Home construction to boom in 2015

Real Estate


Where to in 2015?
 
New home construction is set to be a major driver of the economy in 2015 with new home sales continuing to go from strength to strength. Home owners are showing more and more confidence, particularly those who have managed to pay off their homes and ‘tradies’ involved in the construction industry. Meanwhile the momentum in the housing industry is showing a disparity between states reliant on mining income and investment and those states that aren’t. Outlook confidence is strongest in NSW and Victoria, whilst WA remains gloomy.  

Real estate economic news
 
Following last week’s report from the ABS showing that dwelling starts in the September quarter hit an all time high the Housing Industry Association says the trend is continuing into November.
 
The HIA New Home Sales Report shows a 2.2 per cent rise in November following a 3 per cent lift in October. Sales of detached houses were down by 1.5 per cent but the fall was more than offset by sales of multi-units up by a seasonally adjusted 21.4 per cent in November to reach their highest level in over a decade. 
 
The St George/Melbourne Institute of Household Financial Conditions has shown a rise of 4.3% in the December quarter with the fourth consecutive rise taking the yearly advance to 9.3%. More people are saving money while record low interest rates are allowing people to pay off their home loans off quicker. More than 40 per cent of St George customers were ahead on their repayments and home owner confidence was at a record high for those that own their homes outright. 
 
Meanwhile the NAB Quarterly Australian Residential Property Survey for the December indicates that the outlook for house prices is easing in all states and territories. The index fell to 12 points in Q4 from 19 points in Q3. NSW overtook QLD as the strongest state while sentiment in WA is still deeply negative.  Rental prospects are unchanged with stronger expectations in Victoria and Queensland masking softer outlooks in NSW, South Australia and the Northern Territory. 
 
Commentary
 
FNN spoke to Bill Evans Chief Economist at Westpac about his views on where house prices will head in 2015.
 
“I’m still looking at high single digits for house prices. Obviously different markets will perform differently. The Sydney market is still the one that’s in the best condition. It’s still the one where we have the most undersupply and the underlying economy is a lot stronger in NSW that it is in other states. So I would say that the Sydney market will continue to outperform. The Melbourne market is starting to face some challenges of oversupply and Brisbane and per of course, whilst the oversupply story is really not there the problem is the underlying economy given the over reliance of the resources sector. So by far, the standout housing market will continue to be Sydney and NSW.”
 
Property sector headlines
 
Stockland Limited (ASX:SGP) paid $67 million for a site in Queensland it plans to develop into a project with an end value of $590 million. Plans for the residential zoned land in Brisbane’s north include 1,500 new homes, a village centre, and a lake surrounded by walking and cycling paths and a number of foreshore parks. 
 
iProperty Group Limited (ASX:IPP) has confirmed it is expecting its highest ever fourth quarter revenues. Quarterly billings of $8 million were up 57 per cent from the September quarter and up 29 per cent from the previous year. 
 
Ingenia Communities Group Limited (ASX:INA) will pay $12 million for the Sydney Hills Holiday Park in the growing residential Hills district in Sydney. Surrounding land has been recently rezoned for medium density residential. 
 
And Nine Entertainment Company (ASX:NEC) has returned to basics with the latest season of its hit renovation show ‘The Block’. After a horror series last year in which the renovated apartments underperformed despite the frothy Melbourne auction market the tenth season will go back to the tried and true formula of overhauling a rundown property in a trophy suburb.