New home sales drop 5.2% in February, Telstra reshuffles management: Economy roundup

Sales of new homes dropped by 5.2% in February, negating the 9.5% increase recorded in January, according to the latest figures released from the Housing Industry Association.

The Association’s new home sales report revealed a 4.7% decline in sales of detached new homes, following a 10.1% rise in January. Sales in the multi-unit sector dropped by 9.4%, following a 4.1% rise.

“Detached new home sales fell by nine per cent in New South Wales and were down by 5.8% in Queensland, 7.9% in South Australia, and 5.1% in Western Australia, sales increased by 16.1% in Victoria,” the report said.

Chief economist Harley Dale said in a report that construction activity remains strong due to the stimulus released last year into the industry, but this won’t last.

“This stimulus has been highly successful in driving the first stage new home building recovery, but that stimulus will soon start to fade.”

He also said that land shortages, along with planning delays and levels of taxation and regulation, are acting as deterrents to home purchases.

“All these supply side obstacles require urgent attention or Australia’s chronic housing shortage will worsen and we will, perversely, see more upward pressure on interest rates than would otherwise be the case.”

“In terms of the entire new home building market we also need to see urgent rectification of the unjustifiably low level of finance being extended to small residential developers. Credit rationing is choking off perfectly viable residential projects and pushing households, who aren’t suffering from significant restraints on credit, towards the existing property market.”

Telstra reshuffle

Telecommunications giant Telstra has announced a reshuffle of its executive team, with former Hewlett Packard executive Gordon Ballantyne announced as the company’s managing director of the consumer and channels division.

Former strategic marketing head Kate McKenzie has now been appointed to the role of chief marketing officer, while customer experience general manager Robert is set to take up a corporate strategy role.

BigPond chief Justin Milne also announced his resignation, effective 1 June, with veteran J-B Rousselot to now take up the role as executive director of voice, broadband and media.

“Telstra’s core objectives are to provide our customers with innovative products and services, and to serve our customers better than anybody else,” chief executive David Thodey said in a statement.

“This reorganisation is designed to get the right people and processes in place. It will enable us to better deliver Australians the services and products they want and to profitably grow our business domestically and internationally.”

iiNet in trading halt ahead of possible acquisition

Perth-based ISP iiNet has announced a trading halt this morning, “pending the release of information in respect of a material acquisition”.

It comes after an announcement on 11 March, in which it said it was in discussions with Melbourne ISP Netspace regarding a possible transaction. Media reports had speculated a purchase price of between $60-75 million, but iiNet said that cost tag was well above the discussed price.

Netspace carries about 80,000 business and residential customers.

In China, it is expected the result of the Stern Hu trial will be announced today. Hu and three other executives have been charged with stealing company secrets and taking bribes. The Australian Government requested access to Hu’s trial last week, but was denied access.

The Australian share market has opened flat today after similar results from Wall Street late last week, along with disappointing results in commodities markets.

The benchmark S&P/ASX200 index was up three points or 0.01% to 4897.2 at 12.00 AEST, while the Australian dollar also opened lower to US90c as the Euro gained strength amidst Greece’s new debt plan.

Commonwealth Bank shares have lost 0.7% to $56.98, as Westpac gained 0.6% to $28.15. NAB rose 0.2% to $27.65 as Telstra also gained 0.7% to $3.08.

But despite the optimism surrounding Greece’s new plan, the country’s government has apparently taken no final decision to issue a new bond next week, the Financial Times has reported.

“We would like to return to the market within March,” the FT quoted head of the Public Debt Management Agency Petros Christodoulou as saying. He also said there was “no such decision” when asked regarding a bond sale.

The European Union has banded together to offer refuge for Greece in light of its looming debt problems.

Back home, The Age has reported that the Future Fund is considering purchasing the Macquarie Group’s 23.2% stake in airports fund MAP Group.

It is understood Macquarie is looking for a price of around $1.5 billion for the sake. MAP shares rose 1.6% after the report was released to $3.13.

Bank of Queensland signs exclusivity agreement with CIT

Bank of Queensland has now signed an exclusivity agreement with CIT Group Australia and New Zealand to conduct due diligence on any potential purchase. The lender said an acquisition would involve CIT’s vendor finance business, but also said there is no guarantee of a deal.

“The bank is not in a position to announce any transaction to the market,” it said in a statement. The move comes after BOQ agreed to buy St Andrew’s insurance business from the Commonwealth Bank of Australia last week.

Meanwhile, Seven Network has appointed an independent advisor to help in its search for new directors to add to the Seven Group Holdings Board.

Egon Zehnder International will act as an advisor in the task. Seven has said it intends to increase the number of independent directors on its board from three to five.

“Egon Zehnder International will provide recommendations to the Board for additional appropriately qualified independent director candidates who have a demonstrable and successful track record as directors of top ASX-listed companies,” the company said in a statement on the weekend.

“Further, Egon Zehnder International will be consulting Seven’s major shareholders to better understand their views on board composition including the qualifications of potential director candidates.”