FKP Property Group Ltd says it will keep exploring options for a demerger of its retirement business and consider changing its name, The Australian reports.

According to the newspaper, chief executive officer Geoff Grady had previously told a staff meeting that plans to demerge its retirement business had been scrapped.

He then backtracked after video of the meeting was posted online. 

Mr Grady also said in the video that shareholders would vote on whether to change the company's name to Aveo Group at its annual meeting, The Australian reports.

By a staff reporter

CFS Retail Property Trust Group Ltd will sell four sub-regional shopping centres to newly formed fund Pacific Retail REIT ahead of a planned listing on the Australian Stock Exchange.

In a statement to the Australian Securities Exchange, CFS Retail said it would divest four Victorian centres – Altona Gate, Brimbank, Corio and Rosebud Plaza – for a price of approximately $446.5 million, in line with the group's book value.

"Importantly, the agreements remain conditional on Pacific Retail REIT successfully raising capital via an initial public offering (IPO) and therefore the completion of the transaction remains uncertain," CFS Retail said.

"Assuming that the IPO is successful we anticipate that the transaction will settle in early September 2013."

Michael Gorman, CFS Retail fund manager said the sale of the centres was in line with the group's strategy of actively managing its portfolio and selling non-core assets.

CFS Retail said proceeds will be used to retire debt, as well as providing the group flexibility in pursuing "value enhancing initiatives such as investing in its development pipeline or acquisitions".

There’s no hold-up on property market speculation (is there ever in Australia?). Now Stockland is apparently sizing up Australand Property Group. Just where these whispers will lead, if anywhere, is impossible to tell. Meanwhile, Steadfast Group has some questions hanging over its post-float plans and the Australian Shareholders Association has thrown its hat into the Billabong International jostle and and where does Orica go from here?

Stockland Group, Australand Property Group

As the new week begins, speculation around the property sector is continuing with a pairing between Stockland Group and Australand Property Group the theory that’s currently doing the rounds.

The Australian believes that Stockland executives have being weighing the deal internally and “were serious about launching a bid, even though the $8 billion company had not appointed any investment bankers”.

A source told the newspaper that the most likely structure would be a combination of cash and scrip. Stockland conducted a $400 million institutional raising two months ago.

Other sources reportedly played down the idea, and there’s good reason as to why.

Australand’s share price has been rallying a bit over the past month, up 7.8 per cent. But that doesn’t reveal much anticipation for deal activity. The ASX 200 is up almost 5 per cent over the same period.

Australand’s majority shareholder, Singapore’s CapitaLand, has put its 59 per cent stake up for ‘review’ and the main question has been whether an offer with the right structure for the suitor and the departing parent could be struck.

If CapitaLand wants out of Australand, it would stand to reason that they wouldn’t want in on Stockland-Australand, unless the suitor offers very favourable terms – this play would annoy Stockland shareholders.

Meanwhile, Stockland was also the subject of speculation of a retirement asset strategic partnership with FKP Property to get costs down.

FKP was in damage control last week after a video purportedly revealing the company’s intention to set aside any demerger plans.

Chief executive Geoff Grady was quickly on the front foot denying that anything had been ruled out.

Steadfast Group

As Steadfast Group chief executive Robert Kelly heads to Asia this week to drum up interest for the company’s $335 million IPO, questions are being raised about the acquisition plans the insurance broker has.

The Australian Financial Review reports that fund managers are raising concerns about potential conflicts of interest in Steadfast’s plans to acquire an 87.5 per cent stake in back-office administrator White Outsourcing.

Steadfast board members Stephen Humphrys (also the company’s chief financial officer) and Cameron McCullagh own 8.4 per cent and 12.5 per cent stakes in White Outsourcing, respectively, according to the AFR.

It wouldn’t be a Frank O’Halloran-chaired company if M&A strategy wasn’t in the headlines.

Billabong International

The Australian Shareholders’ Association has rightfully voiced its objection to the $65 million break fee that New York’s Altamont Capital Partners has placed on Billabong International.

On Friday, the Takeovers Panel refused to issue interim orders demanded by rival refinancing suitors Oaktree Capital and Centerbridge Partners that would delay the drawdown of a bridging facility and the sale of brand DaKine.

Oaktree and Centerbridge, both of whom have snapped up Billabong debt in recent weeks, have also sought to have the break fee removed.

It’s a large break fee – huge, as a matter of fact. Break fees are usually employed to make sure one company’s time isn’t wasted. In this instance, it locks Billabong into Altamont in such a way it cannot escape.

ASA chairman Ian Curry isn’t happy, calling on the Panel to rule the fee unacceptable.

“Billabong shareholders have suffered enough at the hands of a board and management team who have imperilled the company,” Curry said.

“At the very least, the board should facilitate a truly competitive auction so that all serious bidders can lodge their best offers.”

That’s where Curry’s probably stretching himself a bit. Billabong has been in a state of due diligence for well over a year. Serious bidders simply cannot claim they haven’t been given a chance.

The ASA doesn’t have good form with Billabong. Back in October 2012 they incorrectly referred to company founder Gordon Merchant as Billabong’s “majority shareholder”. He has less than 17 per cent.

But they’re doing their job representing the interests of shareholders against what are unusual takeover arrangements to say the least, and you can’t knock ‘em for that.

While this mightn’t be comforting to Billabong shareholders, if the break fee is removed, it doesn’t therefore mean that Billabong will seek to consummate an apparently superior deal with Oaktree and Centerbridge – the superiority of this conditional proposal, not yet in the public domain, is highly disputed behind closed doors.

It just means Billabong wouldn’t be as compelled to continue dealing with Altamont. It still would, though.

Billabong has already, and rightly, ignored the after-the-bell charge from Oaktree and Centerbridge. Not because they’re reckless, but because Billabong desperately needs some stability and Oaktree and Centerbridge have opted for a strategy that doesn’t help in that regard.

Orica

Explosives and chemicals company Orica was smashed on Friday after revealing a 10 per cent downgrade in full-year underlying net profit.

Shares in the company dived 13.4 per cent as investors wondered why Orica had run into such difficulty and what the prospects are now for the balance sheet.

Fund managers are expressing dismay at the $1.6 billion spent on the purchases of Excel and Minova, the latter of which is causing some major headaches for Orica.

While the $6.7 billion company has made no indication that a capital raising is on the cards at all, investors are becoming increasing concerned that, with $2.5 billion in gross debt, Orica’s balance sheet is far from ideal.

And this with a weaker mining sector on the horizon.

It’ll be interesting to see what whispers institutional investors let slip into the business pages. When a company’s prospects start going southwards, the big investors are never hesitant to let their suggestions on how to remedy the situation be known.

American investor Harris Associates has been quietly building its stake in Orica over the last two months. Its shareholding in the company lifted to 9.43 per cent last week.

The lower share price will just make buying easier – that’s if they believe the long-term value proposition of Orica.

Wrapping up

Nine Entertainment boss David Gyngell has thrown an interesting spanner into the works amid the quiet jostling between the metropolitan and regional broadcasting for merger partners – Australia might only have enough room for two national free-to-air networks in the end.

The widely respected television chief executive makes the comments in this morning’s edition of The Australian Financial Review.

“With the performance of multi-channels, there is an argument that only two networks can be truly profitable at any one time,” Mr Gyngell told the AFR.

“As always, it comes down to who has the best ideas…If you don’t deliver shows that work, you’re going to be in real financial trouble.”

Speaking of media kingpins, major Fairfax Media shareholder Gina Rinehart is is thought to have won some support from Japan’s Marubeni towards her long coveted Roy Hill iron ore project in the Pilbara.

The Weekend Australian understands that Marubeni increased its stake in the Hancock Prospecting project to 15 per cent by snapping up an additional 2.5 per cent from financially strapped South Korean investor STX Corp.

And finally, anyone thinking about dealing with the cold by hitting the slopes will no longer be able to hurtle down Mt Hotham on a pair of Macquarie Bear Market Screamers.

The Australian investment bank has sold out of the world’s oldest ski brand, Rossignol Group, via its subsidiary Chartreuse et Mont Blanc SAS. It picked up about $US305 million ($332.4 million) for its efforts, according to The Wall Street Journal.

Sources said Stockland executives were weighing up a deal, with a cash and scrip bid the likely scenario, according to the newspaper. The bid would be worth more than $4 billion, given Australand's assets included $2.55 billion worth of investment property, a $900 million residential business and a $380 million commercial and industrial development arm.

"Parts of the Australand business appear to be a good strategic fit, although we would question whether Stockland would want parts of the office portfolio," JPMorgan analyst Richard Jones said, according to The Australian. 

GPT Group made a $2.94bn bid for Australand's office and industrial property businesse in December but abandoned its pursuit in May. 

AAP

Swiss banking giant UBS says it has settled a lawsuit linked to US subprime housing mortgages which sparked the 2008 global financial crisis.

The bank did not specify how much the settlement amounted to, but said it has set aside 865 million Swiss francs ($A1.01 billion),in the second quarter to meet litigation costs including the case.

"The full cost of the settlement is covered by litigation provisions established by UBS during the second quarter of 2013 and in prior periods," Switzerland's biggest bank said.

UBS and 17 other financial institutions were sued by the US Federal Housing Finance Agency in September 2011 for violating federal securities laws when selling residential mortgage-backed securities to government-backed lenders Fannie Mae and Freddie Mac.

The agency accused the 18 firms of misleading Fannie and Freddie about the credit-worthiness of the assets.

"UBS has reached an agreement in principle with the Federal Housing Finance Agency," UBS said.

The bank added that the deal, which still requires a final go-ahead from the different parties, would settle claims connected to the securities between 2004 and 2007.

Despite setting aside massive provisions, the bank, which is due to announce its second quarter results on July 30, said it would post a net profit of around 690 million francs for the three months ending June.

That is a jump of 62.5 per cent from a year ago and a stark improvement over the first quarter, when net profit slid 4.5 per cent. In the fourth quarter of 2012, UBS posted a loss of 1.9-billion francs.

The bank said its operating profit before tax would reach about 1.02 billion francs, an increase of 7.3 per cent over the second quarter in 2012.

Analysts hailed the better-than-expected results and the settlement of the mortgage securities suit, with Panagiotis Spiliopoulos of Vontobel predicting "juicy dividend payouts in the years to come".

Following the announcements, the bank's stocks jumped 3.4 per cent to 18.21 francs in midday trading, outperforming the Swiss stock exchange's main index, which gained just 0.12 per cent.

AAP

The housing market has seen its biggest jump in mortgage demand in three years, outpacing other forms of consumer credit.

Credit data provider Veda says mortgage applications surged by an annual rate of 6.9 per cent in the June quarter, the strongest rise since June 2010, and up from just 1.9 per cent as of the March quarter.

Veda general manager of consumer risk Angus Luffman says mortgage enquiries are a good indicator of home buyer demand and tend to lead movements in house prices by six to nine months.

"The increase in mortgage enquiries appears to suggest better housing market conditions, a good sign in light of the potential tests facing the Australian economy in the future," Mr Luffman said in a statement.

Hopes are being pinned on the housing industry as one sector to take up the slack as the mining investment boom fades.

The surge in enquiries during the past three months coincided with a cut in the cash rate by the Reserve Bank of Australia to an all-time low of 2.75 per cent in May.

However, Veda's overall consumer credit index showed demand grew by 3.9 per cent in the year to June, down from an annual rate of 4.7 per cent in the March quarter.

Personal loan applications shrank to an annual rate of 6.3 per cent from 10.3 per cent previously, while demand for credit cards remained slim at 1.3 per cent growth annually.

Mr Luffman said the index had historically provided an early indication of movements in consumer spending and retail sales.

"The easing in personal loan applications suggests that consumers are reining in their spending due to concerns over the labour market and the fall in the Australian dollar raising the price of big items such as household appliances and imported cars," he said.

AAP

Sales of previously owned United States homes unexpectedly slipped in June but prices continue to rocket higher, a real-estate report shows.

The National Association of Realtors (NAR) says home sales fell 1.2 per cent to an annual rate of 5.08 million in June, from a downwardly revised 5.15 million in May.

The average analyst estimate was for a rise to a 5.28 million pace in June.

Still, June sales were up 15.2 per cent from a year ago as the housing recovery continued to build solid traction six years after the collapse of a price bubble.

Home prices clocked up the seventh consecutive month of year-over-year double-digit gains.

The national median price was $US214,200 in June, up 13.5 per cent from June 2012 and the 16th straight month of year-over-year price gains, NAR said.

The last time there was such a long-running streak was from February 2005 to May 2006, at the peak of the price bubble.

Total housing inventory rose 1.9 per cent but remained tight. At the end of June there were 2.19 million previously owned homes on the market, a 5.2-month supply at the current sales pace. The pace was 5.0 months in May.

"Inventory conditions will continue to broadly favour sellers and contribute to above-normal price growth," Lawrence Yun, NAR chief economist, said in a statement.

AAP

China has introduced a five-year ban on the construction of new government offices, state media reports, following public anger at reports of extravagant official buildings.

The move came as part of a publicity campaign led by newly-installed President Xi Jinping, aimed at showing that the ruling Communist Party is cracking down on corruption and not wasting public money.

The ban, ratified by the State Council, China's cabinet, also covers expensive structures built as training centres or hotels, the official news agency Xinhua reported.

Reports of extravagant public buildings - including a local government office in poverty-stricken Anhui province covering an area larger than the US Pentagon, and a government building in central Jiangxi province with a $US45 million ($A48.9 million) mechanical clock tower - provoked anger online in recent years.

As well as being linked with official graft, the buildings were seen as signs of the ruling party's reliance on construction projects as a means of boosting growth, which economists have said is unsustainable.

The government has said it hopes to reduce the proportion of its economic growth generated by investment, and boost the share taken by consumption.

Officials will still be able to spend money on restoring government offices, Xinhua said.

Plans for the building moratorium were first announced by Premier Li Keqiang at a press conference in March.

Xi has pledged to crack down on corruption at all levels, saying it threatens the future of the communist party.

A number of low and mid-ranked officials have been investigated for corruption since he took the top party post in November.

Analysts have said it will be difficult to clean up politics without reforms such as removing restrictions on the media's reporting of corruption and making courts independent.

By a staff reporter, with AAP

Australand Property Group Ltd expects an uptick in leasing activity to boost its full-year earnings despite posting minor declines in both first-half net profit and revenue.

In the six months to June 30, Australand's net profit was $88.415 million, one per cent lower than the $89.672 million recorded in the previous corresponding half.

In the same period, revenue from continuing operations also took a hit, coming in at $391.510 million, a nine per cent fall on the previous first half's $430.483 million.

The group will pay an unfranked interim dividend of 10.5 cents, payable on August 7.

Australand said it expects to pay a final distribution of 11 cents per stapled security for the second half, resulting in full-year distributions of 21.5 cents per stapled security.

Australand closes door on takeover

Australand said it has closed the door on potential takeover bids for the group, after failing to field an offer that satisfied its shareholders as well as major shareholder CapitaLand.

Late last year, GPT Group made a conditional bid for Australand's investment property and C&I businesses. While the bid was rejected by Australand's board, it prompted CapitaLand to review its 59.3 per cent stake in Australand.

"Several indicative proposals were received for parts and all of the business during the process," Australand said.

"However, no proposal was able to be developed that was superior to business as usual.

"Accordingly, the Australand board decided to conclude the process and continue with the execution of the group’s previously stated strategic objectives."

Australand also noted CapitaLand has completed its strategic review and that the property group will remain one of its key investments.

Johnston confident of Q2 performance

Managing director Bob Johnston said a weaker contribution from the residential division caused the drop in profits during the six months to June, but was confident of a turnaround in the second half of calendar 2013 as projects were completed.

"Despite business and consumer confidence continuing to be fragile, residential sales activity strengthened during the first half, with contracts on hand up 36 per cent," he said.

Australand is expecting market conditions "to remain challenging", but still sees three to four per cent growth in operating earnings as residential contracts are signed in the second half of 2013, the investment property porfolio delivers fixed rental income increases and third-party projects are completed in the commercial and industrial division.

Industrial and office division projects were completed in central Melbourne, Rhodes in Sydney's west and a Coles expansion in Brisbane.

"The second half result is expected to benefit from further leasing activity completed on the residual space at 357 Collins Street, Melbourne (currently 74 per cent leased) and Rhodes F (currently 63 per cent leased)," the group said.

Full-year results are also expected to be buoyed by stronger earnings in the group's commercial and industrial division, which Australand expects to post a lift in second-half earnings because of the number of projects currently underway that are expected to be completed before year end.

Commonwealth Bank’s desire to exit the management of three property trusts was confirmed today. What wasn’t explained was why it wants to sell those rights to manage the trusts.

CBA said today that it had submitted indicative, non-binding proposals to the board of Commonwealth Managed Investments Ltd relating to separate internalisations of the Commonwealth Property Office Fund and CFS Retail Property Trust Group, as well as the acquisition by CFS Retail of CBA’s retail property management and development business. It had also submitted a similar proposal to the board of Kiwi Properties Ltd.

Neither the bank nor the trusts disclosed the amounts involved in the proposals. CFS Retail has a market value of about $5.6 billion and Commonwealth Property is valued at about $2.6 billion so the management rights would have some material value, albeit perhaps not that material in the context of CBA’s own market capitalisation of more than $117 billion.

CBA also owns about 8 per cent of CFS Retail and about 6 per cent of Commonwealth Office, which one would expect to be sold if it distanced itself from managing the trusts, so that would potentially see it extracting about $600 million of cash from the process.

The obvious conclusion to draw from the announcement would be that CBA wants to quit exposures that under the Basel III regime carry quite heavy capital requirements.

The amounts involved, however, aren’t sufficiently large to make that a compelling factor. The near-$600 million tied up in the securities of the two Australian vehicles, for instance, might represent perhaps 20 or 30 basis points of CBA’s tier one capital adequacy ratio, which stood at 10.5 per cent for the December half.

CBA isn’t short of capital – it is one of the better-capitalised banks in the world – and is generating new capital through its profitability at a rate of about 100 basis points a year.

It is more likely to be returning capital to shareholders, directly or indirectly, over the next few years than trying to find ways to raise new capital/reduce the capital intensity of its balance sheet, although capital efficiency will always be a priority for any bank in the emerging regulatory environment.

The better explanation is that CBA’s funds management business, which is predominantly focused on equities and fixed interest, looked at the property investment platform business it has and concluded that the returns and risks weren’t worth the effort.

There are indications that the impetus for the decision to try to exit the management of the trusts came out of the wealth management business rather than from the bank itself.

CBA’s Colonial First State funds management business has been involved in some large-scale retail property developments that perhaps haven’t gone quite as smoothly as it might have liked and that have seen it caught up in a stoush with building unions, which may have been another factor.

Also, and perhaps of greater consequence, across the listed funds management sector external management has increasingly become an anachronism and one not favoured by investors.

Internalising the management, on reasonable terms, would probably be a positive for the trusts and their investors.

If it were to produce a nice little windfall of cash and capital for CBA that it could either reinvest in higher-returning assets or businesses or use to supplement its returns to shareholders, that would an incidental outcome.

AAP

Australian house prices reached three year highs in the June quarter and look set to keep climbing - and that's without the help of a massive government stimulus package.

National median house prices rose by 2.8 per cent in the June quarter - and 5.4 per cent in the year to June - a level of growth not seen since March 2010, according to the Australian Property Monitors (APM) quarterly housing report.

It was the third consecutive quarterly rise for national house prices.

Unlike the price boom of 2009 and 2010, buying hasn't been driven by the federal government's first home owner boost.

APM senior economist Andrew Wilson said the patchiness seen in the housing market last year is diminishing.

"The usually quieter winter market is set to be one of the hottest on record,"

"Unlike 2009 and 2010, buyer activity and prices growth will be generated by underlying local drivers.

"Buyer activity is set to accelerate through the remainder of 2013 with market momentum and prices clearly on the rise.

The lowest interest rates in decades, rising consumer confidence and generally solid economic conditions had boosted buyer activity over the first half of 2013, he said.

The report said Sydney, Canberra and Perth recorded their highest ever median house prices over the June quarter.

Melbourne house prices recorded the strongest growth for the quarter with a rise of 5 per cent, and 6.1 per cent for the year.

Unit prices are also rising, up 4.9 per cent for the year to June in Sydney, and up 9.3 per cent in Perth.

But in Hobart, unit prices fell 7.3 per cent in the June quarter and 1.4 per cent over the year.

By a staff reporter

Dexus Property Group Ltd has acquired a stake in Commonwealth Property Office Fund (CPA), by way of forward contract.

In a statement to the Australian Securities Exchange, Dexus said it would acquire a 14.9 per cent stake in CPA, through the purchase of securities at a price of $1.1334 each.

The CPA portfolio comprises $3.7 billion of prime-grade office properties, consistent with Dexus' investment in high quality Australian office properties, the group said.

"This investment is expected to be accretive to earnings," Dexus said.

Yesterday, Commonwealth Bank of Australia Ltd made an offer to the board of Commonwealth Managed Investments Limited to bring the management of CPA and the CFS Retail Property Trust Group (CFX) in-house.

The proposal to the retail trust group also means it would acquire the wholesale property funds management business and the integrated retail property management and development business owned by the bank.

AAP

Americans have snapped up new homes in June at the fastest pace in five years, a sign the housing recovery is strengthening.

The Commerce Department says sales rose 8.3 per cent last month to a seasonally adjusted pace of 497,000. That's up from 459,000 in May, which was revised lower.

While sales are still below the 700,000 pace consistent with healthy markets, they have risen 38 per cent in the past 12 months. That's the biggest annual gain since January 1992.

Housing has helped drive economic growth at a time when other parts of the economy have languished.

While new-home sales make up only a small part of the market, each home built creates an average of three new jobs and spurs more spending at furniture and home supply stores.

Chevron's $29 billion Wheatstone LNG project faces the threat of being delayed by Fortescue Metals Group (FMG) chairman Andrew Forrest's fight against miners accessing his ancestral land in the Pilbara, according to The Australian.

The link between the two comes in the form of Onslow Resources, which is a small company seeking to excavate sand from the Ashburton River to supply concrete sands to Boral for the Wheatstone project.

Mr Forrest has fought Onslow's plans, prompting Onslow director Warren Slater to say Mr Forrest's campaign could prove to be a “disaster” for the Wheatstone project.

The land in question had been owned by Mr Forrest's family for 120 years until his father was forced to sell it in 1998. However, Mr Forrest bought it back in 2009 for $12 million and has invested millions more restoring the property.

Since repurchasing the property, Mr Forrest objected to applications for mining on at least seven other tenements related to his 280,000 hectare station, according to The Australian.  

AAP

United States pending home sales have edged lower in June after hitting a six-year high in May, under pressure from rising mortgage rates.

The National Association of Realtors (NAR) said its index for pending sales, reflecting sales contracts signed, slipped 0.4 per cent to 110.9 in June from a downwardly revised 111.3 in May.

The decline was much smaller than the average analyst estimate of a 1.7 per cent drop following the May spike to the highest pace since December 2006.

"Mortgage interest rates began to rise in May, taking some of the momentum out of contract activity in June," Lawrence Yun, NAR chief economist, said in a statement.

"The persistent lack of inventory also is contributing to lower contract signings."

Jim O'Sullivan, chief US economist at High Frequency Economics, acknowledged the June dip could be seen as evidence of housing already being hurt by the rise in mortgage rates.

"But the drop paled in comparison with the surge in May, consistent with it being a pause and the trend remaining upward," he said.

Despite the dip, pending home sales were 10.9 per cent higher than in June 2012 as the housing market recovers from the collapse of a price bubble in 2006.

The NAR projected existing-home sales, the lion's share of the US market, would rise more than 8.0 per cent and the median price would jump almost 11 per cent in 2013.

By a staff reporter, with AAP

Building approvals tumbled by almost 7 per cent in June, against analyst expectations of a rise, according to the Australian Bureau of Statistics.

ABS data showed the number of buildings approved decreased a seasonally adjusted 6.9 per cent to 12,778 during the month.

That compares to 13,727 approvals in May, seasonally adjusted.

Bloomberg economists had expected the figures to show a 2 per cent increase in approvals during the month.

Building approvals are now 13 per cent lower, seasonally adjusted, than in the same month last year, against analyst expectations of a flat result. 

Approvals for fully-detached houses rose 2.5 per cent in the month.  

JP Morgan Australia chief economist Stephen Walters said the figures were soft.

"It's all the in the high density space," he said. "This is the very volatile category where we've seen big rises as recently as April and not much payback in May but we've gotten that in the June numbers."

The Reserve Bank of Australia cut the cash rate four times in 2012 and again in May, and Mr Walters said those reductions are offering some help to the building sector.

"Over the quarter, building approvals were up, so you could argue that perhaps there is a little bit of traction there from the policy stimulus the RBA has been delivering but it is clearly not enough," he said.

"It is a source of anxiety that we're not getting consistent lift here."

Mr Walters is confident the housing construction sector is recovering, it's just that there is no evidence of it from the June quarter building approvals figures.

CommSec economist Savanth Sebastian said the figures were not concerning, even if they sparked speculation about the state of the home building sector.

"It really is a volatile reading," he said.

"There certainly seems to be a lot of conjecture about how well the home building market is going.

"What it really highlights is we've got normal levels of building across the economy.

"It certainly does not mean the sector is collapsing."

Mr Sebastian said he did not believe poor building data was enough of a driver for the RBA to cut rates in August.

"The RBA will certainly be looking at the housing sector very closely, but I don't think these numbers will be the defining reason why the Reserve Bank cuts rates," he said.

However, he said low interest rates were already having a positive impact.

"It's still very early days for the sector, but I think the low interest environment is starting to provide a degree of support for the sector."

Morgan Stanley is bullish on Australian property stocks.

“Despite our cautious view on underlying property fundamentals, especially in discretionary retail malls and office; we believe the sector is well positioned in an uncertain macro environment with 7 per net upside to valuation, 7 per cent cash flow yield and 4.5-5 per cent 3-year compound annual growth in funds form operations,” says Morgan Stanley analyst Lou Pirenc.

“Further reductions in interest rates and sector restructuring will act as catalysts for outperformance,” he adds.

Pirenc’s favorite stocks are real estate investment trusts, specifically those exposed to industrial property such as the Goodman Group.

The company “is in a good position to accelerate its growth profile after increasing fire power through a capital raising and asset recycling,” he says. “We expect Stockland to surprise on the upside as its earnings growth accelerates whilst cleaning up the business.”

Pirenc says Federation Centres is getting little to no credit for its superior earnings growth and asset recycling plan.

Westfield Group’s dominant position, offshore exposure and significant development pipeline positions it well for an acceleration in growth, he says.

The Morgan Stanley analyst also likes GPT Group and says the stock market is giving it no credit for its $80 million a year funds management business.

Lend Lease, says Pirenc, continues to look cheap and upside from future projects is attractive. However, this message from the company has been negated by negative news flow on construction and Lend Lease suffers from poor communication.

The average rate on a 30-year fixed mortgage has jumped a full percentage point since early May and reached a two-year high of 4.51 per cent in late June.

AAP

The number of empty offices in Australia is rising as the white collar sector fails to fill them.

Vacancies rose from 8.4 per cent in January to 10.1 per cent in July, according to a Property Council report.

Property Council chief executive Peter Verwer said the decline in white collar jobs growth to a third of pre-GFC levels had severely blunted demand.

He said the dwindling demand for office space reflects Australia's lacklustre economic fundamentals and a lack of "mojo" in the business sector.

While all CBD markets experienced negative demand, Brisbane recorded the biggest hike, with unused office rates up from 9.3 per cent to 12.8 per cent.