Home owner grant boosts new house sales | National News

27th November 2008

Integrity New Homes' display model at Coffs Harbour.

THE sale of new homes rose strongly in October, the same month as government assistance to first time owners was tripled and interest rates cut further, a survey shows.

Yet despite the first monthly sales increase in four months for new homes, the housing industry says a recovery in the sector is still some way off.

New home sales rose by 6.7 per cent in October, the Housing Industry Association's (HIA) New Home Sales Report, shows.

The report was compiled from a sample of the largest 100 residential builders and showed that total residential sales (including new home sales and apartments) rose 4.5 per cent in October.

HIA chief economist Harley Dale said despite the better monthly performance, a recovery still eluded the industry.

"It will be a long road back, but it is hoped that an improvement in new home sales in October could mark the beginning of a stabilisation followed by improvement in leading housing indicators over 2009," Mr Dale said in a statement.

The rise in home sales follows the tripling of the first home owners grant to $21,000 for the purchase of new homes in mid-October.

Grants for first home buyers who purchased established homes were doubled to $14,000.

The Reserve Bank of Australia (RBA) cut interest rates by one per cent in October following a cut of 25 basis points in September.

The RBA has since cut rates by a further 75 basis points this month, to 5.25 per cent.

The HIA survey showed detached house sales increased by 6.7 per cent, although the sale of apartments dropped by 8.6 per cent in October.

Overall residential sales in Queensland increased by 24.9 per cent and 20.3 per cent in Victoria.

Sales in South Australia gained just 0.5 per cent, while sales in Western Australia fell by 12.9 per cent and NSW experienced a 14.7 per cent drop.

The varied results showed it would take more than just further cuts in interest rates to fix the industry, Mr Dale said.

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