Housing slump holds rates
By Teresa Ooi and Andrew Fraser
January 8, 2005
DEMAND for new houses has fallen to a three-and-a-half year low in another sign the housing slowdown may dampen economic growth this year.
With building approvals in November down another 0.3 per cent in the month - and 12.8 per cent for the year - and retail sales also weak, up only 0.1 per cent for the month, interest rates are likely to remain on hold well into this year.
The slowdown is starting to affect holiday homes, with real estate agents saying that middle Australia is beginning to shy away from the market.
Chief economist of AMP Capital Investors Shane Oliver said the continuing weakness in the housing market does not come as a surprise as the government has already taken it into account in its forecast of 3 per cent growth this year.
"The fall in building approvals points to a further weakening - not a crash - of the residential construction market," he said.
"But approvals of the non-housing sector continues to be strong which will help offset some of the weakness in housing."
The slowdown in building approvals is affecting the supply of investment stock on the market.
On the Gold Coast, for example, one of Australia's largest investment property locations, only 350 units were completed in the most recent quarter, well down from the 1150 recorded 18 months ago.
While investment in the upper end of the housing market is still very strong, there are signs that middle Australia is losing its taste for investment in property.
Developers Junipers claim to have sold 70 units for a total of $100 million - or nearly $1.5 million per apartment - in the past week in their proposed beachfront tower at Surfers Paradise. But agents say sales of mid-level units and townhouses, worth between $300,000 and $400,000, are slowing down.
Bill Morris, the director of the Midwood Report, said while there were numerous reports of big sales such as those by Junipers there was less activity in the modestly-priced end of the market.
He said that in Coomera, for example, which has been seen as one of the Gold Coast's hot spots for future development, blocks of land which 12 months ago were selling for $220,000 are now selling for $175,000.
Ray White principal Sam White said that today would be the test of how much activity there was in the
national housing market.
"Most times over Christmas and New Year, people are only looking at property, they rarely think that now's the time to buy," he said.
"But the first Saturday after New Year is generally the time when we can get some sort of indication of how the property market is performing.
"Southeast Queensland remains strong, as does northern NSW, places like Ballina and Coffs Harbour.
"If interest rates remain as they are now, the market should remain strong.
"We found last year, when interest rates went up, that Sydney absorbed them first, then Melbourne, but it had about three months' (lag) effect in Queensland."
The combination of strength in the top end of the market and a softening in the middle was confirmed on the NSW south coast by Gary Dale, principal of Raine and Horne at Mollymook.
Mr Dale said that recently a house had sold at auction for $1.84 million, above the expected price, and there was strong demand for houses priced above $800,000.
"But it is a bit slow around that $400,000 mark," he said.
The Australian
By Teresa Ooi and Andrew Fraser
January 8, 2005
DEMAND for new houses has fallen to a three-and-a-half year low in another sign the housing slowdown may dampen economic growth this year.
With building approvals in November down another 0.3 per cent in the month - and 12.8 per cent for the year - and retail sales also weak, up only 0.1 per cent for the month, interest rates are likely to remain on hold well into this year.
The slowdown is starting to affect holiday homes, with real estate agents saying that middle Australia is beginning to shy away from the market.
Chief economist of AMP Capital Investors Shane Oliver said the continuing weakness in the housing market does not come as a surprise as the government has already taken it into account in its forecast of 3 per cent growth this year.
"The fall in building approvals points to a further weakening - not a crash - of the residential construction market," he said.
"But approvals of the non-housing sector continues to be strong which will help offset some of the weakness in housing."
The slowdown in building approvals is affecting the supply of investment stock on the market.
On the Gold Coast, for example, one of Australia's largest investment property locations, only 350 units were completed in the most recent quarter, well down from the 1150 recorded 18 months ago.
While investment in the upper end of the housing market is still very strong, there are signs that middle Australia is losing its taste for investment in property.
Developers Junipers claim to have sold 70 units for a total of $100 million - or nearly $1.5 million per apartment - in the past week in their proposed beachfront tower at Surfers Paradise. But agents say sales of mid-level units and townhouses, worth between $300,000 and $400,000, are slowing down.
Bill Morris, the director of the Midwood Report, said while there were numerous reports of big sales such as those by Junipers there was less activity in the modestly-priced end of the market.
He said that in Coomera, for example, which has been seen as one of the Gold Coast's hot spots for future development, blocks of land which 12 months ago were selling for $220,000 are now selling for $175,000.
Ray White principal Sam White said that today would be the test of how much activity there was in the
national housing market.
"Most times over Christmas and New Year, people are only looking at property, they rarely think that now's the time to buy," he said.
"But the first Saturday after New Year is generally the time when we can get some sort of indication of how the property market is performing.
"Southeast Queensland remains strong, as does northern NSW, places like Ballina and Coffs Harbour.
"If interest rates remain as they are now, the market should remain strong.
"We found last year, when interest rates went up, that Sydney absorbed them first, then Melbourne, but it had about three months' (lag) effect in Queensland."
The combination of strength in the top end of the market and a softening in the middle was confirmed on the NSW south coast by Gary Dale, principal of Raine and Horne at Mollymook.
Mr Dale said that recently a house had sold at auction for $1.84 million, above the expected price, and there was strong demand for houses priced above $800,000.
"But it is a bit slow around that $400,000 mark," he said.
The Australian
