New home sales have kicked off 2016 in strong form with residential construction expected to have another healthy year ahead.
Housing Industry Association data shows new home sales jumped 3.1 per cent in January, making it a second month of gains.
Detached house sales surged 5.8 per cent, while those of multi-units dropped by the same amount.
HIA chief economist Harley Dale said that while 2016 will be another healthy one for residential construction, it won’t surpass the heights of 2015.
“The new home building sector is crucial to Australia’s economic prospects in 2016 and should continue as a mainstay of domestic economic activity,” he said.
“That is provided policy considerations and debates underway now don’t have adverse consequences for confidence towards housing.”
Mr Harley said the result differs to the disappointing building approvals figures.
Approvals for the construction of new homes fell 7.5 per cent in January and 15.5 per cent annually.
There was a six per cent fall in detached dwelling approvals and a 10.8 per cent drop in the ‘other dwellings’ category, which includes apartment blocks and townhouses.
“(But) the overall trend evident across both leading indicators is very similar,” Mr Harley said.
“Once the current record pipeline is exhausted, new home construction activity will soften.”
Detached house sales rose in each of the five mainland states in the month, led by Queensland and NSW.