Record low interest rates and growing buyer appetite have fuelled expectations Sydney property sales are set to surge this year. Over the weekend Sydney’s clearance rate lifted above 80 per cent, helping to lift the national average to a four month high of near 72 per cent. With Sydney prices having risen 14.2 per cent over last year some commentators have speculated the harbour city could see prices gain between 15 per cent to 20 per cent this year.
As property prices continue to rise Sydney has again been ranked as one of the world’s most expensive central business districts. According to Cushman & Wakefield’s Office Space Across the World report global office rents rose 3 per cent in 2013, buoyed by growth in Africa and the Middle East. On top of the ladder London’s West End dominated with the world’s most expensive office market followed by Hong Kong, Moscow, Beijing, Tokyo midtown Manhattan, Zona Sul, Connaught Place, Paris and Sydney rounding out the top ten.
Economic news
The Reserve Bank of Australia’s February board meeting minutes have suggested the key cash rate could be set for a period of stability. Commenting on the property market the RBA says low interest rates have clearly impacted the housing market where house prices have gained and turnover has picked up to be just below average.
Commentary
Westpac Banking Corporation’s
(ASX:WBC) Chief Economist, Bill Evans predicts Sydney is set for further price gains in 2014:
My view is there will be very different state markets. The Sydney market has still got the potential to rise further. The price to income ratio for Sydney is still in favour of higher residential house prices. Whereas in Melbourne I think things have moved a little too far. If we look about over the past ten year, Melbourne house prices are up about 95 per cent, Sydney prices are up only around 50 per cent. So, I would expect to see continuing strong conditions in Sydney but a genuine topping out in Melbourne. Brisbane has disappointed in this cycle, it has been well behind the cycle. I see evidence that the Brisbane will gradually improve over the course of next year.
Australian auction results
Sydney recorded a 81 per cent clearance rate from 471 properties for auction, Melbourne cleared 74 per cent from 623 properties, Brisbane had a 50 per cent clearance rate from 89 properties listed and Adelaide cleared 63 per cent from 34 reported auctions.
Commercial property sector
Property investor Australand Property Group
(ASX:ALZ) has posted a 25 per cent fall in its full year profit due to write downs and cautioned tenant demand could remain subdued.
Building and construction materials manufacturer Boral Limited
(ASX:BLD) has reported a 4 per cent fall in its first half profit but a 73 per cent rise in its underlying profit
Property developer Stockland
(ASX:SGP) has rebounded to a first half profit aided by its residential business and lifted its annual earnings forecast.
Property investor Charter Hall Retail REIT
(ASX:CQR) has improved its first half net profit by 30 per cent and flagged plans to move its investments entirely to Australia.
Licensed hotel operator Newhaven Hotels Limited
(ASX:NHH) has sold its Buena Vista Hotel in Sydney’s north shore suburb of Mosman for $13 million.
