Aussie visitors spending despite high costs
Australia has been ranked the fourth most expensive country in the world. The International Comparison Program put Switzerland at the top of the ladder followed by Norway and Bermuda. Following Australia in fourth position, Denmark came in fifth ahead of Sweden, Japan, Finland, Luxembourg and Canada. Based on the survey The Economist predicted China is on track to overtake America as the world’s biggest economy by the end this year.
While Australia may be expensive it has not stopped international visitors from spending money. The Australian Government’s Austrade International Visitor Survey reports visitors to Australia increased spending by 6 per cent to a record $28.9 billion last year. The report attributed the surge to continuing growth out of China, European markets recovery and record US arrivals.
Domestic housing data coming off highs
The latest housing data has come off last year’s heady highs but still paints a solid picture of the sector. Building approvals fell more than expected over March but are still showing strength over the year. The Australian Bureau of Statistics reports building approvals dropped 3.5 per cent in March but are 20 per cent stronger over the year. Commenting on the figures Westpac Banking Corporation
(ASX:ABC) says the broader picture is still of activity 'topping out' at a high level, rather than a swing into declines.
While new homes sales remain at a three-year high the pace of growth has declined. The Housing Industry Association has reported new home sales gained 0.2 per cent in March after jumping 4.6 per cent the month before. Over the year new homes sales have gained 23.4 per cent over the year. HIA says strong results occurred in the areas where a new housing recovery is just gaining traction.
May interest rate decision
The Reserve Bank of Australia (RBA) has decided to keep Australia’s official cash rate on hold at record low of 2.5 per cent for its eight straight meeting. As broadly expected the central bank held its fire, affirmed its neutral policy bias and highlighted a significant rise in dwelling prices over the year.
Commentary
CommSec Chief Economist, Craig James shares his outlook for interest rates: “Well, certainly we do expect the Reserve Bank to stay on the interest rate sidelines for the next couple of months. There’s no need for the Reserve Bank to be either lifting rates or cutting rates in the short term but we do believe the Australian economy has been got momentum now, driven by the housing market. It’s going to see an improvement in the jobs market as we move into the second half of the year. And by the December quarter, October, November or December, we will see the Reserve Bank lifting interest rates by a 0.25 per cent.”
Australian auction results
Sydney recorded a 77 per cent clearance rate from 462 properties for auction
Melbourne posted a 72 per cent clearance rate from 572 properties for auction
Brisbane booked a 61 per cent clearance rate from 35 properties for auction
Adelaide saw a 73 per cent clearance rate from 15 properties for auction
Commercial property sector
Charter Hall Group
(ASX:CHC) has expanded its wholesale partnerships through acquiring a $127 million portfolio of Bunnings stores in Western Australia and Queensland from Bunnings.
Real estate manager Mirvac Group
(ASX:MGR) has affirmed its full-year operating earnings per share guidance and struck an $826 million deal with private equity giant Blackstone.
Property developer Lend Lease Group
(ASX:LLC) has been given the go-ahead to construct the final and tallest office tower at its Barangaroo hotel and casino development in Sydney.
Property manager Stockland Limited
(ASX:SGP) has confirmed it expects to achieve annual earnings growth at the top of its guidance range, supported by strength in its residential business.
