Spring is here and analysts say low interest rates and home buyer competition is set to see the spring buying season touch levels not seen since the property peak of 2009-2010. Sydney and Perth are the strongest performers of Australia’s capitals, soaring on the back of high auction clearance rates and home sales, with agents also reporting spiking inquiries and homes being sold prior to hitting the market.
Research firm RP Data says house sales rose 13 per cent nationally over the past 12 months, while unit sales were up 6.4 per cent. Last year’s interest rate cuts were the obvious catalyst for recovery in the property sector, however momentum really began to kick in after the cash rate came down to 2.75 per cent in May this year.
The federal election campaign didn’t dampen spirits either, despite several vendors opting to hold auctions post ballot day. Down in Victoria, the Real Estate Institute has 490 auctions and 550 private sales scheduled this weekend, and estimates auction numbers will almost reach 1000 for each of the following two weekends. Australian Property Monitors says 215 auctions are expected in Sydney this Saturday and 633 the following weekend. Sydney’s has maintained a clearance rate in excess of 80 per cent for two months, while Melbourne’s is around 75 per cent. RP Data spokesman Robert Larocca believes Melbourne is set for a boisterous Spring selling season, to match that of 2009, owing to strong demand in outer-eastern and inner suburbs, with enthusiasm also evident in the southern capital’s new-home market. Mirvac Group’s
(ASX:MGR) Enclave project has sold 114 blocks of land in just four months, including a one day bonanza netting $17.5 million.
Real Estate figures
Australia’s construction industry continued to shrink last month despite record low interest rates. The Australian Industry Group and Housing Industry Association’s Performance of Construction Index eased 0.4 points to 43.7 in August, with a read below 50 indicating contraction.
The Australian Bureau of Statistics has released its housing finance data for July, showing a 2.4 per cent rise in the number of home loans approved. 52,204 loans were approved in the month, up from50,983 in June and ahead of economist forecasts of a 2 per cent rise. Total housing finance by value went up by 1.1 per cent to $24.18 billion.
Australian auction results
This week’s auction results across Australian capital cities - Sydney recorded a 88 per cent clearance rate from 161 properties for auction, Melbourne cleared 77 per cent from 247 properties, Brisbane had a 59 per cent clearance rate from 25 properties listed and Adelaide cleared 100 per cent from 12 reported auctions.
Commercial property sector
Sunland Group Limited
(ASX:SDG) has lost its bid to claim $14 million in damages from Australian businessmen Matt Joyce and Angus Reed. Sunland’s attempt to overturn three Supreme Court judgements was comprehensively rejected by the Court of Appeal, which confirmed the ‘‘groundless’’ basis of many of the developer’s trial claims, leaving it with nothing more than a massive costs bill. Joyce and Reed were recently sentenced to 10 years jail in Dubai for their involvement in a fraudulent $63 million waterfront property transaction in the Gulf state back in 2007.
Sunland Group Limited
(ASX:SDG) is buying 6 hectares of land in Ingleside, Sydney, for $12.2 million. The site forms part of the Ingleside urban release area in which State and Local Governments are planning a process to enable residential development. Sunland’s purchase expands the group’s portfolio with a particular focus on NSW. The group says it has a robust development pipeline across Queensland, NSW and Victoria worth a combined value of $1.4 billion. Sunland generated a full year net profit of $13.6 million.
Mirvac Group
(ASX:MGR) has appointed John Mulcahy as Chair of the business, after James MacKenzie’s resignation. Mr MacKenzie had been in the role for 8 years. Mirvac says Mr Mulcahy is experienced as a company director and has extensive knowledge of the property sector. Mr Mulcahy says the group is well positioned for the future with a skilled team and clear strategy.
Westfield Group
(ASX:WDC) and Westfield Retail Trust
(ASX:WRT) have surrendered a stronghold in Perth’s northern suburbs after opting to exit the $740 million Karrinyup Shopping centre just days after being cleared to take full control of the asset. The ACCC said earlier this week it wouldn’t oppose a proposed acquisition deal, however the Westfield stable mates have opted to sell out their combined interests to superannuation fund Unisuper, which will pay about $246.6 million to take full control.
