Housing shines amid more economic gloom

THE Government and Reserve Bank are gaining traction as they try to strengthen the housing market, with banks writing an increased number of home loans late last year.

But the relief for the sector comes amid broader economic gloom. Sentiment among consumers is weakening, while financial markets met the US Government's latest bank bail-out plan with scepticism.

The value of new housing loans - excluding loans for people wanting to renovate - rose 5.9 per cent in December, led by a surge in interest among first-home buyers.

New-home buyers accounted for a quarter of loans written in the month - the highest proportion since 2001. At the peak of the housing boom in 2004, new-home buyers made up just 12 per cent of the market.

And, in a pleasing result for the Government, which is lavishing support on the construction industry, the number of loans extended to people building new properties rose 9.9 per cent in December.

The rise prompted calls from developers for the Government to extend its increase in the first-home owner's grant.

As part of its proposed $42 billion stimulus package, the Government is also considering investing in property developments that have stalled through a lack of bank lending.

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Housing shines amid more economic gloom | smh.com.au