Any overheating in the property market is certainly going off the boil now with Sydney once again reporting lower auction clearance rates. The Melbourne auction rate also slid sharply lower under high numbers ahead despite the Melbourne Cup long weekend. Steep prices and stricter regulations are driving investors to look at other areas such as Newcastle and Coffs Harbour in New South Wales and suburbs on the outskirts of Melbourne further south. Meanwhile the Canberra market is showing strength while both Adelaide and Brisbane have been experiencing higher clearance rates on average over the last few months.
Real Estate figures
The quarterly Commonwealth Bank State of the States report has again put NSW as the top economy in the country ahead of Victoria and the Northern Territory. The report says that housing finance has helped keep NSW in the top spot as well as population growth, retail trade and dwelling starts. Victoria’s main strengths are population growth, housing finance and dwelling starts. Meanwhile falling population growth and housing finance has tipped the Northern Territory into an equal third place with Western Australia. Tasmania is the bottom of the economic performance table with high unemployment and low spending and equipment investment but it is showing signs of improvement.
The HIA New Home Sales Report shows a dip in monthly new homes sales, down 4 per cent in September and down 5.2 per cent since the April peak. The decline was reflected in both detached and stand alone properties and tighter lending conditions are believed to be the cause. HIA is now forecasting around 200,000 new home starts in the 2016 financial year, down for the record 212,000 achieved in the 2015 financial year. Further falls to 173,500 and 165,400 are expected in the following two years.
Commentary
FNN spoke to Diwa Hopkins, Economist as the Housing Industry Association about the reasons behind the forecast drop in starts.
“What we’ve seen in recent updates to new credit conditions particularly in relation to the housing sector is increasing restrictions so since 2015 we’ve seen APRA put the brakes on lending to investors but more recently we’ve seen the major banks increase their mortgage interest rates so this affects both investors and owner occupiers. We think that this development along with other cyclical factors such as slowing population growth will dampen the level of activity in 2016/17 compared with what we had previously expected.”
Australian auction results
Looking at this week’s auction results across Australian capital cities - Sydney recorded a 63 per cent clearance rate from 1083 properties for auction, Melbourne cleared 66 per cent from 490 properties, Brisbane had a 59 per cent clearance rate from 141 properties listed and Adelaide cleared 62 per cent from 115 listed auctions.
Commercial property sector
REA Group Limited
(ASX:REA) has announced it will acquire leading South East Asian company iProperty
Centuria Property Funds Limited
(ASX:CMA) will lift the leasing occupancy of the recently acquired 54 and 60 Marcus Clarke Street in Canberra from 76 per cent to 84 per cent.
Mirvac Group
(ASX:MGR) has entered into a joint venture with PAYCE Consolidated to purchase an interest in East Village retail centre in Zetland, Sydney for $154.7 million.
SCA Property Group
(ASX:SCP) has upgraded its FY16 earnings guidance following the acquisition of three more shopping centres located in Griffith and Tamworth in NSW and Mackay in Queensland.
