First up this week, we’ll take a look at the Auction market over the weekend just gone, with Sydney posting a third consecutive clearance rate of 84 per cent or greater. According to Australian Property Monitors, the harbour city cleared $333.5 million worth of property at auction last weekend, a staggering 30 per cent higher than its 57.5 per cent clearance rate over the corresponding weekend last year. This is a sound reflection of not only increased buyer activity but also housing market confidence over the past 12 months. Although last weekend’s clearances were undoubtedly boosted by sellers waiting out last weekend’s federal election, the trend of rising listings has been apparent for several months.
APM’s senior economist Andrew Wilson says Sydney and Melbourne had the highest number of listed auctions over the weekend since pre-Easter, with Sydney boasting a clearance rate in excess of 80 per cent over nine of the past ten weeks. Mr Wilson believes the auction market is travelling at its strongest in 10 years, with buyers seemingly willing to do whatever it takes to secure property. Melbourne’s result was also a strong 73 per cent, while the slower markets of Adelaide and Brisbane were both improved on the same periods in 2012.
Australian auction results
Last weekend’s auction results across Australian capital cities - Sydney recorded a 84 per cent clearance rate from 418 properties for auction, Melbourne cleared 73 per cent from 441 properties, Brisbane had a 47 per cent clearance rate from 49 properties listed and Adelaide cleared 68 per cent from 22 reported auctions.
IMF preaches prudence
Amid the exuberance of a soaring auction scene and positive local property indicators, the International Monetary Fund has this week released a report cautioning the potential for a global housing bubble and called for tougher lending rules from banks. The report, titled ‘Key Aspects of Macro-prudential Policy,’ questions whether record low interest rates are spawning a potentially unsustainable property price boom and calls for the use of ‘macro-prudential policies’ to restrict excessive mortgage borrowing. Adding fuel to the concern, bank regulator The Australian Prudential Regulation Authority (APRA), has previously raised concerns of its own and hinted at the potential for imposing lending limits for the first time in ten years. Global bank Citigroup published a report on Monday voicing its own concerns that the property markets continued growth could limit the RBA’s capacity to target broader concerns, such as rising unemployment or the again rising dollar. According to Citigroup economists Paul Brennan and Josh Williamson, “The scope to cut would be compromised if house prices continue to accelerate and precipitate a surge in leverage.”
RBA Sept meeting minutes
The RBA indicated in its September board meeting minutes that it is indeed keeping a close eye on the housing market. According to the central bank: Recent data and information from liaison were consistent with further recovery in the established housing market and moderate growth in dwelling investment. In the current environment of low interest rates and slow credit growth, members agreed that it was especially important that banks maintained prudent lending standards.
Commercial property sector
The latest headlines from the commercial property sector:
Westfield Group
(ASX:WDC) will divest seven non-core shopping centres in the US to private investment firm Starwood Capital Group for $US1.64 billion. Co-Chief Peter Lowy says the group is focused on redeploying capital into superior retail destinations in major cities through divesting non-core assets. After the divestments, Westfield Group will own and operate a portfolio of 40 centres in the US.
Charter Hall Retail REIT
(ASX:CQR) has agreed to buy Westfield’s Innaloo Shopping Centre and the adjoining Innaloo Mega Centre shopping centres in Perth's north-west for $255 million. The acquisition is conditional on the Westfield Group
(ASX:WDC) and Westfield Retail Trust
(ASX:WRT) changing its ownership of the Karrinyup shopping centre, also in Perth, before Christmas.
The most recent offer for residential lender RHG Limited
(ASX:RHG) has been described as inferior, highly conditional and not in shareholders best interests by competing bidder Resimac. Pepper Australia and Cadence Capital this week raised their offer for RHG to 36 cents per share plus a Cadence share offering, however Resimac says RHG shareholders are being pushed into accepting shares in Cadence, which is not well traded.
