As Australia’s property market continues to heat up China has been revealed as the biggest source of foreign demand. Chinese demand for Aussie property soared 44 per cent over the year as the Foreign Investment Review Board gave the green light for $5.9 billion of purchases. China’s appetite for Australian property surpassed demand from America as US demand fell 85 per cent to $4.4 billion, according to the board’s figures.
RBA holds fire as property figures climb
A flood of data out this week has show the property sector shows no sign in slowing down. Stellar gains reflected in the latest figures come as the Reserve Bank opted to keep Australia’s kept cash rate on hold at a record low. The central bank says rates are likely to remain stable while housing construction could be set for even greater expansion. The forecast comes after official statistics showed construction work done dropped against expectations of a gain at the end of last year. The Australian Bureau of Statistics reports total construction work slipped 1 per cent to $53.1 billion in the last three months of 2013, but remains 0.2 per cent higher from 2012.
2014 property figures have gotten off to a stronger start with data showing new home sales rose at the beginning of this year after dipping at the end of 2013. The Housing Industry Association showed new home sales gained 0.5 per cent in January and are now 17 per cent higher than the same time last year. HIA senior economist Shane Garrett says, “The return of house price growth to most cities has done much to oil the market and allow transactions to start occurring in greater numbers”.
Official figures have shown building permits increased ahead of expectations at the beginning of this year and hit record highs. The ABS has shown building permits rose 6.8 per cent in January and are now 34.6 per cent stronger than the same time last year.
The speed of Australian capital city house price growth steadied at the beginning of this year, following eight months of solid gains. RP Data-Rismark reports combined home values across the nation’s eight capital cities saw no growth in January. Across each state the results were mixed Sydney prices moved 0.8 per cent higher, Hobart saw a gain of 1.4 per cent and Darwin prices firmed 0.7 per cent. In contrast property prices in Melbourne, Adelaide and Perth moved 0.2 per cent lower, Canberra eased 0.8 per cent while Brisbane dropped 2 per cent.
Commentary
FNN spoke to Morgans Financial Limited Chief Economist Michael Knox about who is driving housing demand:
“At the moment it [demand for housing] is primarily from investors. First home buyers are held back by the fact that we’ve got a weak employment market. I think once the employment market starts to pick up in the middle of this year or in the later part of this year we’ll see first home buyers come back. But, right now it is being driven pretty stronger by investors, and hopefully first home buyers second.”
Australian auction results
Prices in Australia’s largest city continued to climb with Sydney exceeding an 80 per cent clearance rate for the fifth straight week:
Sydney recorded an 83 per cent clearance rate from 681 properties for auction
Melbourne posted a 76 per cent clearance rate from 1,100 properties for auction
Brisbane booked a 33 per cent clearance rate from 101 properties for auction
Adelaide saw a 71 per cent clearance rate from 58 properties for auction
Commercial property sector
West Australian focussed apartment developer Finbar Group Limited
(ASX:FRI) has delivered a record profit of $18.9 million in the first half of the 2014 financial year in the same week it announced the completion of its $53 million Ecco Project.
Property developer Lend Lease Group
(ASX:LLC) has reported a first half profit fall of 16.4 per cent but says its outlook is positive and its strategy is on track, underpinned by its development pipeline.
Shopping centre operator Westfield Group Limited
(ASX:WDC) has reported a 6.7 per cent profit drop over 2013 while its annual earnings grew on the back of strength in its property management and development businesses.
National Australia Bank Limited
(ASX:NAB) has responded to competition in the mortgage sector by lowering a series of fixed home loan interest rates including its two-year fixed loan and, three-year rates.
