Despite the recent announcement of the Reserve Bank’s decision to increase interest rates this afternoon, Darren Mehl, the General Manager for Marketing for Metricon, predicts continued strong growth in the new home market and points to a number of factors encouraging first and second home buyers into the market despite the buoyant market indicators.

"Despite data showing that established house prices in Australia rocketed up by 20% this year alone, it is important to understand that while all home values have done well, a lot of the growth in prices has come from the established home market. The starter and second homes offered by leading builders in the new home market have remained remarkably affordable in the last 12 months. All the serious contenders in the market have made great strides in forcing down build costs without compromising quality, through process improvements, we are currently the world leaders in delivering dream homes at remarkably affordable prices.

Although we have seen some upward pressure on land prices due to scarcity, the value of the homes we have been selling has remained remarkably constant, and any price increases have been relatively marginal, and almost entirely due to the prices of raw materials going up.

The market is still very competitive, and anyone who wants to build a new home can still find excellent value. At Metricon we have home and land packages in the region for under $300,000 within easy reach of the CBD and other population hubs, and must understand that money is still relatively cheap. Even with the Reserve Bank increasing the standard variable rate this afternoon, we must understand that rates are still at near-historic lows.

On top of that we have just extended our "Double the Grant" offer to First Home Buyers for a couple of weeks to make sure absolutely everyone who wants a new home has every chance of taking maximum advantage of the Government's support. Second and subsequent home buyers have more choice than ever before as we hone our design skills and create eco-friendly homes that suit the smaller block sizes that are now becoming more common.

Indeed, big growth in the market will come from the "knock down and rebuild “market in inner suburban areas. People are increasingly realising that it often makes more sense to replace than renovate, and this trend is increasing fast."

Mr Mehl said the company looked forward to the future with confidence.

"No-one would be disregarding the Government's warning that the world's economic recovery is still relatively fragile, and the news from Europe is worrying, but if we remain basically isolated from the worst of the economic storms doing the rounds the future still looks very bright. We are confident that we will sell a record number of homes in 2010."