New home sales in Australia have surged, recording an 8.8% increase in October, according to the Housing Industry Association (HIA).

The rise was primarily driven by strong sales in New South Wales, Victoria, and Queensland, signalling a positive shift in the market.

HIA economist Maurice Tapang attributes the growth to easing building material costs, noting that the market likely passed its lowest point in mid-2024.

Supporting this trend, the number of loans issued for new home purchases and construction rose by 14.3% in the September 2024 quarter compared to the same period in 2023.

The HIA’s Housing Scorecard highlights Queensland as the nation’s top performer for home buying activity, spurred by strong population growth from overseas and interstate migration.

Western Australia and South Australia follow closely, driven by low unemployment, robust population increases, and stable interest rates, which continue to sustain demand for new home construction.

Renovation spending is also on the rise, reflecting a growing interest in upgrading existing homes.

Analysis by KPMG reveals that renovation expenditure has increased by 6.5% over the past five years and now accounts for 40% of total residential construction spending.