Mirvac Group finance director Greg Dyer has resigned after eight months in the role, effective immediately.

In a statement today the property group said Mr Dyer, who was appointed on August 6 last year, will remain in an executive capacity to assist in transitional arrangements until this September.

Mirvac shares fell 0.49 per cent to $1.622 at 1120 AEDT, against a benchmark fall of 0.39 per cent.

"Greg has played a key role in assisting the Group through the CEO leadership transition and in pursuing a number of important initiatives since that time," Mirvac chief executive officer Susan Lloyd-Hurwitz said.

By a staff reporter

A Lend Lease Ltd consortium has won a $630 million contract to design and build Bendigo Hospital in Victoria.

Investors appeared largely unmoved by the news, with shares rising 1.98 per cent at the 1615 AEDT official close to $10.30, against a benchmark fall of 0.45 per cent.

In a statement today Lend Lease said the Exemplar Health consortium had been chosen as the preferred bidder to to design, construct, maintain and finance the project, a private public partnership.

Lend Lease would invest half of the equity required for the project, with consortium partner Siemens making up the balance. 

Other Exemplar Health partners include Capella Capital and Spotless.  

the project is sexpected to be finalised by the end of May, with site works set to start shortly after.

The contract win follows a report earlier this week that the Victorian government may be exposed to a substantial damages claim from Lend Lease over its handling of the $630 million Bendigo Hospital tender.

In the six months to December 31, Lend Lease posted a net profit of $302.3 million, up 39 per cent from $217.8 million in the previous corresponding period.

Looking for value? About a third of the market is cheap compared to its peers, an interesting bit of research from State Street reckons.

The price-earnings ratio of Telstra, health-care, real estate investment trusts, utilities, transport and consumer staples shares have risen since September 2011. But these stocks all lag the 40 per cent PE gain the S&P/ASX 300 Index has experienced in the last 18 months, says Olivia Engel, State Street's head of active Australian equities.

Moreover, says Engel, the earnings per share forecasts for companies in those sectors favoured by State Street are all positive and are even being revised higher. In contrast, the S&P/ASX 300 Index’s EPS forecast has fallen 10 per cent since September 2011.

The companies in the sectors favored by State Street are expanding with the help of cash rich balance sheets. Engel says that Telstra, health-care, the REITs, utilities, transport and consumer staples offer less volatility than other sectors.

Still, stock selection is paramount. Pockets of value can be found with proper analysis, she says.

State Street says bank valuations have increased more than the market. Banks do not have the earnings growth of the sectors State Street likes as their share price has risen.

Engel warns that bank dividend payments may soon hit a ceiling.

Banks are bolstering their payout ratios from about 60 per cent historically. As the banks' EPS have slid, their dividend payout ratio has increased to the point where up to 90 per cent of their sustainable sources of earnings have been paid out, says the asset manager.

The increase in dividend payments by the banks had gone some ways to attracting an astonishing 67 per cent of the money invested in Australian shares in December 2012 by a local household, versus an average of 44 per cent since 1989, according to the Bureau of Statistics.

By a staff reporter

Confidence in the outlook of housing prices climbed to its highest point in almost three years in the three months to April according to a leading survey.

The Westpac-Melbourne Institute consumer house price expectations index rose from +26.7 in January to +53.9 in Apil.

The index now sits at its highest point since

The index measures the net percentage of those expecting prices to rise and those expecting prices to fall.

"This is a substantial improvement, marking a breakout from the 'moderately positive' range the Index had been stuck in since January 2012," Westpac said of the result.

"After an extended period of uncertainty, Australian consumers now look to be much more convinced that house prices are on the way up."

The bulls are roaring, house prices are rising, and all's well with the world.

Or maybe not. Certainly house prices have risen -- and contrary to popular opinion, I expected price rises this year, since mortgage debt has been accelerating since the beginning of 2012 (see Figure 1). One of my many economic heresies is the argument that asset prices are driven by rising debt. Rising asset prices -- in this case, houses -- require accelerating debt (in this case, mortgage debt), and that’s indeed what we’ve had since the beginning of 2012.

Figure 1: Mortgage debt has been accelerating since early 2012

But I’ve also said that I expect this to be a sucker’s rally, and today I want to delve a bit more into that argument -- with one final caveat motivated by my recent trip to Hong Kong, where I was a speaker at the recent Institute for New Economic Thinking annual conference. (Click here for my panel with Robert Lord Skidelsky and Norberg Haring.)

The basic reason that I expect this rally to peter out is that Australians haven’t de-levered from mortgage debt in the way that Americans have. Mortgage debt peaked at 86 per cent of GDP in America in March 2009, declined to 68 per cent, and is now rising slightly (see Figure 3). In Australia, debt peaked at over 87 per cent (with the First Home Vendors’ Boost reversing a trend to declining mortgage debt to GDP in 2008) and barely dropped -- just a 3 per cent fall from 2010 till 2012, after which it has risen slightly.

Figure 2: America delevered, Australia hovered

This in turn means that the potential for further debt-financed house price appreciation is limited here, whereas deleveraging has created some headroom in the USA. If mortgage debt continues to accelerate, then sooner rather than later the ratio of mortgage debt to GDP has to rise. Since we’re still within cooee of the all-time mortgage debt peak, we will have to go into even more uncharted debt burden waters to keep the appreciation going. Maybe we could end up joining the world-record-holding Dutch on something like 110 per cent of mortgage debt to GDP, but I simply don’t believe that will happen.

The ratios also conceal some important information on this topic that the raw numbers reveal. From those, it’s obvious that the US has been deleveraging since early 2008 -- that uptick in the mortgage debt to GDP ratio in 2008-2009 was in fact due not to rising mortgage debt, but to the country’s GDP falling faster than the decline in mortgage debt.

Figure 3

Australian mortgage debt, on the other hand, seems to have been growing unstoppably. But there the sheer bulk of debt also disguises some important changes. Though mortgage debt has been growing, it’s growing more slowly (see Figure 4). For the last year, it’s been bouncing around at about $50 billion per annum -- half the pace of the mid-2000s.

Figure 4

One further drill down uncovers another crucial fact: behind an apparently stable to rising level of demand for housing is a market that is increasingly dominated by speculators rather than owner-occupiers. Owner-occupier mortgage borrowing has been falling steadily ever since the First Home Vendors Boost ended, from almost $70 billion per annum then to just over $30 billion now. The revival in mortgage debt growth since 2012 has been more than 100 per cent due to additional speculation: the decline in owner-occupier borrowing from $40 billion per annum at the start of 2012 to $32 billion per annum now has been more than outweighed by the increase in speculative mortgages from 11.5 billion per annum to $21.8 billion today (see Figure 6).

Figure 5

The mortgage acceleration data confirms that the current upward impetus to prices is coming entirely from speculators rather than owner-occupiers. Both were trending up from early 2012, but as of the middle of 2012 owner-occupier mortgage debt was decelerating again, and it’s still heading south (see Figure 6).

Figure 6

So the current rise in prices is occurring predominantly because speculators as a group are betting that prices will rise, and they’re busily competing not only First Home Buyers but also existing owner-occupiers out of the market. Given that production of and demand for new houses has also dropped off a cliff, the market is therefore being held aloft by a bunch of speculators hoping to get rich off demand for second-hand houses from other speculators.

Buy a place now, hold on to it and wait for its price to double in seven years, and then sell it for a profit to another speculator. What could possibly go wrong with that?

The Reverse China Syndrome

Actually, there is one factor that could result in a happy ending for the current crop of speculators: rather than attempting to sell their bricks and mortar to each other, they could end up selling them to rich pollution refugees from China.

I’ve heard plenty of anecdotal reports of unbearable pollution in China, and in the last week I’ve had a small taste of it myself in Hong Kong -- which has barely any industry of its own but cops the pollution downwind from some of China’s major industrial areas (and adds to the burning of diesel fuel on the world’s third-busiest port). That haze between me and the other side of Hong Kong isn’t rain or fog: it’s pollution. The distance across the harbour is less than that from Circular Quay to North Sydney (or roughly the same as New York to New Jersey across the Hudson, or say three times the width of the Thames at Westminster).

Figure 7: I can see unclearly now...

A couple of hours in that chemical soup, and all I wanted to do was get back where the air was filtered -- inside the hotel. Were I a wealthy Hong Kong local -- let alone someone from the mainland -- then one trip to Sydney (or New York or London even) would have me consulting their real estate  guides.

Then it comes down to (a) how easy is it for non-residents to buy residential property and (b) whether domestic housing policy puts the interests of residents and owner-occupiers ahead of non-residents and speculators. In Australia’s case, the answers -- as Chris Vedelago has exposed so well by his thus far futile attempts to get any information from Australia’s Foreign Investment Review Board about the proportion of property sales that are to non-residents -- are (a) “Dead easy” and (b) “You’re joking, right?”

So the facts that public policy in Australia is tilted in favour of speculators against homeowners, and property prices  against young would-be home-owners, might yet bring home the bacon for all those speculators playing ‘flip that house’ right now.

By a staff reporter, with AAP

The demand for home loans beat expectations in February, marking the first increase in five months, according to the Australian Bureau of Statistics. 

The data showed the number of home loans granted in February lifted a seasonally adjusted two per cent to 45,423.

The result compares to an upwardly revised 44,547 in January.

Bloomberg had expected the number of housing finance commitments to lift by 1.5 per cent.

Total housing finance by value rose a seasonally adjusted 1.4 per cent in February, to $21.826 billion.

CommSec chief economist Craig James said the findings were broadly encouraging for the housing sector.

"Investors look as though they are continuing to lead the way," he said.

"So investors see the value in the housing market but first home buyers are still to be convinced."

First home buyers made up 14.4 per cent of all new housing loans in February, down from 15 per cent the previous month, and 17.4 per cent a year ago, despite lower interest rates.

Mr James said grants from state governments for first home buyers buying newly built homes or for building their own home were proving unpopular.

"Perhaps the state governments need to rethink about the way that the incentives are provided so they can provide some assistance to the market," Mr James said.

St George senior economist Jo Heffernan said the rise in approvals was a sign the housing sector was picking up after several months of weakness.

"We are expecting to see some further pick up from here, but we would need to see a few more months data to confirm a pick-up was underway," she said.

While demand from first home buyers remained weak, Ms Heffernan said it was likely to improve over the coming months.

"It (the weakness) has continued longer than we would have expected following those state government changes," she said.

"But at some point you would expect to see that turn around."

By a staff reporter

QBE Insurance Group Ltd has taken a 10-year lease out for the top four floors of Sydney's Chifley Square, which is set to be finished by August.  

Mirvac Group, who owns the 34-storey office building with Keppel REIT, told the Australian Securities Exchange today that signing QBE on took the building to more than 56 per cent pre-committed.  

QBE's new offices, on the corner of Hunter Street and Elizabeth Street, will cover about 2,800 square metres.

The group's move comes more than year after law firm Corrs Chambers Westgarth took out a 12-year lease at the site for 8,000 square metres, or about 42 per cent of the building’s net lettable area. 

AAP

Councils could be forced to approve development applications for new homes in just 10 days under proposed reforms to New South Wales planning laws.

A government white paper out Tuesday recommends forcing councils to give rulings on DAs within 10 days or risk losing decision making powers, News Ltd reports.

The report says councils will have to green-light the fast-tracked approvals if the new homes are under two storeys and don't impact neighbours.

The approval process for some apartments, townhouse developments and new shops and land subdivisions will also be sped up under the plan.

Councils reportedly take an average 71 days to adjudicate on DAs at the moment.

The O'Farrell government hopes the recommended changes will save the state up to $1.7 billion over the next decade.

The Australian Securities and Investments Commission will launch an investigation into Gold Coast developer Sunland Group Ltd over questionable statements released to the market during James Packer's directorship in 2009 relating to Dubai bribery allegations, The Australian Financial Review reports.

According to the newspaper, ASIC's Victorian regional commissioner Warren Day wrote to Liberals senator Helen Kroger last week to confirm the probe into "announcements that Sunland made to the ASX on 20 February, 2 March and 21 July 2009 regarding the nature of the investigation by the Dubai authorities".

Billionaire James Packer, currently director of Crown Ltd, was a major shareholder and director of Sunland during the period in question. He resigned from the company's board in August 2009 and sold has subsequently sold his shares.

“ASIC has interviewed and examined a number of people and obtained documents during the course of its investigation," the letter said.

"ASIC is currently seeking information from Dubai authorities to clarify the nature of the Dubai investigation prior to Sunland’s announcements.”

In 2007 Sunland alleged it was conned into paying a $14 million "introductory fee" for securing Dubai waterfront land, leading to the arrest of Australian property developer Matthew Joyce.

The country's largest independent chain of greengrocers has urged the Australian Competition and Consumer Commission (ACCC) to broaden its supermarket probe to include lease agreements and new store developments, according to The Australian Financial Review.

The competition regulator is investigating alleged misuse of market power by Coles Ltd and Woolworths Ltd.

Harris Farm co-chief executive Tristan Harris accused the supermarket giants of absorbing losses on lease agreements and new stores to expand their footprints.

“The [ACCC] should be looking at what is required to make sure companies can compete on a fair basis, including rent and access,” Mr Harris told the AFR.

“Coles and Woolworths are looking well into the future in terms of where they can put down a store and are happy to run it at a loss.”

He said smaller competitors, such as Harris Farm, are unable to absorb steep losses on leases as a cost of expanding into new communities the way Coles and Woolworths can, giving the giants an unfair market advantage.

AAP

US homebuilders have broken the one million mark in March for the first time since June 2008. The gain signals continued strength for the housing recovery at the start of the northern spring buying season.

The overall pace of homes started rose seven per cent from February to March to a seasonally adjusted annual rate of 1.04 million, the Commerce Department said on Tuesday.

Apartment construction, which tends to fluctuate sharply from month to month, led the surge: It jumped nearly 31 per cent to an annual rate of 417,000, the fastest pace since January 2006.

By contrast, the single-family home building, which makes up nearly two-thirds of the market, fell 4.8 per cent to an annual rate of 619,000. That was down from February's pace of 650,000, the fastest since May 2008. The government said February's pace was a sharp 5.2 per cent higher than it had previously estimated.

Applications for building permits, a gauge of future construction, declined 3.9 per cent to an annual rate of 902,000. It was down from February's rate of 939,000, which was also nearly a five-year high.

Paul Ashworth, chief US economist at Capital Economics, called the data "obviously good news". But he noted that the surge was due to a jump in volatile apartment construction and said the pace of building could drop in April.

Steady job growth, near record-low mortgage rates and rising home values have encouraged more people to buy. In response to higher demand and a low supply of available homes for sale, builders have stepped up construction.

March's pace of homes started was nearly 46 per cent higher than in the same month in 2012.

Housing construction fell 5.8 per cent in the northeast but gained in the rest of the country, led by a 10.9 per cent rise in the south. It rose 9.6 per cent in the midwest and 2.7 per cent in the west.

The National Association of Home Builders/Wells Fargo April survey released on Monday showed that builders are concerned that limited land and rising costs for building materials and labour could slow sales in the short term. That led to a third straight monthly drop in confidence.

Still, the builders' outlook for sales over the next six months climbed to the highest level in more than six years, suggesting that the obstacles could be temporary.

And construction firms have stepped up hiring in recent months. They added 18,000 jobs in March and 169,000 since September, according to the Labor Department.

Though new homes represent only a fraction of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $US90,000 ($A87,027.99) in tax revenue, according to statistics from the homebuilders.

By a staff reporter

House prices in almost all Chinese cities rose in March, fuelling speculation the new government will intervene in the sector.

Statistics out of the National Bureau of Statistics showed 68 out of 70 cities surveyed recorded an increase in the price of new homes.

In terms of existing homes, 59 cities recorded a price increase in the month, two were unchanged, while nine fell.

By a a staff reporter

AV Jennings Ltd shares have been placed in a trading halt pending the release of an announcement regarding a funding proposal.

In a statement to the Australian Securities Exchange, AV Jennings requested the halt to commence immediately.

The group said it expected its shares would remain in a halt until an announcement was made or the beginning of trade on Wednesday.

AAP

US existing home sales slipped while prices gained in March as the number of homes on the market remained tight amid rising demand, the National Association of Realtors says.

Sales fell 0.6 per cent from February to an annual pace of 4.92 million units, with condominium sales falling more strongly than single family homes, NAR said on Monday.

Sales were up 10.3 per cent from March 2012.

Home prices jumped from February; the national median stood at $US184,300 ($A180,200), up $US11,100 from February and $US19,500 higher than a year earlier.

The supply of homes on the market remained tight at 4.7 months' supply, contributing to price gains.

"Buyer traffic is 25 per cent above a year ago when we were already seeing notable gains in shopping activity," said NAR economist Lawrence Yun.

"In the same timeframe housing inventories have trended much lower, which is continuing to pressure home prices."

Private equity giant Blackstone Group says it is turning its attention to distressed Chinese real estate, and its founder says he is pleased with the firm's Australian investments, according to The Australian Financial Review.

Stephen Schwarzman said Blackstone, which was the first foreign firm to establish a buyout fund in China, has shifted its view of China's real estate market, having previously deemed the sector overpriced.

“We just bought a large office building in Shanghai as the developer could not hold it,” Mr Schwarzman said, according to the AFR.

“I think there will be lots more of these opportunities. We bought it at a significant discount as the developer ran into trouble.”

Mr Schwarzman also said the outlook is bright for the firm's Australian investments, which include the Valad Property Group and shopping centre group Centro, which has since been renamed Federation Centres.

“It's a good place to do business and its future growth should be pretty strong,” he told the AFR.

“Australia has an educated population and a strong resources base which should ensure its long-term prospects are solid.”

AAP

New figures show housing prices are on the rise.

Australian Property Monitors said on Wednesday in its quarterly housing report that the median price of a house rose by 3.2 per cent over the year to March.

Over the same time, the price of a home unit was up by only 0.7 per cent. (The median is the value in the middle when prices are ranked from high to low.)

The slow rises can be seen in other measures, like the Australian Bureau of Statistics' established house price index, which grew by 2.1 per cent through 2012.

Over the same year, the bureau's consumer price index rose by 2.2 per cent.

So it's not a boom.

Far from it.

And the Reserve Bank of Australia wants to make sure it stays that way.

In a speech in Sydney on Tuesday, the Reserve Bank of Australia's head of financial stability, Luci Ellis, twice warned that the central bank did not want a return to the boom times seen a decade ago.

Her wish is being granted, at least so far.

But the decline starting in late 2010 and extending into early 2012 has ended.

The only questions are how steep, and how durable, the pickup will be.

Dr Ellis thinks the big shift to a low-inflation economy generated a one-off surge in housing prices, as lower interest rates enabled banks to make bigger loans.

"But the transition does end after a while, and it is our assessment that it has now ended," she said.

And that would mean slower growth in prices from here and, as a result, a greater likelihood that fluctuations around that trend would bring falls - rather than just slower growth - in prices, she said.

The recent behaviour of the ABS house price series bears that out.

The index, which in various incarnations goes back as far as 1986, had recorded only two annual falls in prices before the global crisis in 2008.

One was in 1992, but prices fell only 0.2 per cent despite the major recession and double-digit home loan interest rates.

The other was in 1996, but that drop was still only 0.9 per cent even though the RBA had nudged the standard home loan rate up from 8.75 per cent to 10.5 per cent.

More recently, annual falls have been recorded in 2008, 2009, 2011 and 2012.

Of course, for every rise or fall in housing prices there are winners and losers.

Homebuyers like the falls while home owners, including investors, like to see rises.

But this new environment could be seen as the worst of both worlds.

Homebuyers can look forward to persistently high housing prices, but investors will have to do without the prospect of the kind of recurrent booms seen over the past 30 years.

Asian investors are showing rising interest in Australia's property market, with Korean investors in particular looking to shift their assets away from that region's political tensions, according to The Australian Financial Review.

The newspaper cited one international fund manager who said calls from Korean institutions have soared, but added that “they need a lot of hand holding” and “once they turn, they turn quickly”.

Invesco, which opened an office in Sydney in 2012, is believed to have mandates from Korea Life and Korea Post.

But one source warned that the strength of the Australian dollar and concerns about the outlook for the mining boom could dampen the growth potential of any overseas interest in Australian real estate, the AFR added.

The Australian Securities & Investments Commission (ASIC) has dropped its investigation into Wellington Capital and its Premium Income Fund, saying allegations against Wellington cannot be proved in court, according to The Australian.

Wellington had been alleged to have made an unlawful transfer of property assets to Asset Resolution and was accused of hiring 200 actors to influence the outcome of an extraordinary general meeting.

“Prior to commencing proceedings, there needs to be sufficient evidence to prove allegations of misconduct in a form that is admissible in court,” ASIC wrote to a Premium Income Fund unit holder, according to The Australian.

“Other than the Asset Resolution transaction appeal, ASIC has concluded its investigation and, on the basis of the information obtained to date, has decided to take no further action.”  

By a staff reporter

Dexus Property Group Ltd and Dexus Wholesale Property Fund (DWPS) have jointly acquired a strategic office investment in Brisbane.

In a statement to the Australian Securities Exchange, Dexus said it had entered into an agreement with DWPS to each acquire 50 per cent stake in 480 Queen St Brisbane.

The property comprises a premium-grade office building which is set to be developed by Grocon.

The total cost payable is expected to be approximately $543.9 million, representing a capitalisation rate of 7.25 per cent.

"This investment has been acquired with low transaction costs and on a fund-through basis with DEXUS and DWPF jointly acquiring the land and funding the construction costs on a progressive basis," Dexus said.

Chief executive officer Darren Steinberg said the acquisition leverages the group's exposure to quality real estate in the core Brisbane CBD office market, adding to 123 Albert Street and 12 Creek Street.