New home sales rose to their highest level in 13 months in March, as the first-home buyers grant drove demand.
Total new home sales rose by 4.2% last month to 8210, accelerating from the 3.9% growth pace in February, according to the Housing Industry Association. The increase marked the third month of gains and is the highest since February of last year when sale reached 8667.
''It is clear that in the first quarter of 2009 the project home building market was buoyed by the First Home Owners Boost for new dwellings together with very low variable mortgage rates,'' said HIA Chief Economist Dr Harley Dale in a statement.
''The First-Home Owners Boost for new dwellings is clearly lifting residential building activity and securing jobs within the Australian economy,'' he said, calling for an extension of the program past its June 30 cut-off.
Federal Government leaders, including Prime Minister Kevin Rudd, have hinted they intend to scale back incentives for first-home buyers, announced in October as part of the first round of stimulus spending aimed at reversing the economic slump. The current grant rises to as much as $21,000 if the purchase is for a newly built residence.
The program is aimed at jumpstarting home building and lending, two key areas critical to the Australian economys growth. It is also designed to alleviate the shortage of homes in the country, which has made real estate less affordable for first time home buyers.
The National Housing Supply Council estimated a shortfall of 85,000 houses in Australia last year.
Official home loans data, while showing some life since the emergence of the stimulus, gained only 0.4% in February, according to the ABS.
NSW leads
Among the states, detached home sales jumped 4.1% in March, led by New South Wales, where they increased 15.2%.
''While the rate of growth in sales reflects to an extent the low base from which a recovery is emerging,'' the HIA report said, ''there is no doubt that the previously mentioned triple boost from low interest rates, stimulus to first-home buyers, and builder discounts have injected some life into a previously moribund new home building market, especially in Sydney.''
Sales of detached houses also jumped 14.6% in Victoria and 7.3% in Western Australia, the HIA said.
Low interest rates and the first-home owners' boost are having a targetted effect, spurring house sales but leaving multi-unit sales ''at very weak levels,'' the HIA said.
Sales of apartments rose 4.7% in March, following a flat February and four straight months of falls, HIA said.
''This reinforces the fact that while investor enquiries have increased in recent months, actual building activity in the residential investment space is still heading south, a concerning sign for low and lower middle income rental households.''
Although investor enquiries in apartments and town houses have increased in recent months, the building of the units remains stalled, a concerning sign for low and lower middle income rental households,'' HIA said.
czappone@fairfax.com.au
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