With building approvals data this week disappointing expectations and falling for the second consecutive month, it seems apparent that the recovery in the housing construction sector is weakening, however analysts continue to play down the gloom. Total building approvals in June were down 6.9 per cent, while private sector house approvals dropped 1.2 per cent, their first dip in five months. According to Stephen Walters, the chief economist of JP Morgan, the soft figures come in a volatile category, where big rises as recently as April are now seeing payback.
The Reserve Bank of Australia cut the cash rate four times in 2012 and again in May. It appears those reductions are offering some help to the building sector despite the disappointing recent approvals data. Despite their consecutive monthly declines building approvals saw a rise in the June quarter which Mr Walters says is indicative of some policy traction, however not yet enough, as evidenced by the most recent results.
CommSec economist Savanth Sebastian believes the poor building data is not quite enough to convince the central bank to cut rates again in August, and were less concerning than the constant speculation about them may lead people to believe. Mr Sebastian confirmed the belief they are volatile figures highlighting little more than normal levels of building across the economy, and certainly not indicative of a sector collapsing.
Real Estate figures
Approvals for the construction of new homes fell 6.9 per cent across Australia in June, according to the latest Australian Bureau of Statistics building approvals data. Economists had forecast a rise of two per cent. A total of 12,778 new homes were approved in the month, down slightly from 13,727 approvals in May. Over the year to June, building approvals were down 13.0 per cent.
Commentary
Turning to commentary and FNN spoke to Ken Sayer from Mortgage House if he believes expectations of slower economic growth over the next 12 months has put a dampener on sentiment in the property sector:
“As far as the nation is concerned, commerce and industry ought to slow down. The local and state governments are investing heavily in the real estate section; releasing land faster, building infrastructure faster and extending the first home owners grant, which is designed to stimulate the market and that’s exactly what it’s done.”
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 81 per cent clearance rate from 269 properties for auction, Melbourne cleared 70 per cent from 237 properties, Brisbane had a 38 per cent clearance rate from 40 properties listed and Adelaide cleared 41 per cent from 24 reported auctions.
Commercial property sector
The latest headlines from the commercial property sector:
Stockland
(ASX:SGP) has announced the appointment of Tiernan O’Rourke as its CFO, to commence in October. Current CFO Tim Foster will remain on board until the end of October to assist with the transition. CEO Mark Steinert says Mr O’Rourke is a highly qualified executive with more than 20 years experience in senior financial, commercial and planning roles across a range of industry sectors.
Charter Hall Retail REIT
(ASX:CQR) says it has secured $674 million Australian office properties in the past six months, increasing its office portfolio by 12 per cent. The group is providing all investment, property, leasing and financial management services across all of its acquired buildings.
