Reserve Bank eyes market heat

Real Estate

Spring spirits remain high
 
The first month of spring has seen continued buoyant activity in the housing market with strong market activity and high auction clearance rates across the capital cities in particular Sydney and Melbourne. Capital gains have shown signs of slowing though with a 0.3 per cent fall in dwelling values across the five largest capital cities in the first three weeks of the month. 
 
RBA talks with regulators over risky lending
 
Property prices came increasingly under the spotlight with the RBA’s Financial Stability Review released last week. The central bank warned the housing and mortgage markets were becoming unbalanced. It said banks had the potential to ease lending standards too far under current strong investor demand. The RBA also said current vigorous growth in investor demand particularly in Sydney and Melbourne was a sign of speculative excess increasing the potential for prices to fall later. Commercial property has also attracted strong investment from both domestic and foreign markets which has had an adverse impact on prices and rents. Any reversal of demand could expose the market to a sharp re-pricing.
 
Commentary

Soon-to-be listed GPT Metro Office Fund Manager, Chris Blackmore provides an outlook for commercial property.

Investor credit grows
 
Growth in investor loans is at its highest in nearly a quarter of a century. The release of August credit data from the RBA shows a 9.2 per cent lift in outstanding loans to investors for the year-to-date, three times higher than the rate of inflation. In contrast, business loans have grown by just 3.2 per cent adding to fears of a crackdown on property investment and negative gearing. 
 
Australian auction results
 
Sydney recorded an 82 per cent clearance rate from 723 properties for auction
Melbourne cleared 84 per cent from 44 properties on AFL Grand Final day
Brisbane had a 43 per cent clearance rate from 106 properties listed
Adelaide cleared 70 per cent from 28 listed auctions
 
Commercial property sector
 
Property developer Lend Lease Group (ASX:LLC) has once again been awarded top spot the Housing Industry Association’s top one hundred construction companies winning $4.94 billion of building contracts in the 12 months till March. 
 
Ingenia Communities Group (ASX:INA) has raised $73 million in a share placement will be used towards acquiring additional properties to expand its Lifestyle Parks portfolio.
 
CFS Retail Property Trust Group (ASX:CFX) will ask share holders to vote next month on changing the company’s name to Novion Property Group.
 
Folkestone Limited (ASX:FLK) has entered a 50:50 joint venture with Wilmac Properties to develop Stage 2 of its Millers Junction Project in Victoria.