House prices fall, renos on the rise

Panic is, as usual, oversold

ABS stats for renovations show growth, and that alarm over house prices is misplaced

Most of us in the home improvement and hardware industry will be familiar with the sometimes frantic predictions of falls in Australia's house prices. This starts with near-panic announcements of price declines, which tend to increase during the first six to 12 months, followed by uncertainty, with a mixture of dire warnings and more optimistic forecasts, followed by a price recovery.

That was pretty much what we went through from March 2011 through to September 2012, and in a milder form from September 2015 through to June 2016. The current panicky state started around December 2017. While we are still in a state of price decline, this has moderated from predictions of a 20% plunge in values, to falls in the mid-single digits, with some oversold suburbs hitting double digits.

For our industry, the real point of house price behaviour relates to how future sales of goods will be distributed. Overall sales for hardware retail tend to pretty much track growth in gross domestic product (GDP).

When dwelling prices are high, and trending upwards, there is increased activity in home and apartment building. When those prices decline, according to a long-held belief in the industry, if GDP is growing at an acceptable rate, expenditure shifts to renovations.

Graph 1 illustrates all these trends for Australia as a whole. While this is a very regional situation, we're using this graph because it does give a pretty good overall view of the situation.

The orange line represents the Australian Bureau of Statistics (ABS) numbers for the weighted index for house prices in all eight capital cities. HNN sees the bubble in prices starting with the strong increase in house prices beginning with the December 2016 quarter. This followed a moderated market from September quarter 2015 through to June quarter 2016.

The red vertical lines indicate reductions in interest on the cash rate by the Reserve Bank of Australia (RBA). There is an apparent relationship between these rate cuts, and the stimulus on the house price.

In terms of what led to an imbalance in the housing market, the interest cuts in May and August 2016 seem a little dubious. However, what needs to be understood is that the year-ended non-farm GDP growth figure for March quarter 2017 was just 1.8%, and for June quarter 2017 it was just 1.9%. The stimulus the RBA was applying at that time was intended for the broader economy, but, of course, it affected everything, including the housing market which was already sufficiently stimulated. Hence, the bubble.

In its statement regarding the first of those two rate decreases, the RBA said:

At its meeting today, the Board decided to lower the cash rate by 25 basis points to 1.75 per cent, effective 4 May 2016. This follows information showing inflationary pressures are lower than expected.

HNN's analysis of this, as we have written in the past, is that the Australian economy had been braked a little too hard as regards inflation, and actually entered a very brief period of deflationary activity — which the economy is still recovering from today.

At the time of making the second of these rate cuts, the RBA commented:

Supervisory measures have strengthened lending standards in the housing market. Separately, a number of lenders are also taking a more cautious attitude to lending in certain segments. The most recent information suggests that dwelling prices have been rising only moderately over the course of this year, with considerable supply of apartments scheduled to come on stream over the next couple of years, particularly in the eastern capital cities. Growth in lending for housing purposes has slowed a little this year. All this suggests that the likelihood of lower interest rates exacerbating risks in the housing market has diminished.

Unfortunately, that's not how it worked out — though the RBA was still definitely correct in cutting rates, given the state of the overall economy. The interest cuts contributed to five quarters of strong growth in house prices, with the ABS price index going up by nearly 11%.

The current "housing price crisis" consists of this: from the peak in December quarter 2017 through to the recent figures for September quarter 2018, the price index fell by 2.85%.

That would indicate that the price index would still have some way to fall before the RBA gets around to considering another cut in interest rates. If the index continues to fall, down below the level of December quarter 2016, cuts might come up for consideration. Even if that did happen, we would think the rate cut would be another 25 basis points, and happen in July/August 2019, after the Federal Election. It seems more likely, however, that prices will stabilise, and no rate cut will be required.

The other interesting aspect of the graph, from the perspective of our industry, is the green line, which traces the ABS statistics on alterations and additions, which we would all call "renovations". These numbers are derived from household expenditure estimates, and so track most renovations, including those that don't show up on building permit applications.

What we see here is a very sharp fluctuation, with spending dropping back to 2014 levels in the second half of 2017, before rebounding sharply to the highest level we've had in the September 2018 quarter.

If we were to estimate why this happened, we would suggest it was a response to the increase in prudential oversight on lending. For example, a typical way of funding a renovation is through a line of credit loan, which is by its very nature interest only, but secured by the value of a property. With interest-only loans receiving increased scrutiny, these could have been more difficult for borrowers to obtain — at least initially.

Probably what we are seeing in the graph for recent quarters is a combination of factors pushing up the spending on renovations. The first is that if regulations depressed lending for a time, there is a "catch-up" factor at work, as delayed projects get the go-ahead. Secondly, with the drop in house prices, more homeowners may be thinking of renovating rather than selling to trade up. Finally, with the drop of house prices, there has been a decline in building activity, making trades more available on the market, thus reducing the prices they might charge.

What happens next?

It's likely house prices for December quarter 2018 will show a further decline, while renovations will indicate a levelling-off, or slight decline for that quarter. The March quarter of 2019 will show similar trends, though house prices will further stabilise.

The results for the June quarter of 2019 will be crucial to interest rate settings. Given strength in other measures of the economy, we could expect anything from a mild decline to a mild increase, which will be very much a function of the number of properties offered for sale. If that is the case, interest rates will remain stable.

Renovation activity will be an interesting indicator to watch. HNN thinks this is likely to track numbers such as wage growth over the next year or two, as householders take a more conservative approach to credit. In general, 2019 is likely to be a more cautious year, as consumers — especially renovators — seek value for money, and more substance than flash in their home renovations.

That should mean an uptick in some standard home maintenance categories, such as paint, as well as an increase in less expensive renovation items, such as lighting, plumbing fixtures, cabinetry hardware such as handles, and DIY storage projects.

Other areas where we could see growth would include smarthome, both for controllers and appliances, as well as an increase in the sale of heat pumps for heating and cooling, spurred by the recent brutal summer we have endured.

Percentage change quarter-on-quarter for alterations and additions, by state and territory =

statistics

ABS Hardware Retail Revenue

Growth, but in a narrow range

Comparison of growth in hardware retail revenue over recent financial years reveals a trend, and it is set to continue for the next two years

With the June 2017 retail revenue statistics now available from the Australian Bureau of Statistics (ABS), it's possible to look back over the 2016/17 financial year, and to contrast this with previous financial years.

As the chart below illustrates, the proportion of revenue earned by each state has been relatively stable. More recently, NSW has gained ground, while VIC has lost ground. SA, after relatively lean times in 2012/13 and 2013/14, has recovered, as has Western Australia (WA) after its lean years in 2009/10 and 2010/11.

>http://hnn.bz/retail-sales-allstate-June2017-ytd.jpg}Hardware retail sales}http://hnn.bz/retail-sales-allstate-June2017-ytd.jpg

The following chart provides a closer look at the proportional contributions of the states for 2016/17, the previous year, 2015/16, and the pre-GFC year, 2006/07.

>http://hnn.bz/retail-sales-allstate-June2017-comp-bars.jpg}Proportional contribution to annual retail sales by each state/territory}http://hnn.bz/retail-sales-allstate-June2017-comp-bars.jpg

In the two most recent years, virtually the only change has been that Victoria (VIC) has lost 1%, and New South Wales (NSW) has gained 1%. For 2006/07, the contributions by South Australia (SA), Western Australia (WA) and Tasmania (TAS) were much higher that those of recent years, reducing the proportional contributions of VIC and NSW. So, in recent years, there has been an increasing centralisation of revenues to both VIC and NSW.

Using the original data provided by the ABS (rather than trend data), Australia overall reported its most subdued growth for the past seven years, with the national hardware retail industry growing by just 3.14%. The states that were the least subdued were the Australian Capital Territory (ACT), with growth of 16.09%, SA with growth of 6.64%, and NSW with growth of 6.06%. Both Queensland (QLD) and VIC reported quite low growth, of 1.09% and 0.96% respectively. Only the Northern Territory (NT) reported negative growth, with revenues falling by 8.18%.

The next chart, which looks at growth, provides some further insights into these changes. The top five states have continued to consolidate their position in a growth range between 0% and 7%, while the two smallest (by total hardware revenue) territories have broken out of this, with the ACT gaining, and the NT losing.

>http://hnn.bz/retail-sales-percent-change-june-2017.jpg}Percentage change in revenue}http://hnn.bz/retail-sales-percent-change-june-2017.jpg

Real estate and hardware revenue

If we accept that growth in the housing industry, driven by ever-higher real estate prices, has had a big influence on hardware retail expenditure, then we could think that these increasingly restrained growth rates reflect something that is happening in real estate, which in turn is driving changes in the housing market.

One possibility is that the real estate markets are not so much in a "downturn", or that the "real estate bubble has burst", but rather that we are seeing a market finally reach a state close to equilibrium. To understand such an equilibrium, it's necessary to first consider what disrupted the market in the first place.

The next two charts indicate what might be the disrupter. The chart below shows the number of persons employed full-time in manufacturing, FIS and IMT.

>http://hnn.bz/employment.jpg}Employment by industry}http://hnn.bz/employment.jpg

The next chart shows the trend for what is known as "Gross Value Added" (GVA) for manufacturing, construction, information media and telecommunications (IMT), and financial and insurance services (FIS). GVA is essentially the contribution of an industry to Australia's gross domestic product (GDP).

>http://hnn.bz/GVA-manufacturing-FIS.jpg}Gross Value Added by select industries}http://hnn.bz/GVA-manufacturing-FIS.jpg

The employment chart shows the steep decline in manufacturing employment. While employment for IMT remains flat, and FIS shows moderate gains, both of these also produce substantial "halo" employment opportunities.

As can be seen in the chart for GVA, growth in manufacturing moderated to almost nothing in 2004, then entered a decline in 2013. Meanwhile, FIS has, since 2003, entered into a period of high growth. IMT has not grown as strongly, but it has produced consistent growth, despite a flat period from 2010 to 2013.

Construction has largely kept pace with the growth in FIS.

In short, what has been happening over the past 12 or 14 years is that a big part of the Australian economy has transitioned from being manufacturing based to being services based. This has exerted two influences on population distribution.

The first influence is that by its very nature, manufacturing is decentralising. You don't open a factory in the middle of a city, or even in its immediate suburbs. Instead, you choose an area some distance from the city, on a major transportation hub. People who work in the factory naturally choose to live close by to reduce their commuting time.

Thus significant population centres outside of the main city grow.

As manufacturing first reduced its total employment due to increasing automation, and then further reduced employment as businesses shrank or ceased entirely, the attraction of these remote centres was reduced. This was combined with the second influence, the increase of employment in FIS. FIS, of course, will exert pressure to create urban centralisation.

The service industry relies on multiple, internal and external layers of services. The providers and facilitators of these layers need some degree of co-location, as this helps with both service reliability and the ongoing development of those services.

What has happened, then, over the past 12 years or so, has been a revaluation of urban land. It held one value in a city economy where manufacturing played a major role, and another value where manufacturing played only a minor role, and FIS played a major role.

The signals that are currently coming from the real estate market indicate that this process of revaluation is entering its "infill" stage in Sydney and Melbourne, and elsewhere in Australia. In this stage, revaluation is largely completed, while there remain some areas - formerly neglected - that will continue to be re-valued.

Forecasting

How will this affect future revenues for the Australian hardware/home improvement retail industry? It is quite likely that the kind of constrained growth that the industry has seen over the past two to three years will continue for another three to four years, with annual growth rates for the states with higher revenue levels delivering between 3% and 6% annual growth. The states and territories of NT, ACT and TAS will vary outside of this range, subject to local influences.

By the end of that time, it's likely that cities will be entering into the final stage of the manufacturing to service economy transition They will begin to develop significant centres of decentralisation - effectively semi-urban clusters that specialise in particular service areas. These will, in turn, open up new areas for real estate development, and new housing projects, driving annual growth rates over the 6% mark.

statistics

HNN Index for week ending 18 December 2015

Index springs back

There has been an overall lift in share prices

After falling steeply last week, the HNN Home Improvement Index has recovered strongly, and seems set to finish the year close to the level of the underlying ASX 200 index.

The Index closed the week at 939.15 points, up nearly 36 points on the previous week, and close to the level it was at on 20 November 2015. Meanwhile, the underlying ASX 200 index also rallied, but not as strongly. On the comparative scale, it rose by nearly 15 points to close at 950.1. In unindexed terms, the ASX 200 rose by 77 points to close at 5106.7.

The strongest performer in the index stocks for the week was James Hardie, which increased its share price by 7.9%. CMIC also did well, lifting by 6.9%. Wesfarmers and Downer EDI recorded price increases of over 5.2% for the week.

HNN will be revising the basis and weighting of the Index for 2016, and will be publishing a comprehensive summary of sector performance in January 2016.

Adelaide Brighton linked to $3bn play

Building materials provider Adelaide Brighton is believed to be working with investment bank Credit Suisse, as speculation continues about a potential $3 billion sell-off of the Australian and New Zealand operations of LafargeHolcim. Speculation remains that a divestment of the division is being considered by its Swiss head office as part of a global review of non-core operations, with a decision to be made within the first quarter of next year.

Adelaide Brighton linked to $3bn play - Business Spectator

CIMIC Group to buy back 10% of shares next year

Australian construction major CIMIC Group will buy back 10% of its stock over the next year as the shares are said to be at an attractive position now. This decision was made despite the group's share price crashing more than 20% in the last six weeks. CIMIC is majorly owned by Hochtief, which is further controlled by Spanish builder Actividades de Construccion y Servicios SA.

CIMIC Group to buy back 10% of shares next year - International Business Times

CSR seals Tesla Energy deal to sell Powerwall

CSR has expanded into home batteries, sealing an alliance with battery maker, Tesla Energy, to sell the Powerwall system to Australian households through its Bradford division. Anthony Tannous, executive general manager of CSR Bradford, said the move to broaden the product range came after keen interest from home-building developers and consumers. It is a logical add-on to the company's solar business.

CSR seals Tesla Energy deal to sell Powerwall - Fairfax Media

Lendlease factory to spearhead $1b construction disruption

Lendlease will open a factory in Sydney next year with plans to manufacture $1 billion worth of pre-fabricated building material over the next five years. The start-up manufacturing business, to be called Design Make, will have a $15 million investment. It represents the most significant step taken so far by Lendlease to stay ahead of the next wave of innovation in the sector, which is shifting more building production from the construction site to the factory floor.

Lendlease factory to spearhead $1b construction disruption - Fairfax Media

ACCC launches action against Woolworths for alleged unconscionable conduct towards suppliers

The ACCC claims Woolworths sought to make up for an expected profit shortfall in December 2014 by seeking what it referred to as "Mind the Gap" payments from more than 800 suppliers. It is alleged that the supermarket sought approximately $60.2 million in Mind the Gap payments from the suppliers while in a stronger bargaining position than them.

ACCC launches action against Woolworths - ABC
statistics

ABS hardware retail sales October 2015

Good growth

Only the ACT recorded a decline, with South Australia posting a 15% lift

Overall hardware retail sales in Australia performed strongly during October 2015. The only state to record negative growth was the Australian Capital Territory, which fell from $30 million in sales for October 2014 to $29 million in October 2015, a loss of 5%.

South Australia had the strongest performance, posting a 15.1% lift over the previous October, followed by Tasmania with an over 14% increase, and Queensland with a close to 10% increase.

Victoria continues to post slow rates of growth, coming in at close to 3%, while New South Wales posted growth of 6.6%, close to the national Australian growth rate of 6.31%.

>http://hnn.bz/graphRetailStatsOct2015scaled.png}ABS retail statistics for Australia}http://hnn.bz/graphRetailStatsOct2015scaled.png

Online retail

The NAB Online Index fell by 0.6% for October 2015 as contrasted to September 2015. On a year-to-year comparison, NAB estimates that sales are 5.7% higher.

Total online retail expenditure is estimated at $17.9 billion for the 12 months to October. This indicates that online now has a 7.2% market share of total retail spending.

Media, fashion and grocery & liquor all recorded good sales growth, with media posting an over 20% increase. Homewares and appliances fell by 2%.

statistics

HNN Index for week ending 20 November 2015

Going up?

Index sharply corrects much of its losses from the previous week

The HNN Home Improvement Index for the week ended 20 November 2015 closed up by 25 points at 941.37 points. The underlying ASX 200 Index rose even more, closing up 38 points on the comparative index. The actual index closed at 5256.1 points, up by 205 points.

Nine stocks in the HNN Home Improvement Index rose by more than 5% during the week. Myer Holdings and UGL Limited both rose by more than 9.5%. Bluescope Steel was up 9.2%, and Super Retail Group rose by 8.6%. Downer EDI and GUD Holdings rose by almost 7%. JB Hi Fi, the Goodman Group and Harvey Norman all rose by 5.5%.

Bluescope Steel

BlueScope Steel confirms profit lift, warns of pressures ahead

BlueScope Steel has confirmed it is on track for a sharp lift in underlying first-half earnings but has warned of increased margin pressures in the second half of the year. The steelmaker reaffirmed its late-October guidance for a 40% increase in earnings before interest and tax to about $50 million for the six months to December.

BlueScope Steel confirms profit lift, warns of pressures ahead - The Australian

Charter Hall Group

Charter Hall sees earnings grow 21% in FY15

A decade after listing on the ASX, property funds manager Charter Hall has recorded a statutory profit after tax of $117.9 million, up 43.6% for the 2015 financial year. Speaking at the company's annual general meeting, Charter Hall chairman, David Clarke, announced the company had posted earnings growth of $98.8 million for the last financial year.

Charter Hall sees earnings grow 21% in FY15 - Money Management

James Hardie

James Hardie warns on FY profit

James Hardie has detailed a near flat profit result in the second quarter, while delivering a strong lift for the full first half. The slowing growth has seen it warn it may fall short of analyst expectations for the full-year. In the three months to September 30, James Hardie delivered a net profit of $US130.2 million ($A183.1m), up just 2% on last year's corresponding result. Over the first half, however, the building materials supplier saw net profit rise 22% to $US128.8 million.

James Hardie warns on FY profit - Business Spectator

Myer Holdings

David Jones discounts crimp Myer's performance

Discounting at David Jones has limited sales growth at Myer by as much as 2%, according to analysts, who believe the upmarket department store is still benefiting from "acquisition accounting". One analyst said it would be difficult for David Jones to sustain its current sales growth without the discounting that was a legacy of South African Woolworths Holdings' $2.2 billion acquisition of the business in 2014. He believes these price reductions had cut as much as 2% from Myer's like-for-like sales performance.

David Jones discounts crimp Myer's performance - Fairfax Media
statistics

HNN Index for week ending 13 November 2015

Sliding down

No stocks performed particularly well

The HNN Home Improvement Index for the week ending 13 November 2015 closed down 56 points to end at 916 points. Its performance was slightly worse than the underlying ASX 200 index, which closed down 31 points on the adjusted scale to close at 939.8 points. In real terms, the ASX 200 fell by 164 points to close at 5051.3.

There were five stocks in the index which lost more than 5% of their value during the week. Bluescope Steel had the worst performance, closing down by 12.7%, followed by GWA Group, which lost 6.5%. CSR fell by 5.7% and CIMIC (Leighton Holdings) fell by 5.5%. Westfield was also down, by 5.8%.

Breville

Breville says Nov-Dec trading crucial

Appliance maker Breville is counting on a sprinkle of Christmas cheer to lift its performance, amid challenging business conditions. Chairman Steven Fisher told shareholders at its AGM recently: "The key trading period of November and December is always crucial to the group's results, not only for the first half but also for the full year. It is too early to provide more definitive guidance."

Breville says Nov-Dec trading crucial - Yahoo! Finance

Charter Hall

Acquisitive quarter boosts Charter Hall's earnings outlook

Charter Hall Group's joint managing director David Southon says an acquisitive first quarter helped the property fund manager raise its full-year earnings guidance. Charter Hall said it expected operating earnings per share to be boosted by between 7% and 9% for the year to June 2016. It had previously forecast earnings growth of between 5% and 7% a share.

Acquisitive quarter boosts Charter Hall's earnings outlook - The Australian

*CIMIC Group

Devine tells shareholders to take no action on CIMIC takeover

CIMIC, formerly Leighton Holdings, has finally moved to clean up its investment in troubled developer Devine with a $58 million takeover bid for half the company it doesn't already own. CIMIC's offer comes after Devine chief executive David Keir resigned and another profit downgrade. In a statement, CIMIC management said the deterioration in Devine's performance prompted it to take action.

Devine tells shareholders to take no action on CIMIC takeover - Financial Review

Woolworths

Woolworths should keep BIG W and Masters, says former boss

Woolworths should persevere with its struggling BIG W and Masters chains to avoid a replay of the value-destroying sale of Dick Smith to private equity investors, according to former Woolworths executive chairman Paul Simons. Simons told Fairfax Media that the Masters home improvement chain was "worth persevering" with because there was room in the market for another major player, and Woolworths had already "done the hard yards" by investing more than $2 billion and securing more than 50 sites.

Woolworths should keep BIG W and Masters, says former boss - Fairfax Media
statistics

ABS hardware retail statistics for September 2015

QLD, SA lead the way

Australia's overall growth for September 2015 is up 7%

According to statistics from the Australian Bureau of Statistics (ABS), hardware, building and garden supplies retail revenue for September 2015 reached $1582 million, an increase of 6.88% over the previous corresponding period (pcp), which was September 2014. South Australia had the largest percentage increase, up 16.97% over the pcp, followed by Queensland with a 12.86% increase.

New South Wales, Western Australia and the Northern Territory all had increases between 5% and 8%, close to the national average. Victoria had subdued growth of 2.24%. Tasmania and the Australian Capital Territory both declined in contrast to the pcp.

According to the ABS, the following describes activity for household goods:

In current prices, the trend estimate for Household goods retailing rose 0.3% in September 2015. The seasonally adjusted estimate rose 1.0%. By industry subgroup, the trend estimate rose for Electrical and electronic goods retailing (0.5%) and Hardware, building and garden supplies retailing (0.3%) and fell for Furniture, floor coverings, houseware and textile goods retailing (-0.1%).
The seasonally adjusted estimate rose for Electrical and electronic goods retailing (2.2%) and Hardware, building and garden supplies retailing (1.1%) and fell for Furniture, floor coverings, houseware and textile goods retailing (-0.8%).

Online sales

The National Australia Bank (NAB) index for online sales indicates that sales were 5.7% higher for September 2015 as compared to September 2014. The index showed growth of 1.1%, compared to just 0.6% in August 2015.

Fashion fell in terms of sales, but all other categories showed an increase. Grocery and liquor sales grew by 1.9%, and homewares grew by 1.4%.

statistics

HNN Index for week ending 16 October 2015

Slight gain against background loss

Home improvement stocks prove more resilient than ASX 200

The HNN Home Improvement Index for the week ended 16 October 2015 rose slightly by six points to close at 961.64. The underlying ASX 200 index fell by 11 points to close at 5268.2, or 980.1 points on the adjust scale, an adjusted fall of 2.2 points. As a result the HNN Index marginally outperformed the ASX 200.

Metcash and Myer both managed strong performances, with the former gaining by 11.9% and the latter by 11.2%. UGL also increased by 5%.

Brambles

Brambles Q1 sales dip

Supply-chain logistics company Brambles has posted a slight fall in first-quarter sales revenue, due to the impact of a stronger US dollar. Brambles earned sales revenue of US$1.322 billion in the three months to September 30, a 2% decline on the previous corresponding period. Constant-currency sales revenue rose 8%.

Brambles Q1 sales dip - Business Spectator

Goodman Group

Goodman Group puts $350m of assets on sales block

Goodman Group has put $350 million worth of Australian logistics assets on the block, as more portfolios hit the market. The move will see the group look to offload about seven assets in Victoria, Queensland and South Australia. Goodman had already sold about $650m worth of property to the Charter Hall Group, as well as several large individual properties.

Goodman Group puts $350m of assets on sales block - The Australian

Myer

Can Myer CEO Richard Umbers can turn the retailer around?

According to Citi, linking Myer CEO Richard Umbers' pay to sales growth per square metre is a smart move and reflects how serious the company is about expanding its focus in that area, although Myer hasn't disclosed its total square metres since it listed. Umbers has to grow sales per square metre by 30% from the 2015 financial year to 2018 to receive 100% of his total shareholder return target.

Can Myer CEO Richard Umbers can turn the retailer around - Financial Review

Wesfarmers

Coles sales growth tipped to slow

While the supermarket giant is faring better than its rival Woolworths, analysts expect Coles has had a slower start to the financial year. Deutsche Bank research analyst Michael Simotas expects like-for-like sales growth at Coles of 3.1% in the three months to September, down from 4.3% in the first quarter of 2014/15.

Coles sales growth tipped to slow - SBS News
statistics

HNN Index for week ending 9 October 2015

Stocks climb

After a several weeks of declines, the ASX climbed strongly during the week

The HNN Home Improvement Index for the week ending 9 October 2015 closed 28 points higher at 955.89. The underlying ASX 200 index rose 227 points in real terms to close at 5279.7. In comparative terms the ASX 200 rose 42 points to close at 982.3, close to its level for 1 July 2014.

Home improvement stocks rallied strongly during the week. UGL climbed by 14.5%, followed closely by Metcash, which closed at 14.0% higher. Downer EDI rose by 9.3%, Bluescope Steel by 7.5%, and Breville was up 6%. CIMIC ended up 5.4% at the end of the week.

Bluescope Steel

BlueScope Steel workers back ground-breaking deal

BlueScope Steel employees have endorsed a ground-breaking workplace agreement after their union leaders accepted that hundreds of job losses, a wage freeze and a restructuring of work practices were needed to prevent the closure of the steelworks at Port Kembla. BlueScope management referred to the three-year deal as "game-changing".

BlueScope Steel workers back ground-breaking deal - Australian Financial Review

Goodman Group

Goodman Group in $2bn British property pact

The Goodman Group has struck up a GBP 1 billion ($2.1bn) partnership in Britain with two of its major partners. The trio of the Goodman Group, the Canada Pension Plan Investment Board and Dutch group APG Asset Management revealed the Goodman UK Logistics Partnership.

Goodman Group in $2bn British property pact - The Australian

Wesfarmers

Target on track for transformation

Target boss Stuart Machin said the chain is well advanced in its transformation from a loss-making business to a strong performer, with new store formats and an improved online platform winning over shoppers. It has opened 10 of its new larger format stores to date and boosted its online brands after making a deal with British fashion retailer New Look.

Target on track for transformation - Business Spectator

Woolworths

Supermarkets slash private label prices to drive sales

Coles and Woolworths have both slashed private-label prices to drive sales and convert more shoppers to their home-brand products. Woolworths cut prices on its premium private-label range in the three months to the end of September, according to Deutsche Bank research, slashing 9% off prices which Coles cut by 7% in the same period.

Supermarkets slash private label prices to drive sales - Sydney Morning Herald
statistics

HNN Index for week ended 18 September 2015

Slight climb

While the HNN Index flattened out, the underlying ASX 200 continued a moderate recovery

After pulling out of its steep dive last week, this week the HNN Home Improvement Index climbed slightly. It rose 3 points to 937.5 points. Meanwhile the underlying ASX 200 index continued a recovery.

On the adjusted index, it rose 18.5 points to reach 962 points. On the market, the ASX 200 climbed nearly 100 points to reach 5170.5 points.

UGL managed to increase its share price by more than 5%, while Metcash fell by more than 5%.

Boral

Construction union ordered to pay up to $9m to Boral over industrial dispute

The Construction, Forestry, Mining and Energy Union has been ordered to pay up to $9 million in damages and legal costs to Boral following the union's boycott of the construction company. The Victorian Supreme Court also banned the CFMEU from stopping workers from using Boral products at any Victorian worksite, and from interfering in the supply of Boral's goods and services. The injunction lasts for three years.

Construction union ordered to pay up to $9m to Boral - ABC

Breville

Breville brings buying directors to the boil

Breville recently reported slightly lower sales and earnings for the June year and the share price has returned to levels last seen in 2013. Five of the seven directors have taken the opportunity to increase their stakes, spending close to $1 million between them.

Breville brings buying directors to the boil - Fairfax Media

Brambles

Brambles shares slip on market update

Pallet maker and logistics giant Brambles has reaffirmed a plan to increase capital investment and maintained its soft earnings forecast from a month earlier. Brambles told an investment market briefing in California that it is anticipating organic growth investment of US$1.5 billion over next four years, with growth capital expenditure heavily weighted toward well-established businesses.

Brambles shares slip on market update - Business Spectator

CIMIC Group

Thiess India chief executive exits CIMIC

Construction group CIMIC has fired the head of its Thiess India business, Raman Srikanth, as its new management team tries to distance itself from corruption allegations. He is one of the most high-profile executives in CIMIC's international operations to leave the company since Spanish construction group ACS acquired Leighton Holdings in early 2014.

Thiess India chief executive exits CIMIC - Fairfax Media

Metcash

Metcash launches grassroots campaign to fight Aldi incursion

Grocery wholesaler Metcash has kicked off a grassroots campaign to defend the market share of IGA retailers in South Australia and Western Australia. Aldi is preparing to open two distribution centres and the first of as many as 120 stores in South Australia and Western Australia early next year.

Metcash launches grassroots campaign to fight Aldi incursion - Fairfax Media

Super Retail Group

Super Retail Group CMO departs

Super Retail Group's marketing leader, Kevin McAulay, has left the ASX-listed retailer and will not be directly replaced as the group undertakes a major reshuffle. The shared services marketing function is being decentralised, with many of the roles realigned to existing business teams and functions.

Super Retail Group CMO departs - CMO Australia

Wesfarmers

Goyder's boys bank bonuses

Coles managing director John Durkan made $4.6 million in his first year in the role, eclipsing the pay of all other Wesfarmers divisional bosses except Bunnings' John Gillam. Mr Gillam's $4.8 million pay was 63% performance-related. He hit 93% of his bonus target.

Goyder's boys bank bonuses - The West Australian

Woolworths

Woolworths builds solar portfolio to 1.2MW

Woolworths is quietly building up one of the biggest aggregate rooftop solar arrays in the country, with more than 1.2MW so far installed on 27 of its retail sites. The increased investment in rooftop solar has been noted by market analysts in recent months, notably with trade in renewable energy certificates held by the company.

Woolworths builds solar portfolio to 1.2MW - Renew Economy
statistics

HNN Index for week ended 11 September 2015

Slight recovery

Stocks still below the level set for 1 July 2014

The HNN Home Improvement Index for the week ended 11 September 2015 recovered slightly after the previous week's steep decline, closing up nine points at 934.47.

The underlying ASX 200 Index also climbed, though not as sharply. It closed at 5071.1, up nearly 30 points. On the adjusted scale it closed at 943.5, up 5.7 points.

No stocks lost more than 5% of their value. High performance stocks included UGL which closed up by 7.4%, Pact Group Holdings which rose by 6%, and Boral which lifted by 5%.

CIMIC Group

CIMIC's cut-price bids edging out competitors

The restructuring of CIMIC, the construction group formerly known as Leighton Holdings, is paying off for its Spanish owners 18 months after it was acquired, as the company wins a series of big transportation contracts including the design and build of a new tunnel for Sydney's M5 motorway. However competitors on projects claim the company is winning with cheaper bids.

CIMIC's cut-price bids edging out competitors on transportation contracts - Fairfax Media

Metcash

Magellan sounds death knell for Metcash, gives succour to Woolworths

Leading fund manager Hamish Douglass says the Australian grocery industry will remain profitable enough to support three major players but wholesaler Metcash could disappear entirely within 10 years and Woolworths should consider ditching Masters and BIG W.

Magellan sounds death knell for Metcash - Fairfax Media

Stockland Group

Stockland partners with Metro for Brisbane apartment exposure

Diversified property group Stockland has made a small but significant investment in the private Metro Property Development's Newstead Towers in Brisbane and is preparing a similar backing for Metro's Brisbane Casino Towers project. Stockland's investments, which will be worth more than $40 million, are part of its strategy to increase its exposure to higher-density residential property.

Stockland partners with Metro for Brisbane apartment exposure - Fairfax Media

Wesfarmers

ACCC wary of Coles' Supabarn takeover

A proposed takeover of nine Supabarn stores by Coles in NSW and the ACT has piqued the interest of the Australian Competition and Consumer Commission, which says it has found potential concerns about limited competition. It said it has received around 60 submissions from consumers about the proposed acquisition, and has asked for further comment to help it assess the risks the takeover poses to competition.

ACCC wary of Coles' Supabarn takeover - Business Spectator

Westfield

Westfield Warringah Mall gets $310m facelift

The Westfield Warringah Mall shopping centre in Sydney's northern beaches is set to get a $310 million facelift. It will include a new two-storey mall parallel mall, the addition of about 70 stores and a new reconfigured, smaller, Myer department store. The remainder of the Myer space will be let to international and local fashion outlets as well as retailers of electronic devices and tablets.

Westfield Warringah Mall gets $310m facelift - Fairfax Media
statistics

HNN Index for week ending 28 August 2015

Losers and gainers

A rollercoaster week that resulted in net gains

The HNN Home Improvement Index for the week ending 28 August 2015 rose by 8.5 points to close at 967.1. The underlying ASX 200 index also rose, by 49 points to close at 5263.6, or up 9 points to 979 on the adjusted scale.

Over the past three weeks the ASX 200 fell at a steeper rate than the HNN Index, bringing them closer to alignment. Both are now trading below the level they were at on 1 July 2014.

In a roller coaster week on the markets, three stocks showed a significant decline, and three showed strong gains. The losers were Super Retail Group, down by 8.9%, Breville Group, down by 6.4%, and Boral, which dropped 13.2%.

The gainers included GWA Group, up 13.2%, CIMIC (formerly Leighton Holdings) up by 6.1%, and Bluescope Steel, which rose by 23.9%.

Adelaide Brighton

Adelaide Brighton posts record half year profit

Adelaide Brighton posted a statutory net profit after tax of $82.6 million for the six months to 30 June 2015. This is an increase of 61.3% over the previous corresponding period, a record result. Revenue for the period was $678.1 million. The improved result was due to higher cement and lime volumes, improved prices, proceeds from property transactions and 2014 acquisitions in South Australia and north Queensland.

Adelaide Brighton posts record half year profit - Manufacturers' Monthly

Boral

Boral lifts profit to $257 million

Boral has lifted its full year profit by just under 50% to $257 million. Excluding significant items, which included a $115 million gain on the sale of Western Landfill business and costs associated with the disposal of East Coast Bricks and a restructure, net profit rose 45% to $249 million in the year to June 30. However revenues dipped 15.2% to $4.4 billion.

Boral lifts profit to $257 million - Yahoo Finance

Charter Hall Group

Charter Hall charts expansion course as profit surges 43%

Charter Hall aims to expand its suite of funds to increase assets under management and deliver higher earnings growth through the property investment business. In the past year, it has undertaken a significant number of acquisitions across office, industrial and retail sectors, which has led it to boost funds under management by $2.1 billion, or 18%, to $13.2 billion.

Charter Hall charts expansion course as profit surges 43% - Fairfax Media

Metcash

Metcash expects tough trading conditions in food and grocery to continue

Metcash chief executive Ian Morrice told shareholders at the annual meeting recently that difficult trading conditions experienced in food and grocery are expected to continue in the new financial year. Morrice said while the grocery wholesaler's balance sheet had been strengthened by capital initiatives like selling the automotive business and key programs such as Price Match, Private Label and Diamond Store refurbishments, this was not enough to offset food and grocery headwinds in 2015.

Metcash expects tough trading conditions to continue - Fairfax Media

Pact Group

Pact Group flags more growth

Pact Group posted a profit of $67.63 million in the year to June 30, a 17.24% increase on $57.69m a year earlier. Revenue in the period rose 8.03% to $1.253 billion. The packaging group, backed by Melbourne billionaire Raphael Geminder, in June made its biggest acquisition since becoming a listed company with the $80m purchase of Barry Smorgon and John Tisdale's packaging company Jalco.

Pact Group flags more growth - The Australian

Westfield

Westfield on track despite NY delay

Westfield Corporation made a net profit for the six months to June 30 of $US466 million. Funds from operations of $US380.3 million were in line with its forecasts. The opening of the $US1.4 billion Westfield World Trade Center, which is being constructed by the New York Port Authority and then leased by Westfield, has been pushed back to the first half of the next financial year.

Westfield on track despite NY delay - Sky News
statistics

HNN Index for week ending 21 August 2015

Downward slide is ongoing

However the ASX 200 fell further

The HNN Home Improvement Index for 21 August 2015 fell by 17 points to 958.68 points. The ASX 200 fell by 142 points, or 26 points on the adjusted scale to 970.2. These numbers mean the indices have fallen below the level they were at on 1 July 2014. The ASX 200 was worse affected than the HNN Index.

Surprisingly, some stocks still did rise. GWA Group managed a 6.6% gain, and UGL Ltd rose by close to 8%. Losers included CSR and Charter Hall Group. Myer Holdings and JB Hi Fi fell by over 7%.

Boral

Boral closer to deal on bricks arm

Boral could be edging closer to striking a deal with an offshore party to sell or partly divest its bricks business in the US. Adviser Macquarie Capital is said to be in talks with various prospective investors surrounding the assets within the US division. Analysts' valuation estimates range from $US750 million (AUD$1 billion) to $US1.23 billion.

Boral closer to deal on bricks arm - Business Spectator

Breville

Breville investors shrug off poor Australia/NZ results

Investors have shrugged off Breville Group's poor performance in Australia and New Zealand and are hopeful that the turnaround in the small appliance maker's key US market will continue. Breville revealed that 2015 full-year net profit fell 4.3% to $46.68 million and revenue declined 2.7% as it rolled out a new business management software system and discount retailers pushed their home-branded products in Australia/New Zealand.

Breville suffers full year profit sales decline - Sydney Morning Herald

Charter Hall Group

Investors rush to Charter Hall auto fund

Investors have been quick to back Charter Hall's Direct Automotive Trust, with the fund manager raising $43 million in the first four days of the fund's existence. Charter Hall head of direct property, Richard Stacker, said the new trust was a "good fit" for the business, which has been forecast to provide income at 7.5% in the first year.

Investors rush to Charter Hall auto fund - Money Management

Fletcher Building

Fletcher Building full-year profit falls to $NZ270m

Fletcher Building said its full-year net profit after tax fell 20% to $NZ270 million (AUD$300 million) from $NZ339 million a year ago. Operating earnings in the year ended June 30 fell 15% to $NZ503 million from $NZ592 million, the company said, while revenue edged 3% higher to $NZ8.66 billion from $NZ8.4 billion.

Fletcher Building full-year profit falls to $NZ270m - Sydney Morning Herald

Stockland

Stockland FY underlying profit up 9.4%, meets forecast

Stockland Corp Ltd posted a 9.4% rise in underlying annual profit, helped by strong demand for housing, while its retirement living and logistics businesses were also buoyant. Underlying profit rose to $608 million compared to $555 million a year ago and in line with a $607 million estimate of 10 analysts polled by Thomson Reuters. Funds from operations, a measure of underlying and recurring earnings, increased about 15% to $657 million.

Stockland FY underlying profit up 9.4%, meets forecast - Reuters
statistics

HNN Index for week ending 14 August 2015

Slide continues

The reporting season for FY 2014/15 brings little reassurance

The HNN Home Improvement Index for the week ending 14 August 2015 fell by 18 points to 975.62. The underlying ASX 200 index fell still further, down by 118 points to close the week at 5356.5.

On the scale indexed to the HNN Index, it fell by 22 points to 996.6. This indicates that both indices are now below the level they were at on 1 July 2014.

All was not bad news, however. Super Retail Group climbed by 5.9%, and JB Hi-Fi managed to gain an even 6.0%. Metcash lost most of its previous gains over the past weeks, falling by 9.0%, while Downer EDI also fell by 6.8%.

Charter Hall Group

Charter Hall pays $180m on project to house Aurizon

Charter Hall Group will fund the $180 million development of a new office tower on the fringe of Brisbane's central business district. It is expected Charter Hall will forward-fund and then own the office complex that Consolidated Properties plans to develop at 900 Ann Street to accommodate the 20,000sqm of space that listed freight company Aurizon intends to pre-lease.

Charter Hall pays $180m on project to house Aurizon - The Australian

CIMIC Group

Cimic Group's Leighton unit wins $267m Auckland contract

Cimic Group's Leighton Contractors unit has won the NZ$267 million contract to upgrade Auckland's Southern Corridor to improve traffic flows on State Highway 1 between Manukau and Papakura. The project involves building about 11 kilometres of additional lanes, upgrading 16 bridges and constructing six new bridges.

Cimic Group's Leighton unit wins $267m Auckland contract - Scoop NZ

Goodman Group

Demand for houses puts Goodman Group in box seat for land sales

The booming housing market has delivered $1.1 billion in sales for the Goodman Group as it sells down non-core industrial land to residential developers. Goodman chief executive Greg Goodman said the group had sold only a fraction of its land for urban renewal and had enough to keep selling for the next 10 years.

Demand for houses puts Goodman Group in box seat for land sales - Fairfax Media

GUD Holdings

GUD Holdings in good shape

GUD Holdings management foreshadowed a "substantial uplift" in its profit for the upcoming year at its full year results in late July. GUD's net profit soared by 88% to $33.2 million in the 12 months to June 30, a result managing director Jonathan Ling attributed to freight and logistics efficiencies as well its joint venture with United States consumer giant Jarden Corporation.

GUD Holdings in good shape - Fairfax Media

Pact Group

LiquiGlide partners up with paint packaging manufacturer Pact Group

LiquiGlide Inc. has an exclusive agreement with Australian sustainable packaging manufacturer Pact Group Holdings. By implementing the patented slippery coating technology, Pact Group, will explore innovative new paint packaging solutions that will allow consumers to use more of the paint they purchase while reducing the environmental impact associated with residual paint.

LiquiGlide partners with Australian-based Pact Group - Plastics Today

Westfield

Westfield sells stakes in two Chicago-area malls

A group of investors is teaming up to acquire major interests in two local shopping malls owned by Westfield Group which has been paring back its US real estate holdings. Sources in the real estate department at Westfield, who asked not to be identified, say the company is selling a 79% stake in Westfield Hawthorn in Vernon Hills and a 49% stake in Westfield Fox Valley in Aurora.

Westfield sells stakes in two Chicago-area malls - Chicago Business
statistics

ABS retail turnover for June 2015

Hardware continues to grow

New South Wales and Queensland lead growth numbers, with South Australia recovering strongly

According to statistics from the Australian Bureau of Statistics (ABS), overall retail trade figures for June 2015 rose more than was expected by most economists. Retail turnover rose by 0.7% in seasonally adjusted terms, while economists had mostly predicted an increase of 0.4%, which had been the increase for May 2015.

For household goods, retail sales rose by 2.2%, and for hardware and building supplies grew by 2.8%, in seasonally adjusted terms.

Comparing the current turnover numbers for hardware and building supplies with those for the previous corresponding period (pcp), which was June 2014, overall Australian figures grew by 12.34% to $1.382 billion.

South Australia produced the strongest growth in percentage terms, increasing to $77 million from $53 million, a rise of 45.54%. This follows six years of steadily declining June sales, starting in June 2009.

New South Wales increased the most in dollar terms, to $391 million from $350 million, an increase of $41 million or 11.60%. Queensland grew by $37 million to $298 million, an increase of 14.38%.

Only Tasmania showed a sales decline compared to the pcp. The state lost $3 million, falling to $31 million, an 8% decline.

Online sales

The National Australia Bank (NAB) Online Retail Sales Index reported good growth in online sales during June 2015. NAB reports a 2.4% increase for the month in seasonally adjusted terms. It estimates that online retail sales today are 10% higher than they were a year ago.

NAB estimates that the total spent online in the 12 months to June 2015 was $17.3 billion. This equates to 7.1% of amounts spent at equivalent physical retailers during the same time period.

Growth in online sales during June 2015 was particularly high in homewares and appliances, which grew at 25.9% on the pcp. "Daily deals" declined sharply, down 23.1% on the pcp.

statistics

HNN Index for week ending 7 August 2015

A fall, but not a collapse

Harvey Norman and Myer fare well despite overall market slide

The HNN Home Improvement Index has followed the underlying ASX 200 on its rollercoaster ride, closing down 27 points at 993.98 for the week ending 7 August 2015. The ASX 200 fell by 225 points to reach 5474.8, or 1018.6 on the index scaled to match the HNN Index, a fall of 42 points.

As this indicates, while the HNN Index fell, it did not fall as far as the ASX 200. UGL fell by 11.8%, and Downer EDI lost 16.4% of its share value. However, Harvey Norman Holdings rose by 5.4%, and Myer Holdings was boosted by 7.1%.

BWP Trust

BWP Trust posts impressive results

Revenue was up 14% on last year, from $127.4 million to $144.9 million. Profit before gains on investment properties was up 10%, from $92 million to $101.6 million. The gains in the fair value of all BWP's properties was up 90%. The Trust reviewed rents on 20 store sites over the last financial year. The average rent went up 8.2% at each of these sites.

BWP Trust posts impressive full-year results - Money Morning

Charter Hall Group

Tullamarine sold to car dealer

Fairfax's former Melbourne printing plant will become a car distribution centre after a $16 million deal was recently closed. Entrepreneur Bobby Zagame, owner of numerous prestige car dealerships, will use the six hectare site in Tullamarine as a pre-delivery process centre and distribution facility. The $16 million price paid is $4 million less than the $20 million property group Charter Hall was reportedly set to pay as part of a $55m deal for both sites.

Tullamarine sold to car dealer - ProPrint

Downer EDI

Downer wins $680m Carmichael contracts

Adani's Carmichael coal project in Queensland has given Downer EDI two letters of awards for mining services contracts worth $680 million. Downer was selected as the preferred mining services and infrastructure provider on the project in December last year.

Downer wins $680M Carmichael contracts - Mining Monthly

Myer Holdings

Are you being served? Myer cuts to lift its game

Myer's new chief Richard Umbers' new strategic direction will see Myer reduce its store footprint over time. Staff and unions are understandably not happy about plans to reduce permanent staff in 42 stores and cut the hours of part-time staff, warning service standards will deteriorate further.

Are you being served? Myer cuts to lift its game - Fairfax Media

UGL

UGL wins Australia's Tangara passenger rail fleet modernisation contract

Australia's Transport for New South Wales (NSW) has awarded a $131 million contract to UGL Unipart Rail Services to provide technology upgrades for the Tangara passenger rail fleet. UGL Unipart Rail was formed by UGL and Unipart Rail to deliver the Sydney Trains Level 3 maintenance contract. UGL holds a 70% shareholding in the joint venture company.

UGL wins Australia's Tangara contract - Railway Technology
statistics

HNN Index for week ending 17 July 2015

Index climbs steeply

Metcash, CIMIC and UGL lead rally

In a slightly startling turnaround, the HNN Home Improvement Index surged during the week ending 17 July 2015. It gained over 43 points to finish at 1013.79, indicating that it is now above the level it was at on 1 July 2014.

In doing so, it closed ground comparatively with the underlying ASX 200 index, which rose 178 points to close at 5670.1 points. On the comparative scale, this was an increase of 33 points.

Eleven of the index stocks recorded an increase of over 5% for the week. Leading the pack was Mitre 10 owner Metcash, which rose by 10.4%, followed by CIMIC Group (formerly Leighton Holdings) which climbed 7.9%, with UGL close behind, posting an increase of 7.4%.

Bluescope Steel rose by over 6%. Super Retail Group, Adelaide Brighton, Boral, GWA Group, James Hardie and Woolworths all posted gains of between 5.3% and 5.9%.

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Charter Hall Group

$46m of industrial, retail sales

Mining services and manufacturing firm Bracken has sold its Bassendean engineering facility to Charter Hall in an off-market sale and leaseback deal worth about $32.8 million. It will lease back the seven hectare site which comprises 31,000sqm of covered floor space from the property group for a 15-year period.

Bracken sells its engineering facility to Charter Hall - Business News WA

CSR

Residential construction drives positive outlook for CSR

CSR says its outlook is positive as housing starts look to climb to record levels, with more than 200,000 expected in fiscal 2016. Managing director Rob Sindel said an increasing number of people wanted to live closer to where they worked, which is fuelling demand for multi-residential housing closer to city centres. The sector now represents around 45% of all Australia's new dwellings.

Residential construction drives positive outlook for CSR - Sourceable

Metcash

Metcash gets a boost with new supermarket boss

Metcash has appointed retail "hard" man Steven Cain to lead its supermarkets division. He replaces Metcash's long-serving supermarkets chief executive Fergus Collins, who left the business in March after 13 years. Cain is understood to have earned a reputation for being a tough operator during his time as group managing director at Coles a decade ago.

Metcash gets a boost with new supermarket boss - Sydney Morning Herald

Myer Holdings

New chief Richard Umbers prepares Myer for major surgery

Robust sales figures released by David Jones' South African owners, Woolworths, are a reminder of the challenges facing rival Myer as its new boss Richard Umbers prepares his strategy for fixing the business. The skills of his new executive team will be the key to this and Umbers is not going to outline his game plan until they get their feet under the desk. This includes finance chief Grant Devonport who starts soon. Myer is also recruiting for a new chief digital and data officer.

New chief prepares Myer for major surgery - Australian Financial Review

Wesfarmers

Coles takes fresh food battle to Woolworths

Coles has cranked up the marketing battle with Woolworths by muscling in on the fresh food battleground once ruled by its competitor. Creative agency Big Red is behind a TV campaign called Coles Fresh which shows brand ambassador Curtis Stone promoting the freshness of its product. The positioning mirrors that of Woolworths which for years marketed itself as "Woolworths, the Fresh Food People".

Coles takes fresh food battle to Woolworths - Mumbrella

Woolworths

Woolworths chairman Ralph Waters under pressure

A confidential poll of some of the country's biggest and most powerful fund managers rates the performance of the Woolworths board among the lowest of the ASX 100 companies. There is strong speculation among key fund managers that Woolworths chairman Ralph Waters will resign in 2015. Some believe it will be after the company releases its full-year earnings on August 28.

Woolworths chairman Ralph Waters under pressure - Australian Financial Review
statistics

HNN Index for week ending 10 July 2015

Downward trend continues

Uncertainty over Greece continues to depress market

The HNN Home Improvement Index for the week ending 10 July 2015 fell by over 12 points to 970.16. The underlying ASX 200 index fell by close to 54 points to close at 5492, or 1021.8 on the HNN adjusted index, down 9 points.

Metcash and Bluescope led the declines for the HNN Index stocks, with the former losing 5.8% of its value, and the latter declining by 12.8%. DuluxGroup also did not fare well, showing a decline of 4.5%.

One of the few of the Index stocks that showed any signs of upward movement was BWP Trust, which rose by just under 1.3%.

Breville

How Breville is facing its 2015 challenges

In an interview with Appliance Retailer, Breville's general manager Mark O'Kelly describes the challenges the company is facing in 2015. It plans to drive category success through innovation and new product launches. He believes connectivity in small appliances will become increasingly important.

How Breville is facing challenges in 2015 - Appliance Retailer

Charter Hall Group

Fairfax Media sells printing plants for $55 million

Charter Hall Group has purchased Fairfax Media's two printing plants in Sydney and Melbourne in a deal worth about $55 million. Fairfax had originally hoped to reap almost $70 million from the combined sales of its Tullamarine site in Melbourne's northwest and the larger Chullora facility in Sydney but they are now both in due diligence at the lower sum.

Charter Hall buys Fairfax Media printing plants - The Australian

CIMIC Group

CIMIC Group awarded Hong Kong border control contract

CIMIC Group has been awarded a contract by the Government of the Hong Kong Special Administrative Region to construct a boundary control point on the border between Hong Kong and China. The revenue to CIMIC will be approximately $1.2 billion.

CIMIC Group awarded Hong Kong contract - ABN Newswire

Goodman Group

International: Goodman grows in China

Goodman Group has signed two new leases with French sports apparel and equipment retailer Decathlon for the construction of approximately 1.69 million square feet (157,000sqm) of prime logistics space in China.

Goodman grows in China - Commercial Property Executive

Metcash

Metcash's biggest IGA chain sees light at end of tunnel

Australia's largest independent grocery chain, Ritchies Stores, is forecasting its first profit growth in four years. Ritchies chairman Fred Harrison said earnings for the 12 months ending June, which will be lodged with ASIC in December, had risen for the first time since 2011, underpinned by stronger same-store sales growth and better gross margins.

Metcash's biggest IGA chain sees light at end of tunnel - Sydney Morning Herald

Woolworths

Woolworths trails Coles on grocery prices: Macquarie analysis shows

Woolworths is failing to close the gap on Coles when it comes to prices. Despite launching a $500 million price slashing strategy in May, new figures from Macquarie Securities suggest Woolworths' grocery prices were still flat in the June quarter at the same time as Coles got cheaper for shoppers.

Woolworths trails Coles on grocery prices: Macquarie - Sydney Morning Herald
statistics

HNN Index for week ending 19 June 2015

Index drops below 1000

While the ASX 200 showed continued improvement, the hardware retail industry declined slightly

The HNN Home Improvement Index for the week ending 19 June 2015 fell by six points to reach 999.40, close to parity with the 1000 score which reflects the market on 1 July 2014. Both Wesfarmers and Woolworths declined through the week, while the surprise outstanding upside performer was Metcash, which gained 5.9% on the market.

The underlying ASX 200 index climbed for the week, ending nearly 52 points up at 5,597.0, or 1,041.3 on the HNN Index adjusted scale.

Charter Hall

Charter Hall in battle for retail assets

Charter Hall Group has added Katherine Oasis Shopping Centre in the Northern Territory to its portfolio. The Katherine centre is being sold by Federation Centres, which held it at about $27.5m on an 8.5 per cent capitalisation rate, at the end of December. The centre, marketed by Savills, spans 7162sqm.

Charter Hall joins fray for hotly contested retail assets - The Australian

Cimic

CIMIC in US$500m debt buyback

CIMIC Group, formerly known as Leighton Holdings, has offered to buy back up to US$500 million of debt due to mature in 2022, after the group's John Holland divestment generated surplus funds. The buyback forms a part of CIMIC's strategic review and will help to reduce the group's interest costs.

CIMIC's US$500m debt buyback - Business Spectator

Downer EDI

Downer signs contract with NBN Co

Downer EDI is one of the construction partners that have been signed by NBN Co under a new contracting model. The contracts cover around four million homes and businesses which are scheduled to be connected with fibre to the node, fibre to the building or fibre to the premises.

NBN gets new contract model - Sourceable

Fletcher Building

NZ$550 million sale plan for Fletcher

Fletcher Building announced it intended to divest itself of Rocla Quarries, its 50% joint venture stake in Sims Pacific Metals, Fletcher Aluminium, Tasman Sinkware and Fletcher Insulation. It also signalled more investment in Tradelink, Laminex, Formica and residential construction.

NZ$550 million sale plan for Fletcher - Otago Daily Times

Lend Lease

Lend Lease in Chicago residential plan

Lend Lease Group in a joint venture with Chicago developer CMK has submitted plans to build five towers with nearly 2,700 residential units on a 7.3-acre riverside parcel of land in the South Loop neighbourhood of Chicago. The largest building, on the north end of the site, would have 47 stories and include 626 units.

2,700 homes planned on South Loop site - Crain's Chicago Business
statistics

HNN Index for week ending 12 June 2015

Index makes minor recovery

Shares in Myer Holdings experienced the only major decline for the week

The HNN Home Improvement Index for the week ending 12 June 2015 recovered slightly from its previous downward trajectory, rising by 4 points to reach 1,005.59. The underlying ASX 200 index rose by 47 points, or 9 points on the adjusted index.

Myer Holdings was the only stock in the index to decline sharply, falling by 6.5%. UGL and Harvey Norman both climbed by 7%. Bluescope Steel rose by 6.2%. James Hardie and GUD Holdings both rose by more than 5%.

Bluescope Steel

BlueScope denies Port Kembla steelworks closure, admits cost cut push

BlueScope Steel has denied reports it intends to close its Port Kembla steelworks. However the steel giant has admitted the site is under review and it needs to cut costs to remain competitive with imports. The Illawarra Mercury reported that unions were meeting with BlueScope because of the closure of Port Kembla, with up to 1000 jobs at risk.

BlueScope denies Port Kembla closure - Sydney Morning Herald

Downer EDI

Downer EDI switches to renewables

Downer EDI has won a $130 million deal to build another wind farm project at Ararat, northeast of Melbourne. The project, still subject to final financial approval, is expected to produce enough electricity for up to 123,000 homes.

Downer EDI wins $130 million deal to build another wind farm - Business Insider

Goodman Group

Goodman Group's $42 million New Zealand development

Goodman Group will develop four new sites in Auckland, with a total project value of $NZ45.8 million ($42 million). When developed, the four industrial sites will take in a total of 27,112sqm of lettable area, which is expected to generate revenues of $NZ3.4 million for the New Zealand-listed Goodman Property Trust.

Goodman Group's New Zealand development - The Australian

Woolworths

Woolworths unveils budget telco brand

Woolworths has returned to the telecommunications market and launched a budget mobile offering called Woolworths Connect. It has been available since 15 June, and offers two prepaid options each running on the Telstra 3G network.

Woolworths launches budget telco brand - The Australian
statistics

HNN Index for week ending 29 May 2015

Index continues to track ASX 200

BWP Group, Lend Lease and Bluescope post over 5% gains

The HNN Home Improvement Index for the week ending 22 May 2015 rose by 10.6 points. The underlying ASX 200 index climbed by 112 points, or 21 points on the adjusted scale.

Outstanding performers for the week included BWP Group, Lend Lease and Bluescope Steel. All of these stocks posted gains for the week of over 5.4%.

Adelaide Brighton

Company AGM announcements

Adelaide Brighton has provided positive guidance for the 2015/16 financial year at its annual general meeting (AGM). It said it expected cement and clinker product sales volumes should be "similar to or greater than" levels in 2014/15.

The company sees increasing costs due to the weakening Australian dollar, and gas costs in South Australia. However, it also expects to see cost savings from a lower petrol price, the elimination of the carbon tax, and ongoing benefits from business changes made in 2014/15.

Additionally, it expects to make land sales during calendar 2015 which should produce revenues of around $44m.

Adelaide Brighton expects sales gain - Business Spectator

Charter Hall Group

Hostplus backs Charter in pubs play

A new freehold pub fund from Charter Hall Group will target the purchase of $200 million worth of ALH Group pubs. There are 54 pubs in prospect, with 46 of them including a Woolworths-owned liquor store. Hostplus is contributing $90 million, and Charter Hall $10 million.

Hostplus backs Charter Hall's foray into pubs - The Australian

CIMIC Group (formerly Leighton Holdings)

CIMIC preferred developer for Brisbane site

The Queensland government has nominated CIMIC as its preferred developer for a waterfront community in Brisbane. The new waterfront urban precinct at Northshore is located six kilometres from the Brisbane CBD.

CIMIC named as developer for waterfront site in Brisbane - MyWealth Commonwealth Bank

DuluxGroup

Mitre 10 New Zealand leaves Dulux for Valspar

In the most recent saga of the paint wars, Mitre 10 New Zealand has switched paint brands from Dulux to Valspar. Dulux has indicated this will have a minimal (circa 1%) impact on its revenue. This will not impact Dulux sales into Mitre 10 in Australia. Deutsche Bank analysts, however, believe the loss, though small, will be difficult for Dulux to recoup in the current financial year.

DuluxGroup in the Australian Financial Review

Fletcher Building

Diversity in the workplace

In an energetically worded personal note, the CEO of Fletcher Building, Mark Adamson, has written a piece in the New Zealand Herald urging companies to further pursue diversity in the workplace. He writes:

By creating a diverse and inclusive work environment, Fletcher Building will ensure it keeps attracting high-quality employees whatever their gender, ethnicity or sexuality.
Fletcher Building in the New Zealand Herald

Lend Lease

Crown Casinos enters $1 billion deal with Lend Lease

The Crown Casino at Barangaroo South near Sydney will be built by Lend Lease. The deal is worth around $1 billion. Development of the casino still awaits approval from the New South Wales government.

Lend Lease for Sydney Casino - SBS

Lend Lease changes name to Lendlease

Lend Lease will roll out a variation on its current name, changing it from two words, "Lend Lease", to a single word, "Lendlease". The name change will be accompanied by a shift in visual branding as well.

Lend Lease in Marketing Magazine

Stockland Corp

Stockland to construct aged care facility

In a deal with Opal Specialist Aged Care, Stockland will be responsible for the construction of a $33 million aged care facility in Sydney at Ashfield, an inner west suburb.

Stockland in the Sydney Morning Herald

Super Retail Group

Super Retail adopts Manhattan Associates software

Super Retail Group is to adopt Distributed Order Management software from US-based technology supplier Manhattan Associates. This is part of the move by the group to make use of a single distribution centre. The software and the move to the single DC will help the company reduce transportation and inventory costs, Super Retail Group has stated.

Super Retail Group in NASDAQ

UGL

UGL gains BP contract

UGL is to enter into a joint venture contract with BP to maintain the latter company's 17 Australian fuel terminals.

UGL and BP contract in SBS

Westfield

Westfield opens retail incubator in San Francisco

Mall retailer Westfield has opened a 3,450 square metre facility in Northern California where retailers can try out physical/digital hybrid retail ideas. Named "Bespoke" the facility is attracting retailers such as Shoes of Prey, which are making the journey from purely online retail to mixed physical and online retail.

Westfield in The Australian
statistics

Hardware retail turnover March 2015

All regions show growth

South Australia rebounds after two difficult Marches

The Australian Bureau of Statistics reported strong growth throughout most of Australia for hardware, building and garden supplies retailing for March 2015. All regions showed growth of more than 4.9%, except for the Northern Territory, which recorded growth of just 0.6%.

South Australia improved on March 2014 by 30%, lifting from turnover of $60 million to $78 million. This has returned the state to the turnover level of 2012, following on from two years of lower turnover.

Queensland also showed strong growth, reaching $288 million in sales, a 15% improvement over March 2014.

Overall growth for Australia in this category was up 10.9%.

For all of retail, the ABS reports that in trend terms Australian turnover increased by 4.3% in March 2015 as compared to March 2014. Tasmania and Queensland showed the highest increases.

Online

According to the NAB Online Retail Sales Index, seasonally adjusted sales rose by 0.8% in March 2015. NAB estimates that online sales for March 2015 are 8% higher than sales for March 2014.

Overall spending on online retail in the 12 months ending March 2015 is estimated at $16.8 billion, which would represent 6.9% of the spending at bricks-and-mortar retailers.

statistics

HNN Index to 8 May 2015

Downward trend continues

Most of downward trend due to poor retail conditions outside hardware

The HNN Home Improvement Index for the week ending 8 May 2015 fell by a further 9.54 points, the fourth week of decline. The underlying ASX 200 index fell by 54.6 points, or 29 points on the adjusted scale.

With its value close to 1000, the index indicates that few gains have been made since 1 July 2014.

The best performer for the week was Downer EDI, which rose by over 5%. The worst performer was Woolworths, which fell by more than 5%.

The following are significant events from the week.

Charter Hall Group

Slow grocery sales affect Charter REIT

The states of Queensland and Western Australia helped to drag down the results for Charter Group's real estate investment trust (REIT). While growth excluding those states came in at around 3%, including them brought the growth number down to 1.6%.

The lack of growth is largely traceable to a tightening of the market in the supermarket sector, according to analysts.

Charter Hall slow growth - The Australian

Fletcher Building

Fletcher provides steady earnings guidance

In an investor presentation, Fletcher pointed to a good market in both Australia and New Zealand, but forecast its earnings for financial year 2014/15 would come in at the lower range of its prior estimates. The range suggested had been NZ$650 million to NZ$690 million.

Fletcher earnings guidance - National Business Review

JB Hi-Fi

Strong Q3 results

JB Hi-Fi has reported an increase of 6% in its sales for Mary 2015 compared with the previous corresponding period. This was largely driven by sales from its Home format stores, which sell whitegoods in addition to standard JB Hi-Fi products. Sales at those stores increased by 11.8%.

JB Hi-Fi has affirmed its previous earnings guidance. Its previous forecast was for $3.6 billion in sales, and net profit of between $127 million and $131 million.

JB Hi-Fi Home store sales - The Australian

Metcash

Job losses declared

Metcash will let go of 60 workers, adding to the 76 people let go in March 2015. A spokesperson indicated the firing came as a result of an efficiency review. Sources have indicated that Metcash intends to centralise many roles to its Sydney offices. The announcement was followed by a decline in the share price.

Metcash slashes jobs - Fairfax Media

Woolworths

Third quarter results and investor strategy day

Woolworths released its third quarter results during an extended strategy day briefing for analysts. HNN will cover this in more detail during the coming week.

statistics

Customer satisfaction results for hardware

Roy Morgan research shows new leaders

Female consumers at hardware stores have higher levels of satisfaction

The latest Roy Morgan customer satisfaction data (for February 2015) relating to hardware and auto parts indicates that last year's overall winners, True Value Hardware and Autobarn have been overtaken by rivals in recent months.

In hardware retail, less than one per cent separates the customer satisfaction ratings of Bunnings and Mitre 10 in February, while 2014 Hardware Store of the Year, True Value Hardware, is close behind in third place.

Repco is currently leading auto retail, scoring a customer satisfaction rating of just over 88%. Autobarn (winner of the 2014 Auto Store of the Year) is in second position with 87%, just ahead of Supercheap Auto. 

Customer satisfaction February 2015: Hardware and auto stores

>https://farm6.staticflickr.com/5450/16585940164_5d3db95468_n.jpg}Customer satisfaction result for hardware stores, February 2015}http://www.roymorgan.com/findings/6179-new-customer-satisfaction-leaders-hardware-auto-201504170227

Source: Roy Morgan Single Source (Australia), March 2014-February 2015 (n=15,990).Base: Australians 14+

Although a greater proportion of men than women shop at the hardware stores measured in the Customer Satisfaction Awards, women are consistently more likely to be satisfied customers. This gender difference is especially evident in the satisfaction levels for True Value Hardware (91% of women vs 86% of men) and Masters (90% of women vs 82% of men).

A higher proportion of men also shop at auto stores and, in the case of Repco and Autobarn, are considerably more likely than female customers to be satisfied with the service they receive. However, the opposite is true for Supercheap Auto, which achieved a 90% satisfaction rating among its female shoppers (compared with 85% of men).

Michele Levine, CEO, Roy Morgan Research, said:

There's never a dull moment when it comes to customer satisfaction ratings for our retail categories - auto retailers and hardware stores...While both categories had very convincing overall winners last year, the playing field has shifted since then, with new leaders emerging in the first couple of months of 2015.
While men account for the majority of customers at hardware stores and auto retailers alike, they are not necessarily more satisfied than women. In fact, the hardware chains appear to be doing a particularly good job of keeping their female shoppers happy, as does Supercheap Auto.
Despite the almost photo-finish between Bunnings and close contender Mitre 10, their satisfaction ratings vary subtly among different generations of customers. Bunnings does best with pre-boomers and generations Y and Z, while Mitre 10 has the advantage with baby boomers and generation X shoppers.
Updated every month with data from our comprehensive Single Source survey (the largest of its kind in the world), our customer satisfaction ratings provide a regular reminder that shoppers appreciate, remember and reward good customer service.
statistics

HNN Index for 10 April 2015

Home improvement outscores ASX 200

Retail stocks have a good week on the markets

The HNN Home Improvement Index managed to marginally outperform the ASX 200 during the week of 6 April to 10 April 2015. The index rose by 17 points to 1036.47, while the ASX 200 rose by 13 points on the adjusted score, and in its original form by 70 points to 5968.4.

Adelaide Brighton

Adelaide Brighton CEO predicts slowing sales in SA

Adelaide Brighton chief executive Martin Brydon has indicated he expects sales of pre-mixed concrete may fall by as much as 6% in South Australia for the 2015/16 financial year. However, he also believes residential housing will remain strong, securing much of the company's revenue in that state.

Housing boom misses SA: Australian Financial Review

Breville Group

New CEO appointed

Breville has appointed a new CEO. HIs name is Jim Clayton and he will assume the post on 1 July 2015. Trained as a lawyer at the University of Texas, his background includes management consultants McKinsey, private equity firm Symphony and LG Electronics. His salary is reported to be $800,000 a year, plus incentives.

Breville's new CEO: Appliance Retailer Breville's new CEO and the Internet of Things: BRW

DuluxGroup

DuluxGroup faces $NZ15.2m provision in tax case

New Zealand's Internal Revenue Department and DuluxGroup have settled a tax dispute, with DuluxGroup taking a $NZ15.2 million provision. The dispute involved the use of convertible notes by DuluxGroup subsidiary Alesco NZ. New Zealand courts quashed an appeal by DuluxGroup and declared that the principal use of the notes had been to evade paying taxes. Other Australian companies, including Qantas and Telstra will face similar charges.

Downer EDI

Downer EDI refreshes branding

The contracting company is to no longer use its familiar tyre-tread logo. Instead it has an abstract logo in blue, white and green. This is accompanied by the slogan: "Relationships creating success". The rebranding is seen as a part of the company's repositioning as a problem solver for its customers.

Downer EDI gets a makeover - Fairfax Media

A video about the new brand:

Link to YouTube video

Fletcher Building

Fletcher shares may be re-rated due to $A exposure

The strength of the New Zealand dollar versus the Australian dollar could see several New Zealand companies receive downgrades, including Fletcher Building. The company is also suffering from downturns in mining and infrastructure spending.

Fletcher re-rating: Otago Daily Times

Leighton Holdings

Leighton awarded $160m contract

The company has won a contract to extend the Mitchell Freeway in Perth, Western Australia by six kilometres. Design of the extension will begin in April 2015, and construction will commence in mid-2015.

WA contract win: Perth Now

Leighton wins contract in Qatar

A Leighton subsidiary has secured a US$608 million contract to build five water reservoirs in Qatar. The reservoirs will be the largest of their kind in the world, each holding 100 million gallons of water.

Leighton wins Qatar contract: Commonwealth Bank MyWealth

Lend Lease Group

Lend Lease reaches settlement over botched job in US

Lend Lease has agreed to a US$50 million settlement with the Lower Manhattan Development Corporation. The settlement relates to a civil dispute over the demolition of the Deutsche Bank building, near Ground Zero in Manhattan. The original contract was for US$82 million, but blew out to US$266 million.

Myer Holdings

Speculation about takeover spikes up stock

Speculation that the Solomon Lew-owned Premier Investments might seek to acquire a controlling interest in Myer sent shares in the troubled department store retailer higher. Private equity house Archer Capital is thought to also be considering a takeover bid. Analysts do not believe Premier would benefit from such a takeover.

Myer shares surge: Courier Mail

Wesfarmers

Wesfarmers' Coles to pay $2.5 million fine

Wesfarmers will pay a $2.5 million fine after its supermarket division, Coles, falsely advertised that it had freshly baked bread that had in fact been "par-baked" some months previously. A spokesperson for Wesfarmers claimed the deception was not deliberate, but the result of poor communication.

False fresh bread claim: The Australian

Woolworths

Woolworths to sell 10 petrol stations

Woolworths will sell and then lease back 10 petrol stations located in New South Wales and Queensland. The goal is to free up funds invested in the properties to fund development elsewhere in Woolworths.

Woolworths sells 10 petrol stations: Sydney Morning Herald
statistics

Home building drives construction growth

Apartment sector continues to grow

However engineering construction activity contracted further in March

Australia's economic shift away from mining to housing gathered momentum in March as detached home construction and apartment building expanded strongly over the month, according to the Australian Industry Group-Housing Industry Association Australian Performance of Construction Index.

The AIG-HIA Performance of Construction Index jumped 6.2 points in March to just scrape back into expansionary territory at 50.1. The 50-point level separates expansion from contraction. It is the first time since October last year that it has been in the black.

A 10.4-point surge in house building to 55.8 led the improvement. This represents a return to growth after three months of contracting. The apartment sector (led by Sydney, Melbourne and Brisbane) kept growing solidly at 54.9. This is the healthiest pace of expansion in four months. The Australian Industry Group's head of policy Peter Burn said:

Renewed strength in house and apartment building drove the Australian construction industry back into growth territory in March.

A rise in new orders in house building (work in the pipeline) also returned to growth in March (up 8.2 points to 50.6 points) after declining over the previous four months. The report said that "growth in house building sector is likely to be sustained in coming months".

Apartment new orders also strengthened with the sub-index rising by 4.7 points to 52.4 points, its first increase in six months.

In contrast, engineering construction, much of it mining-related, slid again to a 10-month low of 41.2.

Commercial construction also declined, but at a slower pace than in February, rising 5.2 points to 47. Burn said:

The lift in these residential construction sub-sectors from already healthy levels more than compensated for a steeper fall in engineering construction in line with the retreat from investment in mining-related projects and further weakness in commercial construction.
While new orders for residential construction look positive for the near term, the time is now ripe for higher levels of investment in commercial construction and particularly in infrastructure.

The new orders sub-index rose 12.1 points to 50.8, the first time this critical bellwether of future activity has been positive in five months.

statistics

ABS housing statistics to Jan 2015

Capacity of approvals as predictor muted

The housing market seems to be entering a period of uncertainty

One of the things that can seem vaguely worrying in statistics is when measures that really shouldn't normally be synchronised are synchronised.

That is the chief difficulty with this month's housing graph. The grey line, the number of building approvals, should be predictive and therefore out of phase with the other two lines, which measure the state of the current market.

For example, if you look at the numbers for year ending 2011, the change in numbers of dwellings and value of dwellings are both negative, while building approvals are over 15% positive.

In the numbers for year ending 2012, the numbers and value are positive, as predicted, while the building approvals are back in the negative, predicting the flat results for 2013.

As the chart shows, for the last three years the January year to date lines have been closely tracking each other. That could indicate that the building market is finding it difficult to predict what is going to happen next, and is drifting along, responding on the basis of a shorter timeframe.

Just to add to the cheerful news, there is this graph from Business Insider, originally composed by Fitch:

>http://edge.alluremedia.com.au/uploads/businessinsider/2015/02/Fitch-Global-House-prices.jpg}Graph of international nominal house prices}http://edge.alluremedia.com.au/uploads/businessinsider/2015/02/Fitch-Global-House-prices.jpg

You can read some commentary on the Business Insider pages:

This chart shows how ridiculous Australian house prices are.

"Spooky" is not actually a recognised statistical term, but it seems the most appropriate one to apply.

statistics

HNN Index for 20 March 2015

Home improvement stocks lagging ASX 200

Myer implodes, Metcash recovers some ground

The HNN Home Improvement Index recovered from a dip over the past two weeks, but did not return to its previous high from 20 February. On 20 March 2015 it stood at 1023.81 points, up 13.09 points on the previous week.

In contrast, the underlying ASX 200 index climbed from 5814 points to 5975 points, or 1081 points to 1112 points on the comparative scale to the HNN Index.

Myer Holdings was the worst performing stock, losing 14% of its value through the week. Metcash recovered nearly 8% of its value.

Market events

The following companies reported news of significance during the indexed period.

Boral

Share buyback

Boral plans to buy back around $236 million of shares over the next 12 months. The company is in a position to make the buyback after the conclusion of a number of positive deals, including a joint venture with CSR to make bricks.

Boral in The Australian

Leighton Holdings

Name change?

As Leighton finds itself embroiled in a number of corruption scandals, it may be planning on a name change. Leighton Holdings lodged an application to trademark "Cimic" with IP Australia, the government agency that administers intellectual property rights, on March 3. It filed a similar application to trademark "Pacific Construction Contractors" and "PCC" on March 12.

Leighton in Fairfax Media

Lend Lease

Malaysian joint venture

Lend Lease has entered into a joint venture with the Malaysian government body 1MDB. The venture will be involved in the development of The Lifestyle Quarter at TRX in Kuala Lumpur. The development is estimated to be worth $2.8 million.

Lend Lease will be responsible for 60%, while 1MDB will carry the remaining 40%. 1MDB is thought to be under financial pressure, with it coming close to not paying an important loan payment.

Lend Lease in The Australian

Myer Holdings

First half 2014/15 results

Myer reported a poor result for the first half of 2014/15. Earnings before interest and tax (EBIT) fell by 20.8%, coming in at $100.2 million. Net profit after tax (NPAT) fell by 23.1% to $88.8 million. The company also reduced its future earnings projection, giving guidance for second half NPAT of between $13 million and $18 million, as contrasted with $17.5 million for the previous corresponding period. A key factor in this decrease is an expected increase in costs during the period.

The company's newly appointed chief executive, Richard Umbers stated that:

We acknowledge that in recent years, cost growth has outpaced sales growth, and profits have declined. At a macro level, the challenges are well known, particularly the globalisation of retail which has brought new competitors to our shores.
Digitisation has both empowered the consumer and created new channels to market. Customers have changed the way they shop and their expectations of retailers have changed significantly.
Some elements of the existing strategy represent solid retail fundamentals. However, overall it did not deliver a business model able to respond to this new retail environment and we have lost relevance with some customers.
There is strong evidence that department stores can transform and be inspirational to customers. Our international peers have responded to disruption by leading in omni-channel, by reinventing the in-store experience, overhauling the range, and by differentiating through innovation.
Our new strategy to bring the love of shopping to life will be guided by a clear vision and a plan to win back marketshare, to respond faster to change and deliver a sustainable recovery in earnings.
An extensive customer research project using internal and external data sources has delivered a detailed analysis of the current and future Myer customer, and the merchandise and services they want to enrich their lifestyle.

The company's share price fell from a high of $1.90 in early March, to $1.35 on 20 March 2015. This has raised speculation that the company may well be a takeover target.

Myer Holdings results

Pact Group

Digital printing for packaging

Pact Group has installed and commissioned a new digital printing platform. The company says that the direct-to-container process is more efficient and flexible than traditional off-set and in-mould label methods. It is particularly useful in short-run promotional packaging runs.

Plastic News

Wesfarmers

Target moves out of pricey St Kilda digs

Wesfarmers' underperforming sub-department store Target has moved out of expensive office space in Melbourne's St Kilda. Some jobs have moved to Geelong, and others will be serviced by a hot desking space above the retailer's Bourke Street store in the Melbourne's CBD. The move could save Wesfarmers as much as $1.2 million a year.

Target in Fairfax Media

Westfield

Free WiFi offers two-way information flow

A deal with Optus will see customers at Westfield shopping malls able to download one gigabyte of data each day through provision by the listed technology company SkyFii.

As part of the service, SkyFii will be able to track the whereabouts of customers using the wireless network as they move through the shopping mall. SkyFii will also be able to serve personalised content to shoppers.

Westfield in Business Insider

Woolworths

Woolworths close to completing system-wide software upgrade

Woolworths will soon complete a $100 million upgrade to its merchandising software. Codename Project Galaxy, the upgrade will make it easier for the various branches of the company to consolidate orders. The new system from SAP will underpin Woolworths' customer relationship management, performance reporting, buying, and store-ordering processes.

Woolworths in Australian Financial Review
statistics

ABS hardware retail statistics January 2015

WA, TAS and NSW post large gains

Most states and territories showed gains for December 2014 over December 2013

According to figures from the Australian Bureau of Statistics (ABS), hardware, building and garden supplies retailing, performed well during January 2015.

Comparing January 2015 with January 2014 figures, based on raw, non-adjusted data, sales revenue in Australia overall increased by 8.59%. On the same basis, South Australia showed a sharp rise of 20.75%, Queensland rose by 13.48%, and Western Australia was one per cent lower, at a 12.48% increase.

Victoria and the Australian Capital Territory came in around 7%, while New South Wales climbed by a little more than 4%. The only negative figure was for the Northern Territory, which fell by 16.35%.

The ABS reports that in terms of trend estimates:

The following industries rose in trend terms in January 2015: Household goods retailing (0.3%), food retailing (0.1%), clothing, footwear and personal accessory retailing (0.7%), cafes, restaurants and takeaway food services (0.3%) and department stores (0.5%). Other retailing (-0.2%) fell in trend terms in January 2015.

Online sales

According to the NAB's online retail sales index, online spending grew during January 2015. On a year-to-date basis an increase of 9% has been recorded, with sales totalling $16.6 billion.

Online sales now account for 6.9% of retail spending in Australia. While outpacing overall growth in offline retail sales, growth in online sales has slowed considerably over the past year.

statistics

Construction activity weakens again

However apartment boom drives approval rate

Detached housing and resource industry engineering projects had less demand

Australia's building sector shrank for the fourth month in a row even through the Reserve Bank cut the cash rate to a record low of 2.25%.

The Australian Industry Group-Housing Industry Association barometer showed that building activity levels fell two points to 43.9, which is well below the 50 level separating growth from decline as new orders fell.

Apartment building was strong, posting the best reading since November last year, but detached housing activity fell for the third straight month.

Engineering construction declined, with the worst reading in nine months as resource industry projects were scaled back, while commercial building activity also weakened. Ai Group director of policy Peter Burn said:

While house building is retreating from relatively healthy levels, it is no longer offsetting the well-entrenched decline in mining-related engineering construction activity.

Housing intentions

Approvals for the construction of new homes rose 7.9% in January, beating market expectations. They increased 9.1% in the 12 months to January, according to the Australian Bureau of Statistics.

The latest January figures show the number of apartment approvals jumped 19.6%, and was up nearly 24% over the past 12 months. In contrast, house approvals edged up 0.4%, with the number nearly 3% lower than it was a year ago.

Westpac senior economist Matthew Hassan said apartment projects in Queensland were a major factor driving the stronger-than-expected rise, with that state's unit approvals jumping 122%. He said:

The surprisingly strong January approvals number confirms the strong outlook for housing construction in 2015. However, the impact of lump projects on month-to-month readings and the added caveat of seasonality for the January month cautions against taking it as a sign that activity is ramping higher.

HIA economist Geordan Murray said the surge in multi-unit dwellings shows that housing preferences are changing in Sydney, Melbourne and Brisbane. He said:

January 2015 was only the second month on record when the total number of multi-unit dwellings approved eclipsed the number of detached houses approved.
These three states typically account for around 80% of all multi-unit residential building and when you have all three performing strongly, its a recipe for a strong national result in this segment of the market.
statistics

HNN Index 13 February 2015

Index slightly positive in strong market

Reporting season sees good results for Boral and others

The HNN Home Improvement Index ended the week up by 2.26 points at 1027.55. The underlying ASX 200 index climbed 57.3 points over the week to end at 5877.5.

The only exceptional stock was Leighton Holdings, which lost over 5% of its value during the week, most likely in reaction to a lower than expected forecast for its FY 2015 earnings.

As earnings season has commenced, a number of the index stocks reported their earnings this week. Several of these results are covered in more detail elsewhere on HNN.

Boral

FY 2014/15 first half results

Boral's results for the first half of its FY 2014/15 ending 31 December 2014 are what would be expected from a company that is a couple of years into a successful restructuring program. Revenue is down by 21% to $2.3 billion ($2.2 billion for continuing operations), but net profit after tax is at $105 million, up from a loss of $26 million for the previous corresponding period (pcp). Total earnings before income tax (EBIT) for the period is $167 million.

In its construction materials and cement division, revenue and EBIT both fell by 4% to $1.63 billion and $150 million respectively.

Building products, in contrast, recorded a 6% increase in revenue to $263 million, while EBIT grew to $14 million, from $5 million for the pcp.

Boral Gypsum saw its revenue climb by 19% to $638 million, with underlying EBIT lifting by 27% to $70 million. Boral put the increase down to strong housing markets in Australia, and increased growth through Asia due to better market penetration and price increases.

Boral USA continues to generate negative EBIT, but is losing less, reporting an EBIT loss of $8 million. Revenue of $396 million represented an 18% boost on the pcp.

Boral results presentation

BWP Trust

FY 2014/15 first half results

BWP Trust reported good results. Revenue increased by 19.1% over the previous corresponding period (pcp) to $71.2 million, while net profit after revaluations climbed to $117.3 million from $66.7 million for the pcp. Assets increased by $200 million, and gearing increased to 23.4%, up 3.6% on the pcp, as borrowings rose to $451.2 million from $327.7 for the pcp.

BWP reports a positive outlook for the upcoming half, with a total of six rent reviews for Bunnings operations yet to be resolved. The company reports a weighted average increase in past rent reviews of over 8%. It further reports there are nine Bunnings lease expiries occurring over the next three years.

>http://hnn.bz/bwpTrustGeo_crop.png}Rental income by state}http://hnn.bz/bwpTrustGeo.png

BWP results

Goodman Group

FY 2014/15 first half results

Goodman Group has reported an operating profit of $327 million for the first half of its FY 2014/15 ending 31 December 2014. This is a 10% increase on the profit for the previous corresponding period (pcp).

Earnings before income tax (EBIT) came in at $354 million, an 11% increase on the pcp. Some 49% of EBIT was contributed by development and management businesses. Investments made up the rest, with 33% coming from developments and 16% from management services. International operations remain important to the company, and contributed 54% of operating earnings during the half.

The company has maintained an upwardly revised forecast of 7% growth in earnings per share for the full FY 2014/15. The results report mentions that urban renewal activities are expected to provide ongoing profits.

Results announcement

Leighton Holdings

Full year 2014 results

Leighton Holdings announced results that came in at the upper end of market expectations. Revenue was about 1% down on FY2013 at $24 billion, but earnings before interest and tax (EBIT) came in at $1.4 billion for FY 2014, up by 38% over FY 2013. Underlying net profit climbed 6% to $620.1 million. As Leighton has made asset divestments, it returned $973 million in pre-tax profit.

The company has made a provision of $675 million for problem projects which have a reduced certainty of payment.

Leighton's forecast for FY 2015 is for net profit after tax of between $450 million and $520 million, slightly under analyst predictions.

Leighton Holdings results announcement

Stockland Corp. Ltd

FY 2014/15 first half results

Stockland has reported positive results for the first half of its FY2014/15 which ended on 31 December 2014. Net profit was $462 million, up 55% on the previous corresponding period (pcp). Underlying profit increased by 8.5% over the pcp.

The company said this was driven by a 73% increase in earnings form its residential division. It reported 2747 lots were settled during the half, up 21.9% based on the pcp. Revenue increased by 27.1% to $562 million. Return on assets for its core projects came in at 14.8%, up from 9.8% for the pcp.

The company said its market consisted of 45% first home buyers, 20% investors, and 35% people moving from a previously owned home.

For its commercial property division, net operating income compared to the pcp, saw retail fall by 0.1%, logistics and business parks rise by 21.9% and office fall by 13.3%.

Return on assets in this division was 8.4% for the half, compared to 8.5% for the pcp. The company commented that:

Our retail mix, underpinned by supermarkets, mini majors and speciality food and retail services, is proving to be resilient to online leakage.

The company called out the performance of the Kmart store in its Stockland Hervey Bay shopping centre, saying:

The recently opened redevelopment of Stockland Hervey Bay was well received with the new Kmart achieving record sales for a regional store opening.

>http://hnn.bz/stocklandAssetMix.png}Asset mix}http://hnn.bz/stocklandAssetMix.png

Stockland results
statistics

Home builders remain pessimistic

Despite record construction activity

Latest AIG/HIA Index shows the industry is contracting notwithstanding housing approvals

Private research indicates Australia's construction sector continued to shrink in January, even though there are continuing record levels of home building.

The Australian Industry Group/Housing Industry Association Performance of Construction Index improved by 1.5 points to 45.9 during the month. But it is the third straight month the index has been below 50, indicating the sector is contracting.

All sub-sectors declined in the index, but surprisingly house and apartment building scored worst. House construction fell 5.4 points to 40.0 while apartment building dipped 1.4 points to 42.3.

That is at odds with the latest data showing a record number of homes were approved for construction in November, backed up by another strong month in December.

HIA chief economist Harley Dale admitted it is puzzling that the index does not fit in better with the picture being painted by approvals. He said:

We had extremely healthy readings for house building and apartment building through most of 2014 before they fell away a bit at the end of the year and...we've seen that continue into January. I actually expect that we'll see a return to expansion quite quickly.

Dale said the latest index may reflect the fact that home builders expected the market to peak, something which may no longer hold after the Reserve Bank's most recent rate cut. He said:

It may also partly reflect the dynamics of the residential construction industry this cycle. Even allowing for some seasonal adjustment, we do know that January's not a crash hot month for residential construction and we are in an environment in this up cycle where margins are under incredible pressure.

Engineering construction, which has been held back by the slowdown in the mining sector, remained in negative territory for a seventh straight month at 44.7.

Commercial builders came the closest to expanding, rising 7.4 points to 49.

statistics

Building approvals rebound

Apartments driving latest boost to approvals

HIA believes a minimum of 180,000 new dwelling commencements a year are needed

Home building approvals have bounced back in October following September's disappointing result, according to recently released figures by the Australian Bureau of Statistics.

Approvals for the construction of new homes increased 11.4% over the month, after plummeting 11% in September. The result was buoyed by other dwellings - mainly apartments, flats and townhouses - which rose 31.3% in October. Private sector house approvals fell slightly by 0.2% over the month.

In the year to October 2014, there were a total of 197,530 new dwelling approvals, 14.8% higher than the previous twelve-month period. Shane Garrett, senior economist at the Housing Industry Association said:

[These] strong figures show that the home building recovery has still not run its course. However, the large changes in activity over recent months are largely due to significant swings in medium and high-density approvals. Volatility of this nature makes month-to month changes a bit more difficult to interpret.

Garret believes it is critical that this momentum continues. He said:

Australia needs to build a minimum of 180,000 new dwelling commencements per year over the long term. We are only barely scratching this figure now. It is very important that all supply constraints are addressed to ensure a level of commencements in excess of 180,000 being the benchmark, not a cyclical peak.

JP Morgan economist Tom Kennedy said the figures were very strong, but expects they will stabilise over the long term. He said:

When you look into the data, the multi-storey buildings like apartment blocks, that's where all the strength and weakness has been over the past few months.
The number of single family dwelling units is still tracing close to all time highs, although it has cooled a little bit in the past few months, so it's nothing to get too alarmed about. We're really trying to look through the volatility of the past few months.

The supply of housing will continue to rise, which will slow house price rises, St George senior economist Hans Kunnen said.

The basic story is that building approvals are well above their 10 year average, that tells us that construction work going into 2015 will remain firm. It adds to the supply of housing so for those who are worried about house prices, it is helpful.
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Renovation activity on the rise

Renovators pick up their tools after four-year decline

Home improvement enthusiasts motivated by comfort, not profit

After entering a period of steady decline in 2010, renovation activity in Australia edged into recovery mode in fiscal 2014.

Statistics compiled by Roy Morgan Research indicate that 30.5% of Aussies undertook home improvement projects in fiscal 2014, compared with 33.4% in 2010. While the rate has declined over the four-year period, the 2014 result is healthier than the 30% reported in 2013.

The Roy Morgan data measures both homeowners' intentions to renovate and actual works undertaken. Across the three categories of renovations (minor repairs, painting and redecoration), the intent to undertake home improvements has steadily declined since 2010.

However, in 2014, Australian homeowners appeared to overcome their reported lack of intent. In the refurbishment and minor repairs categories, renovation activity exceeded respondents' reported intentions.

Painting was the only category where aspiring renovators failed to meet their own home improvement goals, with a slight gap between intentions and actual painting activity. Consistent with the other signs of improvement in the renovation trends, this gap was smaller than the almost 2% gap reported in 2013.

It appears that even in the most unpopular renovation category (in terms of homeowners' intentions), the overall trend is positive.

According to Roy Morgan's Nathan Morris, the measurement of renovation aspirations and activity is valuable to mortgage providers and businesses in the hardware and home improvement industries.

Being able to pinpoint these people on a map (and instantly gauge their behaviours, values and media consumption habits) can give businesses ranging from hardware and home furnishings stores to mortgage providers, real estate chains and home builders unprecedented access to their most likely and most valuable target market.

Renovation ROI

The upwards trend in renovation activity is not necessarily a precursor of a boom in real estate values.

According to an analysis by British mortgage provider Zopa, 82% of renovators do not intend to sell their newly-refurbished homes. Rather, the home improvement is motivated by a desire to create a more comfortable home environment.

This theory is supported by the popularity of kitchen renovations. Kitchen refurbishments are the most popular renovation activity, accounting for 30% of home improvements. However, kitchen projects achieve a return on investment (ROI) of just 49%.

Bathroom renovations are the least financially rewarding undertakings, with an average ROI of 48%, while a garden overhaul has the potential to achieve a ROI of 88%.

While additional capital does not seem to be a common motivating factor, Zopa statistics do indicate that renovations add an average of 10% to a home's value.

Renovation activity, when motivated by aspirations of comfort and luxury, appears to be a boon for consumer satisfaction and, in some cases, real estate values. If the trends are effectively identified and commercially harnessed, the tentative upswing could also benefit the home improvement industry.

Story by Robyn Williams

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Construction growth is easing

The rate of expansion has slowed down

A slowdown in commercial construction and downturn in high density dwellings are to blame

Despite easing back from record highs during October, the construction sector in Australia continues to expand, helping to rebalance the economy away from mining.

The Australian Industry Group/Housing Industry Association's Performance of Construction (PCI) index fell by a seasonally adjusted 5.7 points to 53.4 in October.

It was the fifth straight month that the reading remained above 50, however, the level that separates expansion from decline.

Residential construction remained strong with apartment building expanding and house building described as "robust".

In contrast, commercial construction grew at a slower rate, while engineering construction activity contracted for a fourth consecutive month. HIA chief economist, Harley Dale said:

Three of the four construction sectors - engineering being the predictable exception - registered expansionary readings. It seems the case, however, that the activity and new orders indices for both detached houses and apartments are consistent with the maintenance of elevated levels of residential building approvals, rather than further growth.

New home approvals decline

The number of new homes approved for construction has experienced a sharp downturn. Official figures showed building approvals fell 11% in September, much worse than the 1% fall economists had been expecting.

But economists said the fall in home building - seen as a key driver for the economy as the mining boom winds down - came from the high-density dwelling category, which is typically volatile and not as important to the economy as stand-alone houses. JP Morgan economist, Tom Kennedy said:

It's a lot weaker than we had expected but if you're looking for the good news, it's that the bulk of the weakness was in the high-density component. We think it's more or less an aberration and we think we'll see it bounce back in the next few months. It's not a good number but it's probably not as alarming as the headline would suggest.

Local councils approved the construction of 15,004 new homes in September, according to the Australian Bureau of Statistics. Approvals for private sector houses fell 2.3% in the month, and the "other dwellings" category, which includes apartment blocks and townhouses, was down 21.9%.

CommSec chief economist Craig James believes the housing market is stabilising after a series of strong results. He said:

Approvals have flattened out at these sorts of levels and they're relatively high levels. We're not seeing any signs of oversupply, which would be the case if approvals kept on going up.
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New homes boost construction sector

It expanded for the fourth month running in September

Home and apartment building led the way, signalling the industry's strongest growth in nine years

The Ai Group (AiG) performance of construction index rose to 59.1 points in September, up 4.1 points from 55.0 in August.

House building was the strongest performing sector with its rate of growth at 61.7 points lifting to its highest level so far in 2014. The apartment building market showed continued strength at 60.5 points while growth in commercial construction also picked up in September.

The main factors influencing activity were a lack of public sector tenders and a decline in mining-related engineering construction activity, according to AiG. This led to a continued contraction of the engineering construction sector.

Housing Industry Association chief economist Harley Dale said residential construction should further strengthen for the remainder of the 2014/15 financial year. He said:

The commercial construction sector finally appears to be following the lead of new residential construction.

Dr Dale said an increase in the supply of housing might keep a lid on housing prices which have been driven higher by an influx of investors buying existing homes. He said:

It will be important for the broader economy that evidence of strong performance in residential and improving performance in commercial construction presents itself throughout 2014 and into next year.
The current elevated focus and uncertainty around the potential implementation of restrictive lending practices, and sweeping generalisations on this subject, are not helpful.

In September, Reserve Bank of Australia governor Glenn Stevens raised the possibility of changing regulations to curb risky lending to property investors, which could pose a threat to banking stability and the economy.

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Residential housing outlook

An additional 180,000 new houses forecast in 2015

However this is may not be enough to satisfy Australia's housing supply shortage

The Australian Residential Development Outlook revealed there is likely to be 30,000 more new houses constructed in 2015 than previously forecasted, but activity still stops short of what is needed. Residential Development Council (RDC) executive director, Nick Proud said:

The good news is that the forecasts for 2015 show residential development reaching 180,000 new starts, which adds tens of thousands of homes for Australian families than on previous years.
On average, Australia builds 150,000 homes each year, but this is simply not enough to meet demand, let alone reduce the housing shortage. These increased construction rates are expected to continue for the next 12-18 months - but the challenge is to keep up this level of activity to meet undersupply.

Tim Lawless is national research director at RP Data - who collaborated with the RDC to produce the findings. Although the increased demand for housing credit and lending finance will feed into construction activity, he is still remaining cautious. He said:

Factors such as rising unemployment rates and falling terms of trade could lead to a drop off in the number of new starts from 2016 and this would not only worsen housing affordability, but put greater pressure on state budgets around the country.

Proud said the residential construction sector will need the support of the government if it has any chance of easing Australia's housing shortage.

Removing policy roadblocks, like planning systems delays and stamp duty costs, are essential to maintaining higher construction rates, offsetting changes to outlook indicators and improving affordable building into the longer term.
State governments need to drive policy changes that will support the residential development industry, which in turn supports their budgets.
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Units behind record dwelling approvals

But not all of them will ultimately be constructed

A key driver of the overall increase in dwelling approvals has been the apartment market

A strong pipeline of residential development remains in place, based on building approvals data for July 2014 released by the Australian Bureau of Statistics (ABS).

In terms of dwelling approvals nationally, there were 9,585 house approvals and 6,733 unit approvals over the month since June. The number of dwelling approvals increased by 2.5% over the month with house approvals up 1.5% and unit approvals up 4.0%.

Although dwelling approvals have increased over the month, they were -7.8% lower in July than the most recent peak in January 2014 when there were 17,698 dwelling approvals. Although dwelling approvals increased over the month, they have fallen for eight of the past 12 months.

Monthly dwelling approvals data tends to be volatile so it is useful to look at annualised data to see a trend. Over the 12 months to July 2014, there were 195,227 dwelling approvals. This was an all-time high number of annual approvals.

Over the 12 months to July 2014, unit approvals accounted for 43.6% of all dwelling approvals, up from 42.1% a year earlier.

Around Australia

Across the combined capital cities, there were a record high of 145,065 dwellings approved for construction over the 12 months to July 2014. The number of capital city dwelling approvals has increased by 21.9% over the past year.

Over the year there were also 71,085 approvals for houses and 73,980 unit approvals. House approvals were up 20.8% and unit approvals 22.9% higher.

Across the individual capital cities, Brisbane has recorded the greatest increase in dwelling approvals over the year (44.5%) followed by: Sydney (29.0%), Perth (26.6%) and Adelaide (25.1%).

Dwelling approvals are lower over the year in Darwin (-14.5%) and Canberra (-7.6%) while Melbourne (10.9%) and Hobart (11.7%) have recorded only moderate rises in dwelling approvals.

Despite certain cities recording significant rises in dwelling approvals, Sydney and Melbourne have accounted for more than 57% of all capital city dwelling approvals over the past year.

Over the past year, the increase in unit approvals has been greater than the increase in house approvals in Sydney, Brisbane, Adelaide and Perth.

Although unit approvals have recorded greater increases in these cities, there has been a substantial decline in unit approvals across Hobart and falls in both Darwin and Canberra.

With more than half of all capital city dwelling approvals for units as opposed to houses, all individual capital cities except for Adelaide (31.1%), Perth (25.0%) and Hobart (9.0%) are seeing a majority of approvals for units.

In Sydney, 68.3% of dwelling approvals were for units over the past year, elsewhere 52.1% were for units in Melbourne, 56.0% in Brisbane, 62.0% in Darwin and 57.6% in Canberra.

Sydney has consistently approved more units than houses since 1993 and Darwin has consistently approved more units than houses since 2003, while across the other cities it is a relatively new phenomenon. Melbourne has only been approving more units than houses since mid-2012, in Brisbane it has occurred since mid-2013 and in Canberra since mid-2010.

The increasing levels of demand for units is obvious but particularly in Melbourne and Brisbane, the number of units in the pipeline is largely untested. Unless the introduction of supply is closely managed there is a potential risk of unit oversupply.

Dwellings completed

Construction work done data for the June quarter showed that residential construction accounted for 25.8% of total work done compared to 57.2% attributable to engineering.

At its peak, residential construction accounted for just over half of the value (50.2%) of all work done. Residential dwelling construction alone will not be able to offset the fall in mining investment.

Furthermore, it is unlikely that all of these approvals will come to fruition in the short-term. Unless there is ongoing demand a proportion of these new approvals won't commence as they won't get the necessary pre-sales to receive construction finance. In light of this, interest rates are likely to remain low to try and encourage further housing demand.

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MBA forecasts nation-wide renovations boom

In WA, renovation costs are set to soar

An increase in home buyer and investor confidence is behind the renovation boom

The Master Builders Association (MBA) recently forecast the home renovation market could grow as much as 27.1% in the next 12 months - a big jump on the 8.3% growth recorded over the past three years.

The MBA also anticipated a major jump in the value of renovation work from about $632 million to $804 million in 2014-15.

However West Australians face skyrocketing costs if they want to renovate their properties over the next three years. The predicted surge in home improvement projects, shortage of tradesmen and new energy efficiency regulations are tipped to blow out building budgets and construction time frames.

Master Builders WA communications and housing director Geoff Cooper said factors including low interest rates, WA's punitive stamp duty and ongoing population growth were to blame. He told the Perth Now website:

The expected pick-up in the alterations and additions sector is likely to lead to upward pressure on trades' rates and its also likely to push out construction times in WA. To add to this problem, we don't have enough apprentices and trainees entering the industry. We would like to see a lot more done to build a construction workforce.

Compounding the problem are the new energy efficiency regulations, which take effect May 1 next year. The legislation requires renovations to have a minimum 6-star energy efficiency. Cooper said:

This will attribute to some additional interest in renovations prior to that date.

Despite the price hike, the MBA foresees the renovations and alterations market in WA will have an annual growth of 18.6% over the next three years.

Renovations in Illawarra

In NSW, the industry is expecting an annual average growth of 19% through to 2017. MBA chief executive Wilhelm Harnisch said:

The robust outlook is in stark contrast to the languid performance experienced over the last three years, when it contracted by an average of 3.2% per annum. The strong growth in renovations will be a shot in the arm for builders across Australia and complement the solid pipeline of work indicated by the lift in new building activity.

MBA spokesman Ben Carter believes another reason behind the boom is the increase in residential building. He said:

People who previously built houses or who have bought houses are renovating those properties to invest in their investment, so to speak...The last few years, things have been in the doldrums in most states and therefore people weren't doing anything, so there's a bit of natural pent-up demand.

Belle Property agent Sam O'Halloran said Illawarra buyers were increasingly keeping an open mind about the property market. He told the Illawarra Mercury:

There has been an influx of people looking for properties that do need work, naturally because it is more affordable and they can then design it the way they want. Since there's not a whole lot of stock on the market, buyers aren't afraid to buy something that they can get their hands dirty on.

Home buyers were often keen to keep original features when renovating an older property to maintain the home's personality.

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Sharp rise for home building starts

ABS data indicates housing market continues to strengthen

It looks set to take over from mining investment as the main driver for economic growth in the coming year

According to Housing Industry Association (HIA) chief economist Harley Dale, new dwelling commencements rose by a strong 8.7% in the March 2014 quarter, including a 12.8% surge in detached houses. With the sole exception of South Australia, all states and territories experienced growth in the quarter.

Total dwelling commencements increased the most in the Australian Capital Territory (31.6%), followed by Victoria (15.4%), Western Australia (12.1%), the Northern Territory (5.9%), Tasmania (5.3%), New South Wales (2.5%) and Queensland (1.3%). South Australia saw dwelling commencements fall by 7.8%.

There was a rise of 0.8% in the value of larger alterations and additions in the March 2014 quarter. However, expenditure in this segment remains modest.

Dale observes that the annual level of new dwelling commencements at 176,891 is at its highest since late 2010 and is approaching historical peaks. He notes that the new home building segment seems to be performing better than the economy at the moment.

More importantly, the impact of new housing into parts of the retail, manufacturing, and supply sectors is providing an economic boost.

Consumer confidence, home sales

Consumers and businesses both believe the Australian economy is on the up as the housing market looks set to take the mantle of the mining industry by driving growth.

The latest weekly ANZ-Roy Morgan survey shows consumer confidence levels have completely recovered from the sharp drop that began in April in the buildup to cuts outlined in the federal budget.

New home sales rose 1.2% in June, seasonally adjusted. They were up 2% in the June quarter, according to the HIA.

CommSec economist Savanth Sebastian said economic growth was shifting from the mining boom states of Western Australia and Queensland to states where home construction is the strongest, such as New South Wales. He said:

It is very likely that home building and home renovations will be the linchpin of the Australian economy growth story over the coming year. While there are signs of a consolidation in housing activity, new home sales are up almost 14% on a year ago.

Dale said new home sales were strong across Australia with four out of the five mainland states recording increases. He said:

The new home building sector will provide a healthy contribution to broader economic growth in 2014/15.

However, Dale said a lack of land on which to build apartment blocks could dampen growth in new home sales in the coming months. He said:

As the recovery enters its third year, the magnitude and duration of the current new home building upcycle is less certain. The share of medium- to high-density construction is higher and there are considerable delays occurring in the availability of titled land for detached and semi-detached housing.

Sales of flats, townhouses and semi-detached houses were up 15.9% in June while sales of new detached houses fell 1%.

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Construction getting stronger

The industry being driven by higher housing prices

Increased confidence in the labour market is also stimulating activity in the sector

The construction industry experienced its second consecutive month of growth. The Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (PCI) rose 0.8 points to 52.6 in July.

An index reading above 50 indicates activity in the sector is rising and the higher the reading, the greater the speed of the expansion.

Commercial construction reached its highest level in six and a half years. The commercial subsector had an index level of 61.2 points, up 11.4 points, followed by houses at 53.2 and then apartments at 51.9.

Ai Group director of public policy Peter Burn said both residential and commercial construction were building a head of steam. He said:

The overall construction sector remained in positive territory despite the ongoing slowdown in engineering construction as investment in mining-related projects fades. While house building has been strong for some time and apartment building is at healthy levels, the broadening of growth to include commercial construction is a welcome addition to the mix.

Housing Industry Association chief economist Harley Dale said a stronger construction sector is a tick in the box for the overall economy. He said:

Labour market outcomes, as well as economic growth will be assisted in 2014-15 by Australia's construction industry, led by what is already a strong recovery in new home building activity.

Dr Dale said the PCI data shows that building approvals may have peaked but should remain at historically high levels for a while yet. Engineering was the only sub-sector to post a fall in construction activity in the July.

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Home loans take the shine off housing boom

Recent figures indicate property market is cooling off

However housing remains a shining light of the economy, according to Commsec

Australian Bureau of Statistics figures show that the number of home loan approvals was steady in May, better than the 0.5% fall economists were expecting.

The figures were another sign that the housing market was taking a break after a year of strong growth, said ANZ head of Australian economics, Justin Fabo. He said:

Housing finance has flattened out at a pretty high level. It's risen substantially and now, along with building approvals, it's just taking a bit of a pause. The level of activity - approvals, auction clearance rates - they're all still at pretty high levels relative to recent years so it's still strong, it's just not getting stronger.

CommSec economist Savanth Sebastian said it was a welcome development that "some of the froth" had been removed from the housing market.

But despite cooling down, housing was still taking the baton from mining as the big driver of growth in the economy. Record high building approvals earlier in the year meant an "avalanche" of home construction was set to take place over the next 12 months. He said:

The housing boom is cooling off but it's still going to remain relatively strong. It's going to be the big driver of growth for the Australian economy - it's supporting employment and it's supporting retail, particularly furniture and floor covering. It's really taken that baton from mining.

The share of first-home buyer loans had also lifted from record lows in April, according to Sebastian.

JP Morgan economist Ben Jarman said the value of new loan commitments to property investors fell, possibly due to the dip in house prices in May. But that could be temporary, given prices bounced back in July. He said:

Loans to investors are still very elevated in value terms, so the debate around first-home buyers being priced out will continue. But, for monetary policy at least, investor lending appears less of a threat to the RBA's easy stance than earlier in the year.
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Home loan data shows market is cooling

Consumer caution ahead of the May budget had an impact

High home prices also appeared to have weighed on housing market sentiment in April

The latest home loan figures indicate that Australia's housing boom appears to be cooling.

The number of home loans approved was flat in April, shy of the 0.2% rise the market had expected, based on recent figures from the Australian Bureau of Statistics. The value of total housing finance rose 1.7% in April, seasonally adjusted, to $27.89 billion, the ABS said.

The figures confirmed that the property boom seen in the second half of 2013 was slowing down, said JP Morgan economist Tom Kennedy.

We've seen building approvals, house prices, auction clearance rates and now loan data all signalling that things are moderating a bit and suggesting that things have softened from very quick growth rates.

CommSec chief economist Craig James said it was encouraging that growth in the housing market had slowed.

What we're seeing in terms of the housing market is consistent with the home price data - the higher prices are causing people to become a little more circumspect. It does look as if we're slowing to a more sustainable pace.

While the value of investor home loans rose 2.3% to a record $11 billion in April, the share of first-home buyers in the market fell to 12.3%, back to the record low set in November, said James.

ANZ researchers David Cannington and Paul Braddick said the housing market was being dominated by investors and upgraders/downsizers.

The sharp decline in consumer confidence since April, when the federal government began releasing details of spending cuts in its May budget, had weighed on housing market sentiment, they said.

Consumer confidence has weakened sharply in the past month, reflecting the sensitivity of sentiment to budget measures, presenting a softer outlook for house price growth, home sales and housing finance going forward.
Nonetheless, strong population gains and pent-up home buyer demand, combined with expectations of low interest rates for an extended period of time will go some way to offsetting the negative impact of weaker market sentiment.
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Slowdown in construction

Despite improvements in house and apartment building

Growth in house and apartment building compensates for the fall in construction activity

The overall performance of the construction sector slipped again in April, based on the latest Australian Industry Group/Housing Industry Association Australian Performance of Construction Index (PCI). It contracted at 45.9, a decrease of 0.3 points (readings below 50 indicate a decline in activity).

However house building rose 3.8 points to 54.6 and apartment building improved by 12.3 points to reach 57.9.

Commercial construction fell by 10.8 points to 45.7, with patchy economic conditions affecting major commercial activity. Engineering also fell by 6.3 points to 39.2. The new-orders sub index, which is an indicator of future activity, decreased by 1.7 points to 46.6.

Peter Burn, Australian Industry Group director - public policy says:

The deepening slide in engineering construction is overshadowing the growth in residential building activity and the tentative recovery of commercial construction as seen in the expansion in April of new commercial construction orders.

Diwa Hopkins, Housing Industry Association economist, adds:

The continuing success story of the Australian PCI in 2014 is house building, with the segment expanding for eight consecutive months. Acceleration in the rate of expansion during April also provides cause for further optimism. It is also encouraging to see that after experiencing three consecutive months of contraction, the apartment building sub-index has returned to expansionary territory in April.
The residential construction sector has a large reach into the broader domestic economy and it will become increasingly important in 2014...
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More lady tradies required

The blue-collar glass ceiling is breaking

This glass ceiling is coming under increasing pressure as more women enter the trades

There has been growing support for women to have the opportunity to pursue a trade career over the past five years. This will eventually influence the type of tradies making purchases at hardware stores.

Last February, Minister for Women Pru Goward announced a $200,000 boost in NSW to assist women in entering ''non-traditional'' roles. Goward said:

We want the best ideas from local government, community organisations and industry bodies to work with the NSW government to increase women in non-traditional occupations.
We are encouraging projects which support women into non-traditional occupations - trades with 25% or less participation of women, such as electricians, cabinet makers and motor mechanics.

Newcastle support group Lady Tradies is one of many incentives benefiting from the state-funded scheme. Founder Wendy Pinch believes it's imperative to provide support and initiative for women to pursue careers of their choice. Pinch told The Herald:

It can be very intimidating and very daunting to be on that very male-dominated industrial site when you're a girl. You've got to have a backbone to work in that industry and you've got to have thick skin and the guys, if they've been brought up right, treat the girls the way they should be treated - as any other employee. But there is still that sexism that goes on.

Twenty-something budding electrician Ella Hepplewhite believes women have a lot to offer on a job site. She says that female tradespeople bring a concentration and a multitasking ability that can make the job flow a lot more smoothly. She explains:

I feel like we have so much to give, we do have a lot of qualities men don't have. Between working full-time jobs and balancing kids, we can multitask, we have an eye for detail, and we don't miss the stuff that guys might, whereas guys might be more one-track minded.

Pinch says one of the main reasons she decided to establish Lady Tradies was because she wanted to provide a better opportunity for female tradespeople such as Hepplewhite. She says:

I was renovating my house at the time and I was just getting fed up with male tradies. They wouldn't turn up on time, they wouldn't return your phone call, they'd talk down to you and I thought other people must be as frustrated with tradies as I am - and they are!
So a couple of times I asked people, 'were there any girls in your course when you were an apprentice?' or, 'do you know any of any female electricians?' and people were saying 'yes'. I was starting to think, well how do you find these girls? If I wanted to employ a female tradie, how do I find her?

With the number of women in vocational training rising 80% since 2008 and the number of women taking part in government-subsidised vocational training almost doubling from 139,800 in 2008 to 251,900 in 2012, it's unsurprising that Lady Tradies received so much attention from female tradespeople seeking work.

Lady Tradies has more than 1500 likes on Facebook and a website in the making, which Pinch says will provide an opportunity for female tradespeople such as Hepplewhite to upload a resume, providing a direct connection for the consumer to find the right tradesperson for the job.

Pinch says female tradespeople are increasingly in demand despite the blue-collar glass ceiling they can face. She says:

People are renovating their homes and more often than not, it's a woman who's at home waiting for the tradie to turn up. She's deciding on colour schemes, she gets a big say these days in the way a house is built or renovated...She wants to deal with someone who can see her perspective better. And we bring that perspective to the industry.

Pinch believes a sexist attitude permeating the trades is what holds back female tradespeople such as Hepplewhite. Pinch says she knows female tradespeople who changed their name to a generic male name on their resume just to get to the interview stage.

Russell Holtham, the national head of apprentices at the Housing Industry Association, agrees that it's ''ignorance more than anything else'' that holds women back in the trades. He says:

The percentage of female applications to male for a position we have would be less than 1%. But at the end of the day, when you're hiring an apprentice if they've got the right attitude and want to be there then it doesn't matter if they're a male or female.

A survey conducted by the Institute of Automotive Mechanical Engineers found that a lack of female toilets was among the top concern for why workshops would not employ or train females, along with maternity leave fears and swearing concerns.

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Construction sector contracts

It decreased at a slower pace in March

There is a slight decline despite the positive signs in building approvals and loans

The construction sector contracted in March, but at a milder pace, according to the Australian Industry Group - Housing Industry Association's Performance of Construction Index (PCI). It was up two points to 46.2 but that is still below the 50-point level that separates expansion from contraction.

It is the third straight month that the index has been below 50, after the industry briefly lifted into expansion late last year.

The lack of strength in house and apartment building is disappointing given the positive leading indicators of rising building approvals and an increase in loans to finance new dwellings.

The mild weakness in construction is due to the engineering and apartment building sectors, which are both under 50 points. House building and commercial construction remain just over 50.

There were no large movements in March, with a 5.8 point rise to 45.5 the biggest shift in the engineering sector. Commercial construction activity declined 3.4 points, but remained positive at 56.5.

The HIA's chief economist Harley Dale is hopeful those positive signs will translate into improved activity this year. He says:

The detached house activity component remains expansionary, if only just, and 2014 should be a healthy year for new home building activity. What the sector and broader economy needs, however, is a sustained recovery in new home building commensurate with average construction levels being considerably higher over coming decades than those achieved over the past 20 years.

The Ai Group's director of public policy, Peter Burn is also hopeful of an increase in infrastructure development to offset a looming fall in mining engineering. He says:

As is the case with the broader economy, the rebalancing of the construction sector as mining-related activity slows still has a considerable way to go. The welcome development in the past couple of months comes from improvements in activity and new orders in commercial construction. If this can continue and recent momentum is maintained in the residential construction sectors, attention can turn to the remaining missing link - greater investment in non-mining related engineering construction.
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Housing finance on the rise

The increase is being driven by investors

Loans to investors increased but first home buyers continue to drop out of the market

The demand for home loans was stronger than expected in February, but the proportion of loans to first home buyers is at the second-lowest level on record, according to the Australian Bureau of Statistics.

The data showed the number of home loans granted in February rose by 2.3% to a seasonally adjusted 52,460. Economists surveyed by Bloomberg expected the number of housing finance commitments to lift by 1.5% in the month.

Total housing finance by value lifted by 2.9% in February, seasonally adjusted, to $27.644 billion. However loans to first home buyers, as a share of total of housing loans, fell to 12.5% - the second-lowest level since data commenced in 1991. The average loan size fell by 2.3% in February but is almost six per cent higher over the year.

The value of loans for investment housing rose by 4.4% in February to $10.737 billion, after falling by 3.3% in January. The value of loans for owner occupied housing lifted by 1.9% to $16.907 billion in February.

JPMorgan economist Ben Jarman said construction loans for investors were up 106% in the month - the biggest monthly rise since 2008. The amount of construction loans issued for investors had risen half a billion dollars to $1.01 billion. He said:

All the right sorts of things are happening when you look at building approvals and new homes. The Reserve Bank has been hoping activity in housing would transform into more home building and if you've got loans for investor construction jumping a lot, that's obviously a positive.

Commonwealth Bank senior economist John Peters said the figures are further confirmation that the recovery in housing construction is well underway. He said:

Lower interest rates are working. There is further evidence self-managed superannuation funds are certainly gearing into property at the moment. It also tells us something about first home buyers, they're finding it difficult to get into the market. There's a lot of caution, households are saving a lot more and they are very reticent about taking out new loans.

Peters said the housing sector looks like it will take over from mining investment as the main driver of growth for the Australian economy.

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Housing trends in Australia

More people are set to live in smaller dwellings

This will have an impact on the type of products being sold at home improvement stores

Queensland property commentator Michael Matusik writes that five years ago, the breakdown of housing types being built in Australia was a reflection of the Australian dream of a house and big back yard for the barbecue. Nearly three-quarters of what was produced back then were detached homes. Another 12% comprised townhouses or similar dwellings.

And of the balance - only 5% were low-rise units and flats and 10% were mid to high-rise apartments. Fast forward to today and a different trend is emerging.

There has been a rapid drop in new detached housing approval, now representing just over half of what is being built. Mid to high-rise apartment building, in contrast, has more than doubled to almost a quarter of new construction.

The levels of construction for townhouses and low-rise units and flats remain almost unchanged. In short, Australia's current housing market is now split between detached homes and apartment towers.

It is one of the stumbling blocks stopping first-home buyers. It is also a stumbling block for empty-nesters, who may want to downsize but are not willing to live in high-rise apartments.

The cost to actually to supply a new detached home (excluding land, taxes and charges etc.) is now similar to the cost of an apartment. It is considerably cheaper to supply a townhouse or walk-up flat.

The average cost to build a project home is about $1000 per square metre. The cost to build mid-to-high-rise stock sits in the vicinity of $2500-$3000 per square metre and it costs about $1500 per square metre to build a townhouse or basic walk-up flat.

New homes, of course, are generally much larger than new apartments and by and large, remain three and four bedrooms. Today, mid-to-high-rise apartments are less than 85sqm and are increasingly a one-bedroom product.

Many new walk-up flats are in two-bedroom, two-bathroom configurations with car parking availability. Most townhouses, on the other hand, are three-bedroom, 2.5 bathrooms and two car spaces.

Current demographic trends strongly suggest the need for more two and three-bedroom attached product. This translates to Australia requiring more townhouses, terrace homes, granny flats, small lot homes and flexible dwellings.

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Housing finance remains flat

However the figures defy last year's trend

The number of first time buyers was virtually unchanged compared to January 2013

The latest figures show a fall in housing investors, while first home buyers made a small comeback into the property market. This has an indirect effect on sales at hardware retail stores, in the medium-to-long-term.

Overall, the number of owner-occupied housing finance approvals was flat in January at 51,054, seasonally adjusted, according to the Bureau of Statistics.

That flat result was due to a 1% fall in loans for the purchase of new dwellings, a 0.7% fall in lending for buying existing homes, offset by a 5.8% surge in loans to build new homes.

In good news for the construction sector, loans to build homes are up 22.1% over the past year, which historically has tended to precede a rise in building approvals.

The ABS data shows first home buyers rose as a proportion of overall lending in January - making up 13.2% of loans, up from 12.7 per cent in December. However, this is well below more typical levels in the high-teens and low-20s, and a very long way from the peak of around 30% when the Rudd government boosted first home owner grants during the financial crisis.

The number of first home buyers - not seasonally adjusted - was 5,798 in January, down 848 on December, however this is probably due mostly to the season hiatus of the property market in January.

The number of first time buyers was virtually unchanged compared to January 2013 and 2011, but well down on the same month in 2012 and 2010, and a fraction of the first home buyer frenzy in January 2009, when the boosted first home owners grant lured 12,589 first time purchasers to take out a home loan.

While the proportion of first home buyers edged up, the amount of money lent to property investors fell by 3.3% last month, in contrast to a 1.5% rise for owner-occupiers.

It is the first time the value of investor loans has fallen since June last year, with lending to landlords still up 28.6% over the past 12 months.

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UK's DIY industry turns to tradies

The Economist magazine examines DIY in the UK

It finds the do-it-yourself industry has fallen victim to trends in home ownership

Britain's improving economy has encouraged people to spend money redecorating. But the way they do so is changing, according to a report by The Economist magazine.

From the 1980s to the early 2000s do-it-yourself, or DIY, was dominant. Television makeover shows such as "Changing Rooms" and "Homefront" encouraged Britons to pick up tools and improve their homes themselves, saving on the pricey fees professionals used to charge.

Since the recession, though, they have mostly avoided dirtying their hands. Spending on DIY tools and materials has fallen 22% in real terms since 2008, according to an analysis of national statistics by Lloyds bank. But spending on tradesmen's services has held steady. In short, says Aynsley Lammin at investment bank Citigroup, doing it yourself has given way to getting someone in.

The number of self-employed construction workers has jumped by nearly 10% since the financial crisis, according to the Office for National Statistics. As consumer confidence grows, small tradesmen stand to benefit more than either DIY retailers or big building firms, says Paul Bogle at the National Federation of Builders.

Sensing this shift, stores are trying to lure professionals rather than dabblers. Hardware giant B&Q has set up trade counters which exclude retail customers. Wickes dumped its loyalty card in 2012 and cut its prices to attract more cost-conscious builders.

Wickes and its sister brands, long favoured by tradesmen, are faring best. Revenues have grown by 17% since 2009, compared with falls of 9% at B&Q and Homebase, two DIY-oriented stores.

Expect this trend to continue. Homeowners in their 20s and 30s are the most enthusiastic DIYers, says Richard Perks at market research company Mintel. Rising house prices mean there are fewer of them, leaving owner-occupiers as a more elderly bunch. The old have less energy for plastering and painting and more money to pay for professional help. That's bad news for DIY shows, though.

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Building contracts with mining

Index shows housing construction is still growing

Overall the industry has another sharp fall in new orders as mining investment fades

The contraction in the building sector deepened in February, according to the Australian Industry Group's Performance of Construction index which fell by 4.0 points to 44.2.

However house building continued to expand in February (52.2) and commercial construction experienced strong growth (59.9) but a steep drop in construction linked to the mining industry dragged the entire sector down.

A reading below 50 points shows the sector is contracting; the lower the number the faster the contraction. A ready above 50 indicates expansion.

Engineering construction dropped 14.6 points to 39.7 while apartment building contracted for the second month in a row (46.6).

New orders across the industry fell to its lowest reading since July 2013. This is the second consecutive month of contraction, dashing hopes of a rebound in the industry after strong growth in house building propelled the broader construction sector into its second consecutive month of expansion in December following several years of decline.

Ai Group director Peter Burn says other sectors of the construction industry were not offsetting the decline in mining investment. He says:

The mining investment boom is fading, as seen in the sharp fall in engineering construction activity and new orders and, even though there is an accumulation of positive signs, other sectors are not filling the void. House building remains healthy and should gain greater traction if there is a reasonable conversion of strong building approvals into new activity.

Housing Industry Association chief economist Harley Dale says expansions in house building and commercial construction are encouraging. However, he believes the sector's deepening contraction demonstrated the enormous challenge the economy's up against as it transitions away from resource investment.

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Housing increases kitchen, bathroom renos

New housing leads to growth in kitchens, bathrooms

A Housing Industry Association report shows an upward trend in some renovations

The kitchen and bathroom industries are benefitting from the recent upturn in new housing construction. They will be further strengthened by a boost in renovation work toward the latter part of the decade, according to a new report by the Housing Industry Association (HIA) in conjunction with GWA Bathrooms and Kitchens.

It estimates that the total number of bathroom installations around Australia rose 12.9% to 311,800 in 2012/13 - the second highest level on record over the past 15 years. The HIA also expects activity in new home bathroom installation to grow by a further one per cent in the current financial year before going up to 331,400 by 2017/18.

The number of kitchen installations rose 11.7% to 162,000 in 2012/13 and is expected grow further by 2.8% this year on its way to reaching 172,600 by 2017/18.

>http:// http://sourceable.net/wp-content/uploads/2014/02/Kitchen-stallations.jpg}The number of kitchen installations is on the increase}http:// http://sourceable.net/housing-upturn-boosts-kitchen-bathroom-industries/

The HIA believes the broader renovations sector will grow along with housing prices which allows for more home improvement lending. As a result, the number of kitchen and bathroom installations resulting from renovation work should rebound strongly toward the middle to latter part of the decade.

Such expectations are underpinned by ABS estimates that the number of houses around the country which are between 11 and 20 years old - the primary age during which significant indoor renovations typically occur - will bottom out at around 920,000 this year and rise to around 970,000 by the end of the decade.

As indoor renovation activity increases, however, so too will demand for skilled tradespeople. This is welcomed by tradespeople themselves but it raises fears of a skills shortage and places pressure on trade prices.

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In other developments noted in the report, with regard to HIA members involved in kitchen work:

  • More than eight in 10 (82%) surveyed say they were engaged by home owners directly as opposed to through a principal building contractor (14%) or an employer (three per cent).
  • More than nine in 10 (91%) expect the same or more levels of work in 2013/14 as opposed to 2012/13.
  • More than half of kitchens installed in new homes (52%) took less than four days to complete.
  • Almost three quarters (74%) say it is more expensive to install a kitchen as a renovation as opposed to a new home.
  • Almost three quarters of all kitchens which are upgraded or remodelled are between 11 and 20 years old.
  • Half of all jobs involve full renovations as part of a broader renovation project, 40% involve full renovations without other concurrent renovations and only a small portion involve functional improvements to existing kitchens or minor updates and repairs to existing kitchens.
  • Seven in 10 say they prefer to use domestically produced goods during kitchen work, with a further 27% saying the origin of goods is not important.
  • Meanwhile, in terms of those surveyed who worked on bathrooms:

  • Almost nine in 10 (88%) are engaged by the homeowner directly.
  • Almost nine in 10 expect more or the same levels of work in 2013/14 compared with 2012/13.
  • 20% of installations in new homes take between nine and 12 days, 17% between five and eight days and 16% between 13 and 15 days.
  • Seven in 10 bathrooms upgraded were between 11 and 20 years old.
  • 49% of bathroom renovation jobs involve full bathroom replacements where no other renovations are occurring, 29% involved full replacements as part of broader renovation jobs, nine per cent involve functional improvements to existing bathrooms and eight per cent involve adding a second bathroom/ensuite.
  • In contrast to kitchens, where almost six in 10 jobs involved enlarging kitchen space, more than three quarters (76%) of bathroom jobs involved working within the existing space.

    The average dollar value of bathrooms installed in new homes is $13,986. Almost three quarters surveyed say it costs more to install a bathroom as part of a renovation as opposed to a new home, with 49% saying the price tag for installed bathrooms in renovations is 10% or more higher compared with new home counterparts.

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    Housing prices remain steady

    The Australian housing market tipped to stay strong

    Recent data from the past month shows that housing prices are generally stable

    In addition to pricing remaining constant, housing supply is constrained with keen demand. So the market is tipped to stay strong - for now.

    Only Melbourne posted a notable rise - 3.1% for the month - according to RP Data's latest weekly report. But the big two capitals were still sitting on big increases over the year, with Sydney prices up by 13% and Melbourne up 10%.

    Perth managed rises of just under eight per cent on average, with Brisbane and Adelaide beating the latest official inflation rate of 2.2% by less than a percentage point.

    The average for the five capitals was up by nine per cent through the year, RP Data said.

    Figures from the Australian Bureau of Statistics recently showed the value of housing loans approved was up by 25% over the year to November, so there is a lot of activity happening on the demand side.

    But RP data's report also showed the number of homes on the market has fallen across the board, with Sydney down by 27%, and the national average down by 14%. As a result, there is pressure on the demand side.

    Not surprisingly, despite talk of interest rate rises later this year and of a housing market bubble, economists at the ANZ see ongoing market strength. Researchers Paul Braddick and David Cannington wrote in a report:

    We expect housing market momentum to remain positive in 2014, underpinned by a significant underlying housing shortage and buoyed by improved household confidence and an extended period of low interest rates.

    This of course does not bode well for people hoping to buy an affordable place to live.

    In the absence of any dramatic change of policy to lift supply, or a shift in the outlook for interest rates, the keenness of speculative investors will be the main driver of prices in the months ahead.

    There may be some heed paid to fundamentals - notably how much rent can be earned from the investment - but at the moment that is being overwhelmed by exuberanc

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    Sales of new homes reach 2.5-year high

    This adds to the hopes of a residential housing recovery

    The increase in new homes should also have a positive impact on hardware retailers

    New home sales grew by 7.5% in November, according to figures released by the Housing Industry Association (HIA) recently. More than 7000 new dwellings sold during the month, a level not seen since May 2011. It is the fastest monthly growth rate since January 2010.

    HIA chief economist Harley Dale says new home sales have been gradually improving since late 2012, which was a good sign for residential construction next year. He says:

    Both new home sales and private sector building approvals increased strongly over the three months to November last year. We need to see upward momentum in these leading indicators continue throughout 2014.

    The Reserve Bank of Australia is counting on growth in residential construction in 2014 to help offset the effects on the economy of a decline in mining investment.

    There have been other positive signs for the sector recently, with the latest Australian Bureau of Statistics figures showing a more than 22% jump in building approvals in the 12 months to November. CommSec economist Savanth Sebastian says:

    It is pretty clear that housing construction is taking over from mining as the driver of economic growth. New home sales have recorded the biggest monthly increase in four years. And when you couple that with housing finance data - which confirmed a 6% surge in private sector house approvals - it certainly suggests that home building is set to lift.

    The HIA figures also shows a 30.5% jump in sales of multi-unit dwellings - such as apartments - while sales of detached houses rose 3.6%.

    Detached house sales rose 19.1% in South Australia, 8.1% in New South Wales and 16% in Queensland during the month. But that was offset by a 2.3% fall in sales in Victoria and a 5% in Western Australia.

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    Women encouraged to enter building trade

    In WA, women account for 2.6% of construction apprentices

    The National Association of Women in Construction works to help women in the industry

    There are calls for females to consider a job on the tools in a bid to fill looming labour shortages in construction. It could also change the demographic profile of traditional tradies coming into hardware stores and trade centres. They may need to change the way they sell tools and other products to female construction workers.

    The National Association of Women in Construction (NAWIC) says females overlook the well-paid jobs partly because of a myth that men are better suited.

    Labour market forecaster Dyball Consulting predicts a skilled labour shortage will hit in about three years after a 7000 fall in people taking on apprenticeships or training in the year to June compared with the previous year. The exit rate also remained high, with 225 WA people walking away from programs every week.

    NAWIC president Hayley McBride says the slow growth in women taking on apprenticeships was partly because of a false perception that they could not handle the physical strain. She says this is unfortunately one of the biggest myths about skilled trades.

    Emma Bain, of Golden Bay, enjoys being a painter because it often involves outdoor work and allows her to be creative. She came across both negativity and encouragement in the male-dominated trade and says both helped drive her to become a better painter.

    The NAWIC launched an awards program to recognise inspirational women in the sector. The organisation's mission is to raise the profile of women working in the construction industry and to be a positive instrument for change in the construction industry. It also works to promote and share construction industry best practice. The NAWIC encourages members to meet, support and network with other women in the construction industry.

    From its beginning in 1995, the association strives to build a dynamic organisation which encourages and supports women in the construction and related affiliate industries.

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    Housing finance demand fuels improvement

    Recent data indicates continuing demand for housing finance

    The data also shows that the housing market is largely driven by investors and upgraders

    Australian Bureau of Statistics (ABS) housing finance data to July 2013 showed a continuing demand for mortgages. There were 35,356 commitments for non-refinanced loans in July 2013 which was the highest monthly figure since November 2009. There were also 16,848 refinance commitments over the month which was the highest number of refinances since April 2008.

    When refinance commitments are removed and we look at the type of owner occupier finance commitment, it is mainly for existing dwellings.

    In July, there were 26,961 commitments for existing dwellings, 5,265 commitments for the construction of new dwellings and 3,131 commitments for the purchase of new dwellings.

    On a rolling three month average basis, there has been a clear trend of improvement across the four sectors analysed (first-home buyers, upgrade buyers, refinances and investment buyers).

    Based on the rolling three month average figures, investment buyers are currently accounting for 37.5% of purchasers, upgraders are accounting for 35.9% of the market, refinances are 17.8% of the market and first-home buyers are just 8.8% of the market.

    Based on the proportion of overall market activity, first-home buyers are sitting at around their lowest proportion of market activity since June 2004 while investors are at their highest proportion since June 2004.

    The low mortgage rates are proving an attractive lure for those looking to upgrade into a slightly superior home.

    The surprising development has been the lack of response to low mortgage rates by first-time buyers. This may be due to the fact that in a number of states first-home buyers can now only receive a grant on brand new homes, and these homes often tend to be more expensive than pre-existing homes. Also, a lot of first home buyer demand was probably pulled forward into 2009 when mortgage rates were at a similar level and first home buyers could buy pre-existing homes with an additional $7,000 in addition to the first-home owners grant.

    Investment purchases are an important component of the overall market. Based on raw figures, there was $9.3 billion in housing finance commitments for investment purposes in July 2013. The total value was slightly down on its recent peak; however, the value of commitments was 30.6% higher than at the same time last year. The result indicates a high level of activity from investors in the housing market at the moment.

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    Budget cuts impact QLD mining and construction

    Deferral of major mining projects will affect QLD construction

    BIS Shrapnel provides updated outlook for QLD mining and construction industries

    Data released by economic forecaster BIS Shrapnel shows that budget cuts at state and federal level and deferrals of major mining projects in Queensland will have consequences for construction sector.

    BIS Shrapnel released its mid-term update on the 2013 Queensland Major Projects Report: Queensland Engineering Construction Outlook.

    It updated the February estimate of a 40% fall in civil and engineering work in the sunshine state to an even tougher 53% fall between 2013-14 and 2016-17.

    Forecaster Adrian Hart says since the February outlook was released, economic conditions had worsened "more than anticipated" at both the domestic and global level.

    He says the outlook for major projects in Queensland was expected to fall each year until 2016-17, from the current $17 billion level to just $8.5 billion in three years' time.

    According to the report: "The Queensland (major projects) construction market is at the forefront of both these negative forces, with the state and federal governments both cutting expenditure to bring their budgets back to surplus, and major mining developments deferred.

    "Queensland construction activity plateaued in 2012 and has already started to weaken. Without further sizeable projects new projects coming on stream, the pace of the decline ... will accelerate."

    Report commissioner, Queensland Major Contractors Association president Tony Hackett, also blames a raft of other changes, including state government increases in coal mining royalties and other cyclical economic factors.

    "Long term infrastructure deficits pose very significant issues for the broader economy given the direct link between investment in infrastructure and economic growth, both actual and potential," he says.

    "There is a need to smooth out the boom and bust cycle and deliver a pipeline of major new projects going beyond the next stage of the electoral cycle."

    Hackett also calls for government to identify more assets "that government should not own and sell or lease these" to spend the proceeds on new government infrastructure projects.

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    Global market for industrial fasteners to reach US$94.65b

    It is expected that this market value will be reached in 2018

    The global demand for industrial fasteners has grown from $US65.5b since 2011

    The Asia Pacific region accounted for the highest demand for industrial fasteners in 2012 and should account for over 45% of the market by 2018. The trend should continue over the next six years due to factors such as rapid industrialisation and favourable economic conditions, which will boost the demand for durable goods and other manufacturing and development activities.

    Economic development in countries such as China, Brazil and India has led to a rise in disposable income of consumers which in turn has resulted in growing demand for automobiles. This factor is expected to be one of the primary reasons driving the growth of the market.

    In addition, rise in construction and maintenance activities all across the world is another important factor which will boost the demand for fasteners over the forecast period. The construction sector for fasteners is forecast to grow at a compound annual growth rate (CAGR) of over 9% from 2012 to 2018.

    The imposition of high anti-dumping duties by the European Union should hamper some growth of the fasteners market. But the development of fasteners for niche applications such as railways and solar equipment might open opportunities for the growth of the market.

    Externally threaded industrial fastener forms the largest product segment, accounting for over $25billion in 2011. This category should show the fastest growth in the near future because of rapid industrialisation and rising demand for durable goods.

    Key participants in the industrial fasteners market include Alcoa Incorporated, Illinois Tool Works Incorporated, LISI Group, NIFCO and Precision Castparts Corporation among others.

    The new market report called "Industrial Fasteners Market (Externally Threaded, Aerospace Grade and Standard) for Automotive OEM, Machinery OEM, MRO and Construction Applications - Global Industry Analysis, Size, Share, Growth, Trends and Forecast, 2012 - 2018" is published by Transparency Market Research.

    To browse the report, visit http://www.transparencymarketresearch.com/industrial-fasteners-market.html

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