Property prices continue to head higher, home loans have risen and auction clearance rates are remaining buoyant. However, Commonwealth Bank of Australia
(ASX:CBA) has sought to hose down fears the Australian property market is in a bubble. The bank believes interest in real estate is a rational response to low interest rates and there is minimal risk of Aussies suffering a US-style house price collapse. CBA says, “Factors that typically characterise a house price bubble, such as rapid credit growth, an easing in lending standards, and expectations of rapidly rising prices, are either not evident or evident only to a limited extent in Australia”.
House prices continue to climb higher
Australian housing prices have climbed more than expected in the June quarter. The Australian Bureau of Statistics reports capital city house prices rose 1.8 per cent over the second quarter after rising 1.5 per cent in the first quarter. Over the year to June the house price index has increased 10.1 per cent, led by growth in the largest Australian cities. Westpac Banking Corporation Limited
(ASX:WBC) says the moderation in price growth looks to be a likely soft landing for the market while the bank believes housing finance approvals have shown a clear 'topping out' in the first half of 2014.
Housing finance falls short of expectations
The Australian Bureau of Statistics has reported home loans granted rose 0.2 per cent to 52,153 in June, against expectations for a gain of 0.6 per cent. Total housing finance by value rose 1 per cent to $27.7 billion in the same month.
Commsec sees property price growth easing
Commsec Economist, Savanth Sebastian's Australian property price outlook:
"It’s been huge hasn’t it? In the capital cities particularly around Sydney and Melbourne but you really haven’t seen that translation effect take place in the other capital cities just yet so I think what will happen over the next 12 months is you start to see Queensland, Adelaide, Perth, those markets start to lift, those regional capital cities if you like.
Around Sydney, Melbourne I think, still strong growth, keep in mind, there’s a huge supply side response coming, we’ve seen building approvals, council approvals to build new homes are at record highs and it means that we’re building a lot more supply, that should ease price growth. So we’re probably not going to see that 20 per cent growth in property prices, something more sedate, 7-8 per cent growth is what we are expecting nationally."
Australian auction results
Last weekend’s auction clearance rates were given a boost just days after the Reserve Bank decided to again keep rates at historic lows. Sydney recorded an 80 per cent clearance rate from 434 properties for auction, Melbourne posted a 73 per cent clearance rate from 624 properties for auction, Brisbane booked a 50 per cent clearance rate from 67 properties for auction, and, Adelaide saw a 81 per cent clearance rate from 35 properties for auction.
Commercial property
Property firm GPT Group
(ASX:GPT) has reported a first half profit fall but increased its earnings per share guidance on the back of strength in its funds management business.
Online real estate advertiser REA Group Limited
(ASX:REA) has improved its full year net profit by 37 per cent following a period of acquisitions and investments.
West Australian focussed Finbar Group Limited
(ASX:FRI) will acquire and develop the Civic Triangle Site in South Perth as part of a consortium after entering into a formal contract with the City of South Perth.
Property investor 360 Capital Industrial Fund
(ASX:TIX) has inked a deal to buy an industrial facility in Carole Park in Queensland for $23.9 million.
