Sydney property hits the skids

Real Estate

Spring selling slows in Sydney
The real estate market is again showing spread amongst different regions across the country. With the spring selling season upon us next week clearance rates have increased in most capital cities with the exception of Sydney. Melbourne is bouncing back from last weekend’s weak performance with a clearance rate of 79.1%. However the Reserve Bank is admitting economic growth may be slower than previously thought and if unemployment rates fail to improve shortly the next movement in interest rates could be down rather than up. 
Sydney’s auction clearance rate is heading steadily downwards after the market hit a low of 73.7 per cent this past weekend. That’s well below the 81.9 per cent rate of the same weekend a year ago. Record levels of supply are having an impact as sellers flood the Sydney market with unprecedented numbers of homes for sale. 816 homes were listed for auction this weekend, higher than the 723 last week and nearly double the 440 for the same weekend last year. The clearance rate has held below 80 per cent for the past six weekends.  
Meanwhile, the Winter edition of Renovations Roundup from HIA has shown that low interest rates have helped a 1.2 per cent jump in the growth of home renovations which slumped a whopping 16 per cent between 2011 and 2013. However the recent strong growth in house prices has lifted equity in the Sydney and Melbourne markets especially resulting in increased renovations and home improvements. The outlook is for a 4.5 per cent increase in renovations for the remainder of 2015 with slower growth of 0.4 per cent for 2016. 
Another HIA report into the sales of new homes shows a seasonally adjusted 0.4 per cent dip in July from June. Sales of detached houses advanced 0.7 per cent in July while multi unit sales slipped by 4.2 per cent. The data points to a cyclical peak of total new home sales back in April with a very small subsequent downward trend since then. However three consecutive years of strong growth should support another healthy year of home construction. 
FNN spoke to Harley Dale, Chief Economist with HIA about what the report on new home sales indicates about future growth in new home sales. 
“Well there’s been a little bit of a decline in new home sales in the month of July which continues a modest downward trend which has been in play for a few months now. It suggests we are not going to see any further growth in new homes construction in the current fiscal year but we are going to see volumes of activity remain very high so the outlook is a very healthy one but we are probably not going to see any further growth this year.”
Australian auction results
Looking at this week’s auction results across Australian capital cities - Sydney recorded a 74 per cent clearance rate from 815 properties for auction, Melbourne cleared 79 per cent from 1047 properties, Brisbane had a 54 per cent clearance rate from 118 properties listed and Adelaide cleared 62 per cent from 71 listed auctions. 
Commercial property sector
Australian Industrial REIT (ASX:ANI) reported a net profit of $36.3 million for the 2015 financial year on the back of strong operational performance and 100 per cent leasing. 
Aveo Group (ASX:AOG) says it has managed to achieve a record retirement result in 2015 and is looking at a 45% increase in underlying net profit guidance for the 2016 financial year of over $80 million. 
PEET Group (ASX:PPC) has also seen a strong 22 per cent lift in both revenue and operating profit announcing a fully-franked final dividend of 3 cents per share. 
Meanwhile Cedar Woods Properties (ASX:CWP) says a 5.6 per cent jump in profit to $42.6 million is a record result and it expects profit momentum to continue in 2016.

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