Property under RBA spotlight

Real Estate


2015 off to a galloping start
 
The property market is off and running into 2015 with Sydney producing a strong clearance rate of 83.3 per cent over the Valentines weekend auctions. The harbour city remains the leader of capital city housing growth rising 12.8 per cent in 2014 and far outstripping results obtained in Melbourne and Brisbane. 
 
RBA to watch property prices

Minutes of the RBA meeting released today reveal that the central bank was debating whether to cut interest rates in February or wait till March. The RBA decided to do so earlier rather than later as they could offer additional communication in the forthcoming Statement on Monetary Policy. However the RBA did say it will be watching property prices carefully in the wake of the cut as well as keeping a close eye on the impact of tighter prudential regulations designed to curb investor activity. 
 
A new report by global real estate company Colliers International is showing a shift in the landscape of CBD buildings across Australia. Ownership is still quite concentrated with Australian institutions dominating however there has been a 9 per cent increase in offshore ownership in the past 5 years. Private and government ownership is on the decline. City living is becoming more popular with an unprecedented level of residential development now occurring. Old office blocks are being demolished to make way for residential developments. Sydney and Melbourne are the stand out cities in that regard. 
 
And ABS Housing Finance for December has shown a 4.7 per cent rise in the number of dwelling approvals across the board. Investors applying for home loans were up by 6 per cent however first home buyers were pushed down to their lowest share of the home loan market in 10 years.

Commentary

However it’s not all bad news for first home buyers, turning to commentary, Jessica Darnsborough from Mortgage Choice says the figures bode well for 2015. 

“Home loan demand hit a five year high in November with new data from the Australian Bureau of Statistics showing more than 53,000 home loans were approved over the course of the month. Investors dominated the market with this buyer segment accounting for more than 40 per cent of all loans written. On the other hand the percentage of first home buyers was down, falling slightly to 14.5 per cent. But while the percentage of first home buyers entering the market was down, the number of loans written for this buyer type was actually up which is good news for the rest of the year. Looking forward we expect to see a moderate to slight increase in home loan demand. Moving forward, throughout 2015 with interest rates sitting at all time lows”. 
 
Australian auction results
 
Looking at this week’s Valentines Day auction results across Australian capital cities - Sydney recorded an 83 per cent clearance rate from 454 properties for auction, Melbourne cleared 74 per cent from 473 properties, Brisbane had a 49 per cent clearance rate from 76 properties listed and Adelaide cleared 54 per cent from 60 listed auctions. 
 
Commercial property sector
 
Mirvac Group (ASX:MGR) has improved its first half profit by 15 per cent and affirmed its growth targets for the full 2015 financial year. 
 
Stockland Limited (ASX:SGP) has boosted its first half result on the back of strength from its residential business with residential profit was up by 73 per cent.  
 
Shopping Centres Australasia Property Group Limited (ASX:SCP) is reporting a 128 per cent jump in first half profit on the back of positive revaluations of the property portfolio and reduced vacancy rates. 
 
Abacus Property Group (ASX:ABP) has entered into a deal with global investment firm KKR to buy Oasis Shopping Centre on Queensland’s Gold Coast for $130.5 million.