Property growth across Australian states

Real Estate

A series of economic indicators have put the property sector in focus over the same week the Reserve Bank of Australia decided to keep rates steady at its first board meeting of the year. Record low interest rates boosted the property sector over 2013 and have also given business confidence a lift according to the National Australia Bank Limited’s (ASX:NAB) index of sentiment. 
 
Australian business confidence rose to a near-three year high as the New Year kicked into gear. NAB shows business conditions rose 1 point to 4, while confidence rose 2 points to 8 in January. NAB says business conditions consolidated the strong pick up in December and while overall conditions are still chasing confidence they are now close to their long run average.
 
Separately, a read on consumer sentiment has produced its lowest read since July last year Westpac Banking Corporation (ASX:WBC) and the Melbourne Institute Index of Consumer Sentiment fell 3.0 per cent to 100.2 in February. The construction industry has also stumbled into the New Year and fallen back into contraction. The Australian Industry Group's Performance of Construction index dropped 2.6 points to 48.2 in January, sinking under the 50 mark which separates expansion from contraction. 
 
On the bright side, Australian capital city residential property prices rose in the last three months of last year. The Australian Bureau of Statistics reports prices lifted 3.4 per cent in the December quarter after a gain of 2.4 per cent in the prior in the September quarter. Over 2013 the residential property price index was 9.3 per cent higher. 
 
Home loan demand dropped against expectations at the end of 2013 but rose 14 per cent over the year. The Australian Bureau of Statistics reports home loans granted dropped 1.9 per cent to 51,692 in December. Housing finance by value rose 0.2 per cent to $27.050 billion. CommSec economist Savanth Sebastian says the dip in housing commitments indicates consolidation while the value of housing finance is up about 15 per cent over 2013. 
 
Commentary
 
Commsec Economist, Savanth Sebastian outlines where to find growth across Australia: 
 
“I think the premier states in terms of the property sector, in terms of house price growth, has been no question New South Wales and Western Australia. Returns on Sydney house prices are up 20 per cent on a year ago when you take into account capital growth plus rental yields. So, it’s been very, very solid. 
 
Now I don’t expect to see that sort of growth in property prices in 2014. 2014 is a year for a much bigger increase in housing supply. A lot of new construction coming up and that should help prices go sideways. We’re expecting about 5-7 per cent growth in property prices this year. 
 
The states that have been lagging like Victoria, they are about six to nine months behind New South Wales in terms of that construction story. We’re starting to see Queensland show good signs of lifting. And, across most of the big capital cities we’re seeing that population growth is also lifting. 
 
So I think the demand for property will be strong. Maybe not from an investment sense, but from a construction sense, and that is a really good multiplier for broader economic growth.” 
 
To watch more of the interview click here:
 
Australian auction results
 
Sydney recorded an 84 per cent clearance rate from 298 properties for auction, Melbourne cleared 76 per cent from 261 properties, Brisbane had a 58 per cent clearance rate from 72 properties listed and Adelaide cleared 78 per cent from 46 reported auctions.  
 
Commercial property sector
 
Department store retailer David Jones Limited (ASX:DJS) is mulling options for its property portfolio and has this week lodged a preliminary development submission to Sydney City Council.
 
Melbourne-based retail property manager Real Estate Corp Limited (ASX:RNC) has backed a $60.7 million off-market takeover bid by unlisted real estate developer Little Group. 

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