The Sydney home auction clearance rate has fallen well below the 60 per cent mark this past weekend which means the rates are now down around 30 per cent in just six months. The surprise mortgage rate hike from the banks has sharply bruised the confidence of both buyers and sellers despite the recent Reserve Bank decision to leave the cash rate on hold. Meanwhile clearance rates in other cities remain more stable and rural land in the New South Wales market has seen a run of impressive sales so far this spring.
The Reserve Bank of Australia (RBA) has kept the official cash on hold at 2 per cent following the two rate cuts in February and again in May. The central bank noted key commodity prices have been weak but puts this down to increasing supply. Emphasis was placed on the likelihood of the US Federal Reserve raising rates over the period ahead. While housing market conditions were mentioned, the RBA says growth in lending to investors in the housing market appears to be easing slightly while that for owner-occupiers has picked up.
RBA Statement on Monetary policy released last week maintained the key forecast that the RBA was expecting growth in the economy of 3 per cent in the 2016 calendar year. However growth to the end of this year was lowered to 2.25 per cent from 2.5 per cent in the August statement. The Statement also noted that housing price growth remained elevated in Sydney and Melbourne though auction rates in the two cities were declining. Loan approvals were also showing signs of moderation. Detached houses prices were growing more rapidly than apartment prices. Mixed signals around forward looking dwelling investment due to land supply restraints could see a long awaited turnaround in renovation activity.
The most recent quarterly survey from CoreLogic RP Data-TEG Rewards on housing market sentiment showed that 68 per cent of homeowners are worried about a significant fall in house prices which is down from 75 per cent in the July survey. We spoke to CoreLogic’s Head of Research Tim Lawless about what the survey reveals.
“Australians are looking at the housing market a little more cautiously than they might have a year ago which is no real surprise when you consider the fact that Sydney values are up by 50 per cent of the current growth cycle. Melbourne values are up by more than 30 per cent. We are seeing volatility in other readings, like auction clearance rates, consumer confidence remains relatively low and the share market is bouncing around quite a bit as well."
Australian auction results
Looking at this week’s auction results across Australian capital cities - Sydney recorded a 59 per cent clearance rate from 1011 properties for auction, Melbourne cleared 70 per cent from 1073 properties, Canberra offloaded 74 per cent of 86 homes on auction, Brisbane had a 35 per cent clearance rate from 120 properties listed, Adelaide cleared 67 per cent from 108 listed auctions.
Commercial property sector
REA Group Limited (ASX:REA)
says it has a seen a 21 per cent jump in revenue to $146 million for the first quarter of the 2016 financial year. The digital advertising company also says it has purchased Asian property portal iProperty Group for $751 million.
Goodman Group (ASX:GMG)
is on track to achieve $3 billion in assets under management following significant progress on the roll-out of its development pipeline in the US industrial property market.
Eureka Group Holdings (ASX:EGH)
has settled on the $4 million Wynnum village purchase on the outskirts of Brisbane.
has announced the $377 million redevelopment of the Green Hills Shopping Centre in the New South Wales Lower Hunter region.