By Robert Carry

The number of new home sales fell by 4.5% in September 2009 following a strong surge in August, a survey by the Housing Industry Association (HIA) has found.

The number of sales of detached houses fell by 4.3% in September but for the September quarter sales were up by 4%. The number of apartment sales was down by 6.5% in September but up by 4% for the quarter due mainly to a burst of sales in August.

"We saw a late burst of sales from first home buyers in August ahead of the step-down in the first home buyers grant," said Dr Harley Dale, HIA's chief economist. "But the stimulus to new home sales from the First Home Owner Boost is now on the wane."

Dale added that with the first home segment weakening, further gains in new home sales will hinge on a return of upgrade buyers and investors. He pointed out that the current level of new home sales pointed to a shallow recovery in residential building which will lag the underlying requirement for new dwellings.

"Indeed there is a very real risk that costly delays in planning approvals and land shortages will combine to blunt the housing recovery, reversing the recent gains in housing affordability," continued Dale.

The HIA reported that the Prime Minister's offer to partner with the States and Territories in unlocking land for development through Commonwealth part-funding of urban infrastructure offers the best opportunity to drive down the cost of new residential development.

There were wide regional differences with detached new home sales in September increasing by 8.9% in New South Wales and 1.1% in Queensland. Sales fell by 12.7% in Victoria, were down by 1.1% in South Australia and by 11.1% in Western Australia.