As the Australian share market climbs to fresh highs could the property market be poised to follow suit? With interest rates at GFC (Global Financial Crisis) lows and the key S&P/ASX 200 index breaking through the 5,000 point barrier confidence has returned to investors. Premier property could receive the biggest boost with gains in financial markets linked to increased interest from potential prestige home buyers.
After it slashed the key cash rate by 1.75 percentage points over the past year [since November 2011], The Reserve Bank of Australia (RBA) has now noted emerging signs Australia’s housing market has improved.
Since cutting rates to a GFC low of 3 per cent at the end of 2012 the RBA says Australian lenders have reduced their standard variable housing rates by around 20 basis points. This reduction has taken the average interest rate on outstanding housing loans to only a little above its 2009 low, according to minutes from the RBA’s first board meeting of the year.
The RBA says building approvals have increased since the middle of last year and prices and rental yields in the established housing market have also picked up. Looking ahead the RBA has forecast improving conditions in the housing market are expected to provide support for dwelling investment.
Real Estate figures
Regional markets have posted see-saw value results, according to RP Data. The property data provider says dwelling values results across Australian regional areas have shown a mixed performances for non-capital city markets. From the 51 regional markets analysed for home value growth, 40 posted rises and 11 posted falls. House values in the Pilbara region in Western Australia gained 20.6 per cent while values in the Murray Lands region in South Australia dropped 9.6 per cent last year. The markets which recorded the largest increases in value were shown to be linked to mining or agriculture.
Commentary
FNN spoke to John Trudgian, a partner from Williams Inference, about the next global market moving trends and how people’s homes are changing:
“What’s happening with the demographics is fewer children - So the demand for family homes, traditional, what we would think of in Australia has suburban family homes, is static or declining. And, what’s really moving is inner city apartments, single living, and in particular in certain hotspot cities, New York, San Francisco, London, Beijing, and we would notice the same trends here in Sydney and Melbourne – That’s where the kids want to move, that’s where the jobs are, that’s where the opportunities are. They want to be close into the city and that is expensive. Often they don’t have very high salaries, so the obvious solution is smaller dwellings. And, they’re getting quite small at the moment, micro apartments is one of the hot trends.”
To watch more of the interview click
here.
Australian auction results
Sydney recorded a 72 per cent clearance rate from 204 properties for auction, Melbourne cleared 60 per cent from 203 properties, Brisbane had a 42 per cent clearance rate from 55 properties listed and Adelaide cleared 51 per cent from 39 reported auctions.
Commercial property sector
Australand Property Group’s
(ASX:ALZ) suitor GPT Group
(ASX:GPT) has affirmed its interest in its takeover target while Mirvac Group
(ASX:MGR) has not ruled out making a rival offer. Releasing results last week, GPT more than doubled its full year net profit while Mirvac’s first half net profit fell 69 per cent.
Shopping centre investor Charter Hall Retail REIT
(ASX:CQR) has forecast stronger full year earnings after returning to profitability in the first half of the 2013 financial year. The result came in the same period Charter Hall executed a number of acquisitions in line with its strategy of reweighting its portfolio to Australia by recycling equity from offshore assets.
New Zealand-based online auction house Trade Me Group Limited (ASX:TME, NZE:TME) says it is optimistic about future prospects after posting a 3 per cent rise in its first half net profit.
