Residential property: under or over supply?

Morgan Stanley may have turned what we understand about the property market upside down. Based on Australian Bureau of Statistics (ABS) 2011 census figures released last month researchers at Morgan Stanley have revealed Australia may have an oversupply of homes, 341,000 to be exact.

The federal government’s 2011 National Housing Supply Council data, shows a housing undersupply of 228,000 based on census figures from five years ago. However, Morgan Stanley admits its new analysis is “simplistic” and is not suggesting the property market is significantly oversupplied but rather to show that calculations of under and over-supply are easily manipulated and subject to statistical error.

Real estate figures

Property research house SQM Research has reported the level of residential stock increased in June rising by 1.7 per cent on a national level to over 386,000.

ABS housing finance for May has come in below expectations, revealing the number of home loans approved for the month fell 1.2 per cent from the previous month, to 46,120. Total housing finance by value was also down 1.4 per cent to $20.19 billion.
 
Despite the Reserve Bank of Australia cutting the cash rate 1.25 percentage points since the end of last year the Australian construction sector has contracted in June for the 25th straight month, with PCI remaining flat at 34.8, according to the Australian Industry Group’s Performance of Construction Index.

Residential sector   

Australian Property Monitors has posted the results of auction clearance rates across Australia’s capital cities at the weekend. Sydney recorded a 56 per cent clearance rate from 188 properties for auction, Melbourne 46 per cent from 161 listings, Brisbane 34 per cent from 40 properties and Adelaide 31 per cent from 25 reported auctions.

Commercial sector

Brisbane has been ranked fourth amongst ten, as the most sought after city for hotel investment, according to a recent survey by Jones Lang LaSalle Hotels. No other Australian city was included on the list.

Lend Lease Group (ASX:LLC) has secured $2 billion worth of funding for the first two office towers at its Barangaroo South development in Sydney.

Real estate fund manager Folkestone Limited (ASX:FLK) has inked a deal to buy Austock Group Limited’s (ASX:ACK) property funds management business. The deal said to be worth $11 million and is pending Folkstone shareholder approval.

Leighton Holdings Limited (ASX:LEI) and Mirvac Group (ASX:MGR) could partner to develop the $5.6 billion Perth City Link  'Urban Renewal Project'. The two companies are required to submit detailed proposals for the development.