A new research by the Housing Industry Association has shown that the sales of newly built houses rose almost 9.5 per cent in the month of January against last month as investors and upgrade owner occupiers show interest in the markets.

The growth in the sales of the new homes is the strongest since September 2009. The sales for the free-standing houses rose more than 10 per cent and unit sales increased climbed 4.1 per cent after it recorded an increase of 14.5 per cent in December.

The research was conducted on the large volume residential builders in Australia. The sales rose the most in Victoria at 17.1 per cent after a few months of declining. The growth in sales in New South Wales, Queensland, South Australia and Western Australia is 3.1 per cent, 6.3 per cent, 6.6 per cent and 12.2 per cent, respectively.

Harley Dale, the chief economist of the association said that the second round of recovery has come and figure shows that construction of more new houses could be under way. He cites increasing interest rates as challenge for the markets.

"If we were to get a sustained improvement in new home sales over the first half of 2010 then that would suggest a second round new housing recovery is achievable, driven by private demand from upgrade buyers and investors," he said.

He also expressed that the recovery in the sector could make the situation better and the shortages of houses could be met this year. The report also shows that the investors and up-graders were offsetting the declining first-time buyers.