Perth slumps as Melbourne soars
Victoria continues its upward trend with home sales soaring again in April, rising by 27.6%, according to the Housing Industry Association (HIA). Nationally, new home sales rose 6.2% in April, up from a 0.9% seasonally adjusted increase in March. Apartment sales fared slightly better, jumping by 8%. Auction listings in Victoria have also jumped to record levels, with the Real Estate Institute of Victoria announcing an expected 1,200 auctions over the next two weeks.
“Without Victoria, detached house sales at the national level would have been lower in April,” said HIA chief economist Harley Dale, who argued that interest rates are blunting new home sales activity. “There is increasing evidence that higher interest rates have started to take a significant bit out of housing demand over the last two months.”
However, Victoria is showing little signs of slowing, thanks in part to the government’s decision to extend the first homebuyers grant in the state. “The strong response by first homebuyers to the new home grant underlines how effective the Victorian stimulus has been in lifting residential building activity. However, there are some warning signs, with buoyant demand eating into the availability of serviced land,” said Dale.
For Perth, the news is not so positive. The collapse in first homebuyer activity is causing a slump in Perth which has recorded a decline in first homebuyers from 2,322 in April last year to 988 in April 2010. “The effects of six interest rate rises and the collapse in first homebuyer activity since January is now evident in all market indicators for Perth and Regional Western Australia,” said Real Estate Institute of Western Australia (REIWA) president Alan Bourke. “The artificial boom of first-time buyers triggered by the Commonwealth grant has now well and truly ended.”
Sales have also fallen for the state, with REIWA data indicating activity has fallen by 15% in Perth during April. “This trend is matched with a steady increase in listings which have risen from 12,700 at the end of March to 13,400 in mid-May,” said Bourke.
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