Housing affordability has improved for the seventh consecutive quarter across Australia, suggesting interest rate cuts from the Reserve Bank of Australia are working through the economy.
The Housing Industry Association-Commonwealth Bank housing affordability index released on Tuesday, showed a rise of 5.3 per cent in the September quarter, for a reading of 65.8. This is up by 15 per cent compared to the same quarter last year.
“Tentative signs of a recovery in transactions volumes should hopefully gather legs – another interest rate cut in early December would enhance the prospects of this occurring.
“An increase in home buyer action can occur without generating undue inflationary pressure and would assist a much-needed recovery in new residential construction activity,” Housing Industry Association chief economist, Harley Dale says.
HIA-CBA Housing Affordability Report recorded improved affordability in all seven capital cities. Sydney was the least affordable, with an index of 54.2, followed by Melbourne at 63.6 and Perth at 64.1.
Australia's $1.3 trillion mortgage market is set to grow up to five 5 per cent in 2013, according to a new report from Deloitte. Deloitte's Australian Mortgage Report 2013 predicts competition within the sector will be aggressive in the year ahead as more borrowers look to secure the lowest price.
A roundtable discussion of the report noted that despite the combination of interest rate reductions and stronger personal balance sheets, the current flat property prices combined with what was perceived as real systemic issues around consumer confidence, would be likely to keep borrowers sitting on the fence in 2013.
Commentary
SQM Research chief executive, Louis Christopher says there have been some big developments in recent days over auctions which is beneficial to all except those rigging the system. NSW Fair Trading officers have been turning up to real estate businesses unannounced and attending 20 weekend auctions, the result of which has been that up to five agents remain under investigation for breaches to the fair trading requirements of the Property Stock and Business Agents Act 2002.
Auction Results
Australian Property Monitors has reported Sydney’s auction clearance rate dropped from 62 to 60 per cent from 330 properties set for auction last week, Melbourne recorded a stagnant 65 per cent clearance rate this week with only 204 properties sold compared to 283 last week, Brisbane posted a mere 22 per cent clearance rate from 23 properties listed and Adelaide reported a 44 per cent clearance rate from 32 properties listed, slightly better than last week.
The South Australian Government has put out a bill on “bait pricing” a tactic used by real estate agents to unfairly suck in prospective home buyers. If the bill passes, it would be illegal for properties to be passed in at a higher price than the reserve, which must be set at no more than 110 per cent of the “advertised price”. Vendors will now become more conservative in price setting in auction advertising.
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Commercial Property Sector
Shopping Centres Australasia Property Group
(ASX:SCP) has debuted on the Australian Securities Exchange. The Woolworths Limited
(ASX:WOW) property spinoff is valued at $1.4 billion and will see Woolies shareholders receive one SCA Property stapled unit for every five shares held in Woolworths. The new property fund comprises of 69 neighborhood, sub-regional and freestanding shopping centers across Australia and New Zealand.
Commercial Property news
Investors in property funds retreated in the global financial crisis but many are now taking tentative steps back into the sector. Companies like Primewest, GDI Property Group and Sentinel Property Group have bought assets ranging from a Fremantle hotel in Western Australia to a warehouse in Richlands, Queensland.
Centuria Property Funds, is targeting an office tower in Sydney, and is likely to offer investors some upside due to the asset’s development potential.
Charter Hall Group
(ASX:CHC) is changing one of its diversified funds into an office trust. It is also working on a new industrial fund after its recent offer was over-subscribed and has opened its main diversified trust.
Centuria Property Funds, is targeting an office tower in Sydney, and is likely to offer investors some upside due to the asset’s development potential.
Demand for premium office space in Sydney's western corridor is set to increase over the next five years as the commercial component of the $6 billion Barangaroo project causes rents to rise up to 20 per cent, according to a report from Jones Lang LaSalle. Sydney's western corridor will account for about 30 per cent of the central business district's market for higher-quality office space by 2016.
REST Industry Super has snapped up the Eclipse Tower in Parramatta for $167.5 million in one of the largest plays for a Sydney office building this year.
