Moody’s Investor Services has released a report claiming rising house prices are not yet a concern for Australian bank but noted the risks are increasing. The credit rating agency acknowledges the rapid rise of house prices has stoked fears of a housing bubble and the possible impact on banks and the financial sector.
Moody’s says the extent of overvaluation appears to be limited and house prices are near fair value with the key cash rate at a record low. However, looking ahead the agency has warned prices remain vulnerable to rising interest rates, possible economic volatility and a slowing resources investment boom.
Real estate figures
The Australian Bureau of Statistics property price index has shown Australian home values rose 1.7 per cent over the March quarter for a gain of 10.9 per cent over the year. The growth was boosted by a quaterly gain of 2.3 per cent in Sydney prices for a gain of almost 16 per cent over the year.
Demand for home loans dropped in March despite expectations for a rise. The Australian Bureau of Statistics reports home loans granted fell 0.9 per cent to 52,013. Total housing finance by value fell 1.1 per cent to $27.35 billion. The value of loans for owner occupied housing fell 1.2 per cent to $16.64 billion. The value of loans for investment housing fell 0.8 per cent to $10.7 billion.
Commentary
CommSec Chief Economist, Craig James outlines where he sees house prices heading this year:
“I think we will see some moderation in property prices, moderation in the growth rate of property prices over the second half of the year. At present, nationally, we are seeing growth of around 10 or 11 per cent and I don't think that's sustainable and I think, given the amount of supply of new homes that will be coming onto the market over the second half of the year, increased supply, high prices choking off some of the demand, the supply and demand will come back into balance and then by the end of this year I think we are probably going to see home prices rise nationally by between 5 and 7 per cent.”
That was CommSec Chief Economist, Craig James.
Australian auction results
Sydney recorded a 78 per cent clearance rate from 465 properties for auction
Melbourne posted a 73 per cent clearance rate from 603 properties for auction
Brisbane booked a 46 per cent clearance rate from 62 properties for auction
Adelaide saw a 62 per cent clearance rate from 34 properties for auction
Commercial property sector
CFS Retail Property Trust Group
(ASX:CFX) has boosted its stake in Melbourne CBD retail outlet DFO South Wharf to 75 per cent after paying $87.6 million for the extra 25 per cent interest.
Investa Office Fund’s
(ASX:IOF) redevelopment of a building site in Sydney’s CBD will go-ahead after securing a pre-commitment from engineering firm Arup for 27 per cent of the new building.
Westfield Group
(ASX:WDC) has sweetened its proposed $70 billion restructure in an effort to win over Westfield Retail Trust’s
(ASX:WRT) investors ahead of a shareholder vote on May 29, 2014.
Property investor Goodman Group
(ASX:GMG) says it is well positioned to meet its growth aspirations after releasing an upbeat update showing it lifted total assets under management by 13 per cent in the third quarter.
Investment fund Centuria Capital Limited
(ASX:CNI) has inked a deal to sell a commercial office building on Queen St in Melbourne for $40.7 million.
