The Sydney housing market is showing signs of strong winter momentum as it posts its most impressive comparative auction results in years. They say statistics don’t lie and Sydney’s auction clearance rate was again well above 70 per cent, 77 to be precise, with sales totalling $258 million. Compared to the same time last year, that is an improvement in excess of 20 percentage points and approximately $100 million more in sales. This points to a strong period for the Sydney housing market, with the majority of activity being seen in the lower and budget end, although the prestige segment is seeing very credible clearance rates as well.
Taking a closer look at the Sydney stats from the weekend just gone. The median house price was $930,000 and the median apartment price was $660,000, both of which are above their equivalents from 2012. Median apartment price growth was also ahead by an average of $90,000. According to analysts, increased in the number of listed properties are an indication sellers are confident of upward pressure on prices and therefore eager to list their homes for sale. Meanwhile, the spate of cuts to the cash rate from the Reserve bank in recent months are greatly aiding housing affordability throughout Australia, contributing to strength in the usually subdued winter period.
Economic News In its June board meeting minutes the Reserve Bank of Australia indicated the effects of low interest rates have been evident in a range of housing market indicators, citing increases in building and loan approvals, as well as high auction clearance rates, as undercurrents for improved positivity about the outlook for dwelling investment.The RBA says that while measures of dwelling prices had been relatively flat over recent months, they were still higher than the previous year.
Commentary Turning to commentary and Century 21’s CEO of Home Loans James Green has told FNN about the driving force behind improved credit growth in the property sector:
‘It’s purely being driven by affordability. To be able to buy the property you’re renting for cheaper than it is to pay your rent, and you know that it’s an appreciating asset in Australia. People are fairly confident around Australia with property and its growth story, particularly with the undersupply factor in Australia, particularly Sydney. If you get the opportunity to buy something that’s cheaper than to rent it, most people would choose the buy option. That underpins the credit growth.'
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 77 per cent clearance rate from 342 properties for auction, Melbourne cleared 68 per cent from 337 properties, Brisbane had a 38 per cent clearance rate from 28 properties listed and Adelaide cleared 49 per cent from 39 reported auctions.
Commercial property sectorNow to the latest headlines from the commercial property sector:
Lend Lease Group
(ASX:LLC)shares took a battering this week after the property group warned shareholders construction output will be lower and flagged reduced earnings from construction in Australia, Europe and the Middle East. Despite this, the property groupalso tried to reassure investors its overall earnings will grow this financial year despite a flagged restructure to deal with a slowing construction market. The restructure is of its construction and infrastructure businesses, proposing to consolidate the Abigroup, Baulderstone, Project Management and Construction and Infrastructure Services bodies.
Also this week, Lend Lease launched Lend Lease Jem Partners Fund to acquire the group's stake in Jem, a suburban retail and office asset in Singapore. Lend Lease says its 25 per cent equity interest has been sold to the fund for $189 million, and believes the sale of a direct stake in Jem will lead to another strong result for its Asian operations in the current financial year.
DEXUS Property Group
(ASX:DXS)has announced an upgraded distribution for the half year, increasing its payout ratio from 75 to 80 per cent of funds from operations. The resultant shareholder payout will be 3.11 cents, coming after a reduction in capital expenditure within its portfolio over the period.
Leighton Holdings Limited
(ASX:LEI)is set to build a new $180 million facility for the University of Sydney Business School. The construction giant’s subsidiary John Holland will start on the project next month, which is due to be finished early 2015.
CFS Retail Property Trust (ASX:CFX
) has confirmed it’s in talks to sell four Victorian sub-regional shopping centres and says the potential sale is in line with its previously outlined strategy. CFS says the proceeds have been earmarked to be re-invested into the trust’s development pipeline and future acquisitions.
