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Property strength continues into 2015



Investors see a great change on the property market this year! One month into the New Year, analysts who were eyeing off interest rate cuts have been proven correct as the RBA lowered the cash rates by 0.25 basis points at its February meeting. The RBA said lower petrol prices had little effect on an economy with a rising unemployment rate and with growth was continuing below trend, some stimulus was needed.
 Property strength continues into 2015
Meanwhile, the latest economic figures are showing that property prices and building approvals continue to rise as residential building proves one of the top performers in the current economic climate.
Economic news
The CoreLogic RP Data Home Values Index shows combined capital city house prices continue to rise, up 1.3 per cent in January. Melbourne house prices lead the way up 2.7 per cent, dark horse Hobart posted a 1.6 per cent increase whilst Sydney was also a standout, up 1.4 per cent. Darwin, Adelaide and Perth reported declines over the month.
ABS building approvals remained elevated in December after reaching their highest ever monthly level during November. The December figures showed new home approvals were 3.3 per cent lower that the November record however they were 8.8 per cent higher than December last year. Multi-unit approvals continue to be the main driver and detached house approvals are steady, up 1.1 per cent in December. New South Wales remains the best performing state for building approvals.
Turning to commentary and The Housing Industry Association has welcomed the release of a free building code online. The online release of the National Construction Code and changed to the code are moving from an annual to a three year review cycle also freeing up red tape for home builders.
FNN spoke to HIA’s Executive Director of Building, Development and Environment, Kristin Brookfield about what the changes mean and how they will benefit the industry.
“The changes that have occurred now mean that the Building Code of Australia which is part of the National Construction Code is free online, the BCA has been online for several years but people have had to pay $385 to get a copy and now they will be able to access that 24 hours a day by just being a subscriber. Having to buy the BCA every year has meant that builders have had to spend that money and keep their businesses buying this annual copy of the code. Now they won’t need to do that, they can save the money and they can keep up to date as quickly as they need to in their own business to check that their plans and their designs meet the National Building Code and they are going to be able to get their approvals from council”
Australian auction results
Auctions got into the swing of 2015 across Australian capital cities this past weekend albeit with greatly reduced volumes from the pre-Christmas rush- Sydney recorded a 71 per cent clearance rate from 97 properties for auction, Melbourne cleared 59 per cent from 59 properties, Brisbane had a 60 per cent clearance rate from 60 properties listed and Adelaide cleared 65 per cent from 69 listed auctions.
Commercial property sector
Federation Centres Limited (ASX:FDC) and Novion Property Group (ASX:NVN) have outlined plans to merge into a single entity with a combined $22 billion of assets under management.
According to a market report from Credit Suisse, Mirvac Group (ASX:MGR) is set to benefit from improving office markets in Sydney and Melbourne over the next three years.
Australian Industrial REIT (ASX:ANI) has upped its distribution guidance for the 2015 financial year by 5.8 per cent after a recent restructure.
Ingenia Communities Group Limited (ASX:INA) has forked out $12 million for the Sydney Hills Holiday Park in the growing residential Hills district in Sydney. Surrounding land has been recently rezoned for medium density residential.
This year maybe a great year to start investing!
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Auction tips: Why and when you should auction



WHEN it comes time to sell your property, the age-old argument of auction versus private treaty naturally comes to the fore.

There is no one best practice but the general consensus among property professionals is both type of housing and market confidence play pivotal roles.

Core Logic RP Data auctions spokesman Kevin Brogan crunched combined capital city data over the 12 months to November 2015 and found higher valued and more unusual properties were taken to auction.

“If you have a house in a street and there are 10 others like it, you have a pretty good idea of what it’s worth,” Mr Brogan said.

“But if it’s unique or unusual you might not be able to pick what it’s worth so you take it to auction on the proviso there’s enough interest.

“Looking at the combined capital city data over the past 12 months to November, you see the general median price of houses that sold at auction is about $950,000.

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Brisbane’s Moreton Bay gaining strength: Terry Ryder



Brisbane's Moreton Bay gaining strength: Terry Ryder

The latest event in the evolution of the Brisbane market is the strong emergence of the Moreton Bay Region in the far north of the city.

It has joined Logan City in the far south as the precinct with the most momentum in the Greater Brisbane area. Meanwhile, Ipswich City in the south-west is putting its hand up as well.

Most national commentators misunderstand what’s happening with the Brisbane market. They look at that single figure which apparently describes the whole Brisbane metropolitan area and conclude not much is happening. Australian Property Monitors says Brisbane prices rose 5% last year while CoreLogic RP Data says 4%.

But beneath that one generalised (and highly misleading) figure, there has been lots of activity in precincts which have recorded double-digit annual growth in median house prices.

Markets in the Greater Brisbane area have been on the move for about two years. The inner-city suburbs were busy a couple of years ago and then the middle-ring suburbs on the northside surged. Many of them had annual growth in the 13% to 15% range. The middle-ring suburbs on the southside joined the party 12-18 months ago.

Now it’s the outer-ring areas that are leading. There are still rising suburbs in those northside and southside middle-market precincts, but it’s the cheaper areas on the outskirts that have the greatest activity and momentum.

In this regard, Brisbane is displaying the same pattern we have seen over the past three years in Sydney and Melbourne – the upturn started in the near-city areas and gradually gravitated outwards from the centre. The Ripple Effect is alive and well in residential real estate.

In Brisbane, Logan City (which is the urban bridge between Brisbane and the Gold Coast) has been  the market leader in terms of sales volumes for the past 12 months or so. But now it’s counterpart in the north, the Moreton Bay Region local government area (which is the urban bridge between Brisbane and the Sunshine Coast) has mounted a challenge.

Like Logan City, Moreton Bay Region is all about affordability, transport infrastructure and jobs nodes. Many of the suburbs of Moreton Bay Region – including Caboolture (the capital suburb), Morayfield and Deception Bay – have median prices in the $300,000s, while Burpengary and Narangba are in the low $400,000s.

These are high-volume housing markets: Caboolture, Deception Bay, Morayfield and Narangba have each recorded over 340 house sales in the past 12 months. Some have seen median prices rise 6-7% in the past year – but, in terms of price growth, they’re just getting started.

Median rental yields are an attraction for investors, ranging from 5.2% to 5.6% in most of the suburbs of the Moreton Bay Region.

The LGA includes the Redcliffe Peninsula, which has heightened appeal because the long-awaited Moreton Bay Rail Link will be completed this year.

The overall region has improved amenity through the evolution of the North Lakes master-planned community, which includes major retail (and will soon include an Ikea superstore).

The region also has good proximity to Brisbane Airport, the Port of Brisbane and the Australia Trade Coast industrial precinct, which means plenty of jobs are handy to the suburbs of Moreton Bay Region.


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Illegal homes sell-off will not affect market



THE property industry has backed Treasurer Joe Hockey’s plans to force 500 foreign home owners who breached investment rules to sell their properties.

Mr Hockey said an investigation into foreign investment had found the homes, worth a total of $1billion, were bought outside the investment rules.

He said among those found were overseas students – “some who had never filed a tax return have bought properties worth $5 million”.

Property Council of Australia chief Ken Morrison backed the move, but said it would not do anything to address housing affordability.

Mr Morrison said the sales were a “drop in the ocean” and far too few to impact the market.

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