Some good news for mortgage holders and potential borrowers, with the Reserve Bank lowering the cash rate by 25 basis points to 3.25 per cent at its October board meeting. The cash rate has been on hold at 3.5 per cent since June and is now at its lowest level since October 2009. The board noted that interest rates have been below their medium-term averages but says monetary policy changes will take time to work through the economy. The Housing Industry Association says the decision to cut rates was a welcome relief, particularly for the residential construction sector. Real Estate Institute of Australia says average loan repayments will be reduced by $50 per month.
Bank of Queensland Limited
(ASX:BOQ) was the first lender to pass on interest rate cuts, lowering its standard variable rate by 20 basis points, bringing it to 6.71 per cent on home loans. The bank is currently rewarding borrowers who switch their existing home loans, over $150,000, with a $1,000 cash incentive. Other major banks said their rates were under review.
Last week saw the Reserve bank of Australia release financial aggregate figures that showed moderate Australian credit growth for the third consecutive month. August saw a 0.2 per cent rise in total credit provided to the private sector, by banks and other lenders, while total credit has risen by 4.1 per cent over the year so far.
Industry figures
New home sales fell to a 15 year low in August according to the Housing Industry Association. New dwelling sales retreated 5.3 per cent. All states fell with Western Australia posting the biggest decline of 9.4 per cent.
Home values across Australia’s capital cities have jumped by 2 per cent in the three months to September according to RP Data-Rismark. The rise is the highest recorded in more than two years. Sydney values climbed 2.8 per cent, Melbourne jumped 3 per cent, Adelaide was up by 1.2 per cent and Brisbane by 0.8 per cent. There were falls in Perth and Hobart. Rismark International’s chief says further rate cuts would spur house prices, exceeding growth in household disposable incomes.
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 62 per cent clearance rate from 203 properties for auction, Melbourne’s property market was soft due to the AFL grand final and recorded an 80 per cent clearance rate from only 9 properties, Brisbane had 33 properties listed and posted a 21 per cent clearance rate and Adelaide was substantially down clearing 56 per cent from 7 reported auctions.
Commercial property sector
All eyes will be on Woolworths Limited
(ASX:WOW) this week as the supermarket giant is expected to unveil plans to sell about $1.5 billion worth of property to a new listed fund that is part owned by woolies. The news follows the sale of its Dick Smith electronics arm for $20 million. Woolies saw its annual profit drop by 14.5 per cent, the first time in more than a decade. The retailer revealed earlier this year that it intends to refurbish 170 stores nationwide and open 120 stores over the next five years.
Property investor Goodman Group
(ASX:GMG) says its industrial property fund, Goodman Australia Industrial Fund Ltd (GAIF), will launch a capital raising for more than $400 million. The fund has already received more than $400 million of conditional equity commitments, which it expects to increase on the back of talks with new and existing investors. Goodman Group advises talks with investors are continuing with a view to completing the capital raising by the end of this year. Goodman Group booked a net profit of $450.5 million in the 2012 financial year.
Commercial property news Lend Lease Group
(ASX:LLC) has reportedly inked a joint venture agreement with a privately-held Malaysian property developer. According to News Corporation the Australian construction company will be working as part of a joint venture to build a $1.3 billion regional retail centre, office, hotel and residences in Malaysia. Lend Lease has not as yet commented on the report.
The mining industry has driven construction work over the year to March according to the HIA-Cordell Construction 100 report. Public and private projects spiked 18.1 per cent. Among the country’s biggest builders, Leighton Holdings Limited
(ASX:LEI) owned John Holland Group were placed on the top of the list, acquiring contracts worth $7.09 billion during the year, with the majority focused in civil engineering. Leighton Contractors followed with $6.5 billion worth of contracts. As expected, the resource rich states of Western Australia and Queensland dominated construction.
