Apartments Drive Growth in Building Approvals

The highs of Australian house approvals have been joined by the apartment sector, with a huge increase recorded.

The number of multi-unit dwellings approved in March jumped 63.6 per cent, the biggest increase since November 2017, according to the Australian Bureau of Statistics.

New house approvals remained at near-record highs, edging up by 0.1 per cent to 14117, an increase of just nine houses on February’s results.

Total dwelling approvals rose in New South Wales by 26.9 per cent, Victoria 24.7 per cent, Queensland 12.1 per cent and South Australia 3.5 per cent, in seasonally adjusted terms.

Western Australia and Tasmania fell -6.4 per cent and -4.8 per cent respectively.

Dwellings approved by building type

^Source: Australian Bureau of Statistics, March 2021 Seasonally Adjusted

ABS director of construction statistics Daniel Rossi said the apartment market was the major contributor to building approvals continuing the record climb this month.

“The total number of dwellings approved in March was the second-highest recorded, only exceeded by the November 2017 result,” Rossi said.

“The number of private sector house approvals also remained at elevated levels due to HomeBuilder.

House and apartment approvals 

^Source: Australian Bureau of Statistics, March 2021 Seasonally Adjusted 

Commonwealth Bank senior economist Kristina Clifton said the end of HomeBuilder on March 31 would have an impact on new house approvals.

“We expect approvals for houses to drop off relatively sharply during the next few months as many people who were looking to build a home would have brought this decision forward in order to receive the grant,” Clifton said.

“Nonetheless, record low interest rates will continue to support the demand for dwellings.”

 

Article Source: www.theurbandeveloper.com

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Cromwell Lands Former Flight Centre HQ

Brisbane-based fund manager Cromwell will add the former Flight Centre headquarters at 545 Queen Street in Brisbane to its managed portfolio.

Settlement is imminent for the $117.5 million acquisition being sold by Axis Capital, which bought it in 2017 for $70 million, in a deal that requires Foreign Investment Review Board approval.

The 13,300sq m, A-grade office building is located on a 2735sq m parcel of land at the entrance to the Brisbane CBD’s ‘Golden Triangle’ and has undergone an extensive refurbishment programme.

Hamish Wehl, Cromwell’s head of retail funds management, said the property fit its target profile with 88 per cent of income derived from the federal government, as well as listed or multinational tenant-customers

“The current interest rate environment has made things challenging for investors searching for opportunities that meet their income needs.

“Cromwell is actively seeking additional assets that will help DPF meet its objectives and benefit unitholders even further,” Wehl said.

DPF, which started in 2013, owns seven office and retail assets—in Queensland, New South Wales, Victoria, South Australia and ACT—outright and has exposure to a further three with a total value of just over $1 billion.

Wehl said the fund had been strongly supported by local investors who are paid a monthly dividend averaging 5.8 per cent a year.

The transaction was negotiated by CBRE’s Peter Chapple, Bruce Baker, Flint Davidson and Stuart McCann.

“We have seen a strong increase in buyer demand for high quality, multi-let Brisbane office towers, with long-term investors backing that there will be a flight to quality as tenants seek to upgrade to prime grade CBD and metropolitan office assets,” Baker said.

Brisbane’s renowned Golden Triangle has been subject to a number of high-profile transactions in recent years.

The tower, at 410 Queen Street, sold for $53.5 million to local development and investment group PGA Properties early last year.

Dexus and Canada’s CPP Investment Board also recently sold Brisbane’s 10 Eagle Street office tower for $285 million to Brisbane-based investment manager Marquette Properties.

 

Article Source: www.theurbandeveloper.com

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Little movement on HTW residential property clock in April

Herron Todd White have released their April property clock, and there has been little movement in the residential sector.

Broome and Canberra were the only locations to change their position on the clock in terms of residential housing values, with both regions moving to ‘rising market’.

There were also few changes to the property clock for the residential unit market last month, with the biggest shift being Canberra moving to a declining market.

oowoomba units shifted to ‘start of recovery’ and Emerald is now classified as a ‘rising market’.

The residential property clock

Top of the clock:

Houses – Albury, Bathurst, Burnie/Devonport, Dubbo, Launceston, and Tamworth’s housing values all remain at the peak of the market.

Units – The best-performing unit markets include five of the same locations that featured at the top for houses: Albury, Bathurst, Burnie/Devonport, Launceston, and Tamworth.

Starting to decline

Houses – Wodonga

Units – Wodonga

Declining market

Canberra’s unit market was the only area classified as in decline.

Approaching bottom of the market

No areas

Bottom of the market

Houses – Albany, Geraldton, and Kalgoorlie remain at the bottom of the market.

Units – Albany, Geraldton, and Kalgoorlie all make another appearance for units, along with Sydney and the Whitsunday region.

Start of recovery 

Houses – Alice Springs, Bundaberg, and Darwin’s housing markets were all classified as being at the start of their recovery.

Units – Alice Springs, Brisbane, Bundaberg, Cairns, Canberra, Darwin, Emerald, Ipswich, Melbourne, Perth, South West WA, Toowoomba, and Townsville’s unit markets are also starting to recover.

Rising market

Houses – Once again, it’s a crowded field on the rising market end of the clock, with Adelaide, Adelaide Hills, Ballina/Byron Bay, Barossa Valley, Brisbane, Broome, Cairns, Canberra, Central Coast, Coffs Harbour, Emerald, Gladstone, Gold Coast, Hervey Bay, Hobart, Illawarra, Ipswich, Karratha, Lismore, Mackay, Melbourne, Mildura, Mount Gambier, Newcastle, Perth, Port Hedland, Rockhampton, Shepparton, South West WA, Southern Highlands, Sunshine Coast, Sydney, Toowoomba, Townsville, and Whitsunday housing markets all on the rise.

Units – Adelaide, Adelaide Hills, Ballina/Byron Bay, Barossa Valley, Broome, Coffs Harbour, Dubbo, Gladstone, Gold Coast, Hervey Bay, Hobart, Illawarra, Karratha, Lismore, Mackay, Mildura, Mt Gambier, Newcastle, Port Hedland, Rockhampton, Shepparton, Southern Highlands, and the Sunshine Coast’s unit markets were all classified as rising.

Approaching peak of the market

Geelong was the only location classed as approaching the peak of the market for both houses and units.

 

Article Source: eliteagent.com

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Is now a good time to buy property? Nearly 40 per cent of people think so, despite record house prices

House prices are at historical highs, records tumble every weekend at real estates auctions around the country and price growth rates continue to rise.

Despite those facts, nearly 40 per cent of Australians believe that now is a good time to buy.

According to new research from the financial comparison website Canstar, 38 per cent of those surveyed believed that it was a good idea to buy property now.

Canstar group executive financial services Steve Mickenbecker said that of those who thought it was a good time to buy, many were expecting prices to continue to rise. They also cited low interest rates as another reason.

“Either way there will be no shortage of buyers as sellers come out,” he said.

“Today the market is overwhelmed with buyers, auctions are intensely competitive, open houses crowded, and unconditional contracts are becoming the norm. Low housing supply on the market has intensified the fear of missing out. We are in a low interest rate frenzy.”

Of the 39 per cent who said they didn’t think now was a good time to buy, 45 per cent said the market was currently in a bubble, inflated or under-supplied.

Mr Mickenbecker said the almost-equal number of respondents who said it was a good time and a bad time to buy indicated the rapid growth was slowing down.

“The Reserve Bank and APRA are likely to welcome a leading indicator of a return to balance, tempering growth and discouraging bank excess, but at the same time strong enough to support sustainable economic growth that won’t implode,” he said.

“The Reserve Bank doesn’t want to hurt the broader economy with higher interest rates and currency and is hoping for healthy property prices to support spending, but at a slower pace, so first-home buyers can afford to stay in the race.”

The latest quarterly Domain House Price Report, released last week, found price growth had hit a 32-year high in March.

Sydney’s median house price for the last quarter was $1.3 million, and Melbourne’s reached a record high of $975,000. Hobart’s was just above $600,000, and prices in Canberra grew 20 per cent in a year to a median of $930,000.

Brisbane and Adelaide’s median house prices were at their highest ever, and Perth’s was at its highest since December 2015. Darwin’s median house price was at its highest since December 2017.

CoreLogic figures released this week showed the rapid growth had started to slow, but prices continued to grow in every capital city and regional market in April.

“First-home buyers have been anything but deterred from the market and have leapt in with gusto, encouraged by government incentives,” Mr Mickenbecker said. “They are increasingly competing with investors able to make unconditional offers and blow them away at auctions, and would clearly welcome a more stable market.

“The market continues unabated for now, but a slow and steady future is hopefully ahead of us.”

 

Article Source: www.domain.com.au

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Speculators back in the game to push up property prices

Investors in residential property have come out of hibernation and were the driving force behind the record 5.5 per cent increase in housing finance in March.

Having kept a low profile during the pandemic, investors and speculators are now returning to the market with gusto. And that suggests only one thing – home prices will continue to be pushed higher.

The colloquial definition of what turns a housing boom to a housing bubble is the increasing participation of investors. Judging by the latest numbers from the Australian Bureau of Statistics (ABS) investors could soon replace first home buyers as key drivers of the red-hot property market.

The 12.7 per cent increase in financing to investors dwarfed the (already strong) 5.2 per cent increase in finance to owner occupiers. And the value of those loan commitments to investors is up 54 per cent on March last year.

And the phoenix-like rise in housing investors has coincided with early signs of a peak in demand for finance by first home buyers whose participation in the housing market appears to be running out of steam. In March first home buyer finance fell by 3.1 per cent (seasonally adjusted), according to the ABS.

The levelling out of first home buyer demand was only ever a matter of time as this group would ultimately come up against the barrier of affordability.

Government assistance and low interest rates spurred demand from first home buyers last year but as prices have moved up the window of opportunity has narrowed. Meanwhile, some of the robust demand from those making their first move into property is thought to have been pulled forward.

Investors deserted the residential property market in response to COVID as rents and returns fell as did values in the early stages of the pandemic. The apartments segment was hit particularly hard as immigration disappeared.

While rents remain at historically low levels, there are clear signs that rental increases are starting to come through – particularly in the outer suburbs of capital cities, the smaller capitals and in regional areas. In March rents rose by 0.6 per cent in Sydney and by 0.2 per cent in Melbourne according to CoreLogic

But the broader enticement for investors is capital gains on offer in the housing market, which is now in full swing. Prices nationally rose by 1.8 per cent in April and by 2.8 per cent in March and careered ahead 6.8 per cent over the past three months.

For big banks lenders the return of the residential property investor could provide them a new source of demand growth in the event the first home owner market continues to run out of puff.

Despite historically low interest rates, the banks say they are not seeing any deterioration in the quality of their loan books. This is despite intense competition among bank and non-bank lenders to capitalise on the demand for housing finance driven by low rates.

Westpac’s accounts for the six months to March, which were released this week ,showed that only 2 per cent of customers were behind on repayments – a level that has remained the same for a year.

For the most part the banks are arguing that there is no need to apply any macroprudential brakes to the housing market.

But history tells us the rise in investor participation also sets off alarm bells within the regulatory agencies, the Australian Prudential Regulation Authority (APRA) and the Reserve Bank.

Both have been disinclined so far to wade into the rapidly heating property market and introduce measures that will hamper first home owners. But regulators have plenty of form in targeting the more speculative investor cohort with macroprudential tools. And the banks will need to avoid the riskier lending that has traditionally been associated with financing investors.

’The resurgence in investor financing and the continuing surge in owner occupiers who are trading up points to further near term strength in home prices,” according to AMP chief economist Shane Oliver.

“It also points to a further acceleration in housing debt, a further rise in the share of interest only loans and increasing lending at high loan to valuation ratios. All of which is increasing pressure on the RBA and APRA to move to tighten lending standards in order to head off increasing risks of financial instability – which we expect to occur sometime in the next six months.”

 

 

Article Source: www.brisbanetimes.com.au

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Cromwell buys in Brisbane and on the hunt for more properties

Cromwell Property Group has confirmed it is buying the former Flight Centre headquarters at 545 Queen St, Brisbane, for $117.5 million.

Hamish Wehl, Cromwell’s head of retail funds management, said the refurbished office building in the Brisbane CBD’s so-called “Golden Triangle” was purchased for its Direct Property Fund (DPF), a retail investment vehicle.

“We are actively looking for further acquisition opportunities,” he said.

“The fund remains open, we’re seeing attractive investment inflows and it’s all about acquiring the right property that suits the return profile of the investors.”

He said DPF has been strongly supported by “mum and dad investors” who are paid a monthly dividend averaging 5.8 per cent a year.

DPF, which started in 2013, owns seven assets outright and has exposure to a further three with a total value of just over $1 billion . All but one – a Bunnings in South Australia – is an office building.

Mr Wehl said office will remain a focus for DPF though there is scope to invest in other sectors, depending on returns.

“We are cautiously optimistic in the current environment and think the office sector as a whole will always be relevant for white collar employment,” he said.

“It fosters innovation, creates and maintains workplace culture.”

He added: “There’s still a bit to play out from last year’s fallout [and] if we see quality property that is attractively priced within the retail and industrial sectors, the fund has the ability within its investment mandate to acquire those assets.”

Cromwell bought the 13,000sq m building – now 100 per cent leased with average weighted expiry of 4.1 years – from Axis Capital, which paid $70 million in 2017 shortly after Flight Centre moved to other premises and left it mostly empty.

Axis Capital refurbished and repositioned the building, leasing it up before selling to Cromwell on a yield of 5.9 per cent.

The sale required Foreign Investment Review Board approval due to the large stake activist investor, ARA Asset Management, based in Singapore, has in Cromwell.

The transaction was negotiated by CBRE’s Peter Chapple, Bruce Baker, Flint Davidson and Stuart McCann.

Brisbane CBD has sprung back to life after the quiet 2020, with at least four other major properties still on the market. Total transaction value this year is expected to exceed $1 billion over the next two months.

The catalyst for the listings surge has been strong post-COVID-19 prices paid for office towers at 10 Eagle Street, which fetched $285 million, and 310 Ann Street, sold to Ashe Morgan for $210 million.

 

Article Source: www.afr.com

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CoreLogic: Home values continue to rise but the pace of growth loses steam in April

Australian housing values lifted by 1.8% in April according to CoreLogic’s national home value index, with the monthly pace of capital gains easing from a 32-year high in March (2.8%).  Although growth conditions have slowed, housing values are still rising at a rapid pace, up 6.8% over the past three months to be 10.2% higher than the COVID low in September last year.

CoreLogic’s research director, Tim Lawless, says the pace of capital gains could slow further over the coming months as inventory levels rise and affordability constraints dampen housing demand.

“The slowdown in housing value appreciation is unsurprising given the rapid rate of growth seen over the past six months, especially in the context of subdued wages growth.  With housing prices rising faster than incomes, it’s likely price sensitive sectors of the market, such as first home buyers and lower income households, are finding it harder to save for a deposit and transactional costs.”

 

There is already some evidence of fewer first time buyers in the market, with the Australian Bureau of Statistics reporting a -4.0% fall in the value of first home buyer home loans through February, the first drop since May last year.

Despite the slowdown, positive housing market conditions remain geographically broad-based with every capital city and ‘rest-of-state’ region continuing to record a lift in dwelling values over the month.   Darwin (2.7%) and Sydney (2.4%) recorded the largest month-on-month rise in dwelling values, while Perth values recorded the lowest rate of growth amongst the capital cities at 0.8%.

The four smallest capital cities recorded double digit annual growth (Adelaide 10.3%, Hobart 13.8%, Darwin 15.3% and Canberra 14.2%), reflecting a smaller COVID-related disruption and an earlier start to the growth phase last year.  Melbourne is recording the lowest level of annual growth (2.2%) due to a larger downturn, attributable to the extended lockdown period last year.

The broad trend of houses outperforming the unit sector continued through April as higher density styles of housing experienced less demand amidst elevated supply across some inner city precincts.  At the combined capital city level house values (8.6%) have risen at double the pace of unit values (4.3%) over the first four months of the year.

“A preference shift away from higher density housing during a global pandemic is understandable, however a rise in flexible working arrangements also seems to be supporting greater demand for houses around the outer-fringes of capital cities.  Relatively weak investor activity, compounded by a supply overhang in some high-rise precincts, is also dampening price growth in unit markets,” Mr Lawless said.

 

 

Article Source: www.corelogic.com.au

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