Despite a monthly fall building approvals Commsec says it is clear there is a building boom underway. The Australian Bureau of Statistics reports building approvals fell 5 per cent to 16,669 in February against expectations for a fall of 2 per cent. Though the drop was more than expected and the largest fall in eight months, building approvals are still 23 per cent stronger from the year before. Commsec says approvals to build new homes are at record highs and with work on these new homes due to get underway in the next few months it is evident the building boom is occurring.
Commsec has also released Hot Spots for home building, showing Victoria & Western Australia are dominating the list of strongest home building regions in Australia. In the top spot Commsec placed Melbourne - Inner followed by Brisbane Inner City, Sydney – Inner South West, Melbourne – South East, and, Perth – South West.
AMP Capital’s Chief Economist, Dr Shane Oliver has warned the risk of a bubble in the home buyer market is rising. Mr Oliver has forecast further gains in house prices this year but says they are likely to slow as the RBA [Reserve Bank of Australia] steps up its warnings about excessively rising house prices.
Commentary
UBS Investment Bank, Chief Economist Australasia, Scott Haslem details the drivers behind the Australian housing sector:
“I think if we look at what is driving the Australian housing sector, I think it is just a good old fashioned asset allocation shift into housing. Because we can see now the yield on Australian residential housing is above a term deposit, it’s above the unfranked dividend yield on the equity market. So we’re seeking investors asset allocating to housing. We can see that is it not first home owners. It is people who can see relative value.”
Australian auction results
Sydney recorded an 81 per cent clearance rate from 843 properties for auction
Melbourne posted a 72 per cent clearance rate from 1,019 properties for auction
Brisbane booked a 51 per cent clearance rate from 93 properties for auction
Adelaide saw an 80 per cent clearance rate from 67 properties for auction
Commercial property sector
Property and investment company Aveo Group
(ASX:AOG) has forecast higher net cash flows this year as a result of strong sales from its retirement established business and residential communities and apartment division.
ALE Property Group Limited
(ASX:LEP) has tied up the $4.5 million sale of the Victoria Hotel in the regional centre of the state, representing a 98 per cent premium to the cost of the property when it was bought in 2003.
Real estate investment trust 360 Capital Industrial Fund
(ASX:TIX) has tied up the disposal of an asset on Barry Road in Campbellfield in Victoria for $4.6 million.
Growthpoint Properties Australia Limited
(ASX:GOZ) has secured a significant extension of a lease to engineering giant Downer EDI Limited
(ASX:DOW) at an office complex in Brisbane.
