This week we’ll start with a look at the Sydney and Melbourne auction scene, where weekend clearances have strung together a spate of clearance results over 70 per cent. In Melbourne on the weekend, the 72 per cent clearance was the third consecutive rate to exceed the 70 threshold, marking the first occurrence of this since 2010. Melbourne’s recent weekend clearance rates have consistently tracked 10 per cent higher than the corresponding periods last year, while listing numbers have increased by roughly 100 each weekend.
Meanwhile, analysts say Sydney’s property market is continuing to fly on the back of a 70 per cent clearance rate on the weekend, following on from a three year high 78 per cent conversion rate the week prior, and 74 per cent the week before that. The Sydney auction market has now recorded 11 weekends with clearances in excess of 70 per cent, with two others just shy at 69 per cent. According to Australian Property Monitors, this performance in Australia’s two largest capital cities reflect a market where buyer confidence has risen over the past year.
With the federal budget in focus, we would be remiss not to touch on it. Most notably, property investors will be buoyed by the fact that Mr Swan has made no changes to the tax treatment of property investments. Less welcome is the expectation that annual national economic growth is expected to decline and unemployment is touted to rise. The better performing property markets are very much usually those with strong economies particularly in relation to high levels of employment. Otherwise, the declining economic activity predicted in the budget will place further downward pressure on interest rates, conceivably improving housing affordability.
Real Estate figures
The ABS says home loan approvals rose by 5.2 per cent in March, above expectations of a 4 per cent climb. There were 48,071 approvals in the month, while total housing finance by value increased 4.5 per cent to $22.98 billion.
Commentary
FNN asked Paul Bloxham, HSBC’s Chief economist, to give his take on the performance of the property sector so far in 2013 and in particular, house price trends:
“Well we’re seeing that house prices are gradually rising, they’re up about 3 per cent since the beginning of this year, they’re up about 4 per cent since their trough in the middle of last year, so we’re seeing that house prices are starting to rise. And really that’s what you’d expect, given where interest rates are. Mortgage rates are at their lowest level since 2009, they were a little bit lower than this just after the global financial crisis, but they’re still at very low levels.”
To watch more of the interview click
here.
Australian auction results
Looking at this week’s auction results across Australian capital cities - Sydney recorded a 70 per cent clearance rate from 265 properties for auction, Melbourne cleared 72 per cent from 240 properties, Brisbane had a 39 per cent clearance rate from 29 properties listed and Adelaide cleared 64 per cent from 21 reported auctions.
Commercial property sector
Stockland’s
(ASX:SGP) new boss has revealed a management team shuffle will occur at the property development company. Investment banker Simon Shakesheff will step into the head of strategy role in mid August, while, chief financial officer Tim Foster and head of residential Mark Hunter will depart the company.
DEXUS Property Group
(ASX:DXS) has sold five of its European industrial properties for $21.3 million. The property developer has just one European property remaining after the sale, an industrial distribution facility in Berlin currently on the market. CEO Darren Steinberg says the sale of the majority of the company’s European portfolio delivers on its strategic objective of divesting out of its non-core offshore markets to concentrate on Australian CBD office markets.
Mirvac Group
(ASX:MGR) has successfully completed a fully underwritten $400 million capital raising from institutional investors. The funds will be directed towards the property developer’s $584 million purchase of seven office assets from GE Real Estate Investments Australia.
Also this week, Mirvac Group
(ASX:MGR) has reaffirmed its full-year earnings per share guidance and says it’s on track to reach its target of 10 per cent return on invested capital for the development division in 2014. The property developer maintained its operating EPS guidance range of 10.7 to 10.8 cents per stapled security, in its third-quarter operational update.
