Bubble – what property bubble?

Real Estate


A number of experts are quick to oppose the idea that there is a property bubble or that it is set to burst. Melbourne’s hot auction market seems to be following the Sydney market lower with both cities showing falling clearance rates despite the traditionally stronger spring selling season. Unprecedented numbers of homes on offer are also compounding the situation as sellers face more competition while buyers get more choice. Analysts also argue that depreciating Aussie dollar makes the Australian housing market more attractive overseas, particularly to Chinese buyers while the shortage of supply in major markets expected to last for some years yet. 
 
Real estate news
 
According to figures from CoreLogic RP Data, 92,000 properties are currently listed for sale across Australian capital cities, the highest level since March this year. 26,000 of those properties have been listed since the start of spring. No surprises that Sydney and Melbourne show the most activity with 8,371 properties on sale in Sydney and 7830 up for grabs in Melbourne. 
 
Figures released by the ABS show that the Australian population grew by 1.4 per cent in the 12 months to March 2015. That’s a total of 316,000 people with 173,000 coming from migration inflow and the remaining 143,000 coming from natural increase. Victoria and New South Wales recorded the strongest growth rates with 1.7 per cent and 1.4 per cent respectively. 
 
Despite the increase in population first home buyer activity remains subdued. Data from the ABS shows the number of loans approved for first home buyers fell by 0.7 per cent in July. The value of loans approved to first home buyers accounted for just 7.7 per cent of residential lending in NSW, just above May’s record low of 7.2 per cent. Victoria fared better at 11.7 per cent whilst in WA, first home buyers accounted for 18.9 per cent of all loans approved. The Northern Territory saw the least share of first home buyers at 6.9 per cent of total loans approved. 
 
Commentary

Harley Dale from the Housing Industry Association has this week claimed that apartment builders have now outstripped firms tied to large mining projects as the top construction firms in the country accournding to information released in the HIA-Cordell Construction 100 for 2014/15. 

‘We’ve seen quite a clear trend away from mining related investment towards not only apartment construction but detached housing construction but also many ranges of commercial construction as well. It’s not quite enough yet to tip all the bucket over that was left with mining related investment but we are certainly moving in a direction where there is some encouraging investment outlooks for a range of areas that aren’t related to mining.”
 
Australian auction results

Looking at this week’s auction results across Australian capital cities - Sydney recorded a 70 per cent clearance rate from 984 properties for auction, Melbourne cleared 73 per cent from 1101 properties, Brisbane had a 56 per cent clearance rate from 132 properties listed and Adelaide cleared 73 per cent from 45 listed auctions.
 
Commercial property sector
 
And Lend Lease (ASX:LLC) and Stockland (ASX:SGP) have missed out on the second largest purchase of industrial property in Asia Pacific history. Singaporean Group GIC will pay $1.073 billion for the Frasers Property Australia portfolio which includes the Kmart Distribution Centre at Eastern Creek, NSW. 
 
360 Capital Industrial Fund (ASX:TIX) says it will call a meeting of members of takeover target Australian Industrial REIT (ASX:ANI) on 26 October in Sydney in a bid to remove Fife Funds as the responsible entity of ANI. 
 
Industrial REIT (ASX:IDR) has sold a 8.29 percent stake to 360 Capital Total Return Fund for $20.5 million. 
 
And Dexus Property Group (ASX:DXS) say they have secured lease pre-commitments from Neil Perry’s The Burger Project and Chat Thai for the revitalised Gateway development at Sydney’s Circular Quay.