Property market slowdown needed
The property market could soon feel the effects of plunging stock market with real estate agents expecting to see lower enquiries in the next few weeks as buyer take stock of their portfolios. The heat in the Sydney market has already been coming off the boil as the market is flooded with unprecedented sales. Sydney property prices are up around 20 per cent in the past year with Melbourne prices adding around 12 per cent. Nationally, prices have risen 30 per cent in the past three years. Some economists believe that with no interest rate hikes on the horizon the Australian Prudential Regulation Authority may be forced to make further restrictions on bank lending to borrowers in order to curtail the market.
Real Estate economic news
AMP Capital Chief Economist Dr Shane Oliver has described the property markets in Sydney and Melbourne as overvalued. Speaking at an Asia-Pacific Banking and Finance event Dr Oliver said the market has gone too far, is overvalued and has a high degree of euphoric buying. “Fear of missing out’ has led property buyers to become irrational. However Dr Oliver doesn’t believe the ‘property bubble’ will burst but he says the buying frenzy must slow.
The latest long term forecast from industry analyst BIS Shrapnel is predicting three years of a soft economy before stronger growth resumes. The report says it expects another 18 months of strong residential building before and upswing in renovations activity. However the strength will not be uniform between regions with low stock set to drive stronger advances in the Queensland and NSW markets. BIS Shrapnel also predicts that solid growth in private non-dwelling building will offset a fall in government building.
FNN spoke to Richard Robinson from BIS Shrapnel about the long term outlook.
As you know the property prices have come through strongly but so have dwelling approvals and dwelling approvals are at their highest level annually, its over 200,00 for the year. So what that means is that there is still a fair bit of work in the pipeline so we’re looking at at least another 18 months, possibly even two years worth of further growth in dwelling building now.
Australian auction results
Looking at this week’s auction results across Australian capital cities - Sydney recorded a 76 per cent clearance rate from 724 properties for auction, Melbourne cleared 76 per cent from 838 properties, Brisbane had a 44 per cent clearance rate from 111 properties listed and Adelaide cleared 71 per cent from 60 listed auctions.
Commercial property sector
Westfield Corporation (ASX:WFD)
has delivered a profit of $US465.9 million in the six months to June 30.
Meanwhile the spin-off of Westfield’s Australian business Scentre Group limited (ASX:SCG)
has reported a significant fall in net profit to $1.08 billion for the half year.
Lend Lease Group (ASX:LLC)
achieved a strong profit of $619 million and has plenty of room for good growth potential into next year with $45 billion dollars of business in the development pipeline.
And Dexus Property Group (ASX:DXS)
has announced that Chris Beare will retire as director and Chairman of the Board to be replaced by Richard Sheppard.