Regulators look to real estate risk

Real Estate


Real estate risk

The risk of a correction in the housing market could leave investors exposed with super fund investors most at risk. ASIC Chairman Greg Medcraft has expressed his concern about a potential housing bubble in Sydney and Melbourne telling the AFR that, ‘History shows people don’t know they are in a bubble until it’s over’. Mr Medcraft cautioned borrowers taking on high debt at low interest rates which they won’t be able to afford once rates start rising again. 
 
Economic news
 
In a move which could increase pressure on local policy makers, New Zealand has announced a capital gains tax on residential property holdings. In a bid to control the rampant property market in Auckland, a new tax of up to 33 per cent will be levied on any property that is bought and then sold again within two years. The tax will only apply to homes that are not the seller’s main residence. Non-resident buyers are also required to hold a New Zealand bank account and Inland Revenue tax identification number. 
 
Home loan approvals were up in March, beating expectations. The 1.6 per cent rise was more than analyst expectations of a 1 per cent rise. Investor housing loans were up 6.4 per cent for the month while owner occupier loans increased 1.6 per cent. Economists expect the recent interest rate cut will continue to boost home loan demand. 
 
The latest HIA Autumn 2015 National Outlook has highlighted the record level of home building activity still falls short of current demand for new dwellings. HIA is forecasting a 13 per cent increase in new dwelling commencements to an all-time high of 205,490. HIA projections also indicate that dwelling commencements will fall by 10.6 per cent in the 2016 financial year and then fall a further 4.7 per cent in 2017. HIA also say detached housing commencements have peaked for the cycle and a lack of shovel ready land and other supply obstacles is hampering demand. 
 
Commentary

FNN spoke to Harley Dale from the Housing Industry Association the effects of the lack of new housing supply. 
 
‘There are a considerable number of potential clients of new house builders in many parts of the country who are not actually signing a contract to proceed to build a house because of the holding costs involved in terms of the considerable delay in bringing land to market and getting the correct approvals are simply making it unaffordable from a mortgage financing perspective’.
 
Australian auction results
 
Looking at this week’s auction results across Australian capital cities - Sydney recorded an 84 per cent clearance rate from 556 properties for auction, Melbourne cleared 80 per cent from 834 properties, Brisbane had a 46 per cent clearance rate from 94 properties listed and Adelaide cleared 79 per cent from 60 listed auctions. 
 
Commercial property sector

Australian Industrial REIT (ASX:ANI) say that the four proxy advisors have recommended clients vote no to the installation of 360 Capital Group as manager. 
 
Growthpoint Properies Australia (ASX:GOZ) has completed the acquisition of three industrial properties in Victoria for $57 million. 
 
BWP Trust (ASX:BWP) have divested a multi-tenanted industrial property in Blackburn, Victoria for $17.5 million, half a million above its valuation in December. 
 
And Mirvac Group (ASX:MGR) have beaten out Leighton Holdings and Walker Corporation to win the right to develop Brisbane Racing’s Club’s Eagle Farm Residential Precinct.