The RP Data-Rismark Home Value Index this week indicated a rise in house prices in almost all capital cities over the last financial year, and prices are expected to continue to grow according to the property research firm. The index showed capital city home values rose by 3.8 per cent in fiscal 2013, swinging from a 3.6 per cent decline in value in the previous financial year, with increases in house prices in every capital city bar Hobart, where prices dipped by 1.8 per cent.
Taking a closer look at the numbers, Darwin was on top of the pile with a 6.1 per cent increase in price. Perth was snapping at its heels with prices up 6 per cent, while Sydney took the proverbial bronze with a 5.6 per cent price increase. RP Data’s research director Tim Lawless says home values should continue to trend higher at a measured pace if confidence levels remain high and unemployment rates remain low.
Turning now to the near future, we’ll take a brief look at BIS Shrapnel’s Residential Property Prospects 2013 – 2016 report, which has tipped continued low interest rate driven improvement in New South Wales and Queensland over the next three years. BIS Shrapnel touts a 19 and 17 per cent increase in Sydney and Brisbane home values respectively, whereas it tips the rest of the states, headed by Western Australia and the Northern Territory, to soften. Melbourne, Adelaide, Hobart and Canberra are tipped to experience challenging economic conditions and minimal price movement in the next three years, with the nation’s capital at further risk from cuts to public sector funding pending the result of the upcoming federal election. Melbourne is tipped to be stagnated by weakness in the Victorian economy and a lack of pent-up demand. BIS predicts interest rates to retreat from stimulatory levels in 2015 – 2016 with the resultant sentiment to hit demand for residential property, slowing the markets of Sydney and Brisbane and further weakening others.
Real Estate figures
Recapping the RP Data Home Value Index: Capital city home values saw a rise of 3.8 per cent over the last financial year, bouncing back from a 3.6 per cent fall in fiscal 2012. House prices rose in every capital except for Hobart, with Darwin seeing the strongest increase.
Also this week, the Reserve Bank of Australia (RBA) has moved in line with expectations and kept Australia’s official cash rate unchanged at a record low of 2.75 per cent. RBA Governor Glenn Stevens says easier financial conditions now in place will contribute to a strengthening of growth over time.
New home sales rose for the third straight month in May, reaching their highest level in 18 months in a promising sign that low mortgage rates are breathing life into the property market. The Housing Industry Association says sales of new homes went up by 1.6 per cent in May.
Commentary
Turning to commentary and FNN asked St. George’s chief economist Hans Kunnen for his take on the performance of the property sector thus far in 2013:
“Thinking purely from the residential side, we have seen pickups in that sector. Credit for investor lending is up 5.5 per cent- it’s the strongest area of bank lending growth. Prices have picked up across most of the major capital cities, if you look at the auction clearance rates; they’ve all come off their lows over the past 18 months. Lower interest rates and steady job growth does that- people are putting the GFC behind them. So we’re seeing modest rises in house prices and in lending for housing, and that’s something we want to see and something the RBA wants to see.”
To watch more of the interview click
here.
Australian auction results
This week’s auction results across Australian capital cities - Sydney recorded a 77 per cent clearance rate from 342 properties for auction, Melbourne cleared 67 per cent from 258 properties, Brisbane had a 62 per cent clearance rate from 47 properties listed and Adelaide cleared 67 per cent from 11 reported auctions.
Commercial property sector
Mirvac Group
(ASX:MGR) is selling half its stake in the land and development of 200 George St, Sydney, to AMP Capital Wholesale Office Fund. Mirvac says the 50 per cent interest of the completed development would be about $317 million.
Charter Hall Retail REIT
(ASX:CQR) has inked a $33.2 million contract to buy Secret Harbour shopping centre near Rockingham, Western Australia. The 5,574 square meter property includes an additional 31,000 square meters of development land, with the opportunity to expand the centre.
Dexus Property Group
(ASX:DXS) says it expects a a 5.2 per cent increase in earnings in the 2014 financial year following strong independent valuations. The group says property valuations for the quarter have increased by 4.4 per cent to $58 million on prior book values.
