Investor appetite for property remains strong despite mounting evidence showing the real estate sector is coming off its highs. Mortgage Choice Limited (ASX:MOC) says the property market is being buoyed by investor demand. Despite the slowing pace of growth, research compiled by the Australian mortgage broking firm shows investors currently account for more than 30 per cent of all new loans written compared to 27 per cent recorded last year. Mortgage Choice says while the investment market growing the percentage of individual investors is shrinking with rising property prices making it harder for individuals to jump onto the property ladder alone.
Housing coming off highs
While demand for property remains strong the latest loan data has shown the pace of home loan approvals is slowing. The Australian Bureau of Statistics reports 52,092 home loan were approved in May. The result was only 21 approvals higher from April but 4.6 per cent stronger over the year and better than the 0.5 per cent fall economists had expected. Commsec says the results show the froth coming off the housing market with new home loans flattening, building approvals easing and home prices showing signs of more moderate growth.
Battle between demand & supply
With Australia’s population rising to 23.32 million last year the battle between demand and supple for property continues to remain in the spotlight. FNN asked AMP Limited’s
(ASX:AMP) AMP Capital Investors Head of Investment Strategy and Chief Economist, Dr Shane Oliver how the property sector is positioned to meet demand:
"The reality of Australian property is that it’s relatively solid demand compared to constrained supply which has put up prices. It’s not the foreign buyers, it’s not the SMSF’s, superannuation funds buying, it is basically Australians, buying on the back of low interest rates at a time when supply is constrained and the reality is, is that there are more and more Australians.
Immigration, population growth generally over the last 12 months is running at 1.7 per cent. You don’t find many rich countries with that sort of population growth. Population in Japan is going backwards, much of Europe going backwards and even in the US it’s slower than Australia. So you can sort of see what’s happening here.
We’ve got strong underlying demand for housing from Australians but the supply has not kept up. Now I’m hopeful that the current building boom we’re seeing in Australian property will see some of the supply and balance addressed over the course of the next couple of years but we need to see that building boom go on for a while there before it starts to have a significant impact on prices but that’s the underlying reality. You’ve got strong population growth, you’ve got strong household formation, low interest rates, constrained supply, guess what, prices go up and that’s what we are seeing."
Australian auction results
Sydney recorded a 78 per cent clearance rate from 410 properties for auction
Melbourne posted a 73 per cent clearance rate from 478 properties for auction
Brisbane booked a 58 per cent clearance rate from 77 properties for auction
Adelaide saw a 67 per cent clearance rate from 42 properties for auction
Commercial property
Fairfax Media Limited’s
(ASX:FXJ) The Domain Group has inked a deal to buy a Canberra based online property portal AllHomes for $50 million to boost its position in the ACT and regional New South Wales.
Mark Bouris’ Yellow Brick Road Holdings Limited
(ASX:YBR) will acquire privately owned mortgage manager RESI Mortgage Corporation for $36 million to take on the Big Four Bank’s share of the market.
Westpac Banking Corporation
(ASX:WBC) has taken the major media sponsorship position on Onthehouse Holdings Limited
(ASX:OTH) to assist the property information portal to grow its ties with real estate agents and property consumers.
Takeover target Australand Property Group
(ASX:ALZ) has edged closer to being taken over by Singapore-listed Frasers Centrepoint Limited (SGX:TQ5) with Australia’s Foreign Investment Review Board giving the green light for the $2.6 billion takeover.
