 New homes sales rise
Sales of new homes have seen a dramatic rise during the month of August, and Victoria leads the way with rising sales of 21.8 per cent. As buyers rush to the market before rates rises and the boost to the first home owner grant ends, sales have climbed in most states.
Nationally, sales of new homes rose in August by a surprising 11.4 per cent, according to the Housing Industry Association. This is a rise of 0.1 per cent in July.
NSW did record a sharp drop in sales, due to a struggling economy however this did not hamper the national rise.
New apartment sales rose a modest 7.5 per cent while stand-alone housing numbers rose an impressive 11.8 per cent.
Blomberg comments that in the three year history of the HIA monthly survey, this is the highest increase.
"The boost to new home construction from the tripling of the First Home Owner Grant for new dwellings will be apparent throughout the second half of 2009 and well into 2010," said HIA chief economist Harley Dale.
Queensland was second in the title for biggest gains with a jump of 20.9 per cent followed by Western Australia where gains of 15.1 per cent were seen.
NSW did see a slump of 11.3 per cent HIA said, and South Australia also saw a decline of 2.5 per cent..
With the boost to the grant due to be reduced as of next month, many first home buyers may have cottoned on to the $21,000 grant being offered by the federal government for first home buyers who build a new home.
The grant was doubled last October to $14,000 for existing homes and $21,000 for new properties as the Rudd government tried desperately to avoid a recession in Australia.
The grant will fall to $10,500 and $14,000 respectively from 1 October and will then be set back at original levels for both at the end of the year.
Recently, there has been growing speculation that interest rises are on the cards. The RBA is due to meet again for its monthly policy meeting in two weeks and many are expecting the cash rate to be left on hold for another month, but are predicting rate increases as early as November or December.
Variable mortgage rates will inevitably follow upwards, with some banks already raising fixed rates. While interest rates are so low, housing affordability is improved, but if rates start to climb again the industry could be in for a tough time.
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