New home sales in Australia rose 4.2% month-on-month in March, representing the third straight month of increase, a report by the Housing Industry Association showed Wednesday.

Harley Dale, Chief Economist at the HIA said the Government's First Home Owners Boost helped lift residential building activity in March. The economist noted that an extension of the government's stimulus package for first homeowners would help secure jobs and tackle the chronic shortage of housing across Australia. The government's stimulus package and low variable mortgage rates were also helpful in increasing building activity in the first quarter.

In March, detached home sales increased 4.1% and were up 17% over the first quarter. In the first quarter, detached home sales grew in all the five mainland states, the first such increase since the beginning of 2007.

Detached home sales were up 15.2% in New South Wales, 14.6% in Victoria and 7.3% in Western Australia. However, sales declined 4.6% in South Australia and 16.9% in Queensland.

Further, sales of apartments and units rose 4.7% in March, but fell 14% over the first quarter.

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