Australia new home sales rebound in September, likely to decline over next two years

New home sales in Australia rebounded during the month of September, although the underlying pace of movement indicates a likely decline over the next two years or so.

Australia’s monthly survey of large-volume builders said new home sales rose 6.1 percent in September after plummeting 9.7 percent in August, data released  by the Housing Industry Association (HIA) showed Friday. The monthly indicator is prone to wild fluctuations.

The number of seasonally-adjusted detached house sales increased by 2.9 percent in August 2016, following a decline of 7.4 percent in July, the data showed. However, 'multi-unit' sales dropped by 17.3 percent in July before recovering by 17.8 percent in August.

Further, in August 2016 sales increased by 12.1 percent in South Australia; 8.7 percent in New South Wales; 7.8 percent in Western Australia and by 4.2 percent in Queensland. Detached house sales fell by 5.0 percent in Victoria during the month.

Meanwhile, a recent report from UBS indicated that Sydney’s housing market was the fourth riskiest in the world. Home prices in the city have skyrocketed 45 percent over the past three years thanks to a flood of foreign investors, particularly from China.

"Despite being at the mature stage of this cycle we still face a situation where key leading indicators such as new home sales point to healthy levels of construction ahead, even if volumes will be down on the 2015-16 record high," said Harley Dale, Chief Economist, HIA.