Housing finance figures have shown a modest response to recent interest rate cuts. According to the Australian Bureau of Statistics (ABS), housing finance for December decreased by 0.1 per cent and follows marginal increases late last year. The figures also show first-home buyers are being more cautious with only 14.9 per cent taking out loans in December, the lowest since 2001.
Last year, state governments made dramatic changes to the extra benefits available to first-home buyers. The Victorian government cut out its $7000 grant and the NSW and Queensland governments cut their $7000 grant to buyers of second-hand homes, replacing it in October, with a $15,000 grant to those buying new homes.
Some analysts are pointing to evidence that suggest house prices are making a slight recovery and squeezing young buyers out of the market.
Real estate figures
The ABS has released lending finance figures which lifted by 8.6 per cent in December. Personal lending also edged up by 0.2 per cent for the month.
The Australian Industry Group and Housing Industry Association's performance of construction index fell 2.6 points to an index level of 36.2 in January. A reading below 50 indicates contraction.
Commentary
Turning now to commentary and FNN spoke to Professor Warwick McKibbin Chair in Public Policy at the Crawford School at Australian National University and Former Reserve Bank of Australia Board Member, on where he sees the key cash rate moving this year.
“Well it could move anywhere. If there is a crisis in Europe it could well go down. My guess is though that it will probably be more likely to be higher than it is today. And, the main reason is that these asset price movements around the world are beginning to become very concerning. Not just in Australia, but you’re seeing asset prices, particularly houses in Hong Kong and in Thailand, really pushing the central banks to tighten their policies. This is a global asset bubble being driven by very low interest rates in Europe, Japan and the US. And, Australia is not immune from that. And so, I think the Reserve Bank will really decide they have to respond, for example, to the recent increase in house prices in the last quarter of last year [Q4, 2012] which were quite surprisingly high.”
To watch more of the interview click
here.
Auction results
Sydney cleared 62 per cent from 137 properties for auction, Melbourne had a 67 per cent clearance rate from 113 properties, Brisbane 44 per cent from 27 properties and Adelaide cleared 36 per cent from 43 reported auctions.
Commercial property sector
Property giant Mirvac Group
(ASX:MGR) has revealed a 69 per cent slump in first half net profit to $55.2 million, weighed down by a string of project write downs across the country. Mirvac says it’s on track to deliver its full year operating earnings. The company declared a 4.2 cent unfranked dividend.
Stockland
(ASX:SGP) has posted a $147 million first half loss following a write down on the value of residential developments amid a soft housing market. The property developer expects full year earnings per share to decline more than previously forecast.
GPT Group (ASX: GPT) has more than doubled its full year net profit thanks to another surge in the value of its property portfolio and exceeding expectations. Looking ahead, GPT expects earnings per share growth of five per cent this financial year due to higher rent and occupancy rates.
Charter Hall Group
(ASX:CHC) has inked a deal to buy an office tower in Sydney for $172.5 million. Charter Hall Group expects the office tower to generate a rental income of $15.1 million on a fully leased basis.
