Auction numbers up, prices are down
Sydney broke the record for spring auctions last weekend with 1058 homes going under the hammer. Melbourne is also seeing late spring auction numbers elevating, last weekend’s 1325 properties up for auction was a big jump on the 1152 set for sale the previous weekend. The increasing supply is leading to lower clearance rates and slowing value growth. Sydney has seen its fourth consecutive week of clearance rates below 80 per cent down from the 80.4 per cent average of the preceding four weeks. In Melbourne, the most recent four weekend average was down to 69.5 per cent from 76.4 per cent. Annual growth rates are also down for November but up on the year to date.
Construction activity on the rise
The Reserve Bank has left the cash rate on hold at 2.5 per cent for the 15th consecutive month. In its statement the RBA said that ‘while weakening property markets present a challenge in the near term, economic policies have been responding in a way that should support growth’.
ABS figures show a strong bounce in new dwelling approvals for October after an 11.2 per cent fall in September. Total dwelling approvals rose by a seasonally adjusted 11.4 per cent led by a rebound in multi-unit dwellings which were up by 30 per cent for the month. Detached dwelling slipped by 0.3 per cent. Victoria led the way for new homes with approvals up 27.6 per cent. Tasmania and NSW followed next with South Australia the only state to see a decline in approvals for October, down 3.5 per cent.
In more upbeat numbers, The Housing Industry Association says new home sales rose by 3 per cent in October after a flat September. The figures are a big improvement on the 5.7 per cent slump in July however they are still well off the April peak. The numbers indicate that new home construction activity should continue at healthy levels in 2015.
And research from CoreLogic RP Data shows November home values across the combined capital cities has slipped 0.3 per cent in November. Sydney and Perth bucked the trend gaining 1 per cent and 0.9 per cent respectively. Melbourne posted the biggest loss down 2.6 per cent for the month. National growth is up 0.8 per cent for the three months to the end of November and has advanced by 8.5 per cent so far this year.
Commentary
Turning to commentary and FNN spoke to Robert LaRocca from CoreLogic RP Data. He says the latest figures from November are simply a reflection of the volume coming onto the market in the lead up to Christmas.
‘Sydney continues to be the strongest of the capital city auction markets. Except for one week it’s been in the mid seventies and that was again repeated last week with 75.2 per cent. Melbourne is certainly showing some strain from very high volumes of auctions – around 1400 a week at the moment and anyone planning to buy between now and Christmas will be looking at these recent results with a smile on their face because the competitive tension has eased a bit. The thing that’s worth noting though, these are not bad outcomes for the market because we are at record high volumes of auctions – the unprecedented fact is that Sydney has seen more homes sold at auction so far this year than Melbourne and that’s never happened before.’
Australian auction results
Looking at this week’s auction results across Australian capital cities - Sydney recorded a 75 per cent clearance rate from 1058 properties for auction, Melbourne cleared 67 per cent from a late spring rush of 1325 properties, Brisbane had a 32 per cent clearance rate from 173 properties listed and Adelaide cleared 68 per cent from 100 listed auctions.
Commercial property sector
Cedar Woods Properties Limited
(ASX:CWP) says first stage of Williams Landing Shopping Centre is now open for business, providing retail stores and job opportunities for the 5000 residents already living at its landmark Williams Landing resident project.
Villa World Limited
(ASX:VLW) has announced the purchase of two sites in South East Queensland. The development sites at Joyner and Mango Hill cost a total of $13.65 million and are expected to deliver a total of 189 residential lots.
Mirvac Group
(ASX:MGR) has announced two new board members, appointing Christine Bartlett and Samantha Mostyn as non-executive directors increasing the number of directors to eight.
And Lend Lease Group
(ASX:LLC) has reached financial close on Darling Square and the ICC Sydney Hotel in deal with Infrastructure NSW and Sydney Harbour Foreshore Authority to develop the two sites worth an expected $1.9 billion when finished.
