The good fortune associated with buying a new home during the Chinese New Year fuelled the Sydney auction market to a near record clearance race of 85 per cent whilst buyers were also out in force in Canberra over the weekend. The ACT was awash with inspection groups and registered bidders with 44 of the 50 homes for sale sold at auction or prior to the weekend. Elsewhere moves are afoot to make changes to the Significant Investor Visa Scheme amid claims that the Visa grants by the Federal Government are up 500 per cent on the previous year. The falling dollar is also helping to make foreign investment in Australia look cheap with pockets of the Australian property market set to enjoy plenty of momentum for the remainder of the year.
Real estate economic news
The HIA-RP Data Residential Land Report is showing that in the September 2014 quarter, land market transactions fell while price growth lifted indicating potential supply bottlenecks starting to affect the residential land market. Turnover in the land market was down by 16.7 per cent for the 3rd quarter compared to a rise of 3.3 per cent in prices. The lack of vacant land could increase the cost of construction which is currently proving a strong driver of the economy.
The HIA has also released its Summer 2015 National Outlook. In the report, the Housing Industry Association says that new home building is set to continue at record levels. Close to 196 thousand homes are expected to be commenced during the 2015 financial year with strong growth expected in certain markets, declines in new dwelling commencement growth are forecast for South Australia, WA, Tassie and the ACT and the Northern Territory whilst growth should remain positive in Queensland, Victoria and New South Wales.
Home building boom to continue
Turning to commentary and FNN spoke to Harley Dale Chief Economist with HIA and asked what impact the recent cut in the cash rate could have on the outlook for the market.
‘The further lowering of borrowing costs is going to be a positive for the residential construction outlook. We already have a really strong boom in new home building underway and that can only be underpinned for a longer period of time by a further lowering in interest rates. We’re also seeing, slowly, momentum building in the renovations part of the market which has been quite slow to date, but with further borrowing costs coming down you’ll find that you should get hopefully a little bit of a kick along on that renovations side of things particularly as we move through to 2015/2016 financial year’.
Australian auction results
Looking at this week’s auction results across Australian capital cities - Sydney recorded an 85 per cent clearance rate from 636 properties for auction, Melbourne cleared 77 per cent from 906 properties, Brisbane had a 57 per cent clearance rate from 86 properties listed and Adelaide cleared 62 per cent from 78 listed auctions.
Commercial property sector
Lend Lease Group (ASX:LLC)
has reported a 25 per cent jump in half year profit due in part to housing construction strength in both the UK and Australian residential markets. Apartment pre-sales in the local market were up 195 per cent for the 6 months.
Building products supplier James Hardie Industries (ASX:JHX)
says its third quarter results reflect increased volumes across its US, European and Asia Pacific businesses.
Genworth Mortgage Insurance Australia (ASX:GMA)
advised the market that Westpac Bank (ASX:WBC)
is terminating an agreement for the provision of lenders mortgage insurance with Genworth following a strategic review.
And Villa World Limited (ASX:VLW)
has agreed to pay $10.5 million for land in Brisbane’s Bayside areas which it will market as 86 lots of premium land-only sites.