Rate cuts begin to spur property

Real Estate

The benefits from the Reserve Bank of Australia’s (RBA) recent rate cuts are starting to spur improvement in the property sector. House prices are rising across the country and the commercial property sector has delivered encouraging results and outlook statements.

Australia’s Big Four Banks are facing increasing calls to cut interest rates independently of the RBA as profits from new mortgages soar. As the property sector starts to feel the benefits from a 1.75 percentage reduction in the key cash rate since November 2011 mortgage holders have asked the banks to consider adjusting rates outside the official interest rate monthly cycle. 

Real Estate figures

House values in Australia’s five largest cities have risen 1.1 per cent. According to RP Data’s property market indicators Sydney home values have gained 3 per cent, matched by Perth also rising 3 per cent while shares in Brisbane and the Gold Coast gained 1.1 per cent. Melbourne and Adelaide have both reported falls of 1.3 per cent. The property data provider reports Sydney’s median house price value rose to $582,500 and Melbourne’s median value dipped to $430,000 while the national median across Australia is $475,557.
 
Commentary

FNN spoke to John Trudgian, a partner from Williams Inference, about the next global market moving trends - including trends in the commercial real estate sector:
 
“The square footage per employee is shrinking and has been shrinking for some time and is continuing to shrink. And there is a number of reasons for that. One is the obvious one is to save money. It’s cheaper to have less floor space. But, I think also with demographics young people don’t see the corner office or a separate office as being a high status item any longer. They prefer to work close to their colleagues and that should spur collaboration and creativity.” 
 
Australian auction results

Australian’s largest auction markets have strengthened despite a jump in listings: Sydney recorded a 76 per cent clearance rate from 316 properties for auction, Melbourne cleared 72 per cent from 341 properties, Brisbane had a 48 per cent clearance rate from 40 properties listed and Adelaide cleared 66 per cent from 31 reported auctions.
 
Commercial property sector

Shopping centre owner Federation Centres Limited (ASX:FDC), the re-branded Centro, has rebounded to a first half net profit of $116 million following its restructure in 2011. 
 
Construction materials maker Adelaide Brighton Limited (ASX:ABC) has forecast an improvement in residential construction after posting a record net profit of $154 million for the 2012 financial year. 
 
Australia’s only listed non-bank mortgage lender Homeloans Limited (ASX:HOM) has reported a 32 per cent rise in its first half net profit and notes signs momentum is building in the property sector. 
 
Retirement village owner and developer Becton Property Group Limited (ASX:BEC) has been placed in receivership after failing to secure another extension on its debt. 

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