The gulf between home owners and renters is on the rise, according to data from the ‘Renovating housing policy’ report from the Grattan Institute. The report indicated that government tax and welfare policies are weighted towards rewarding property investors and owners over those who rent, effectively freezing aspiring home buyers out of the market. The report pushes for far reaching housing policy overhaul, including the abolition of stamp duty and amendments to negative gearing, as well as extended tenancy agreements to provide renters with more security and stability. The Grattan Institute found that nearly 90 per cent of government housing benefits are currently directed towards homeowners and property investors. Homeowners receive benefits totaling $36 billion annually- an average of $6,100 per homeowner- through current policies, while residential investors reap almost $7 billion a year at an average of $4,500 a pop. Meanwhile, those who rent are issued a scraps ration of less than 6 per cent of total benefits distributed. This is despite the number of households renting increasing markedly in the past two decades, with over 25 per cent of Australian householders now on rental agreements.
Australian Property Monitors has released quarterly data showing that the median house price in Sydney jumped 4.2 per cent to $722,718. Apartment prices have also grown, lifting by 3.3 per cent to $515,035, the first time they have passed the $500,000 mark. This is further bad news for first home owners already facing myriad hurdles in gaining a foothold in the property market, with the average house price in Sydney now $90,000 higher than it was at the start of last year, while apartments are almost $65,000 greater. Across the country there was a more modest 2.2 per cent increase in the September quarter. Among the major capitals, Melbourne’s house prices lifted 2.2 per cent, Brisbane rose 0.7per cent, Adelaide and Perth were flat, while Canberra’s prices fell 1.4 per cent.
Real Estate figures
Further proof of housing sector strength - Australian residential land sales achieved the highest quarterly volume in more than three years. The Housing Industry Association and RP Data Residential Land Report shows land sales grew 18.2 per cent to 17,170 in the second quarter. HIA Chief Economist Harley Dale says, “The recovery in residential land sales in impressive but from a very low base”.
Australian auction results
Looking at this week’s auction results across Australian capital cities - Sydney recorded a 80 per cent clearance rate from 425 properties for auction, Melbourne cleared 72 per cent from 625 properties, Brisbane had a 37 per cent clearance rate from 44 properties listed and Adelaide cleared 57 per cent from 30 reported auctions.
Commercial property sector
The latest headlines from the commercial property sector:
RHG Limited
(ASX:RHG) has agreed to a sweetened takeover bid from the Resimac syndicate and its shares have been reinstated to official quotation. RHG says it’s reached agreement on a 50.1 cents per share cash offer from Resimac and the Australian Mortgage Acquisition Company. The parties aim to implement the deal by January 6, with an end date of February 28.
FKP Property Group
(ASX:FKP) revealed it will sell its 37.7 per cent stake in New Zealand retirement village owner and operator Metlifecare Limited (NZX:MET). The property investor is the fund manager of Retirement Villages Group (RVG) who will appoint Goldman Sachs to sell the interest, with proceeds to be used to retire RVG’s $186.3 million of secured debt, leaving it as a debt free wholesale fund.
Charter Hall Retail REIT
(ASX:CQR) announced it plans to buy the Southgate Plaza Shopping Centre in South Australia for $60 million, funding the purchase through the recently finalised the sale of its Polish assets. The property investor completed the sale of its Polish assets on Monday and expects the $174.5 million Euro to settle on October 31. Regarding the acquisition, Fund Manager Scott Dundas describes Southgate Plaza as a good fit with Charter Hall’s existing asset base, one which will take the Australian supermarket anchored portfolio up to 76 assets.
Mirvac Group
(ASX:MGR) has reaffirmed operating earnings per share guidance for fiscal 2014, saying housing volumes and pricing are starting to improve. In its first quarter update, Mirvac reiterated earnings per share forecasts of 11.7 cents to 12 cents per stapled security and distribution guidance of 8.8 cents to 9 cents per stapled security. The integrated real estate group says it is on track to achieve a development return on invested capital of greater than 10 per cent.
