Property prices lift the NSW economy

Real Estate

Property love affair continues
 
Sydney is continuing its love affair with propertyt as the robust housing sector contributes to making New South Wales the No.1 economy in the country. Home construction has reached its best level in two decades as stronger house price expectations were offset by weaker rental prospects. With the countdown to Christmas approaching auction clearances are still proving strong as sellers rush to get their properties on the market before the end of the year
 
Housing strength lifts the economy
 
The Commonwealth Bank State of the States report has revealed that NSW is once again the top economy in the country. WA has held the spot for the past three years but the strengthening housing sector has lifted New South Wales to the top of the rankings thanks to robust dwelling commencements and population growth. Strong retail trade and low unemployment also helped boost NSW to No.1. WA’s fading mining boom has seen the state lose ground on retail trade and equipment investment with the Northern Territory now the third best performing economy. Tasmania remains at the bottom of the economic performance table. 
 
The Housing Industry Association says that new home building has reached its highest level in 20 years. Despite showing a 6.9 per cent decline on the March figures, new housing starts in the June quarter totaled 45,527 seasonally adjusted, bringing total starts for the 2013/14 financial year to over 180,000. This is the highest 12 month total since March 1995. 
 
The NAB Quarterly Residential Property Survey has shown the Index was unchanged at +19 points in Q3. House prices are still increasing with expectations nation house prices will grow by 2.1 per cent in the next year. However the rental market is now facing pricing pressures with average national rents expected to grow by just 0.7 per cent next year. Stronger house price expectations were offset by weaker rental prospects. Sentiment has softened to an all time low in WA whilst foreign buyers how account for 1 in 6 new properties nationally.  
 
Commentary
 
Turning to commentary and FNN spoke to Alan Oster, NAB Group Chief Economist about the key finding in the report.  

"We have seen wuite a big increase in foreign buying of essentially apartments, in other words new. In total terms it has gone from somewhere around about 12 per cent to somewhere around about 16 per cent. Across Australia the biggest increase has actually been in Melbourne where they are saying roughly 1 in 4 apartments are currently being purchased by overseas buyers. If you are thinking about the existing market then its more like somewhere around about eight per cent. The reason there is so much focus on the new apartments is if you have something that is new, a a foreigner can buy it without haveing to go the the Foreign Investment Review Board. Existing markets you can buy but only essentially if you have children being educated here."
 
Australian auction results
 
Looking at this week’s auction results across Australian capital cities - Sydney recorded a 81 per cent clearance rate from 704 properties for auction, Melbourne cleared 76 per cent from 1005 properties, Brisbane had a 42 per cent clearance rate from 114 properties listed and Adelaide also cleared 42 per cent from 70 listed auctions. 
 
Property news
 
Stockland (ASX:SGP) has sold a 50 per cent stake in Townsville Shopping Centre to an AMP Capital managed Fund for $229 million. 
 
Mortgage Choice Limited (ASX:MOC) has had a cracking start to the new financial year with a 12.5 per cent lift in home loan approvals for the first quarter
 
CFS Retail Property Trust 1 (ASX:CFX) will sell Post Office Square in Brisbane’s CBD to a private investor for $67 million. 
 
Shopping Centres Australasia Property Group (ASX:SCP) has bought The Markets Shopping Centre in South Brisbane, Queensland. The real estate investment trust has paid $32 million to a private investor group, representing an initial yield of around 7.2 per cent.