Low rates fail to spur home buyers

Real Estate

Four interest rate cuts in 10 months have failed to attract potential home-buyers into the housing market. The latest figures released by the Australian Bureau of Statistics have shown home loans approved in July fell one per cent. 44,804 home loans were approved in the month. Total housing finance dropped 1.8 per cent to $20.05 billion. Economists were expecting figures to remain steady. 
 
For those who were wanting to sell their homes should be prepared for a long campaign or possibly re-think their asking price. According to SQM Research, over 300,000 homes were up for sale last month but more than half had been on the market for at least three months.
 
FNN recently spoke with RBS Morgans Chief Economist and Director of Strategy, Michael Knox on when we can expect to see the housing industry respond to the RBA’s monetary policy. 

To watch the full interview click here

The Queensland state government has handed down its first state budget, designed to boost the new home market. A $15,000 first home buyers grant will be given for any new house purchase. The prestige residential market has been dealt a blow, stamp duty on homes worth more than $1 million will jump to 5.75 per cent from 5.25 per cent.

Industry figures

ABS dwelling unit commencements for the June quarter have jumped 4.6 per cent. In the year to June, total housing starts declined 10.8 per cent. Queensland was the only state which rose for the quarter. The Northern Territory also spiked in the second quarter posting its third consecutive rise. 
 
Australia’s construction sector has contracted for the 27th consecutive month. Australian Industry Group’s performance of construction index has shown construction activity fell to 32.2 points in August, from 36.6 points the month before. A reading below 50 indicates 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 61 per cent clearance rate from 245 properties for auction, Melbourne had a 58 per cent clearance rate from 123 properties, Brisbane 35 per cent from 38 properties and Adelaide cleared 45 per cent from 27 reported auctions. 

Commercial property sector 
 
The transition into new leadership for Mirvac Group (ASX:MGR) will start earlier than expected, amid recent scrutiny of the group’s current senior management. A release issued to the market confirmed incoming CEO and Managing Director, Susan Lloyd-Hurwitz will start her new role on the November 5, six to eight weeks earlier than planned.  Some shareholders expressed concerns over the transparency of the company’s management changes with the surprise exit of Managing Director Nick Collishaw, announced a week before its profit results were released.
 
Lend Lease Group (ASX:LLC) has been in the spotlight this week as its subsidiary Abigroup misreported on projects worth more than $1.5 billion. The construction giant said earlier this week the financial errors will not affect its financial position or outlook but analysts are not convinced, with some expecting additional write downs at its Peninsula Link project in Victoria. 

Commercial property news
 
The battle continues between Mirvac (ASX:MGR) and Nathan Tinkler after the mining magnate failed to meet a deadline to pay $17 million earlier this month, for the agreed sale of industrial land. Both will return to the NSW Supreme Court next week, as Mirvac continues its efforts to pursue the debt.
 
Australian REIT Goodman Group (ASX:GMG) has formed a 50/50 development joint venture with the Abu Dhabi Investment Council as part of a strategy to expand modern logistics facilities in major logistics markets of Japan. A combined $US500 million of equity has been allocated to the deal known as the Goodman Japan Development Partnership which has an initial investment target of over $US1 billion with additional debt-raising capabilities. Goodman says it has raised more than $US100 million from institutions on behalf of a Japanese real estate fund with a second-stage equity raising expected to close later this year.
 
PrimeAg Australia Limited (ASX:PAG) announced it is looking to sell its assets as it reported its full year results. The farming group reported a 30 per cent drop in its full-year profit, amid falling commodity prices and a high Aussie dollar. Assets include properties in Liverpool Plains in NSW and central Queensland.
 
Boral Limited (ASX:BLD) has appointed Mike Kane as its new Chief Executive of its US operations. Former chief Mark Selway stood down in May this year, after rumours he had lost support from the board. Mr Kane who joined Boral in 2010 as President of Boral USA, says his immediate priority is to strengthen Boral’s financial position by maximising cash generation. The construction manufacturer revealed it had firmed its full year net profit by 5.3 per cent last month generating a net profit of $177.7 million.