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Archive for the ‘Property Market Place’ Category
AUSTRALIA’S housing market is unlikely to suffer a “structural collapse” on the scale of America’s property rout, a new report says.
This is despite deep household vulnerability to further rate rises.
But the two-speed economy is a “serious problem” for the market, with confidence sliding as weak demand buffets employers in the retail, manufacturing and tourism sectors.
The report, by investment research group Morningstar, comes as Housing Industry Association data reveals that sales of new homes in April were down 10 per cent on the same month a year ago.
About 7700 new homes were sold nationwide – up 0.2 per cent on the March sales, but down from about 8600 a year earlier.
HIA chief economist Harley Dale said the rate of new unit sales was about half the long-term average, while new home sales were more than 20 per cent below long-term figures.
“That profile is an unfortunate indictment of the weak new home building conditions … but it’s nothing compared to what we’ll see if another rate hike bullet is fired,” Mr Dale said.
In research on the outlook for the banking sector, Morningstar’s analysts said uncertainty in share markets was also sapping confidence in the property market at a time when households were already highly geared.
But despite softening house prices, there was “no cause for alarm” for the banking sector, the Morningstar report said.
It comes amid speculation that professional investors are short-selling Australian banks as a means of betting that house prices will fall.
Short sellers effectively gamble on falling stock prices by borrowing shares and selling them, hoping to buy them back at a lower price.
Shares in all four major banks fell heavily last week and lost further ground yesterday.
The Morningstar research team, led by head of Australian banking research David Ellis, urged investors holding shares in the major banks “to be patient”.
“Despite widespread coverage and speculation we do not see sufficient pressure on the sector to change our positive view.”
The report nominated the banks’ reliance on wholesale funding borrowed from international investors as a “structural weakness, but one that is slowly becoming less important”.
A major slowdown in Chinese economic activity would put downward pressure on bank share prices, it said.
The beginning of recent housing developments around the nation is forging ahead, driven more or less exclusively by government stimulus spending on public accommodation. New home numbers leaped to the greatest level since middle-2004 in the March quarter.
The number of public sector housing starts jumped from 2,360 inside the December quarter to 4,096 in the March quarter, but this doesn’t precisely depict the vastness of the federal government’s public housing program, which is constructing 20,000 housing units.
Housing Industry Association chief economist Harley Dale estimates the total starts for public housing jumped from 4,000 to 8,000 units in the March quarter, which suggests that new housing for personal purchases dropped inside the quarter.
“The level of detached house starts, while significantly healthier than in the course of the GFC, came back by 2.1 per cent in the March quarter,” he said. There was hopes this year that the housing industry would indicate a stable recovery because of the rush in new housing approvals from local councils within the latter part of last year.
The speedy growth in population has also led to forecasts that home construction would soon pick up. But Mr Dale believed those approvals weren’t in fact equating to new housing starts, to a certain extent because of the difficulty in securing home loans.
The overall number of housing starts climbed buy by 4.3 per cent to 42,400, amid strongest growth in Western Australia (12.1 per cent), South Australia (10.5 per cent Victoria (9.4 per cent) and New South Wales (9.2 per cent).
“A positive outlook for 2010-11 and beyond isn’t assured amongst considerable supply-side obstacles, which, in this cycle, have been added to by a dire shortage of available finance for development,” he said.
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