As the fall-out from the Abbott Government’s first Federal Budget continues the housing sector has not escaped cuts but fared better than other sectors. As part of the government’s plans to return to surplus Treasurer Joe Hockey’s maiden budget has revealed a series of fiscal tightening measures. Most significantly Labor’s National Rental Affordability Scheme (NRAS) has been axed and the property sector will also farewell the Housing Help for Seniors program. However, negative gearing and other multi-billion tax breaks remained intact amid hopes new initiatives such as an $11.6 billion transport infrastructure package will also continue to support the sector.
HIA Chief Economist Harley Dale responds to the Federal Budget
“We did see a few announcements in the Federal Budget that I think were disappointing from the perspective of the new home building sector and the wider housing industry. The National Rental Affordability Scheme, which I think was slow to get off the ground but I think gathered legs and was more successful over time, saw the final tranche actually cut from the budget, so the final ten thousand homes that would have been built under the National Rental Affordability Scheme will no longer be built. I think that’s disappointing. There were some elements of the scheme that were exploited and you needed some tightening up if you like of eligibility requirements but I think it would have been preferable to see those requirements tightened up rather than the entire program cut the way it has been.
We have also seen some reduction in funding in a net sense I think for skills and training in and around areas that will have an impact on the residential construction industry. Residential construction is an industry that does suffer from a structural shortage of skilled labour. So when things are recovering again like they are now, historical experience shows we are very quickly going to run into some capacity constraints from a labour market perspective, and any cuts to skills and training areas in that regard are disappointing to see, and we did see some evidence of that in the budget.”
To watch more of the interview click here Evidence mounts of cooling property market
More evidence has surfaced of a cooling housing market with property prices, home loans and auction sales pulling back. Soaring property prices look to be stalling with RP Data’s latest figures showing prices dropped across all capital cities over budget week. The property data provider has reported Melbourne led the falls with a 1.5 per cent weekly drop followed by Brisbane and Perth down 1 per cent, Adelaide prices down 0.8 per cent and Sydney house prices easing just 0.4 per cent.
While home loans have risen over the past year they fell over March. The Australian Bureau of Statistics reports housing finance fell 1.2 per cent in March but is 12.9 per cent higher over the year. Loan Market has highlighted the double digit home loan growth at the beginning of the year but predicted April also may show little if any growth due to the extended holiday period.
Australian auction results
Australian capital cities posted slowing sales momentum over the week - Sydney recorded a 75 per cent clearance rate from 599 properties for auction, Melbourne posted a 76 per cent clearance rate from 876 properties for auction, Brisbane booked a 47 per cent clearance rate from 76 properties for auction, and, Adelaide saw a 64 per cent clearance rate from 65 properties for auction.
Commercial property sector
Industrial property investor Australand Property Group (ASX:ALZ)
has been named the preferred purchaser on a residential site north east of Sydney and is now poised to acquire a 1.3 hectare residential infill site in North Ryde in joint venture with La Salle Investment Management.
Real estate investment trust GDI Property Group Limited (ASX:GDI)
is set to establish a new external fund after inking a deal to acquire of a portfolio of seven properties from engineering company UGL Limited (ASX:UGL)
in a deal worth $66.5 million.
Property group GPT Group (ASX:GPT)
has bought half of the 2 Southbank Boulevard in Melbourne for $196.7 million from Commonwealth Property Office Fund.
Residential developer Devine Limited (ASX:DVN)
will sell the remainder of its Sandstone Lakes project north of Brisbane in Queensland for $14 million.
Mortgage broker and loans assessor Mortgage Choice Limited (ASX:MOC)
has forecast its full year cash earnings will grow 16.5 cent on the back of continued strength in housing demand.