Growth in home values slowed to a six month low in November, prompting fears the strong run of Australia’s housing market may be beginning to lose steam. RP Data Rismark’s November capital city home value index edged up by just 0.1 per cent in November, the first time- barring August’s 0.5 per cent growth- it has come in below 1 per cent in half a year. This could be a blessing for first home buyers that have been struggling to force their way into the highly priced and hotly contested market, where house values have risen 8.4 per cent and units by 8.2 per cent so far in 2013.
RP Data research analyst Cameron Kusher believes it looks like the market has hit its peak growth based on historical precedence. The previous two growth cycles, in 2007 and 2009, peaked around 18 or 19 months. The current cycle has reached 19 months and growth now appears to be starting to flatten out.
According to Mr Kusher, interest rates are still low and there will still be some capital growth in the market, however it is not likely to be as strong as it has been over the last few months. RP Data-Rismark found the Melbourne market fell back by a notable 2.1 per cent in November. Brisbane failed to show any movement and values fell by 0.5 per cent in Hobart and 1.3 per cent in Canberra. Rises of 0.9 per cent were recorded in Sydney, Adelaide was up 1.2 per cent, Darwin by 2.8 per cent, and Perth by 2.9 per cent.
Louis Christopher, an analyst from Independent property advisory firm SQM Research, believes it’s too early to make a call on whether or not the market has peaked based on a single month’s data. Mr Christopher says there can be a lot of seasonality in the later spring months, when clearance rates ease and there is a lot of stock on the market.
Real Estate figures
Recapping the RP Data figures first:
RP Data’s monthly house price index edged up just 0.1 per cent in November, the subdued result coming on the back of increases of 1.6 per cent in September and 1.3 per cent in October. Perth recorded the strongest growth in the month, followed by Darwin, Adelaide and Sydney. Dwelling values fell in Melbourne Canberra and Hobart, while remaining flat in Brisbane. Despite the slowdown, the combined values of house prices over the eight capital cities remain 8 per cent higher over the past 12 months.
The Australian Bureau of Statistics says building approvals slipped 1.8 per cent in October, well ahead of the 5 per cent fall tipped by economists. Approvals had jumped 16.9 per cent in September, and are 23.1 per cent up over the year. Also from the ABS, Company profits rose a stronger than expected 3.9 per cent in the third quarter, after nudging up 0.4 per cent in the previous quarter.
The Reserve Bank of Australia offered few surprises in leaving interest rates on hold at 2.5 per cent for another month. In explaining the decision, Governor Glenn Stevens said, among other things, that housing and equity markets have strengthened further over recent months, trends which should in time be supportive of investment.
Commentary
Amid all the talk of a potential slow down of the Australian property market and its current hot spots Sydney and Melbourne, FNN spoke to Loan Market CEO Sam White to get his view on where the next hot spot for property may be.
"I like South East Queensland as a market, in 2007 the median house price in Queensland was 5 per cent less than the median house price in Sydney, there’s now about 30-35 per cent difference between the two, so I think you’ve got some run up to go in Queensland still. Last cycle it was two years behind Sydney, sort of indicates that maybe next year or year after, it’s probably a sign that things will start to change."
Australian auction results
Looking at this week’s auction results across Australian capital cities - Sydney recorded a 80 per cent clearance rate from 483 properties for auction, Melbourne cleared 75 per cent from 747 properties, Brisbane had a 57 per cent clearance rate from 7 properties listed and Adelaide cleared 100 per cent from 1 reported auctions.
Commercial property sector
The latest headlines from the commercial property sector:
Stockland Corporation Limited
(ASX:SGP) has confirmed it is on track to achieve its guidance after making good progress in restructuring the business over the last year.In a statement to the Australian Securities Exchange, Stockland reaffirmed guidance of four per cent to six per cent earnings per security growth in fiscal 2014. The group expects profit to be skewed towards the second half and driven primarily by residential and retirement living settlements.
DEXUS Property Group
(ASX:DXS) this week announced the acquisition of two properties in Queensland for a total price of $128.03 million. The Groups wholesale funds management arm has picked up a shopping centre and an industrial estate. The shopping centre, Beenleigh Marketplace, was acquired for $88.4m and adds to the fund's $2.1 billion retail property portfolio. Fund Manager Graham Pearson says the acquisition progresses the fund's retail strategy of increasing the allocation to centres that have strong non-discretionary expenditure.
Mortgage Choice Limited
(ASX:MOC) has been fined for false advertising, after it wrongly claimed customers had saved an average of $10,000 over five years by refinancing their home loans. ASIC says it has taken exception to television advertisements from 2012 that say customers had saved an average of $10,000 over five years. Rather than representing real savings by customers, the claim was based on calculations relating to a group of 300 refinancing customers over a six month period, according to ASIC.
