Significant housing market correction tipped

Real Estate

More than two thirds of Australians believe the housing market is vulnerable to a significant correction. The prediction comes as property prices continue to record gains and after Sydney’s average asking price for a home broke through $1 million. 
 
68% of Aussies see property price correction
 
Against a backdrop of rising prices CoreLogic RP Data & Nine Reward asked more than 1,000 respondents about their housing market expectations. The property data provider shows 68 per cent of respondents believe the market is vulnerable to a correction, which is the highest read received for the question. In contrast 66 per cent of respondents also felt that now was a good time to buy a property but this figure has fallen from 71 per cent over the past quarter. 
 
Sydney’s house prices more unaffordable than ever
 
SQM Research has branded house prices in Australia’s biggest city more unaffordable than ever. The data company has shown Sydney’s median asking price for freestanding houses surpassed the $1 million mark for the first time. SQM Research says it would be impossible to purchase a free standing house in Sydney’s inner ring for under $1 million right now and will become increasingly difficult to purchase a free standing house in Sydney’s middle ring for under $1 million. Sydney’s property market has seen gains of almost 15 per cent in the year to September. 
 
Home values up 9.3% over year to September
 
A new report commissioned by National Australia Bank Limited (ASX:NAB) has confirmed home values are continuing to increase but growth has moderated a little in recent months. The RP Data produced Australian Housing Market Report shows Australian capital city home values increased by 9.3 per cent in the year to the end of September. Over the past year the report also showed Sydney and Melbourne posted the largest number of sales while Darwin recorded a lower number of sales despite an increase in home values
 
Profiting from listed property stocks
 
Antares Listed Property Fund, Portfolio Manager, Brett McNeill outlines which sectors of the property market are appealing to the fund:
 
“The highlight of the most recent profit reporting season was definitely the residential sector, in our view. All the main metrics were extremely positive. So if you look at one stock we own, which is Stockland Limited (ASX:SGP), the net deposits that they took for the June quarter, were up 29 per cent versus a year ago. And that was really driven by some strong performance from the New South Wales projects. And that has driven really good increases in the profit for the residential division and the business as a whole. So that’s been a highlight.
 
The other sector that we really like out of the main commercial sectors is the industrial sector. It’s just delivering good solid predictable growth of two to three per cent. So not huge growth, but on top of a starting yield of about eight per cent, that adds up to a really good total return for investors of 10 to 11 per cent. And when gearing levels are in check and vacancy levels are very high, that’s a really attractive proposition for investors.”
 
To watch more of the interview click here
 
Australian auction results
 
Sydney recorded a 74 per cent clearance rate from 875 properties for auction, Melbourne cleared 72 per cent from 1,177 properties, Brisbane had a 33 per cent clearance rate from 85 properties listed and Adelaide cleared 66 per cent from 89 listed auctions. 
 
Property headlines
 
Fairfax Media Limited’s (ASX:FXJ) online residential listings business Domain will team up with Firstfolio Limited (ASX:FFF) to launch a new home buyers guide website early next year. 
 
Stockland Limited (ASX:SGP) is expanding its footprint in Western Australia. The property developer notes housing affordability remains steady in Perth and both consumer and dwelling sentiment are above national averages.  
 
Property developer Lend Lease Group (ASX:LLC) has spruiked an upbeat outlook on the back of growth in its residential business and says its well placed to benefit from the $50 billion infrastructure spend foreshadowed in Australia. 
 
Real estate investment trust GDI Property Group Limited (ASX:GDI) has confirmed its annual guidance and says it has identified a number of potential acquisitions and intends to launch a large fund early 2015.