Property: heartbreaking prices
Property editor Marika Dobbin takes a look at the property results from the weekend.
New home sales jumped in January, rising the most in five months, as investors and up-graders took advantage of low interest rates and a strengthening economy to snap up property. Victoria's sales soared.
Nationwide the volume of homes sales jumped 9.5 per cent after falling 4.6 per cent in December, according to data from the Housing Industry Association. The gain was the most since August when they leapt 11 per cent.
''With home prices and interest rates on an upward march, affordability is going to suffer in 2010 until the new stock comes on stream later in the year,'' said TD Securities senior strategist Annette Beacher.
January's surge in home sales comes amid increasing concerns that house prices have been rising too quickly to be sustainable. The First Home Owner Buyer's grant boost enacted last year during a period of low interest rates has induced an estimated 250,000 people into the housing market. The Reserve Bank began raising rates in October, with markets and analysts expecting another rate rise - likely to squeeze new home buyers among other borrowers - tomorrow.
In Victoria, new home sales rose 17.1 per cent, while in New South Wales house sales increased by 3.1 per cent. They rose 6.3 per cent in Queensland, 6.6 per cent in South Australia and 12.2 per cent in Western Australia.
Prices for house and units rose 1.8 per cent in January, according to RP Data-Rismark said last week, the most in five years, based on preliminary numbers.
''The successful policy of targeting new home construction via the tripling of the grant to first-time buyers has now gone, interest rates are on the rise, and the considerable supply side obstacles to boosting the new housing stock, such as land supply and skilled labour constraints, are still clearly evident,'' said HIA chief economist Harley Dale.
Mr Dale said activity from investors and upgraders, if sustained through the first half of the year, could trigger a new round of building offering relief for a "very challenging period for residential construction."
Detached house sales rose 10.1 per cent in January, while multi-unit sales achieved their second consecutive monthly increase rising 4.1 per cent.
czappone@fairfax.com.au
BusinessDay
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