New home market strenghtening: CommSec's Craig James

More and more Australians have been either building or buying homes, according to the latest Australian Bureau of Statistics (ABS) data.

The number of new owner-occupier housing loans sits as a five year high. And the boom in home construction has been the key driver of a lift in retail activity. 

The December ABS data, excluding the refinancing of dwellings, has the number of loans up by 2.5%, the biggest rise in 15 months.

Craig James at CommSec Research noted the number of owner-occupier home loans across states/territories rose the highest in NSW (+6.6%); Victoria (+1.5%); Queensland (+0.4%); South Australia (+4.5%); Western Australia (+1.6%); Tasmania (+2.3%); Northern Territory (+1.9%); ACT (+1.8%).

"Interest rates are at record lows and we haven’t been building enough homes to house our growing population," said James.

"So it is hardly a surprise that demand for homes is at record highs.

"And while higher prices may be inducing some caution by those buying homes, the demand both by owner occupiers and investors continues to strengthen.

"In fact the value of loans by owner-occupiers and investors to build new homes rose to $2.92 billion in December – the highest reading on record.

"The result comes below the latest rate cut and was a reflection of a more stable interest rate environment as opposed to the discussion of further rate cuts.

"No doubt the housing sector will see another lift in activity over 2015."