Aussie house prices led by Sydney
As Sydney keeps leading Australian property prices higher some analysts are now saying the Sydney market is heavily overvalued. Apart from Sydney and some parts of Melbourne there is no real upward momentum in the Aussie housing market at all. In fact, in mining states like Western Australia and the Northern Territory home prices are collapsing. However the soaring prices in Sydney are providing a massive headache for the Reserve bank which is trying to spark economic growth whilst also keeping a lid on boom property conditions in Sydney. Whilst some economists are expecting a further rate cut in May, others are convinced the RBA will not raise rate simply because of the growth in Sydney property prices.
Real Estate figures
The AIG/HIA Performance of Construction Index climbed 6.2 points into positive growth territory of 50.1 in March. There was a reversal of the three month contraction trend in house building activity which was up 10.4 points to 55.8. Apartment building also continues to strengthen, up 1.8 points to 54. Commercial construction along with mining-related engineering construction continues to fall.
Meanwhile new home loans to owner occupiers in South Australia are falling well below the rest of the country. Loans for those purchasing brand new homes were down 17.4 per cent on a year ago with the three month figure down 11.7 per cent. Established home loans are down 7.4 per cent whilst activity in the first home buyer market was a worrying 34.3 per cent down on 12 months ago.
And an ABS report on housing finance figures showed that lending to investors has fallen for the second month in a row. Total housing finance was down 1 per cent in February, with investor loans sliding 3.4 per cent. The figures signal the tighter rules around investment lending may be starting to take effect on the market as a whole.
Commentary
FNN spoke to Geordan Murray at HIA about the drop in investor lending.
‘The latest figures showed that investor finance has eased very slightly. The financial market regulators in APRA and the RBA have been paying close attention to developments in housing finance or lending to investors. So it will be interesting to see the developments in that particular part of the market throughout this year to see how lenders and market participants have responded”
Australian auction results
Looking at this week’s auction results across Australian capital cities - Sydney recorded a record 87 per cent clearance rate from 533 properties for auction, Melbourne cleared 77 per cent from 562 properties, Brisbane had a 42 per cent clearance rate from 94 properties listed and Adelaide cleared 79 per cent from 65 listed auctions.
Commercial property sector
Diploma Group
(ASX:DGX) has confirmed it has sold the Quest Rockingham development to an undisclosed buyer for $22 million.
The proposed merger between Federation Centres
(ASX:FDC) and Novion Property Group
(ASX:NVN) is one step closer with approval from the Supreme Court of NSW for a shareholder vote on the proposal.
GDI Property Group Limited
(ASX:GDI) has exchanged contracts to purchase a $38.7 million office tower at 80 George Street in Parramatta, New South Wales.
Shopping Centres Australasia Property Group Limited
(ASX:SCP) has inked a deal to buy the Whitsunday Shopping Centre for $47 million.
