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Dr. Mark Sinclair
Dr. Mark Sinclair, Mentor Education

Lower mortgage rates drive new home sales

5 July 2013

RP Data has indicated that low mortgage rates have been a massive influence why new home values rose almost 4 per cent during 2012-13.

Over the month of May sales have hit an 18-month high showing their strongest levels since November 2011. After record lows in 2012 buyers in New South Wales, Victoria and South Australia are leading the charge with more than 7000 new homes recorded sold in May 2013, according to the Housing Industry Association’s New Home Sales report. Perth, Darwin and Sydney also showed highest gains with an increase of more than 5.6 per cent in the 12 months to June 30, while homes in Hobart, Brisbane and Adelaide recorded negligible growth.

Cameron Kusher RP Data senior research analyst has said that,“home values are likely to return to peak levels in as little as 12 months if the momentum is maintained, and stable employment levels have played a role alongside low interest rates in spurring on turnover in the residential sector.”

However Gavin Hulcombe, of Herron Todd White property valuers, hasn’t been as optimistic indicating that, “a full recovery in prices might take longer” with an “increase in the volume that is for sale being evident”, but “not to expect massive increases in value for a lot of areas”. “Any recovery is bound to be long and steady,” he has indicated.

Although these latest figures highlight a recovery in the housing market to 4.9 per cent since July 2012 the figure is still below the 7.4 per cent drop recorded between 2010 and 2011.

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