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The new homes sector in Australia has seen strong growth in March 2015, taking sales volumes to their highest level since early 2010, according to the latest survey. Overall new home sales were up 4.4%. There was an 11.3% rise in multi-unit sales and a 2.6% rise in detached home sales in March, according to the latest new home sales report covering the largest volume builders by the Housing Industry Association. ‘The monthly rise in both the detached and multi-unit segments of the market is an encouraging result. However, the broader trend is that growth over the past year has been driven by multi-unit sales, while detached house sales have tracked sideways,’ said HIA economist Diwa Hopkins. ‘The residential construction sector continues to be the main bright spot in the broader domestic economy, with updates to the sector showing its ongoing strength. Lower lending rates will provide added support to residential construction activity, which is emerging as a key area of growth mitigating the effects of the downturn in mining investment and construction,’ she added. A breakdown of the figures show that detached house sales increased by 5.9% in Victoria, 4.2% in New South Wales and also 4.2% in Western Australia. They declined by 5.8% in South Australia and by 2.3% in Queensland. In the March 2015 quarter, detached house sales increased by 5.2% in Victoria and by 4.3% in Queensland. In Western Australia they fell by 6.4%, in New South Wales by 3.6% and in South Australia by 1.4%. However, the latest renovations report from the HIA shows that this sector of the property market is struggling. Over the past three years the volume of renovations activity has fallen by 15%. The performance of South Australia typified the national trend. Over the 2012/2013 period, renovations activity the state declined from $2.10 billion to $1.78 billion, a drop of 15.1%. ‘The importance of the home renovations market is often underestimated. Valued at $29.66 billion during 2014, the renovations sector accounts for over one third of all residential construction activity and about 2% of GDP,’ said HIA senior economist Shane Garrett. ‘Big ticket expenditure items like home renovation jobs tend to suffer disproportionately at times when economic growth is slow and when unemployment is drifting upwards. The deceleration of wages growth to its lowest rate in almost two decades has also challenged the renovations sector,’ he explained. The report envisages a further decline of 2.8% in renovations activity during 2015. However, activity will experience an 8.2% uplift between 2015 and 2018, as a result of low interest rates and the gradual recovery of economic activity. Continue reading →
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