The Reserve Bank of Australia’s (RBA) monthly decision on interest rates was again in the spotlight this week with the central bank deciding to keep the nation’s official interest rate unchanged at 3.5 per cent at its August board meeting yesterday. The move was in line with expectations and is the second straight month where rates have been left on hold. The current rate represents a three year low, following two rate cuts earlier this year totalling 75 basis points.
FNN recently spoke with Steve Keen, Professor of Economics and Finance at the University of Western Sydney, on whether both recent and future rates cuts will boost the property market.
To watch the full interview click here
Real Estate industry figures
The Australian Bureau of Statistics (ABS) has acknowledged a shortfall in its measurement of its quarterly house price index. The statistics provider says it will now extend the coverage to include all dwelling types. The changes are subject to assessment and available funding.
The ABS reported the number home loans approved in June was up 1.3 per cent from May to over 46,000, slightly below expectations.
Construction activity in Australia has contracted for the 26th consecutive month. According to the Australian Industry Group and Housing Industry Association, the performance of construction index dropped 2.2 points to 32.6 in July, with a read below 50 indicating contraction.
Residential property market
Australian Property Monitors has posted the results of auction clearance rates across Australia’s capital cities at the weekend. Sydney recorded a solid 68 per cent clearance rate although its 180 properties for auction was less than last week, Melbourne had a 52 per cent clearance rate from 144 properties, Brisbane 37 per cent from 34 properties and Adelaide 68 per cent from 18 reported auctions.
Commercial property sector
Lend Lease Group (ASX:LLC) has inked an exclusive deal with Crown Limited (ASX:CWN) to work with the casino operator to develop a six star hotel resort at Barangaroo South. The luxury hotel will stand at the north-western end of the commercial development which has gained the seal of approval from former Prime Minister Paul Keating.
“A well-designed hotel building standing apart from the three office towers is central to the precinct having a point of recognition identifying Barangaroo as a place other than an office development site,” Mr Keating said.
Crown is reportedly raising about $500 million via a hybrid issue as it prepares for the commercial development.
Clive Palmer is confident his proposal of redeveloping his Coolum resort at the Sunshine Coast will attract the support it needs, “I believe there is a strong willingness from people on the Sunshine Coast for a major job-creating project like this to happen,” he said.
The development which includes a casino and an international airport, is now in the hands of the community and local government to provide feedback. Mr Palmer said if his plans were rejected he will take his development proposals overseas. Full year results
Challenger Diversified Property Group (ASX:CDI) has posted a full-year net profit of $36.2 million. The result is down from the $51.5 million it reported last year which the infrastructure asset investor says was due to unrealised moves in interest rate swaps. CDI managed to boost its profit from operating activities to $44.8 million, up from $44.4 million for the same time last year. Its property valuations were also up by 2.2 per cent. CDI’s Fund Manager Trevor Hardie says, its full year 2013 earnings and distribution guidance have both risen by about 4 per cent and affirmed it is on track deliver further earnings growth.
Stockland (ASX:SGP) booked a 35 per cent decline in its full year profit. A fall in property valuations saw the property developer's net profit slump to $487 million to the end of June. Stockland maintains an uncertain outlook for the residential property market over the next financial year. Revenue and other income for the year fell 20.8 per cent. The diversified property group has provided three earnings downgrades over the year due to softening real estate markets. An unfranked final dividend of 12 cents per share has been declared. Stockland has extended its on-market share buy back that will run until it has acquired 10 per cent of issued capital or until the 17 August, whichever occurs sooner. The residential property developer sold two of its commercial property assets last week for $196 million. The proceeds of the sale will be used to fund the share buy back, maintain low debt, as well as build on its core businesses.