Property ends 2014 on a high

Real Estate

Sydney market remains strong
 
The hot Sydney property market is finishing the year with a bang achieving its highest clearance rate in 6 weeks. The rate rebounded to 75 per cent after touching an 18 month low of 70.54 per cent the previous weekend. Historically low interest rates have stimulated housing markets over the past two years with Sydney and Melbourne improving leaps and bounds ahead of other capital cities. However most economists now believe that price growth has moderated and the outlook for housing markets in 2015 is relatively flat. Sydney and Melbourne should continue to outperform other cities however. 
 
Real Estate figures
 
Taking a look at real estate economic news: Interest rates have stayed at the current 60 year low of 2.5 per cent for all of 2014. It has now been 16 consecutive months since we had an interest rate cut. However, weak economic data and the lack of employment growth are making the case for a cut in interest rates next year. Both Deutsch Bank and National Australia Bank have now predicted up to two reductions in the official cash rate during 2015. However December minutes from the Reserve Bank’s latest meeting say the current period of stability is the best way forward. 
 
The ABS reports that home loan demands have lifted a higher than expected 0.3 per cent in October, a rise of 0.1 per cent was predicted by economists. Seasonally adjusted, 51,720 home loans were approved during the month and the value of investor lending rose 1 per cent in the month to $12.09 billion. 
 
And the Housing Industry Association says the figures represent a positive signal for new home construction into 2015. Already, loans to those constructing a new home have lifted 14.6 per cent in the past 12 months with investor loans for new housing now up 24.3 per cent on the year, a key driver of growth in the sector. 
 
Commentary
 
HIA welcomes new guidelines unveiled by APRA to restrict risky lending and applauded the flexibility of the new policy. Diwa Hopkins, Economist with HIA, says it is important that residential construction is not curbed unfairly by the new provisions
 
“Residential construction is actually one of the brighter spots, one of a minority of bright spots in the broader economy. In the recent couple of weeks we have had quite a string of disappointing data updates from consumer sentiment to the market as well as the slump in commodity prices. Residential construction on the other hand is forecast to reach a record high in 2014 so for those elevated levels to continue in the medium term is pretty important for the private economy considering weaknesses pervading elsewhere”. 
 
That was Diwa Hopkins from the Housing Industry Association. 
 
Australian auction results
 
Looking at this week’s auction results across Australian capital cities - Sydney recorded a 75 per cent clearance rate from 998 properties for auction, Melbourne cleared 71 per cent from 1327 properties, Brisbane had a 39  per cent clearance rate from 167 properties listed and Adelaide cleared 54 per cent from 93 listed auctions. 
 
Commercial property sector
 
Villa World Limited (ASX:VLW) and CVC Limited (ASX:CVC) have teamed up to buy a $22.8 residential land subdivision development site in Donnybrook, Victoria. 
 
Leighton Holdings Limited (ASX:LEI) will sell its subsidiary John Holland to China Communications Construction Company for $1.15 billion.  
 
Federation Centres Limited (ASX:FDC) has completed the $74 million purchase of Currambine Central shopping centre in Western Australia and will now get started on a $20 million expansion of the centre. 
 
Finbar Group Limited (ASX:FRI) has scored approval for a development of 118 residential apartments in South Perth which has an end sales value of about $120 million.