The total value of auction sales in Sydney and Melbourne came off the boil somewhat on the weekend just gone, falling by 24 per cent from the previous weekend’s boom result of $731.1 million. Andrew Wilson, the senior economist from Australian Property Monitors, believes both housing markets have peaked, in particular Melbourne with the southern capital set to shift to a market that favours buyers as opposed to sellers. Melbourne’s auction clearance rate dropped by 4 per cent on the weekend, falling to 70.3 per cent, while Sydney witnessed a more miserly 0.2 per cent dip to 80.1 per cent. Breaking down the figures a bit further, the 475 houses sold under the hammer in Melbourne represented a 27 per cent drop from the prior weekend, while Sydney’s 407 sales were down by 17 per cent. According to Wilson, the winds of change are blowing in favour of the buyers. He says that in a competitive market filled with sellers looking to close deals by the end of the year, buyers will be afforded a wider choice. Dr Wilson is also adamant the Sydney market has peaked, yet auction results remain at near record levels and will remain strong in 2014. Both cities are expected to be examined by bumper auction releases in the next fortnight, with Melbourne expected to put up 2,500 apartments, while Sydney will release a city record 900 houses for auction next weekend. According to BIS Shrapnel Managing Director Robert Mellow, the new apartment market in Sydney will stay strong on account of Asian and local investors, as well as market undersupply, while in Melbourne off the plan sales will lag next year due to oversupply in key locations including the CBD.
Real Estate figures
The Australian Bureau of Statistics says the total amount of construction work done in the country rose by 2.7 per cent in the September quarter. Over the year to September, the volume of construction work done was up 1.3 per cent. Economists had tipped a 0.3 per cent fall.
Australian auction results
Looking at this week’s auction results across Australian capital cities - Sydney recorded a 80 per cent clearance rate from 466 properties for auction, Melbourne cleared 70 per cent from 670 properties, Brisbane had a 47 per cent clearance rate from 44 properties listed and Adelaide cleared 73 per cent from 10 reported auctions.
Commercial property sector
The latest headlines from the commercial property sector:
DEXUS Property Group
(ASX:DXS) has announced the termination of the process agreement between itself, Commonwealth Managed Investments and the Canada Pension Plan Investment Board, in pursuit of a takeover of Commonwealth Property Office Fund
(ASX:CPA), after failing to match a rival bid from GPT Group
(ASX:GPT). Dexus says while it remains strongly committed to take over all remaining CPA shares, the competing offers have a significant scrip component and it remains too early to respond.
Australand Property Group’s
(ASX:ALZ) major shareholder, multinational real estate company Capitaland, has sold a 20 per cent stake of the group to a range of existing and new institutional investors. Capitaland says when the placement is complete, its interest in Australand will be reduced from 59.1 per cent to 39.1 per cent. The placement was priced at $3.68 per security, representing a 1.7 per cent discount to Australand's closing price last Thursday, when the shares were sold in an aftermarket book build. Australand will now become an associated company of Capitaland, which will remain its largest shareholder.
Charter Hall Retail REIT
(ASX:CQR) has completed its fully underwritten $80 million institutional placement to partially fund the acquisition of Melbourne shopping centre Rosebud Plaza from CFS Retail Property Trust
(ASX:CFX). Charter Hall says approximately 21 million new units were issued to institutional investors at a fixed price of $3.80 per unit. The placement was fully underwritten by Citigroup Global Markets Australia and Macquarie Capital who acted as joint lead managers, underwriters and bookrunners. Units issued will settle on November 27, with allotment to occur on November 28.
