Critics of the conditions for Westfield Group's $65.8 billion merger with Westfield Retail Trust hope the companies' full-year results briefings this week will bring news of a revised deal, as investors tip earnings slightly ahead of expectations.

After announcing in December a restructure of its shopping centre empire, pressure has been mounting on Westfield to offer a greater payout to WRT investors.

These investors believe they are being asked to buy Westfield Group's Australian and New Zealand management and development business on a price-earnings multiple some fund managers have estimated at about 20 times.

The deal involves merging Westfield Group's Australian and NZ property interests with WRT to form a new company called Scentre Group, while Westfield Group's global malls would be in a company renamed Westfield Corporation, which may be listed in Australia and London or New York. One option is for Westfield Group to spin out Scentre as a separate company, with the status quo to remain for WRT.

While analysts say any news on the merger proposal, to be voted on in May, would dominate results, the shopping centre giant is likely to offer a relatively positive outlook, but the Australian portfolio is still under pressure from an income growth perspective, judging on the recent result from local rival landlord CFS Retail.

Westfield has offered guidance of a 2.3 per cent lift in earnings for the 2013 calendar year.

"With the results we have seen to date, they will come in with results in line with expectations," the managing director of fund manager Maxim Asset Management, Winston Sammut, said.

"It may be a little bit better, given the US seems to be in a recovery phase and what we are seeing with Simon Property Group."

Other sources said questions would remain over the performance of the company's US malls.

"Westfield had rent falls during the global financial crisis, but not as much as its peers, so there is less upside as things improve," one analyst said.

The company's two major malls in Britain, Westfield London and Westfield Stratford, had had strong rent growth, which was likely to continue.

Mr Sammut said should Westfield deliver better than expected numbers, it might justify a move by the group to reconsider the amount of money distributed to WRT shareholders under the merger plan and justify a change.

"If there's a catalyst that would cause them to revisit the metrics, it would give them a good opportunity to change the mix without making it seem like they had changed their mind because of pressure from investors," he said.

Among those calling for the deal to be dropped or revamped has been UniSuper, which has a 7.27 per cent stake in WRT.

Shareholders object to the conditions of the rejig, which would see WRT shareholders receive an $850m payout and Westfield Group shareholders receive 1000 securities in the new Westfield Corp and 1246 securities in Scentre Group for every 1000 Westfield Group securities held.

Westfield needs 75 per cent of shareholder approval.

A clearance rate of 82 per cent nationwide over the weekend has boosted optimism around the housing sector, according to The Australian Financial Review.

RP Data numbers showed a substantial lift in activity across the country, with capital city auction numbers climbing 70 per cent at the same time as clearance rates soared.

Sydney led the way with a record clearance rate of 85.2 per cent, though the second biggest market of Melbourne also performed well with the clearance rate jumping from 69.2 per cent to 79 per cent.

“The market appears to be continuing to rise,” Australian Property Monitors’ senior economist, Andrew Wilson, told the AFR. “We’re seeing anecdotally reports of auction reserves being exceeded by 10, 15, 20 per cent.”

The publisher is keen to give the real estate business the firepower to compete with News Corp’s REA Group.

Media can also reveal that the strategic option emerged after Kerry Stokes’ Seven West Media proposed buying half of Domain in late 2012, but the deal fell down amid frustration at the pace of talks and resistance from some Fairfax board members.

Sources close to the aborted talks said the terms of the deal were a major sticking point. Seven put a combination of cash and contra advertising from its television and publishing assets on the table to fund the transction. The discussion was also complicated by a failure to reach agreement on the value of the West Australian real estate franchise.

Discussions were led on the Fairfax side by the then chief executive of the digital transaction and classified advertising business Marketplaces, Nic Cola.

The two sides reached an impasse and Seven walked away despite believing that real estate remains the only classified advertising sector in Australia where a duopoly exists (REA and Domain). Seek dominates classified advertising in jobs, while Carsales.com.au leads the automotive sector.

Speculation had been mounting last year that Fairfax might float Domain or initiate a sale process.

In April, Fairfax placed Domain in a separate business unit as part of a major corporate rejig. It also gave Fairfax the ability to replicate News’s structure with REA, which owns websites including realestate.com.au.

News holds 62 per cent of REA, which is now capitalised at $6.5 billion after shares surged 87 per cent in the last year, a rise that has not gone unnoticed by Fairfax executives.

On Thursday, Fairfax broke out the financial performance of Domain in detail for the first time. Chief executive Greg Hywood played down talk of a public offering, although he did not completely rule the option out.

“We have some strategic options (as to) how we build the business, but I’m going to talk about that and I’m certainly not going to talk about an IPO,” Mr Hywood said.

As well as a potential float, another option is said to include a sale, if Fairfax was approached with a valuation close to an IPO target above $500m.

After refinancing cash borrowings of $1.49bn earlier this month, Seven could be tempted to revive its interest after improving the flexibility of its financial position.

Fairfax sources said the Domain business was internally valued at $350m in mid-2013. In August 2012, Morgan Stanley ran the numbers on Domain and attached an equity value of $232m to $464m.

Nationally, REA is the No 1 player in the Australian property market, but Domain has a strong market share in the Sydney and Melbourne markets.

Seven declined to comment.

A spokesman for Fairfax said in relation to a potential float of Domain in early 2015 that the assertion was “totally incorrect and we reject it”.

Last week, the Fairfax board came under renewed pressure from shareholder and mining magnate Gina Rinehart.

Mrs Rinehart’s key adviser on her $200m investment in Fairfax expressed frustration that the company was not growing revenues fast enough.

“They continue to move at glacial speed on key areas of revenue growth and value-creative mergers that have synergies like the radio assets,” John Klepec, chief development officer at Mrs Rinehart’s Hancock Prospecting, told The Australian.

Fairfax shareholder and chief executive of fund manager Allan Gray, Simon Marais, urged Fairfax to focus on building Domain’s revenues “for two more years before a float or sale”.

Retirement village owner and operator Ingenia is poised to buy three manufactured housing parks for more than $25 million.

The acquisitions take the number of manufactured home parks bought by Ingenia to 15 since it entered the sector almost a year ago.

Two of the properties, Town & Country Estate in Sydney's Marsden Park and Sun Country Holiday Village in southwest NSW, are being purchased for about $18 million and $7 million respectively. A third Sydney property is also under negotiation.

Ingenia is in the final stages of due diligence on Sun Country Holiday Village and Town & Country Estate. Both are set to deliver a rate of return above 15 per cent and are being funded from Ingenia's $61.7 million capital raising in September. The properties will add 495 homes and tourist sites and more than 280 development sites to Ingenia's existing portfolio of 858 homes, with an end value of an estimated $208 million.

The company's focus for manufactured housing estates is in NSW, particularly the Sydney basin, southwest NSW and Hunter Valley and Newcastle. Ingenia is the largest holder of the manufactured housing estates in NSW. The retirement accommodation allows occupants to rent or buy the properties for about $250,000.

It plans to expand into Western Australia and Queensland in what has been described as a highly fragmented industry. In November, Ingenia said it had secured four manufactured home estates in the Hunter Valley for $10.7 million.

A recent decision by the Canadian government to drop a 28-year-old visa scheme for foreign investors could be beneficial to Australian house prices, Fairfax Media reports.

The move was made amid fears Chinese buyers were artificially inflating house prices in the North American country and Tyndall Asset Management’s head of fixed income, Roger Bridges, believes more Chinese investors will now look to Australia.

As a result the bond strategist has the local housing market on a list of “low probability, high impact” events to keep an eye on, Fairfax reported.

The news follows a report from the real estate advisory arm of Korda Mentha that revealed the Australian government’s significant investment visa scheme had attracted $440 million of investment in the local economy by Chinese investors.

Charter Hall Group Ltd has lifted its full-year earnings guidance despite posting a slight slip in first-half profit as it simultaneously unveiled a capital raising.

In the six months to December 31, Charter Hall posted a net profit of $28.6 million, a 4.3 decline on the $29.9 million recorded in the first half of the previous year.

Operating earnings came in at $38.1 million, 13.1 per cent higher than the previous corresponding period's $33.7 million.

Charter Hall’s joint managing director, David Southon, said the strong operational performance drove property investment earnings growth, contributing to the 10 per cent increase in operating earnings per security.

In the same period revenue, was $59.8 million, a 3.8 per cent lift on the $58 million recorded in the first half of the previous year.

The group will pay an interim dividend of 11 cents on February 25 to shareholders on the register at December 31.

The group lifted its earnings guidance for the full year, and said barring any unexpected events is projecting full-year operating earnings per security growth of seven per cent to nine per cent on the expanded total capital base.

A distribution payout ratio of between 85 per cent and 95 per cent of operating earnings per security is also expected.

Raising to repay drawn debt

In a separate release, Charter Hall announced its shares would be placed in a one-day trading halt pending the outcome of a proposed capital raising.

Charter Hall said the capital raising was a fully underwritten $140 million institutional placement which will be used to repay drawn debt used for recent investments, fund identified investments and to provide capital for growth initiatives planned.

The group said it is undertaking the placement in order to continue the its partnering business model and provide growth capital following an active three years of recycling.

Home builder AV Jennings is back in the black with a solid half year profit.

The company has announced a profit of $8.4 million during the six months to December 31, a big turnaround from a $19.1 million loss made in the same period a year earlier.

The improved results reflect an increase in production and sales, including growing consumer confidence in the key New South Wales and southeast Queensland markets, AV Jennings director Peter Summers' report says.

"This is reflected in the improved performance of individual estates although the recovery is much more established in NSW at this stage," he said.

"Further improvement in the company's Queensland markets is expected in the short term."

He said home sales in Victoria is showing signs of recovery but South Australian sales remain subdued.

At 1042 AEDT, AV Jennings' shares have risen 2.5 cents at 62.5 cents.

Defence Minister David Johnston has raised the prospect of selling off some of defence's vast and expensive real estate holdings.

The defence estate covers three million hectares with 25,000 buildings and includes major and minor bases, ports and airfields and even stately heritage-listed homes and world heritage areas.

Senator Johnston told the Australian Defence Magazine conference in Canberra that maintenance of its 400 properties would cost $511 million in 2013-14.

"The estate is vast, it is costing an absolute fortune to maintain and it needs to be rationalised," he said.

"This is a very sensitive and political area that we must attack right now."

Some properties, such as on the Sydney Harbour foreshore, are extremely valuable.

Past moves to sell defence properties have sparked strong opposition from local communities and their MPs.

Some state governments have taken the view that they should gain surplus defence property at nil or nominal cost.

Senator Johnston said these were challenging times but reaffirmed coalition promises of no further cuts to defence spending and increasing defence spending to two per cent of GDP in a decade.

He said the government's plan for defence would be outlined in the new White Paper to be released in early 2015.

"The government is committed to gaining the best value for taxpayers' dollars that are spent on defence," he said.

Fast-growing Charter Hall Group has tapped the market for $140 million to fuel another spate of acquisitions as it raised earnings guidance for the full year after a strong first-half result.

The raising comes as the group readies to roll out a third unlisted industrial fund and lays the groundwork for a major wholesale retail property fund to be seeded with assets of between $100 million and $200 million.

The property fund manager booked a small, 4.3 per cent decline in net profit to $28.6 million for the first half due to the amortisation of the management rights for its previously listed office fund, Charter Hall Office Trust.

The bottom line result masked a 13.1 per cent lift in operating earnings to $38.1 million for the six-month period and 10 per cent rise in operating earnings per security of 12.42 cents, which was driven by strong transaction fees during the half.

The company declared an interim distribution of 11 cents a security, a 12.2 per cent increase on the previous corresponding period.

During the half Charter Hall made $1 billion of acquisitions, the largest of which was its $458 million purchase of Raine Square with partners Canada Pension Plan Investment Board and PSP Investments. It also sold $900 million of property during the six months, while funds under management grew by 6 per cent to $10.5 billion.

Joint managing director David Harrison said about $100 million of the capital raised yesterday through a share placement managed and underwritten by UBS and Macquarie at a 3.6 per cent discount to its last closing price would go towards more acquisitions. Shares stayed in a trading halt during yesterday's raising.

Mr Harrison said that the group had upgraded full-year guidance to operating earnings growth per share of between 7 per cent and 9 per cent, from 7 per cent previously, as a result of the high level of activity the group had experienced during the half.

Fellow joint MD David Southon said demand from institutions for retail assets larger than $100 million had led the group to consider rolling out a shopping centre wholesale fund.

Deutsche Bank analyst Ian Randall said the raising was larger than he expected.

Lend Lease Group Ltd says it is in a strong position to leverage positive trends in the residential sector, despite posting a slight decline in first-half profit.

In the six months to December 31, the property and infrastructure company posted a net profit of $251.6 million, a 16.4 per cent decrease on the $300.9 million recorded in the previous corresponding period.

Lend Lease stipulated the previous corresponding period included initial earnings from Barangaroo South, which skewed the year-on-year comparison somewhat.

In the same period, revenue was $6.509 billion, a slight 3.7 per cent fall on the previous corresponding period's $6.755 billion.

The group will pay an interim, unfranked dividend of 22 cents on March 21 to shareholders on the register at March 7.

Lend Lease chief executive officer Steve McCann said the group's first half results were solid, and particularly noted the strength of the the group's development pipeline.

"Our Australian and United Kingdom residential businesses are performing well and our US Construction business has offset the tougher conditions in our Australian construction business," he said.

“The group finished the half year with a robust pipeline of global construction backlog revenue of $15.5 billion and a global development pipeline with an estimated end value of $38.4 billion."

He also noted Lend Lease finished the period with $2 billion of available liquidity on its balance sheet.

“Forward sales in our residential development business and embedded returns in our pipeline of opportunities clearly underpin our earnings visibility over the next three years," Mr McCann added.

Westfield Retail Trust expects to increase funds from operations by 2.8 per cent in fiscal 2014, after its 2013 profit fell slightly.

Profit after tax attributable to unitholders fell by 6.5 per cent to $777.1 million in the full year to December 2013, compared with $830.8 million in the year to December 2012.

Revenue increased by 2.1 per cent to $1.10 billion in 2013, compared with $1.08 billion in the previous year.

The group will pay a final distribution of 9.925 cents on February 28 to shareholders who were on the record on February 13.

Meanwhile, funds from operations rose by 0.9 per cent in the year to $596.8 million, compared with $591.4 million in the previous year, while funds from operations per stapled security lifted by 2.5 per cent to 19.85 cents in the year, compared with 19.367 in the prior year.

Westfield said it expects to increase funds from operations to increase by 2.8 per cent to 20.4 cents per stapled security in 2014, and pay out the full 20.4 cents per security in distributions.

The increase assumes comparable net operating income growth of 2 per cent to 2.5 per cent for Australia and 1.5 per cent to 2 per cent for the portfolio, assumes no material change in the current operating environment and excludes the impact of a previously announced merger proposal or any future capital transactions.

The group said it has the capacity and capital to deliver incremental long-term growth for securityholders.

The Trust last year announced a proposal to merge with Westfield Group's Australian and New Zealand business to form a new entity called Scentre Group, which will manage, develop and partly own Westfield branded shopping centres in Australia and New Zealand.

The 2014 proforma forecast for Scentre Group is funds from operations of 21.5 cents per stapled security in 2014.

The focus on the results of the two Westfield vehicles today was never going to be on their performance – which was in line with guidance – but on whether the Lowys would blink in the face of investor opposition to the terms of their proposed restructuring of the Westfield empire.

They didn't. Peter Lowy said that the proposed split of the group into independent Australasian and international vehicles would go ahead on the terms that were announced in December. Westfield Group’s Australasian interests – and the management rights to them – would be backed by a rebadged Westfield Retail Trust.

The investor unrest, which surfaced almost as soon as the proposal was unveiled, isn’t related to the concept of the restructure.

The Australasian interests housed within Westfield Group and Westfield Trust are high-quality, low-risk assets generating strong and consistent cash flows from a mature portfolio of shopping centres.

The international business, centred on the US and UK, has a far stronger development element to it. Potentially there could be far more growth from its big pipeline of future developments, but with significantly more risk and volatility.

The different risk and maturity profiles of the portfolios and their appeal to different sets of investors underpins the logic for their separation.

The Lowys clearly believe the international business (which is where their attention will be devoted and where the bulk of their own investment will ultimately be) will be regarded differently by international property investors after the separation. The Australasian assets appeal to yield-conscious investors with a low appetite for risk.

The terms of the separation, however, have divided investors.

Under the proposal, Westfield Group will merge its Australasian operations with Westfield Retail Trust. It will be renamed Scentre Group.

Westfield Retail Trust securityholders would get 918 securities in the new group and $285 cash for every 1000 WRT securities they hold, while Westfield Group securityholders would get 1000 securities in the new Westfield Corporation and 1246 in Scentre Group for every 1000 securities they hold.

It didn’t take analysts and fund managers long to realise that the proposal would see a very big ($1.9 billion) reduction in Westfield Retail Trust’s net tangible assets and an $8 billion increase in its debt.

While it makes sense to shift a disproportionate share of the existing debt into the new Scentre, the terms implied a massive price-tag on the management rights that Westfield Group would be vending into the transaction. There are some estimates that the transaction implies $3.5 billion of value for those rights.

The investor discontent is a threat to the proposal, which requires the approval of securityholders in both the existing entities.

It is clear from Peter Lowy’s comments today that the Lowys have no intention of altering the terms, which they argue reflect the relative incomes and market values of the two entities. The restructuring is to be accretive for Westfield Retail Trust securityholders.

It is probable that investors in the trust are going to be presented with a ‘’take it or leave it’’ ultimatum when they vote on the restructure in late May.

It is also conceivable, if they successfully opposed the transaction, Westfield might still spin-out its Australasian assets and create a competing entity with interests in many of the same core assets as the trust. This wouldn’t be ideal for the trust’s securityholders.

Westfield plans to issue an explanatory memorandum on the transaction in late April. This may help dispel some of the cynicism about the terms and the suspicion of a large-scale value transfer from Westfield Retail Trust towards the new Westfield Corporation.

The memorandum can be expected to both provide more precise numbers on the valuation of the management rights and the arguments that support the valuation.

However, there is a big overlap of investors in both entities who would have few concerns about where the value flows. Given that the proposal has logic – and that the alternative for Westfield Retail Trust securityholders is disappointing sharemarket performance – one suspects the Lowys will ultimately prevail.

While investment banks working on the sweeping restructure of Westfield's $70 billion shopping centre empire have been named as JPMorgan, Rothschild, Morgan Stanley and UBS, other investment banks such as Citi are wading into the deal, providing debt for the shopping centre giant.

Morgan Stanley and UBS are advisers on the deal for WRT, while JPMorgan and Rothschild are in Westfield Group's corner.

Groups such as Citi are looking for some fees with some of the work ahead of a vote on May by shareholders to combine Westfield's Australian and New Zealand properties with Westfield Retail Trust to form Scentre Group, making Westfield Group a company with just European and US properties that would be rebranded Westfield Corporation.

Previously, the shopping centre giant had said the company had yet to decide whether to list the proposed Westfield Corporation in London and New York, and/or Australia.

However, yesterday, Westfield investors said they were betting on New York as the location where a proposed new company comprising the landlord's global shopping centres would be listed, should investors vote in May in favour of the business being spun out.

Sources say Westfield would be eyeing up the multiples its rival Simon Property Group was trading at on the New York Stock Exchange, which were far higher than Westfield Group's.

British companies such as Hammerson were trading at multiples about 21 times in London, but the NYSE was favoured because there was a far deeper real estate investment trust pool than Britain. Simon, the largest listed owner of commercial real estate in the US, was trading at 16 times price earnings compared with Westfield's 14.7 times in Australia.

According to the Reserve Bank of Australia, measures of housing affordability have improved since the onset of the global financial crisis. But that is little relief for prospective first home buyers who have fled the market as prices have boomed.

In its submission to the Inquiry into Affordable Housing, the RBA suggested that housing affordability has improved over the past six years. It is unconcerned about recent housing speculation and believes that construction costs are the driving force behind high house prices.

However, housing credit has picked up recently (after never declining during the global financial crisis) and speculative activity in Sydney is at unprecedented levels. I’d go so far as to say that investors are almost entirely driving price growth in Sydney and stopping prices from falling in most other capital cities. At the very least, house price growth is out of step with the broader economy.

With the housing market valued at $5 trillion, and accounting for around 60 per cent of household net wealth, I wouldn’t be as quick as the RBA to downplay the potential financial stability risks of a housing downturn. Despite the global financial crisis, the Australian economy really hasn’t been hit with a proper downturn in over two decades and our lending and borrowing behaviour has become based around those risk-free good times.

On the issue of housing affordability for first home buyers, the RBA effectively acknowledges that having wealthy parents is a great way to get into the housing market. It notes that there is an increasing share of first home buyers relying on parental assistance to enter the market. Unfortunately, the same assistance is often not available to the children of renters.

The RBA can tell us that housing affordability has improved as much as it likes, but actions speak louder than words. The simple fact is that first home buyers across most states have irrefutably declared that housing is unaffordable. With the labour market deteriorating they want absolutely nothing to do with the housing market. Perhaps they just need richer parents?

But it doesn’t necessarily have to be that way. There are many reforms on both the demand and supply side that could help. Supply-side reforms are necessary to address long-run affordability issues but demand-side measures could immediately lower prices.

First, state governments should scrap stamp duty. Stamp duty places a massive and unnecessary cost on home buyers who have already been stretched to save for a mortgage deposit. There are better and more efficient alternatives, such as a small annual land tax that would apply to all home owners.

In addition, stamp duty simply makes it harder to move. Harder to move next door, across town or interstate. It creates a barrier to labour mobility and that can only be inefficient for both the housing market and the broader economy.

Second, we should end the inefficient wealth redistribution vehicle we know as government housing policy. According to estimates from the Grattan Institute, owner occupiers and investors receive over 90 per cent of government funding directed towards the housing market. More disturbingly it has failed to raise the level of housing ownership; instead it simply redistributes wealth from renters towards home owners and investors and in the process increases house prices.

According to the RBA, the bulk of the cost of a new dwelling is due to construction, rather than government charges or land. However, the RBA estimates of land prices are well below other measures of land prices and land prices have accounted for most of the increase in house prices over the past couple of decades. Construction costs on the other hand have increased at a fairly modest pace. Addressing land supply and increasing the speed at which newly released land can be utilised appears to be a key to addressing the long-term supply issues that have pushed prices higher.

The RBA doubts that there is much you can do to “reduce prices by enough to bring home purchase within reach of many additional households” but a defeatist attitude is not the way forward. Improving housing supply might be difficult and time-consuming but there are simple demand reforms that could improve affordability immediately. Ending stamp duty and redirecting government funds from owner-occupiers and investors towards those who need it are two simple methods to improve affordability for the poor – and isn’t that what a housing affordability inquiry is all about?

Chinese investors were the largest source of foreign investment in Australian property in 2012-13, according to figures from the Foreign Investment Review Board (FIRB).

FIRB's annual report reveals that $5.9 billion of purchases in Australian property emanated from China, an increase of 44 per cent on the previous year. The result eclipsed the total approvals from the Canada, $4.9 billion, and the USA, $4.4 billion.

However, total foreign investment in Australian real estate fell to $51.9 billion from $59.1 billion.

It total, Chinese investors gained approval for $15.8 billion worth of investment, trailing the USA on $20.6 billion and Switzerland with $18.4 billion (the vast majority of Swiss investment was tied to mining, probably via the Glencore-Xstrata merger).

Canada ranked fourth in terms of total investment, followed by the UK. Japan slipped to sixth on the list.

The overall value of foreign investment fell to $135.7 billion from $170.7 billion as the resources construction boom came to an end.

A new name has emerged as a potential contender to buy the $2.26 billion Australand business: Pacific Alliance Group out of Hong Kong.

Listed real estate trust Mirvac Group has continuously been named among the suitors for the $2.26bn target, along with Stockland and the GPT Group, which tried unsuccessfully to buy the bulk of the property business almost a year ago.

But PAG is now thought to be looking at a takeover of the entire listed business, sources have suggested.

It comes with suggestions Mirvac Group could also be looking at calling on US pension fund TIAA-CREF to make a play for Morgan Stanley's $1.9bn listed Investa Office Fund in a deal similar to the recent $3bn takeover by Dexus and the Canadian Pension Plan Investment Board of the Commonwealth Property Office Fund (CPA).

TIAA-Cref has $US441bn of assets under management and is known to be close to Mirvac, but Mirvac has denied any play for IOF was afoot. The GPT Group has previously been tipped as a potential candidate to buy IOF and a bid from it for the business still hasn't been ruled out, given that it missed out on CPA to Dexus.

PAG's real estate arm has at least $US9bn of property across Asia under its control, and 100 staff. In the past it has been a strong contender to buy more than $1bn of distressed Australian commercial property debt on offer by British bank Lloyds.

Australian Broderick Storie, who began his real estate investment banking career in Australia with roles at Gresham and as head of real estate at the former investment bank Babcock & Brown, is a partner at PAG.

PAG would not comment on the rumours.

On the IOF front, it is thought Macquarie could play a part as a defence adviser for IOF, while any bid launched by Mirvac would likely happen through Citi.

House price growth eased in February in all major cities outside Sydney, but that is likely to do little to halt an upward march in Australian property prices, economists have told The Australian Financial Review.

The RP Data-Rismark daily index reportedly showed Sydney as the leading capital city market in February with prices climbing 0.8 per cent, while Melbourne, Perth and Adelaide all saw slight reductions and the combined Brisbane-Gold Coast market saw heavier falls.

Bank of America Merrill Lynch economist Alex Joiner said first home buyers would be sidelined for much of 2014 but still expects significant annual gains of 7-8 per cent nationwide.

“Much of these gains will occur in the Melbourne and Sydney markets, with other capital cities experiencing more inconsistent growth,” Mr Joiner told the AFR.

Capital city home values held steady in February, according to the RP Data Rismark Home Value Index for the month.

After eight successive monthly increases, Australia's combined capital cities recorded zero month-on-month growth in February, the survey found.

Dwelling values have lifted 13.2 per cent since June 2012, when the current growth cycle started, the survey found.

In Sydney, dwelling values increased 0.8 per cent in the month, while Melbourne posted a fall of 0.2 per cent.

Brisbane fell two per cent, Adelaide slipped 0.2 per cent, Perth lost 0.2 per cent and Canberra shed 0.8 per cent.

Meanwhile, Hobart lifted 1.4 per cent and Darwin rose 0.7 per cent.

New home sales increased in January after falling in December, according to the Housing Industry Association.

The volume of new home sales lifted by 0.5 per cent in the month, with sales of new detached houses increasing by 0.3 per cent and multi-unit sales rising by 1.6 per cent, the body found.

New home sales lifted by 17 per cent when compared with the same month last year.

HIA senior economist Shane Garrett said new home sales resumed their growth trajectory in January, after a small decline in December.

"New home sales have been rising pretty steadily since the third quarter of 2012, encouraged by the falling interest rates and the return of confidence to the housing market," Mr Garrett said.

Mr Garrett said the body has lifted its forecasts for new home commencements for 2014.

The group expects 165,600 commencements this year, followed by 168,000 in 2015, and stronger sales activity in coming years.

But Mr Garrett warned the new home sales recovery had not helped all states.

New private detached house sales lifted by 10.9 per cent in Victoria and 0.4 per cent in Queensland in January, with falls of 6.9 per cent South Australia, 6.4 per cent in New South Wales and 1.9 per cent in Western Australia.

REA Group has appointed non-executive director Peter Tonagh as interim chief executive officer, replacing outgoing CEO Greg Ellis who will leave the business on March 14.

REA, the group that owns realestate.com.au and realcommercial.com.au, said Mr Tonagh will start as interim CEO on March 17.

Mr Tonagh is the chief operating officer for News Corp Australia and will remain in the role until completion of a global recruitment search for a successor to Mr Ellis.

When Mr Ellis' resignation was announced in December, REA shares dropped more than eight per cent on the news.

REA Group chairman Hamish McLennan thanked Mr Ellis for his contribution.

"The board has chosen to make an interim CEO appointment to ensure that we can continue to conduct a thorough global recruitment search for a permanent CEO," Mr McLennan said.

“The recruitment process is well underway.

"Peter’s role will be to work closely with the board and the senior leadership team to continue the momentum of the company."

Business Spectator is owned by News Corp Australia.