Housing finance increases, but auction rates still down: Economy Roundup

The total value of housing finance commitments increased by a seasonally adjusted 0.7% in May, according to the latest figures from the Australian Bureau of Statistics. It is the first rise in eight months, signalling a possible boost for the cooling property market.

The figures show that in trend terms, commitments for owner occupied housing finance fell by 1.2%, with the number of commitments for dwellings falling 3.6%.

In original terms, the number of first home buyer commitments continued to fall as a percentage of total commitments, from 16.3% in April to 16.1% in May.

Additionally, the figures show the total value of number of construction commitments dropped by a seasonally adjusted 2.2% to 5,391. Total value of commitments rose by 0.7% to $21.3 billion.

However, the figures come alongside disappointingly low clearance rates. The REIV reported Melbourne only recorded a clearance rate of 68% out of 528 auctions on the market.

Sydney recorded a clearance rate of just 53% from 198 auctions, while Adelaide recorded 50% from 20 sales with a total value of $6.6 million. Brisbane recorded just 43% from six sales, with a total value of $2.9 million.

DuluxGroup has made its debut on the Australian Securities Exchange this morning, listing at $2.50 following the demerger from parent group Orica.

However, the opening price was at the bottom end of a forecast published by a Reuters poll. At 11.25 AEST, shares were up 4.4% to $2.61.

Orica chief executive Graeme Liebelt told ABC Television he believes the demerger was worth the coast.

“When you look at those costs…and you look at the size of the two businesses that are going to be separated – Dulux with whatever it turns out to be, potentially a million dollars or more, Orica in the several million dollars of market capitalisation – if greater focus allows both companies to generate more value, that kind of number will be fairly quickly outweighed by the extra value generated.”

Billabong to purchase RCVA brand in California

Surfwear retail group Billabong will buy “progressive” clothing brand RCVA in California for an undisclosed amount, the company announced in a statement.

The company said this group was “an art and design-driven brand focusing on a diverse range of activities that both represent and inspire youth”.

Billabong chief executive officer Derek O’Neill said RVCA was “one of southern California’s most exciting emerging brands”.

“RVCA is not defined by any single sport or culture. It represents a community of culturally aware youth and is inspired by a diverse range of interests, each of which is underpinned by an original, highly creative design element.”

“It is a brand that has developed a very strong presence in the United States, particularly in southern California, on the strength of its fashion-forward ranges in categories including art-driven t-shirts, denim, wovens, boardshorts and, more recently, its girls line.”

The company said it expects RVCA to contribute 2% of Billabong revenue, with earnings per share neutral in the 2011 financial year. “The purchase price, which is not considered material, remains undisclosed,” Billabong said.

The Australian share market has opened flat today, despite a higher lead from Wall Street late last week and a relatively positive outcome in commodities markets over the weekend.

The benchmark S&P/ASX200 index was up 10 points or 0.25% to 4407.3 at 11.40 AEST, while the Australian dollar was up to US87c.

Commonwealth Bank shares were down 0.3% to $49.63, while ANZ lost 0.1% to $22.37. NAB gained 1.6% to $24.43 while Westpac rose 0.5% to $22.30.

Clive Palmer plans new coal facility

As reported by The Australian, mining mogul Clive Palmer plans to construct a new coal loading facility in Queensland north of the Abbot Point facility. The publication suggests it will run 40 million tonnes a year.

“We’re planning to put 40 million tonnes a year through here, and we’ll be building our own jetty,” Palmer said.

Meanwhile, Sigma Pharmaceuticals is continuing its discussions with Aspen Pharmacare with the aim of improving the conditional proposal of 55 cents per share.

“Aspen has also been advised that such discussions should not be interpreted as a willingness on the part of the board to recommend to Sigma shareholders an offer of $0.55 per share,” Sigma general counsel Sue Morgan-Dethick said in a statement.

“These considerations include evaluating expressions of interest for parts of the group including Sigma’s generics business,” the company said. “Sigma has made no final decisions about these actions at this time.”