Adequate population growth to support high levels of residential construction exists in a total of 68 metro and regional markets, according to the Housing Industry Association (HIA). The Population and Residential Building Hotspots report gauged population growth to rank Australia’s fastest growing housing markets, unveiling the 68 areaswith population growth exceeding the national average of 1.6 per cent and residential building approval values of more than $100 million. The figures were gathered during the past financial year.
Taking a closer look at the report, it was Victoria which came out on top with 10 out of the top 20 markets, with Western Australia not far behind, featuring in 4 of the top 20- 3 of which ascended into the top 5. At the top of the pile however, was the ACT, with the suburb Bonner, which recorded a population growth rate of 99.7 per cent in the survey period. Belying their prominent placings in the survery, levels of housing construction activity in both Victoria and the ACT are at the moment freefalling, having posted strong levels of output in recent years.
According to HIA chief economist Harley Dale, the hot spot report demonstrates considerable potential for higher levels of housing construction activity in many areas of Australia, however laments the existence of a ‘disconnect’ between the potential evident in the hotspots report and current output levels. According to Dale, further policy measures are needed to provide a cornerstone for sufficient levels of building activity to meet Australia’s long term housing requirements.
Real Estate figures Australia’s construction sector has now remained in contraction for three years. The Australian Industry Group and Housing Industry Association’s Performance of Construction Index (PCI) added 0.1 points to 35.3 in April, remaining under 50 which indicates construction activity is shrinking. AIG says "Successive cuts in interest rates by the Reserve Bank of Australia have been welcome but, so far, (they) appear only to have steadied the decline in building activity.”
Home loan demand fell below expectations in April according to the Australian Bureau of Statistics. The number of home loans lifted 0.8 per cent to 48,475, short of analyst expectations for a 2 per cent rise.
Commentary Turning to commentary, following on from the disappointing PCI result, Housing Industry Association chief economist Harley Dale has this week claimed there was no sign a sustainable recovery was on its way for the sector. According to Mr Dale:
“The balance of risks points to a modest increase in building activity in 2012/13, followed by a subsequent pull-back next year. That's hardly the desirable result for the tens of thousands of businesses and hundreds of thousands of people who rely on new home building for their livelihood...With interest rates falling significantly we would normally be seeing far healthier levels of activity and compelling evidence of a sustainable recovery, but neither of these outcomes is forthcoming in mid-2013.” Australian auction results Looking at this week’s auction results across Australian capital cities - Sydney recorded a 67 per cent clearance rate from 381 properties for auction, Melbourne cleared 70 per cent from 196 properties, Brisbane had a 33 per cent clearance rate from 64 properties listed and Adelaide cleared 52 per cent from 55 reported auctions.
Commercial property sector Headlines from the commercial property sector:
GPT Group
(ASX:GPT) managing director Michael Cameron says he has no regrets about the failed $3 billion bid for Australand Property Group’s
(ASX:ALZ) commercial and industrial business. Mr Cameron told media while the acquisitions would have been a chance to accelerate the group's strategy, he believes GPT can do it organically. He says the company’s goal is to be the best performing property group, not the biggest.
CSR Limited
(ASX:CSR) has told shareholders that a rebound in earnings may be stagnated by ongoing tough trading conditions. The building materials group has spent time recouping the losses from its doomed glass division and does not expect to return to the black before March next year.
NRW Holdings Limited
(ASX:NWH) has lowered its full year earnings and revenue guidance due to delays in new contract awards and slower than anticipated project ramp ups. The civil contractor says owing to these factors, its revenue is expected to come in at $1.3 billion and its net profit will be between $73 and $76 million.
James Hardie Industries PLC
(ASX:JHX) has appointed Matthew Marsh, a senior executive from GE, to replace outgoing CFO Russell Chenu. Marsh will join the building materials maker later this month, after a 17 year stint with GE, where is currently serves as CFO of GE Healthcare's IT business.
