New home sales in Australia struggled in December with demand for units fading

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New home sales fell by 1.9% in December with a big drop in demand for units, according to Australia’s builders.

Multi-unit sales slipped by 9.2% and detached house sales were flat (-0.2%).

However, over the quarter total new home sales were up 4.9%, according to the Housing Industry Association’s (HIA) New Home Sales Report.

And over the 12 months of 2014, sales were 14.4% higher than the year before.

Official numbers are showing an easing in the growth in home values across Australia. Home lending is also being dominated by investors who typically seek units rather than houses.

HIA Economist Diwa Hopkins says the key change in conditions to the residential construction sector in 2015 is the February cut to the official cash rate to a new historic low.

“However, it should be noted that this cut was made in the context of a mooted tightening of lending conditions in parts of the housing market,” she says.

“This year will be another healthy one for the national new home building sector.

“The two key leading indicators of new home building activity, new home sales and residential building approvals, both saw increases during the December quarter of 2014.This is a clear indication that actual residential construction activity will rise in the current early months of 2015, which is good news for the broader domestic economy in addition to the housing sector.”

In the final month of 2014, detached house sales increased by 2.8% in Western Australia and by 2.6% in Queensland.

Detached house sales declined 5.3% in South Australia, 2.6% in Victoria and 1.4% in New South Wales.

During the December 2014 quarter, sales increased by 13.4% in Western Australia, 11.6% in Queensland and 2.7% in Victoria. Meanwhile, sales declined by 10.3% in New South Wales and by 7.5% in South Australia

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