Reports reflecting Australia’s property sector have shown gains in prices and sales over the same week the nation’s biggest banks cut five and three-year fixed rate mortgage rates. After snapping an uptrend in May new home sales were back on the rise in June, according to a survey of Australia’s largest volume builders. The Housing Industry Association reports new home sales rose 1.2 per cent in June and 2 per cent over the June quarter. HIA Chief Economist, Dr Harley Dale predicts the new home building sector will provide a healthy contribution to broader economic growth over the following 2015 financial year.
House prices spike in fiscal 2014
Over the past 2014 financial year total Australian house price growth soared more than 10 per cent to an average of $627,940. The Australian Property Monitors’ Quarterly House Price Report shows all of Australia’s major capital cities but Canberra posted house price gains in the twelve months to the end of June. Sydney and Melbourne led the charge with double digit gains, followed by Brisbane, Hobart, while Adelaide, Perth and Darwin where at the bottom of the ladder. APM senior economist Dr Andrew Wilson says leading indicators of housing market activity, such as home loan activity and auction clearance rates, point to continued solid buyer activity through this year.
Big Banks slash fixed rates
Three of Australia’s biggest banks have lowered their five-year fixed rate mortgage rates with competition remaining fierce in the battle for market share. Commonwealth Bank of Australia (ASX:CBA)
moved first by cutting its five-year rate by 0.7 per cent to a new low of 4.99 per cent. National Australia Bank Limited (ASX:NAB)
and Westpac Banking Corporation (ASX:WBC)
swiftly responded by matching the rate. ANZ Banking Group (ASX:ANZ)
and Westpac have lowered their three-year fixed interest mortgage rates under 5 per cent.
Finding value in listed property
FNN speaks to CMC Markets Chief Market Strategist Michael McCarthy about Australia’s property sector and listed property stocks:
“Well there certainly has been a strong up-move in the property sector, however it’s a recovery situation. It was the last sector to recover from the GFC because of the high exposure to lending, the high level of leverage that we entered 2008 with. That recovery is now coming through and we’re also seeing a recovery in construction with construction numbers now coming back towards long term averages after being very depressed and reaching a low point two years ago.
What’s most interesting about the sector in my point of view however is the number of potential deals yet to be done. We know there are a number of companies already under bid, Australand Property Group (ASX:ALZ)
. The most recent of them however we do know that the majors in the sector, GPT Group (ASX:GPT)
, Mirvac Group (ASX:MGR)
and Stockland (ASX:SGP)
are all looking at expanding their business as this recovery continues to kick through, that means particularly some of the smaller property trusts are vulnerable to a takeover bid.”
Australian auction results
Sydney recorded a 77 per cent clearance rate from 506 properties for auction
Melbourne posted a 73 per cent clearance rate from 625 properties for auction
Brisbane booked a 41 per cent clearance rate from 102 properties for auction
Adelaide saw a 61 per cent clearance rate from 44 properties for auction
A consortium led by West Australian focussed property developer Finbar Group Limited (ASX:FRI)
has been selected as the preferred tenderer to acquire and develop the Civic Triangle Site in South Perth.
Owner of online real estate sites REA Group Limited (ASX:REA)
has bought a 17.22 per cent stake in iProperty Group Limited (ASX:IPP)
for $106.3 million as part of its international expansion.
Property manager DEXUS Property Group (ASX:DXS)
has sold its 50 per cent stake in 201 Kent Street Sydney to the co-owner for $173 million.
Affordable community provider Lifestyle Communities Limited (ASX:LIC)
has inked a $7.5 million deal to buy a 150 home site in Rosebud, Victoria which is poised to become the company’s tenth community.