Rate rises spook property investors

Real Estate

ANZ Banking Group became the last of Australia’s big four banks to announce increases to interest rates on investor and owner-occupied homes. The move by ANZ came hot on the heels of NAB’s announcement that morning, following action taken earlier in the week by Westpac  and the Commonwealth Bank.

It would appear that homebuyers did not take the move lightly as Sydney reported its lowest clearance rate of the year at 65 percent.  Meanwhile Melbourne and Brisbane clearance rates both slipped from recent peaks; a sign that the prospect of higher mortgage-interest rates is not sitting well with skittish owner-occupiers. 
 
Economic news
 
The Reserve Bank noted that the main domestic risk to financial stability and the economy more broadly, continues to come from the housing market. Nonetheless the RBA continues to feel that the response of the banks to supervisory measures implemented by APRA were helping to manage these risks. 
 
Melbourne and Sydney reported sharp declines in the rate of house price growth in the three months to September, according to the Domain.com.au House Price Report. The paper highlighted most other capitals reported weakening market activity as Perth house prices continue to fall and Brisbane’s property market remains flat. The real estate platform said general outlook for housing markets across Australia is moderate to modest growth over the remainder of 2015 and in to 2016. 
 
Commentary
 
Domain Senior Economist, Dr Andrew Wilson said of the September Domain.com.au House Price Report: 
 
“The recent strong capital city property markets of Melbourne and Sydney are now recording weaker price growth, with low interest rates – previously a key driver of the market – gradually losing impact. With rates steady over five consecutive months and income growth remaining subdued, the capacity for house price increases is moderating.
 
“Local factors continue to drive capital city house price growth, with resource states, QLD, WA and NT, the clear underperformers as a consequence of weakening economies.”
 
Australian auction results
 
Looking at this week’s auction results across Australian capital cities - Sydney recorded a 65 per cent clearance rate from 796 properties for auction, Melbourne cleared 70 per cent from 1478 properties, Brisbane had a 53 per cent clearance rate from 135 properties listed and Adelaide cleared 67 per cent from 77 listed auctions.
 
Commercial Property
 
Stockland Limited (ASX:SGP) is on track to deliver underlying earnings per security guidance following strong performance across all key business areas in the first quarter.
 
SKYCITY Entertainment Group Limited (ASX:SKC) has teamed up with New Zealand construction company Fletcher Construction Company Limited to build the New Zealand International Convention Centre and a new 5-star hotel.
 
Charter Hall Retail REIT (ASX:CQR) is set to acquire a 47.5 percent interest in Bateau Bay Square on the Central Coast of New South Wales.
 
Ingenia Communities Group (ASX:INA) has purchased the Lakeside Lara manufactured home community in Victoria for $16.3 million.