By a staff reporter

Home loan provider RHG Ltd posted a fall in full-year profit and said it expects future years' profits to be materially lower as its mortgage book is now closed. 

The group's net profit attributable to members fell 25.5 per cent to $30.3 million in fiscal 2013, from $40.7 million in the prior year.

Its revenue dropped 19.7 per cent to $59.6 million in the year, compared with $74.2 million in the previous corresponding period.

RHG has not declared a final dividend.

During the financial year it paid one dividend of 10 cents per share on October 15 2012, and another of 9 cents per share on April 10 2013, for a total payout of 19 cents.

By a staff reporter

Leighton Holdings Ltd has sealed a deal for a $400 million North Sydney high rise development, with completion scheduled in the first half of 2016.

In a statement to the Australian Securities Exchange, Leighton Properties said it had agreed terms with vendor Winten Property Group for the building, which will have 40,000 square metres of A-grade commercial space across 30 levels.

Leighton will take a head lease over 76 per cent of the office space and the remainder will be available to other corporates.

Jones Lang LaSalle and CBRE have been appointed agents to sell the site to local and international investors.

Leighton Holdings chief executive officer Hamish Tyrwhitt said Leighton Group companies currently occupy 11 office buildings in Sydney.

"The potential for a high performance workplace that consolidates our corporate and operational office spaces with shared facilities and high amenity will drive a more efficient and collegiate working environment," Mr Tyrwhitt said.

The tower is expected to be the first of more than $1 billion in skyscrapers in the pipeline for North Sydney.

Stockland chief executive Mark Steinert tells Stephen Bartholomeusz and Robert Gottliebsen:

– The Australian housing market is seeing a healthy recovery, especially in metropolitan Sydney and Perth.

– The Sydney area is undersupplied and has been for a number of years.

– What's behind falling development earnings and a recent $355 million land bank writedown.

– How the company is managing its high capitalised interest.

– What surprises he has found in the business since taking on the job.

Stephen Bartholomeusz: Hi Mark, thank you for joining us. Mark, we’ve heard from the real estate agent, John McGrath, and Commonwealth Bank’s Ian Narev warning about the impact of these historically low interest rates on the housing market and the potential for overheating. Now, you’ve got a real grassroots view of the new home market. Where do you think it’s at? And do you see any signs of emerging or latent problems?

Mark Steinert:No. We don’t see any signs of problems and we’re confident that we’re seeing a recovery and in different levels, depending on which state and which market you’re talking about, but definitely metropolitan Sydney is the strongest market, followed by Perth. The parts of regional New South Wales are a bit on the softer side. We think Victoria has stabilised and Queensland has stabilised and starting to trend up.

We think affordability has improved quite significantly after a few years of either flat prices or slight declines because of combined income growth and clearly very low interest rates. The main thing we’re seeing now is at the affordable end, a first home buyer, particularly with the state grants that are focussed on new construction both on the eastern seaboard and now Western Australia, that their repayments on the mortgage aren’t that different to rent.

SB: So, you haven’t seen any signs of cautiousness from the lenders?

MS: No, no. There was a period where certainly the lending process was very tight, I guess for want of a better word, and it remains at a high standard absolutely, but in terms of wanting to grow loan books, we don’t see any evidence that that is something that’s not being sought by banks and building societies, etc.

Robert Gottliebsen: Mark, can I put a different point of view to you – the strength of the market is not so much in the outer suburban areas but in the inner city areas, particularly in Sydney and a lesser extent in Melbourne, where we’re seeing very spirited bidding for dwellings. And I wonder whether there’s quite a big differentiation now within our cities between the outer suburban areas and the inner suburbs?

MS: I think there’s certainly absolute truth in part of that statement in that those markets are certainly the strongest and that’s where the demand supply dynamics are, you know, certainly most skewed towards moderate undersupply. Having said that, the normal process is that those markets tend to move first in all recoveries and then it ripples out.

You’ve got a couple of dynamics at play. Upgraders typically have to sell their home first before they’re going to either build a new home or buy a bigger home than the existing home. So there are the markets you described where the recovery that starts that whole process in train. The first home buyers, you know, are just as evident certainly or more evident in the outer areas relative to the inner and if they see some markets starting to show price appreciation, then their confidence could make a commitment to align growth. And the layered recovery has been about confidence. I think there’s been, post GFC an absolute lack of confidence and that’s started to change and it’s… I guess we’ve gotten far enough past the GFC where that’s becoming more evident. And it’s a little bit like you see with the share market. You go back a few years ago and people start moving and going and back into the share market and now in the last year or so you’ve seen quite a stark shift. What led this first was investors, so they were certainly the first tough market to get confidence to come back into the market and start to buy.

RG: Right now, in inner Sydney the agents are telling us that it’s white hot and investors are leading it, and it’s not quite as hot in Melbourne, but it’s still very hot.  It’s all in the city and that’s where the investors are putting their money.  I wonder whether we’re not seeing a real change in the market where we’re going to see really quite major price escalation in the inner city and much less in the outer areas.

MS:Yeah. Obviously we’re not active in the inner city, but certainly we are bringing Willowdale at East Leppington to market on the weekend and that’s a good example of where the preregistrations of interest were over a thousand. You know, we’re going to be marketing forty-nine lots of land on Saturday and Sunday. We have considerably more demand; dramatically more demand than we have lots available. 

The Sydney market across the board in the metropolitan area is undersupplied and it has been for a number of years. It’s going to take quite a few years for that to be addressed. We’re just coming back into the metropolitan Sydney market, but in the same locations where we’re bringing projects like Leppington and Marsden Park. 

You know, we’ve seen examples of other land that’s been divided where there have been campouts, where there’s been pretty strong appreciation as well.  We don’t think that’s necessarily constructive.  We chose to discourage that.  We’re showing land on the basis of the first to register gets the first opportunity and I would highlight that there have been a lot of changes where the New South Wales government has really lined up infrastructure now, heavy rail, road connectivity to open up this land and make it convenient for people. 

I mean East Leppington has got a major train station one and a half kilometres away, a direct line into the city at fifteen minute intervals, forty-five minutes on the train, and eight hundred car parks around the station.  That brings real amenity.  We’ve got private schools coming in, public schools, shopping centres, and there’s a very significant employment base over in Parramatta, Liverpool and Campbelltown.  That is actually a big part of the economic engine of Sydney.  So, I wouldn’t agree that it’s all just in the inner city and there’s nothing going on outside of that.

RG: But as you describe, people camping out and things like that, that’s boom time stuff.  That’s a bit of a panic. And so, what you’re telling me is that in eastern Sydney the intensity of demand that you’re seeing in the inner city is starting to go into the outer suburbs as well.

MS: Yeah.  But I would highlight that there is a determined protest around land release. You know, the New South Wales government has… you know, the Minister has put a very clear program around land release to address that. That’s why I started out by saying the markets are definitely improving, but I don’t see we’re going to get into a situation where we have some sort of severe bubble that gets created. But yes it’s a solid market and it’s getting stronger.

SB: Mark, within the Stockland result we saw a big fall in the recent development earnings and a $355 million dollar writedown in the value of your land bank. Now, is that a reflection of the conditions that you have been experiencing and the outlook or does it relate to wholly of what you inherited?

MS: A lot of it related to land that was bought in the early 2000s in certain quite often nonmetropolitan locations, lifestyle orientated end buyers in mind who, you know, that’s a shallow demand base and with post GFC we saw the demand for lifestyle land actually impacted quite considerably as well which compounded that issue. So, it’s more to do with where that land has been located and that the lack of demand in some of those submarkets which is why we dealt with the land in the way that we’ve written it down, so that others who are active in those markets, local developers, are able to buy that land from us and achieve a decent return from that and drafted them and it make sense to start operations in some of those locations, we thought were better to focus in the core growth corridors which has been our strategy for the last three or four years and that’s where demand is steepest, that’s where the population growth is and that’s where there’s more consistent demand for the end product.

SB: So, what are the implications of that for your earnings from that residential development division going forward?

MS: Having cleared the decks it sets the stage for a solid improvement in profitability which we believe will be sustainable into the future.  That was all part of the rationale for taking those write downs in the first place and changing our policies around things like interest treatment, so that our margins would be a lot more predictable into the future, stable through time and by focusing on the core activities around the growth corridors that I described before, that really gives us the ability to give a lot more confidence in relation to the improvement in profits from that part of the business.

SB: I wanted to ask you about that treatment of capitalised interest because you did change it – I’m aware of that – and to bring it forward some future interest to smooth out the earnings. Despite the high levels of your capitalised interest in your cost of goods sold, the capitalised interest balance in the business remained pretty much stable and relative to the value of the remaining inventory, actually rose. How does one reconcile that?

MS: It’s starting to come down and that will accelerate now as we move forward and what would really accelerate it would be completing the disposal of the 14 sites that we’ve identified for sale. In fact the cost expense will be higher than capitalised interest, so that organic decline that I’ve described starts to come through and as we trade through there’s another parcel of land that we’ve identified as it’s impaired, but we’re going to trade it out for cash generation. We can unlock an incremental $300 million dollars over the next five years by trading through that impaired land and that obviously has the heavy component of capitalised interest in the cost of goods sold, so you’ll see that decline quite dramatically over the years to come.

RG: Mark, you’re basically telling us that past management made a mistake in buying land in those lifestyle areas. I wonder if it is the second mistake that requires attention in that what you have is a business that is on the one hand a land development, housing residential business and then you have a property investment business and wouldn’t it be far better to have those two businesses in totally different structures, so that the people who investing in a property in the retirement areas or particularly in the property areas would accept much lower returns because there’s much less risk in them and of course the the housing areas would be rated differently.  By putting it in together you get the worst of all worlds.

MS: I mean we look very carefully as part of the strategic review about whether we could unlock value for our investor base by doing exactly what you’ve just described and it was very clear that under all the scenarios that that would actually destroy or remove a lot of value for our investor base. The historic position at the company (and, you know, it’s got a 62-year history) has been that by combining those two activities in the right portion, and we define that as part of the review as well where we didn’t want too much development activity, try and maintain it in the 20-30 per cent allocation and the core to focus on investment assets which you’ve described. But that combination, when it’s done, in a consistent way and where there is very realistic assumptions which we believe we’re now overlaying and that was also part of what we changed earlier in the year.

We reduced the future growth rate as well as changing the interest policy, so we didn’t only normalise the margins but we also provided a more conservative forward looking view about how we plan the business where we get the corporation side of the business back into profit and retain earnings to allow us to also manage any volatility in future years or try to manage that in a consistent way to the cycle that’s actually seen the group trade at a very large premium. And it’s not trading at that premium right now, but obviously we’re re-earning trust and we’re resetting as we’ve talked about.  But I covered the company for ten years. You analyse the twenty-year history before the ten years that I took it over, I was fortunate enough to spend a lot of time with Ervin Graf and Peter Daly and John Pettigrew and then obviously Matthew in the early parts of his tenure and, you know, I can assure you for the vast majority of time that I served the company its structure and its business model is something that investors held in very high regard and that’s our intention; to get back to that position over time.

RG: Mark, both the results and the strategy presentation you made earlier in the year had the 'new broom' effect to them. When you got there, was Stockland what you expected it to be?

MS: The impairments were larger than I anticipated. That was what we felt was prudent to do. You can see I’ve made considerable changes. In management, only 75 per cent of the management team has changed and we are making a lot of changes. We’ve consolidated many activities to create critical mass and efficiency and take costs out. We’ve committed to bringing the full-year effect of those changes in 2013 through in FY14 and that reflects a 10 per cent net reduction in costs. We’ve consolidated the finance function. We’ve consolidated human resources. We’ve consolidated branding and marketing. We’ve consolidated all communication. We’ve consolidated research and strategy. We’ve consolidated project management so that it’s over the entire business, so we can now value-engineer the residential side of the business as well as the retirement living business. We’re progressively improving processes and systematising where appropriate. 

We’re really focussed on making sure that we have a very strong, reliable business model that’s able to deliver consistent earnings per security and total security-holder returns that are above that tier group. That is our core business objective, together with the company’s purpose – through our sustainability initiatives to help improve the community and create a better way to live – that’s where the synergies between the residential communities, the shopping centre business, retirement living start to come into play. If you look at the majority of the shopping centre developments we’ve got in the $1.5 billion dollar highly accretive development program, the majority of those either were part of a residential community that Stockland built at some point in history or, because we were active in the submarket, we were able to acquire those shopping centres in a reasonable manner.

RG: Mark, I wonder if I could take you in a broader sphere, partly affecting your own company, but mainly the development industry in total. While the banks are happy to lend to people who want to buy houses, I get the impression that, for a lot of developers, it’s very hard to get the money. That applies to apartments; it probably applies to outer suburban areas as well. Is that your impression?

MS: You know, levered development is, as you highlighted earlier, very risky. In that regard, banks put prudent requirements around lending and make individual assessments about the direct exposures. You know, in prudent practising is very prudent practice. What you want are well capitalised operators that are able to ensure the quality of what’s delivered is there and, for the end buyer, that they’re able to rely on what’s delivered and know that there’s a very high-quality organisation standing behind that product. When I talked about the history of Stockland, that was a key part of it. There’s a lot of trust in the Stockland brand. We’ve got $12 billion of outfits, we’ve got an A-minus credit rating, we’ve got one of the lowest levels of leverage in the industry. We’re here for the long term.

RG: Now, I’m recognising your position and as a lowly exercise, I’m really taking you outside side your own company and there is a real risk here that you’ve got the banks with low interest rates and plenty of money, but for consumers to buy houses it’s much tougher to get the supply. Not just houses, I’m talking apartments. In those situations, you can get into a very nasty position because you can find the consumer is being pumped with money, but the supply is not there because it’s much harder to get, albeit for prudent reasons. Can you see that as a real danger, not for yourself but for the wider development industry?

MS: Not really. We see plenty of evidence of people building good product in the right locations and we see plenty of evidence of people building product where, to be honest, if they made a profit, I’d be quite surprised. I don’t see any evidence of some type of dire constraint in terms of capital. It may not be coming from the banks, it may be coming from the ultra-high net worth individuals and the superannuation savings, because it’s pretty clear that at this point in the country’s history, the accumulated wealth of Australians has never been higher. We see a lot of activity from the private sector as well as from institutions like ourselves.

SB: Mark, I’m afraid we’re going to have to end it there, but we do appreciate your talking to us, so thank you.

There have not been many instances in the past decade or so where economic policy changes in New Zealand have presented a template or lead for Australia. After all, New Zealand is only just recovering from a recession that Australia never experienced, it’s per capita GDP is more than 40 per cent lower than in Australia and it has net government debt at 36 per cent of GDP compared with Australia’s 12 per cent.

Confronted by an uncomfortable house price surge at a time when the economy is only just gaining a foothold after the recession and when the New Zealand dollar is significantly overvalued, the Reserve Bank of New Zealand has a dilemma. It clearly is reluctant to hike interest rates as this would obviously risk choking off growth and reflating the Kiwi dollar, but it needs to stifle housing demand as the house price surge is threatening to become a troublesome bubble.

In a valiant effort to tackle this dilemma, the New Zealand central bank has announced a regulatory change for new mortgages in a move that is designed to limit leveraged lending for housing. This housing-specific policy is designed to contain the house price bubble without inflicting collateral damage to the rest of the economy.

Reserve Bank of New Zealand Governor Graeme Wheeler announced yesterday that from 1 October 2013, New Zealand’s banks would be required to limit their new residential mortgage lending at loan to valuation ratios of over 80 per cent to a maximum of 10 per cent of the value of their new lending levels.

In other words, the regulatory change effectively means that only 10 per cent of new loans written are allowed to have a loan to valuation ratio over more than 80 per cent.

In terms of some of the details, the seasonal or lumpy nature of the mortgage market will allow the banks to operate under a three month moving average of this 10/80 rule, and given the pipeline of approved loans that have yet to be advanced, there is a six month grace before the scheme takes full effect.

The penalty on the banks for breaching these new rules is the loss of their licence, a threshold that suggests the banks will impose their own internal lending practices that will undershoot the upper limit.

According to Nick Tuffley, Chief Economist as ASB, “The Reserve Bank of New Zealand estimates the 10 per cent speed limit will limit banks’ high-LVR lending flows to about 15 per cent of their new residential lending… The New Zealand central bank noted that earlier this year that around 30 per cent of new lending was for 80+ per cent LVRs, with recent anecdotes suggesting some reduction to around 20-25 per cent of new lending”. 

Reflecting on the reluctance of the Reserve Bank of New Zealand to hike interest rates to tackle the house price bubble, Governor Wheeler noted, “with policy rates remaining very low in the major economies, and falling in Australia, any OCR increases in the near term would risk causing the New Zealand dollar to appreciate sharply, putting further pressure on New Zealand’s export and import competing industries.” Wheeler also noted that with inflation below the bottom of the 1 to 3 per cent target range, there was no need to increase interest rates for inflation reasons.

It is a bold policy step and one that may provide a template on how the Reserve Bank here in Australia may tackle any future house price surge. It will, of course, be fascinating to see how the housing market responds to such a regulatory change, rather than relying on the old-fashioned interest rate hiking method to cool demand.

It is premature to expect a similar approach to be taken in Australia. House prices are only just recapturing the losses from a couple of years ago. The central bank may also hike for reasons broader than housing as the pace of economic growth picks up through the course of the next year. That said, if the housing price lift that has been evident recently picks up further momentum and it occurs when the rest of the economy is subdued, the Australian dollar overvalued and inflation low, the Reserve Bank may well look to New Zealand to see how to dampen a housing bubble without smacking the rest of the economy down.

The Reserve Bank of Australia will be watching events in New Zealand with more than a little interest.

Whatever those relative macroeconomic benchmarks say about New Zealand continuing to lag behind Australia, New Zealand could well be leading Australia with its approach to managing a potential housing bubble in the context of ongoing low inflation, a high currency and let’s say a problematic outlook for the economy.

The efforts to stop “the mother of all housing booms” are intensifying. Australia’s biggest apartment builder and owner, Harry Triguboff, has seen a seven per cent rise in the price of Sydney apartments in recent months. He understands the dangers of an apartment price explosion in Sydney so he has decided to start selling part of his portfolio of more than 5,000 Meriton Sydney apartments.

Just how many he will sell is not known but it will curb the threatened Sydney apartment price explosion and of course, he is still building new apartments at full pace.

At the same time the big banks have been quietly told by the Reserve Bank that a dwelling price boom is the Reserve Bank’s greatest fear in the current climate because Australian dwelling prices are already high by most world standards. If a new housing price boom starts to break out then interest rates will have to rise.

Banks play a big role in maintaining the level of dwelling prices. They are currently fanning demand by encouraging people to buy dwellings, both privately and as investors, with generous credit and low rates. But on the supply side the banks reduce the supply of dwellings because they are reluctant to take risks in lending to developers because history has shown that almost all big bank losses have come via property development loans during booms. 

The developers are often being forced to seek other financiers including big institutions seeking higher returns. That boosts the costs and limits the supply.

Of course in the apartment market it is local councils and state government planners that multiply the supply squeeze caused by the reluctance of bankers to finance developers.

In Melbourne and Brisbane there is more supply of apartments than in Sydney although in Melbourne the apartment supply tends to be concentrated in inner city areas.

And in the case of some apartment block towers, the cartel style agreements between large commercial builders and the big building unions also boosts the price.

(If the Coalition wins the election it will join Victoria, NSW and Queensland in taking steps to eliminate the cartel style agreements in the large commercial building sector and government projects).

In most Australian capitals, but particularly Sydney and Melbourne, the demand for inner city suburban houses is white hot because there is a supply shortage. Investors are paying a big role in the demand. Auction clearance rates are high. If the inner suburban housing market starts to rise substantially then that’s where the boom will start although as prices rise yields will fall and demand will swing to apartments and outer suburban areas.

In terms of rental demand the greater intensity of dwelling occupancy (more people are now living in an apartment or house) plus the slowdown in salary rises virtually stopped apartment rent rises in Sydney. And in Melbourne some apartment owners are having problems finding tenants. This will help curb the spread of the inner city housing boom.

In outer suburban housing the chief executive of Stockland, Mark Steinert says in his KGB interview that he believes that there is capacity to satisfy the demand in Sydney and Melbourne and other capitals.

But if that inner suburban boom gets out of hand be ready to change the interest rate forecasts.

By a staff reporter

Charter Hall Group Ltd is tipping flat operating earnings for the current year as it eyes Australian acquisitions, after posting a jump in full year net profit.  

Charter Hall recorded a net profit of $52.6 million for the year to June, from $9.7 million in  the previous corresponding period, when it took a heavy loss on derivative investments.

Total income for the half lifted 16.3 per cent to $192.7 million, from $165.7 million year-on-year. 

Operating earnings beat the company's guidance, rising 11.7 per cent to $96.4 million. 

The group will pay an final distribution of 13.5 cents, a slight rise on the 13.3 cents paid last year.

It brings the total dividend to 26.8 cents, up on last year's payment of 26.1 cents.

Investa Office Fund Ltd says that business confidence is weak and investment in property has been delayed due to political uncertainty, describing demand for prime office space as below average and demand for secondary office space as “the worst on record” as it posted a lift in net profit.

The company delivered a 56 per cent gain in full-year statutory net profit to $158.7 million for the year, which included a $60 million of asset revaluation. Operating earnings were up 7 per cent to $137.5 million.

The group undertook $440 million in acquisitions over the year, including prime addresses 66 St Georges Terrace in Perth and 567 Collins St in Melbourne, and said it was on track to offload European assets.

Investa said it focused on debt management and de-risking over the year, with $400 million of debt refinanced.

The company forecast moderate growth of 6 per cent in the year ahead, in declaring a distribution per unit of 17.75 cents.

By a staff reporter

APN Property Group Ltd has moved to calm speculation about its possible bid for the Australand Wholesale Property Fund No. 6.

In a statement to the Australian Securities Exchange, APN noted recent media speculation that it was the preferred bidder for the fund.

APN confirmed it is in exclusive negotiations with Australand Funds Management Ltd, but insisted these are at an early stage, incomplete and subject to conditions including due diligence and a number of board and investor approvals.

Dow Jones

Sales of previously owned homes rose to their highest level in close to four years, possibly reflecting a spike in activity as buyers look to close deals before mortgage rates rise further. 

Existing-home sales rose 6.5 per cent in July from a month earlier to an annual rate of 5.39 million, the National Association of Realtors said Wednesday. That was the best month of sales since November 2009, when a home buyer tax credit spurred activity. 

Economists had predicted that sales would rise to a pace of 5.15 million. 

"The current housing market recovery is on a solid footing," the Realtors group chief economist Lawrence Yun said.

Last month's existing-home sales were 17.2 per cent higher than a year earlier. 

A resurgent housing market has helped the US economy, generating confidence among consumers, boosting household spending and creating construction jobs. 

But there have been signs elsewhere that the market could stumble amid higher mortgage rates, skilled-labor shortages, higher materials costs and a lack of available land for new homes. Builders last month started construction on single-family homes at the slowest pace in eight months. 

July's existing-home numbers, meanwhile, were likely inflated by a rush of buyers trying to lock in lower mortgage rates, TD Securities director of US research and strategy Millan Mulraine said. 

"In this regard, with some sales being brought forward, we expect to see a fall-off in sales activity in the coming months as the higher borrowing cost tempers sales activity," Mr Mulraine said ahead of Wednesday's release. 

The housing recovery will continue, though at a more moderate pace, he added. 

Mr Yun concurred. "The increases in rates I think panicked some buyers," he said. The Realtors' group expects mortgage rates to rise to 5 per cent by year's end, reducing the pool of potential home buyers. 

Mortgage giant Freddie Mac last week said that 30-year fixed mortgage rates averaged 4.40 per cent, up more than one percentage point since the start of May. 

Federal Reserve officials have expressed some concern about rising interest rates. Still, recent signs of strength in the housing market could reassure Fed policy makers as they consider the next steps for the central bank's $85 billion a month in bond buying. The program has helped keep mortgage rates low. 

Monday's report showed that home prices climbed, with the median price of homes sold in July at $213,500, up 13.7 per cent from a year earlier.

Earnings from building products manufacturers have illustrated the extent to which Australia's housing construction sector is struggling to achieve its hopes for a full recovery.

Firms such as Boral Ltd, CSR, Adelaide Brighton and Fletcher Building Ltd have cut costs and jobs as high costs and industrial relations issues have hampered earnings.

“I think that costs are extraordinarily high by global standards,” Boral chief executive Mike Kane said, according to The Australian Financial Review.

Boral reported a heavy swing to a full-year loss of $A212.1 million from a $A176.6 million profit in the previous year.

Fletcher Building reported a 22 per cent fall in operating earnings in Australia, with the firm's head, Mark Adamson, describing Australian residential and commercial construction conditions as “weak” and in need of “a dose of Margaret Thatcher”, in reference to union power and high-cost issues, the AFR reported.

“In the broader, macro sense, I do come across unions and union arrangements [in Australia] the likes of which I have not seen since I was a child watching TV in the UK in the '70s,” he reportedly said.

“I've been recruiting recently for a number of the senior roles ... and naturally you look closer to home in Australia and New Zealand. I've ended up picking up people from the US and the UK because they're demonstrably cheaper.”

Mr Adamson added that in the broadest sense he finds the Australian economy attractive, and recognised the need for unions. But he said Australia has become too inefficient and high-salaried. 

"I think there are some spots of hope around [New South Wales], some of the coal-seam gas projects on the eastern seaboard -- Queensland, potentially through to NSW are positive -- and Western Australia will probably at some point return to an economy we have enjoyed in the past," Mr Adamson said, according to The Australian. 

The inability of the housing sector to mount a sustained recovery despite record-low interest rates is likely to spark additional concerns for the Reserve Bank of Australia (RBA).

Mirvac Group chairman James MacKenzie is expected to announce his resignation when the firm announces its full-year results Friday, according to The Australian Financial Review.

The move would come barely a year after he survived a vote that would have removed him from the board and is the latest development in a volatile period for the company sparked by the removal of then-chief executive Nick Collishaw in August 2012.

Mr MacKenzie has been on a two-month sabbatical from the property group.

The AFR reported that the decision is believed to be tied more to personal reasons than company matters.

AAP

James Packer's $570 million six-star hotel plan for Perth is a step closer to becoming the subject of a Supreme Court challenge by local residents.

A Supreme Court ruling has told 23 Burswood residents, who live just metres from where the billionaire wants to expand his Crown casino complex, that they may have a case against the West Australian government's sale of the land where it will be built.

The state government has been ordered to hand over sensitive documents to the residents, so they can decide whether they could win if they took their grievances to court.

Earlier this year, residents of the Burswood Peninsula went public with their anger after the state government revealed it was selling 5.8ha of land to Mr Packer - and also putting aside more land to build Perth's new football stadium.

They said the developments would ruin their panoramic views of the nearby golf course, Crown Perth, the Swan River and the city.

Premier Colin Barnett said the WA government intended to use the state's 1985 Casino Agreement Act to sell the land to Crown Ltd for $60 million, while exempting the company from having to lodge plans with the local council or the state's planning commission.

But after getting little satisfaction from meetings with the state government, the residents argued in court they should be given access to the terms of the agreement so they could decide whether to fight it.

On Thursday, Master Craig Sanderson ruled the residents should get access to relevant documents "in the interests of justice and the interests of the parties".

Master Sanderson also said their case did have a chance of success.

"Certainly this is not a case where the plaintiffs' position is hopeless and no encouragement to a pointless action should be given," he said.

By a staff reporter

Investors have welcomed Mirvac Group Ltd's plans to continue to focus on delivering disciplined growth in the year ahead, after it posted a fall in full-year net profit.

At 1205 AEST, shares in Mirvac rose 3.2 per cent to $1.6925, against a benchmark rise of 1.18 per cent.

In the year June 30, Mirvac's net profit was $139.9 million, a 66.6 per cent fall on the $416.1 million recorded in the previous year.

The result was impacted by a $273.2 million worth of writedowns in the value of developments in Queensland and Western Australia announced to the market in February.

Revenue in the same period was $1.57 billion, a 10 per cent decline on the previous year.

Operating profit, which excludes significant items, was up three per cent to $377.6 million.

Mirvac's total dividend for the year was 8.7 cents, unfranked. The group paid an interim dividend of 4.2 cents on January 25 and a final dividend of 4.5 cents on July 26, both of which were unfranked.

Mirvac chief executive Susan Lloyd-Hurwitz said the outlook for the company's development division was strong, with major projects in Sydney and Melbourne on track to deliver earnings in the next three years.

"Our capacity to balance recurring income from our passive investment assets with earnings from our active developments positions us well to deliver strong returns to our securityholders," she said.

The group set operating EPS guidance for fiscal 2014 of between 11.7 and 12 cents per share, and dividend guidance of between 8.8 and 9 cents.

Ms Lloyd-Hurwitz said the group delivered earnings ahead of market guidance despite challenging conditions.

"The continued focus on driving the portfolio through our internal leasing and asset management capabilities, combined with our strategy on delivering disciplined growth, means the group is well positioned for the future," she said.

"Our balance sheet remains robust and we will continue to monitor and access diversified sources of capital including equity, domestic and international debt and wholesale capital."

She said the company was seeing signs of improvement in its residential business, although the outlook for the sector was mixed.

"Residential markets remain mixed in terms of current performance and outlook. However, we are seeing signs of recovery as a result of improving housing affordability, population growth and low rental vacancy," she said.

The results come a day after chairman James MacKenzie announced he will step down from the position at the property group's November annual general meeting.

By a staff reporter 

Lend Lease Ltd is tipping earnings growth over the next three years after recording a solid jump in full year net profit but is warning on a weakening domestic construction market and challenging macro economic conditions. 

Investors cautiously welcomed the news, sending Lend Lease shares 1.11 per cent higher at 1205 AEST to $9.12, against a benchmark rise of 1.18 per cent.

Net profit grew 10 per cent to $551.6 million for the year, from $501.4 million in the previous corresponding period, on the back of earnings from new joint ventures and two new commercial tower at Barangaroo South.  

Revenues rose 5.7 per cent rise to $12.2 billion in the period, from $11.54 billion. 

It will pay an unfranked final dividend of 20 cents. 

By a staff reporter

Resimac Ltd has again sweetened its takeover bid for RHG Ltd, formerly RAMS Mortgage Corp, in an attempt to stymie a rival bid put by Pepper Australia and the target's largest shareholder last week. 

The Resimac-led syndicate has increased its all-cash offer to 49.5 cents per share, from 48 cents - which was already an increase of 3.9 cents per share over its original offer. 

The move came after spurned suitor Pepper Australia joined forces with Cadence Capital, the largest shareholder of RHG, to put an increased offer of 49.65 cents a share, in cash and Cadence scrip.

RHG said its board was mulling the competing offers - which have both been been made under schemes of arrangement. 

However, Resimac's latest offer had seen RHG enter an amended merger implementation deed with the syndicate.  

The syndicate, which included the Australian Mortgage Acquisition Company, said it was open to working with Cadence to restructure part of the offer. 

RHG today also disputed a requirement under the Pepper offer that it pay a fully-franked dividend of about 2 cents by October 31, saying it could not pay without going into a franking deficit.  

The extra dividend would cut the amount Pepper would pay for RHG. 

In the last few days I have been in the company of people very close to the art community. I have never seen them looking so happy.

They have reason to believe that Tony Abbott will allow self-managed funds to hang their art investments on the walls of the homes of fund beneficiaries.

This will transform the Australian art market and mean that artists will not have to come to the government for handouts.

It will also deliver a big chunk of the arts community into the Coalition camp.

The Australian art market has been devastated in the last few years because the main buyers, self-managed funds, were forced by the Labor government to store their art in storage houses.

Usually that involved paying storage fees. Very often the self-managed funds simply sold the art and, as a result, the Australian art market collapsed.

Should Tony Abbott announce such a policy switch then the Australian art market will take off and artists will get to work again.

There are absolutely no guarantees with this rumour pass on but, rest assured, I would not do it if I did not believe there is strong evidence that such a policy switch is in the wings and could happen before the election campaign is completed. Maybe it will be part of the Coalition’s campaign launch. 

Dow Jones

Sales of newly built homes fell sharply in July to the lowest level in nine months, heightening worries that higher mortgage rates will slow the housing recovery. 

New-home sales fell by 13.4 per cent in July from a month earlier to an annual rate of 394,000, the Commerce Department said Friday. That was the steepest drop in three years and sent sales down to the lowest level since last October. 

The report also showed that June sales were lower than previously estimated, with that month's figure now at 455,000 from an initially reported 497,000. 

Economists surveyed by Dow Jones Newswires had expected July sales to reach 490,000. 

The drop in new-home sales came at a time of industry concerns that higher mortgage rates from spring, which effectively raise the cost of buying a home, would scare away potential buyers. The average rate on a 30-year mortgage rose to 4.58 per cent this week, according to Freddie Mac, up from 4.40 per cent a week ago and more than a point higher from the level in May. 

Many economists say it's still too early to tell how the higher rates are affecting the industry. But the big drop in new home sales could add to industry worries that overall home sales, including previously owned properties, will slow in coming months. That could slow the overall United States recovery, which has leaned heavily on housing as a source for growth as other sectors, such as manufacturing and government spending, remain weak. 

Even with the big decline, new-home sales are still up on the year, reflecting a sturdy housing recovery. Sales in July were 6.8 per cent higher from a year ago. 

Other reports indicate that housing remains strong. Sales of previously owned homes rose 6.5 per cent in July from a month earlier to the highest level in nearly four years, the National Association of Realtors, an industry trade group, said earlier this week. Some economists said that might reflect buyers rushing to lock in ahead of higher rates. The median price of homes sold that month continued to climb. 

The latest batch of data come at a crucial time, as the Federal Reserve contemplates reducing an $US85 billion a month bond-buying program as early as September. Fed officials are looking for signs of an improving economy before reducing the purchases. 

The slower sales pace in July, coupled with rising inventory, caused a small dip in prices. 

The median price for a new home slipped 0.5 per cent to $257,200. The number of new homes listed for sale, seasonally adjusted, at the end of July was 171,000. The supply would take 5.2 months to deplete at the current sales pace. 

A copy of the full report is available at: http://www.census.gov/construction/nrs.

Dow Jones

The steep drop in new United States home sales in July is not necessarily an indication that the housing recovery is slowing, said John Williams, president of the San Francisco Federal Reserve Bank, in an interview with Bloomberg TV on the sidelines of the Fed's annual meeting at Jackson Hole, Wyo. 

"I think the housing recovery is on a good track and continuing," Mr Williams said, noting on the West Coast there has been at least a "really good improvement" in the housing market. 

I wouldn't want "to over react" to one month of data, he said. 

Friday, the Commerce Department reported July new-home sales fell by 13.4 per cent from June to an annual pace of 394,000, the steepest drop in three years. 

About the recent rise in rates after talk of the Fed's tapering began in May, Mr Williams said it was a part of the Fed's calculation but more generally was a reflection of an improving economy and that "we are moving closer, gradually over time, to a more normal economy which is a good sign." 

When asked about prospects for the Fed to begin tapering its asset purchases at either the September or subsequent meetings, he said it should be driven entirely by the data and economic forecasts. 

"I'm going to go into the meetings with an open mind," he said, adding he thought Fed chairman Ben Bernanke's plan laid out in June was a good plan and still on track. 

Mr Williams is not currently a voting member of the Fed's monetary-policy-setting committee. 

Outgoing chairman of Mirvac Group Ltd, James MacKenzie, may be forced to pay hundreds of thousands of dollars to settle a tax liability arising from his directorship of the property group, The Australian Financial Review reports.

According to the newspaper, a board-level debate on the issue has taken place, with a subcommitte organised to investigate the matter, said to centre on Mr MacKenzie's living-away-from-home allowance and a special investment allowance.

Sources told the AFR, the probe stretches back to Mr MacKenzie's commencement as chairman in 2005.

The newspaper reports the group streesed 'no money has been lost, though Mr MacKenzie may look to settle the matter through a payment near $340,000.