The RBA offered few surprises with its decision to keep the key cash rate on hold at 2.5 per cent this week, and from a housing perspective this is reflective of eight cuts in two years having their desired effect in stimulating the housing market. RP Data’s national research director Tim Lawless says transaction numbers are almost 20 per cent above where they were a year ago, while dwelling values across the combined capital cities index are up by 7.9 per cent over the past year. According to Mr Lawless, more buyers in the market has begun to encourage new housing construction; and the central bank has itself confirmed that it is comfortable with the capital gains being achieved in the housing market.
According to Mr Lawless- “The improvement in housing market sentiment has flowed through to improved developer sentiment as well, with the number of dwelling approvals showing a marked improvement over recent months.” Mr Lawless says the RBA will keep a close eye on the national housing market, with a particular focus on Sydney and Melbourne, where value rises are out-stripping those of other capitals.
Real Estate figures
Australian capital city house prices rose 1.9 per cent in the September quarter, according to the Australian Bureau of Statistics. The result follows a rise of 2.7 per cent in the June quarter. In the year to September, the house price index rose 7.6 per cent. Economists had expected a rise of 2.2 per cent for the September quarter.
The Australian Bureau of Statistics reports building approvals for the construction of new homes climbed 14.4 per cent last month, beating expectations for a 2.8 per cent rise. Over the year to September building approvals have now surged 18.6 per cent.
Also in the real estate sector: Australia’s third-largest lender has predicted property prices will continue climb from now until the end of 2015. ANZ Banking Corporation
(ASX:ANZ) analysts, led by David Cannington, expect a 15 to 20 per cent lift in home prices over the next 2.5 years.
The value of homes remained on the rise last month in Australia's eight capital cities. RP Data-Rismark’s home value index shows home values gained 1.3 per cent in October and are now 12.6 per cent higher from the year before.
And finally, A new index compiled by CommSec shows housing bubble hype has now reached levels not seen for a decade. The index started in January 2003 and tracks when the phrase “housing bubble” appears in Australian media. The phrase hit a 10 year high last month when CommSec found 194 mentions of the housing bubble, compared to 201 mentions in September 2003.
Australian auction results
Looking at this week’s auction results across Australian capital cities - Sydney recorded a 81 per cent clearance rate from 473 properties for auction, Melbourne cleared 75 per cent from 81 properties, Brisbane had a 58 per cent clearance rate from 32 properties listed and Adelaide cleared 83 per cent from 45 reported auctions.
Commercial property sector
The latest headlines from the commercial property sector:
FKP Property Group
(ASX:FKP) is to change its name to Aveo Group, following shareholder approval at its annual general meeting. Having seen rival Stockland exit its share register this week, FKP's chief executive Geoff Grady says the group was moving towards its strategy of being a pure play, Australian retirement property manager, owner and developer. Chairman, Seng Huang Lee says in the past 12 months, FKP has streamlined, simplified and made the business a lot more easily understood by removing a lot of the fractional interest joint ventures, as well as commenced the disposal of its non-retirement assets.
Stockland Corporation Limited
(ASX:SGP) has defended its decision to buy back a piece of Victorian residential development land at a hefty premium to its initial sale price. The listed developer acquired the 108-hectare parcel from Places Victoria for $57.5 million after selling it to the same agency in November 2008 for $34.6 million. Now zoned residential, the site is next to Stockland’s Highlands estate in Melbourne. Stockland said the 2008 deal allowed it to remove the ¬carrying cost from its balance sheet and the risk associated with the planning and rezoning process. Places Victoria refused to comment on the original transaction price, insisting it was commercial-in-confidence despite Stockland’s 2008 disclosure to the ASX.
Investa Office Fund
(ASX:IOF) will sell its long running investment in the Dutch Office Fund (DOF) to a consortium of existing DOF investors for $224.7 million, part of its strategy to become 100 per cent Australian focused. IOF Fund Manager Toby Phelps says the plan is to reinvest the sale proceeds into high quality Australian CBD assets and further leverage the capability and experience of Investa in the Australian office sector.
