Latest figures show home owners are holding on to their homes longer while house prices continue to rise and affordability is falling.
The average length of residential home ownership has continued to rise, according to RP Data. The property data provider says home owners in Victoria & New South Wales hang on to their homes the longest while Melbourne and Hobart are doing the same with their units. RP Data’s figures show the average hold period across Australia’s capital cities was 10.1 years at the end of 2013. RP Data reports each capital city has recorded an increase in the average hold period for houses and units over the past year led by Melbourne and followed by Sydney.
Housing affordability fell at the end of last year as the impact of lower interest rates subsided. The Housing Industry Association and Commonwealth Bank of Australia’s
(ASX:CBA) Housing Affordability Index slipped 0.5 per cent in the last three months of 2013. Affordability across the nation fell in four out the six surveyed capital cities including Hobart (-9.2 per cent), Sydney (-4.4 per cent), Perth (-2.5 per cent) and Brisbane (-1 per cent). Over the December quarter affordability only increased in Adelaide (+5.5 per cent) and Melbourne (+5.5 per cent). HIA has forecast further gains in residential property prices but in an environment of subdued household earnings growth and steady interest rates.
On the sales front home values for Australian capital cities saw almost a record rate of growth in March this year. RP Data-Rismark’s Daily Home Value Index for the five major capital cities shows values rose 2.3 per cent in March after flat conditions through February. RP Data says strong housing market momentum is continuing on from last year supported by strong levels of auction clearance and the ongoing escalation in housing finance commitments.
The Housing Industry Association has shown detached house sales jumped 6.9 per cent while sales of multi-units fell 6.8 per cent in February. Chief Economist, Dr Harley Dale says the results signal suggests more balanced growth ahead in the composition of new home building.
Commentary
Macquarie Group Limited’s
(ASX:MQG) Global Head of Economics, Richard Gibbs forecasts where he sees Australian property prices heading this year:
“I think the gains will probably follow the states in terms of economic performance. The two states that are best placed in 2014 and New South Wales and Queensland. That is in line with our view that the traded services sectors of the economy, or industries in those sectors will do best. Obviously Sydney being a key focal point for that. Queensland also benefiting from tourism and education exports, but also coal coming out of Queensland will benefit that economy as well. So, I suspect that house price gains will be largest in those two state economies - probably in the 3-5 per cent range, on top of the 10 per cent average that we’ve seen in the last 12 months.”
Australian auction results
Sydney recorded an 83 per cent clearance rate from 820 properties for auction
Melbourne posted a 72 per cent clearance rate from 1,186 properties for auction
Brisbane booked a 50 per cent clearance rate from 100 properties for auction
Adelaide saw a 66 per cent clearance rate from 59 properties for auction
Commercial property sector
Shopping centre giant Westfield Group
(ASX:WDC) proposed restructure has received a boost with the shopping centre giant securing $22 billion in funds to finance the plan.
Construction firm Australand Property Group
(ASX:ALZ) has upgraded its annual earnings and distribution guidance on the back of an improvement in the Australian housing market.
Property company GPT Group
(ASX:GPT) will spend $496 million to buy a 50 per cent stake in Melbourne's Northland Shopping Centre.
