Spring market shows signs of rebound

Real Estate


The latest auction results are showing a small rebound in the clearance rates for the nation. A preliminary national clearance rate from Core Logic – RP Data came in at 72 per cent, up from the previous weekend’s rate of 69.6%. Sydney rates lifted 1.4 per cent and Melbourne rates jumped nearly 6 per cent despite higher volumes of homes under the hammer. In fact overall auction volumes were significantly higher from the previous weekend which was impacted by AFL & NRL grand finals as well as long weekends due to public holidays. The best is yet to come however with all eyes turning to Oct 24, the pre-Melbourne Cup weekend and traditionally a ‘Super Saturday’ of the auction calendar.   
 
Real Estate figures
 
The Reserve Bank of Australia (RBA) has kept the official cash on hold at 2 per cent. The decision came after two rate cuts earlier this year in February and May. Explaining the decision, the Reserve Bank again noted the further softening of conditions in China and eastern Asia, alongside a slip in key commodity prices. Emphasis was placed on expectations that US Federal Reserve will increase its policy rate over the period ahead but it was qualified with a suggestion that other countries are still pushing rates lower. Strong housing prices in Sydney and Melbourne were noted, however the RBA said regulatory measures were helping to contain housing-related risks. 
 
The Housing Industry Association is reporting that new home sales picked up in August driven mainly by the sales of detached houses. The figures rebounded from a 0.4 per cent decline in July to a 2.3 per cent rise in August. Detached house sales were up 3.5 per cent while multi-unit sales dropped 1.7 per cent. Total sales activity has peaked for the year however housing construction is expected to remain at high levels. 
 
Meanwhile data is supporting the regulator efforts of a slowdown in lending to property investors. Housing finance for August shows the value of loans to investors dipped 0.4 per cent in August, the second consecutive monthly decline. Meanwhile the value of owner-occupier lending jumped 6.1 per cent during the month more than offsetting the slowdown investment lending. The number of loan approvals for owner-occupiers increased a smaller-than-anticipated 2.9 per cent however. The value of total housing finance was up 3.5 per cent for the month. 
 
Turning to commentary and FNN spoke to Jessica Darnborough from Mortgage Choice about what the data means.  
 
“We have seen a lot of lenders pare back on their investment lending with changes to LVR’s and other restrictions around their investment products and pricing. We did however see a massive uptick in owner-occupier housing. We have seen home lenders act quite competitively in this space of late with many offering incredible incentives for owner-occupier borrowers. This level of demand has not been seen since December 2009 when the boosted home owners grant was in full swing. I don’t think we are at the top of the market. I think we will continue to see a reduction in investment lending but a continued uptick in owner-occupier lending moving forward.” 
 
Australian auction results
 
Looking at this week’s auction results across Australian capital cities - Sydney recorded a 70 per cent clearance rate from 1020 properties for auction, Melbourne cleared 74 per cent from a Super Saturday of 1250 properties, Brisbane had a 76 per cent clearance rate from 146 properties listed and Adelaide cleared 67 per cent from 87 listed auctions. 
 
Commercial property sector
 
PBD Developments Limited (ASX:PBD) says it has managed to secure a second loan agreement worth $11 million with AP Finance taking the total unsecured loan facility to $22 million.
 
An application by Australian Industrial REIT (ASX:ANI) to the Australian Government Takeovers Panel, regarding an alleged misleading notice regarding the off-market takeover bid by 360 Capital Industrial Fund was denied as having no merit. 
 
iProperty Group Limited (ASX:IPP) has sought to consolidate its position in the Thai market with the $2.7 million acquisition of real estate portal, Prakard.com.
 
And Federation Centres (ASX:FDC) has appointed Michael O’Brien as Chief Investment Officer following a recent review of the group’s operating model.