New home sales grow in October

October saw new home sales in Australia move up from their slump and increase by 3.4 per cent, representing a marked improvement from what was a very weak few months, the Housing Industry Association (HIA) has revealed.

The HIA New Home Sales report, a survey of Australia's largest volume builders, suggests that Australian banks are offering more mortgages to consumers keen to get on to the property ladder.

However, the organisation stressed that the result was a mixed bag, with the headline increase largely being driven by a 31.4 per cent jump in the sale of multi-units over the course of the month.

HIA chief economist Harvey Dale admitted the figures are "modest" but hailed them as "a move in the right direction".

"Within the weak headline result for detached houses there were modest increases for New South Wales, South Australia and Western Australia, albeit from very low bases," he added.

Despite this positive news, Mr Dale insisted that there needs to be evidence of a sustained broad-based recovery in the market before anyone can feel comfortable that the situation is set to improve.

This uncertainty is a key reason why the Reserve Bank of Australia must cut interest rates when it meets on Tuesday, the economist explained, adding that a decision to make further reductions would bolster the possibilities of a "sustained recovery in house building" over the course of 2013.

According to the HIA, the second half of the year is likely to mark a low point in residential building for Australia, making things even more difficult for mortgage customers looking for a new property that falls within their price range.

Preliminary figures released by the Australian Bureau of Statistics showed a slight jump of 0.6 per cent in construction levels – ending five quarters of decline – but the property body suggested this represents a blip rather than a change in trend.

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