Against the worrying backdrop of continued contraction in the construction sector and first home buyer hesitation it seems Sydney is enjoying a fruitful run in the auction property market, with approximately $182 million in properties going under the hammer over the weekend. Analysts believe the recent glut of auction momentum is comprised largely of owner-occupiers upgrading to their second or third home. Things are however somewhat tougher in the realm of the first home buyer. Financial comparison website RateCity says falling interest rates are making mortgage repayments cheaper while deposit amounts are on the rise. The website says median price increases, while good for existing home owners, are making life difficult for new home buyers trying to poke their heads into the market. Growth in average house prices has increased the required deposit price by approximately $1,430 since 2012.
Real Estate figures
Australia's building activity continued to contract last month. The Australian Industry Group and Housing Industry Association’s Performance of Construction Index sank 6.6 points to 39 points in March, remaining below 50 for the 34th straight month which indicates ongoing contraction.
New home sales have fallen for the first time in four months, despite last year's interest rate cuts. According to the Housing Industry Association new homes sales fell 5.3 per cent in February, weighed down by an 11 per cent fall in multi-unit sales.
Commentary
FNN asked Paul Smith, a leading mortgage broker from Ray White Group’s Loan Market, for his opinion on the top three factors holding first home buyers back from entering the property market?
“The main issues that first homer buyers have to come by are usually the deposit size and matching their borrowing capacity to the type of house they’d like to purchase. The second point for many first home buyers is high mortgage insurance premiums deter many of them, and the third one is probably just the fear of committing to a larger debt. I think after the GFC some home owners felt safer to put money in a bank rather than take out a huge debt, and there’s still some confidence issues that weren’t around previous to the GFC happening.”
Australian auction results
This week’s auction results across Australian capital cities - Sydney recorded a 69 per cent clearance rate from 314 properties for auction, Melbourne cleared 64 per cent from 162 properties, Brisbane had a 60 per cent clearance rate from 17 properties listed and Adelaide cleared 50 per cent from 19 reported auctions.
Commercial property sector
The latest headlines from the commercial property sector:
Cedar Woods Properties Limited
(ASX:CWP) has paid $22.35 million to buy a site northeast of Perth’s central business district, located in a growth corridor.
Mirvac Group
(ASX:MGR) is on the hunt for a new CFO after its finance director Greg Dyer put in his resignation. The property developer says Mr Dyer will remain in an executive role until September to help with the transition.
Watpac Limited
(ASX:WTP) says Belgian construction giant Besix Group will buy out company director Kevin Seymour’s 15.6 per cent stake in the company.
