New home sales post biggest gain in six years

Aubrey Gemignani/NASA via Getty Images

For all the talk of housing bubbles, apartment gluts and a steep deceleration in prices this year, Australia’s residential property market is doing pretty well.

Prices continue to trend higher, building approvals have risen for two months in a row and now new home sales have bounced.

According to latest figures released by the Housing Industry Association (HIA), sales of new properties surged by 8.9% in March after seasonal adjustments, rebounding strongly following a 5.3% contraction in February.

It was the largest percentage increase since January 2010.

For the quarter sales increase by 2.8%, although fell 1.3% compared to the same period a year earlier.

Over the month sales of apartments jumped by 16.3%, outpacing a strong increase of 7.0% for unattached housing.

For houses, sales increased in four of the five mainland states, led by Queensland with an increase of 13.2%.

Elsewhere sales in Western Australia, New South Wales and Victoria rose by 9.8%, 8.3% and 2.8% respectively. South Australia was the only mainland state to register a decline, falling 6.9%.

“This is another positive update for the residential construction sector,” said Diwa Hopkins, an economist at the HIA. “The bounce in March has moderated the downward trend that emerged in the second half of 2015. It’s also consistent with the trend in ABS new home building approvals.”

Hopkins suggests the data “provides a strong signal that new home building activity in 2016 will remain strong”.

This isn’t an unrealistic expectation, particularly given the cut in official interest rates earlier this week and no changes to the tax treatment of housing in the federal budget.

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