2010,” he said.

“It is clear that momentum is coming out of new home sales as the stimulus from first time buyer- related activity recedes. We don’t as yet, however, have evidence of trade-up buyer and investor activity gathering sufficient momentum to propel us into the second round of a new home building up cycle.

“This evidence is going to be harder to come by as interest rates move higher. Without a broad based recovery in private sector new residential construction we will face undue upward pressure on existing home values and unrelenting tightness in rental markets.”

Detached new home sales fell by 6.2 per cent in the month of December 2009, while the volatile apartment sector saw a rise of 10.4 per cent.

The number of new home sales waned in December 2009 as the number of first home buyers in the market continued to drop.

According to figures from the Australian Bureau of Statistics, new home sales fell by 4.6 per cent in December 2009.

The Housing Industry Association’s chief economist Harley Dale said that while a lift in new home sales in calendar year 2009 signalled a first round recovery in residential construction, there remained a big question mark over whether such a recovery could be sustained beyond 2010.

“New detached home sales increased by 7 per cent in 2009 with that recovery driven in large part by first time buyer-related activity. After seven years of trend decline we will finally see an increase in housing starts in 2010,” he said.

“It is clear that momentum is coming out of new home sales as the stimulus from first time buyer- related activity recedes. We don’t as yet, however, have evidence of trade-up buyer and investor activity gathering sufficient momentum to propel us into the second round of a new home building up cycle.

“This evidence is going to be harder to come by as interest rates move higher. Without a broad based recovery in private sector new residential construction we will face undue upward pressure on existing home values and unrelenting tightness in rental markets.”

Detached new home sales fell by 6.2 per cent in the month of December 2009, while the volatile apartment sector saw a rise of 10.4 per cent.

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