Low interest rates have kicked in with some positive signs of recovery in the new house sales market.
Private detached house sales in South Australia increased in the month of September 2013, reaching their highest level in over two years, the Housing Industry Association New Home Sales report showed.
The report, a survey of Australia’s largest volume builders, reported total seasonally adjusted private detached house sales in South Australia increased by 4.6 per cent in the month.
While the numbers are up, the base from which they come is a low one, the industry body said.
“There was a weak result in July and at that point the recovery appeared to be losing some momentum so this September outcome is a very positive development,” HIA Regional Executive Director, SA, Robert Harding said.
“This latest result for new house sales needs to gather further steam.
“Clear upward momentum across other indicators of SA’s residential construction sector needs to occur over the foreseeable future,” he said.
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“The latest changes to the planning system announced yesterday are an encouraging development in the state’s policy settings to aid this process.
Total new home sales hit a two-year high in September quarter, according to the Housing Industry Association.
The news was better on the national front; new home sales lifted by 6.4 per cent in September, the fastest monthly growth since April last year.
The increase was underpinned by a 4.5 per cent rise in detached house sales and a 19.9 per cent jump in multi-unit sales.
“Total new home sales reached their highest level in over two years in September 2013,” HIA chief economist Harley Dale said.
“Given the recovery in sales is occurring from a record low and that the upward momentum appeared to be stalling in mid-2013, this September outcome is very positive.”
Dale said the strong September result for new home sales needs to gather further steam and clear upward momentum for building approvals and new housing finance needs to occur over the foreseeable future.
“These outcomes would provide confidence that the first round new home building recovery seen in 2012-13 can gather legs this financial year,” he said.
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The Australian Bureau of Statistics released its latest figures today; new home building approvals rose 14.4 per cent across Australia in September, much better than the forecast rise of 2.8 per cent.
Approvals for private sector houses rose 1.5 per cent, but most of the gains was in the ‘other dwellings’ category, which includes apartment blocks and townhouses, and was up 31.8 per cent.
JP Morgan economist Tom Kennedy said the gain in higher density dwellings made the headline building approvals figures look quite good.
“Increases of that size are usually accompanied by a large payback the following month,” he said.
“So to get a better read on this we should have a look at the data over the next few months and see how that general trend is playing out.”
Mr Kennedy said the gain in the less volatile detached houses category has been building on consistent gains over the past few months.
“The residential property market is improving and is ticking higher,” Mr Kennedy said.
In the year to September, total building approvals gained 18.6 per cent.
National Australia Bank senior economist Spiros Papadopoulos said although the September rise was mainly driven by the approval of multi-unit buildings, it showed that the housing market was continuing to recover.
“In trend terms, we are seeing a gentle recovery happening in building approvals,” he said.
“We are seeing small gains in private housing, which is supportive for dwelling investment going forward.
“From an economywide perspective, there are more jobs and labour resources that go into building one house than building one apartment.
“You’d much rather have, from a dwelling investment perspective, 5,000 new homes being built than 5,000 apartments because there’d be a lot more job creation.”
Mr Papadopoulos said the building approvals now needed to translate into actual building before people could start feeling confident about a construction recovery.
