Home sales rose in June and national house prices were also up in the June quarter, however a Housing Industry of Australia quarterly report has suggested widespread decline in the housing market. In the commercial property sector real estate investment funds are expected to deliver strong earnings growth in the current financial year thanks to a declining cost of debt.
Real estate industry figures
Australian capital city house prices have come in above expectations, rising 0.5 per cent in the June quarter according to the Australian Bureau of Statistics. The result compares to a 0.1 per cent decline in the previous three months. In the year to June the house price index fell 2.1 per cent.
New home sales have risen in June due to a spike in multi-unit sales. According to the Housing Industry Association’s (HIA) survey of Australia’s largest volume builders. Home sales rose 2.8 per cent for the month driven by a 15.7 per cent spike in apartments and townhouses. Detached house sales grew slightly by 0.7 per cent following a 2.0 per cent descent in May. House sales in Queensland and Victoria were the worst reported among the capital cities.
Building approvals in June dropped 2.5 per cent according to the Australian Bureau of Statistics (ABS) but falling less than expected. The results follow a 27 per cent surge in May.
The ABS also released private sector data this week. Private lending for June rose 0.3 per cent in line with expectations and is slightly softer than the month before.
Fairfax Media Limited (ASX:FXJ) owned Australian Property Monitors has reported national house prices rose 0.4 per cent in the June quarter. Apartment and townhouse prices eased by 0.8 per cent for the same period.
HIA says its June quarter trades report has confirmed widespread housing weakness. Its survey of builders and sub-contractors, highlights the increase in availability of skilled labour amid a decline in new home building and renovations activity.
HIA has also advised the Council of Australian Governments will conduct a review into the cost of construction.
Residential property market
Australian Property Monitors has posted the results of auction clearance rates across Australia’s capital cities at the weekend. Sydney was slightly up from last week, recording a 61 per cent clearance rate from 222 properties for auction, Melbourne also marginally up with a 59 per cent clearance rate from 111 properties, Brisbane 31 per cent from 21 properties and Adelaide 48 per cent from 23 reported auctions.
Commercial property sector
Australand Property Group’s (ASX:ALZ) shares have jumped almost 10 per cent in the past two weeks. The real estate developer reported a 6 per cent increase in its half year net profit last week compared to the same time last year and forecast a rise in its full-year operating earnings by about 3-4 per cent.
Real estate investment trusts are expected to deliver strong earnings growth thanks to a declining cost of debt. Analysts have forecast 3.4 per cent earnings per share growth for the current financial year.
Growth in the resources sector has seen a rise in hotel profits. Hotels located in capital cities within resource rich states are seeing the benefits. According to STR Global data, Brisbane showed 4 per cent average room rate growth in the year to date and a 1.1 per cent rise in occupancy levels. Perth recorded a 3.8 per cent increase in occupancy levels and average room rates were up 12.8 per cent.
CFS Retail Property Trust (ASX:CFX) reported softer sales growth from its specialty retail stores. CFS saw a 1.7 per cent decline on a comparable basis with its department stores sales sliding 2.5 per cent.
Westfield Group (ASX:WDC) is reportedly planning to invest an extra $4.5 billion into major British shopping centres in the coming years. Westfield entered the UK market in the year 2000. Mr Lowy has noted the current lull over the economy but says London is a resilient city and the company believes in it for the long term.
Aspen Group (ASX:APZ) has downgraded its full year guidance due to a marked deterioration of several development syndicates over the last three months. The Perth based developer expects its results to be between $33 million and $34 million. Aspen has been in a trading halt since late last week after it announced $95 million worth of non-cash balance sheet impairments.