Australian residential property market takes another hit
Discounted sales and more days on market as the residential property sector responds to consecutive interest rate increases
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Properties are taking longer to sell, buyer demand is slowing and the combined value of Australia’s residential real estate fell by $100 billion over January, according to data released by CoreLogic.
Key market metrics released by the property data provider today show a national residential market in decline as the heat comes out of the residential sector. It follows the RBA decision yesterday to raise the cash rate a further 25 basis points, its ninth increase since May last year, hitting borrowers with a 3.35 percent interest rate.
CoreLogic data also revealed national home values declined over January, down a further -1.0 percent from the December drop of -1.1 percent. Sydney property values have been hardest hit, down -13.8 percent in the past year.
The median number of days a property is on the market increased over the three months to January, up from a low of 20 days in November 2021 to 37 days. Perhaps unsurprisingly, vendor discounting has also increased, at -4.3 percent in the past quarter compared with -2.9 percent in the three months to November 2021.
While annual rent values eased slightly in January to 10.1 percent in January, yields rose over the same period to 3.9 percent, and increase from 3.21 percent a year earlier.
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The company is best known for its prestigious Penfolds brand
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Australia’s Treasury Wine Estates admitted defeat in its effort to divest brands including Wolf Blass and Blossom Hill, moderating its annual earnings guidance amid weaker sales of its cheaper products.
Last year, Treasury outlined plans to offload its so-called commercial portfolio in a pivot toward costlier, higher-margin brands. As part of the move, it bought California’s Frank Family Vineyards in 2021 and Daou Vineyards in 2023 in deals worth US$1.31 billion combined.
On Thursday, Treasury told investors that it had failed to find a buyer for its budget brands.
“TWE has concluded that the offers received for these brands did not represent compelling value and therefore their retention is the best course of action,” Treasury said.
The company, which is best known for its prestigious Penfolds brand, said that demand for brands typically retailing for less than US$19 a bottle had fallen by 4.9% in the December-half. That includes the commercial portfolio, which comprises the company’s cheapest offerings.
As a result, Treasury expects so-called Ebits—earnings before interest, tax and other impacts including one-off items—for the full fiscal year of 780 million Australian dollars, or about US$489.8 million. That’s at the bottom end of its previously issued A$780 million-A$810 million guidance range.
Even so, Treasury on Thursday reported a A$220.9 million net profit for its fiscal first half, up 33% on year as the company continued to re-establish its Penfolds brand in China following that country’s removal of tariffs on Australian wine.
Revenue rose by 20% to A$1.57 billion, while profit increased 33% to A$239.6 million once material items and currency moves were stripped out.
The average analyst forecast had been for a net profit of A$242.1 million from revenue of A$1.57 billion, according to data compiled by Visible Alpha. Treasury reported first-half Ebits of A$391.4 million.
The board declared a dividend of 20 Australian cents a share, up from 17 cents a year earlier.
This stylish family home combines a classic palette and finishes with a flexible floorplan
Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.
