Home sales rose moderately in April, posting their fourth straight month of increases.
New home sales increased by 0.5 per cent in April, after growing by a revised 3.1 per cent in March, the Housing Industry Association said today.
The combination of low interest rates and the $21,000 first-home buyer's boost have lifted prospects for the housing industry, which is expected to convert to a recovery in home building activity from the June quarter of 2009, said HIA chief economist Harley Dale in a statement.
"We still have some negative news to digest. But most of it is historical. The leading indicators point to housing as an emerging bright spot in the economy,'' Dr Dale said.
But Australian Property Monitor's economist Matthew Bell said the figures indicated a pause in the purchase of new homes.
"While housing finance approvals for the construction and purchase of new dwellings were up strongly in March and April ... potential buyers may have been waiting to see what the government had in store for the first-home owner boost in the May budget before actually buying," he said.
"With the extension of the first-home owner boost in full until September, it's possible that people who had originally planned to buy a new home before June may defer the purchase for a few months, so the rate of increase may pause or even fall slightly in then next few months before picking up again in the third quarter.
Apartment sales drop
Sales of detached homes drove the overall sales increase in April, while apartment sales remained subdued.
Purchases of detached homes rose by 1.1 per cent to 7496 houses in April, HIA said. That was driven by the disproportionate stimulus to project home builders from the Federal Government, HIA said.
In mid-October, the Federal Government doubled the first home buyers grant to $14,000 for established dwellings and tripled it to $21,000 for newly built homes.
The Reserve Bank of Australia (RBA) lowered the cash rate by four percentage points to 3.25 per cent between September and February.
Subsequently, the RBA cut official interest rates on April 7 by 25 basis points to 3 per cent, a 49-year low.
Sales of flats fell by 5.6 per cent to 695 units, as investors continued to be reluctant to commit in an environment where it's difficult to secure credit.
In individual states, new home sales rose by 4.5 per cent in NSW during April, with Victoria up 1.5 per cent and Queensland 2.9 per cent higher.
South Australia experienced a 4.8 per cent fall and Western Australia declined 4 per cent.
Housing market holding up
The modest home sales rise will fuel more speculation about how well Australia's housing market is holding up through a global recession linked to huge drops in home values in the US, UK, Ireland and Spain.
RPData said last week that median home prices in capital cities rose 2.8 per cent in the four months to April, rebounding from a 3 per cent fall in 2008.
However, other gauges of real estate values have shown declines through the first quarter.
The Australian Bureau of Statistics showed a 2.2 per cent drop in the weighted average for capital city house prices in the March quarter, and a 6.7 per cent drop for the year to March.
czappone@fairfax.com.au
BusinessDay, with AAP
