Suzanne Rossi McGrath Report QLD 2017

The McGrath Report

Two Thousand Seventeen

All information has been obtained from sources believed to be reliable. McGrath Limited and its subsidiaries, together with their directors, officers and agents have used their best endeavours to ensure the information passed on in this report is accurate; however they have not checked the information and have no belief either way as to the accuracy of the information contained in this report.

Any recommendations and forward looking statements are statements of opinion only, not guarantees of future performance, and should not be relied upon. Prior to relying on the information in this report, you should make your own inquiries. Š 2016 and the McGrath trade mark are property of McGrath Limited and its subsidiaries. All other names and trade marks are the property of their respective owners.

Published Spring 2016

A Message From Suzanne Rossi

Another compelling year in Australian real estate is behind us so what do we take out of it? In our annual report we try to understand the movements in the market and pinpoint the trends that seem to be having the greatest impact on us now and into the future.

The last few years have been a fascinating time for Australian residential property with a number of trends emerging and indeed driving different markets in different ways. This year’s report will delve into a number of these in an attempt to share our insights including why we’re staying in our homes longer, the rise in off-market prestige sales and how technology is and will continue to change the way we transact real estate.

Australia is no longer one market but large cities like Sydney and Melbourne are indeed multiple markets within their own city boundaries.

Suzanne Rossi suzannerossi@mcgrath.com.au 0416 199 379

The East Coast capital city suburbs with the highest price growth prove that lifestyle options, strong or improving infrastructure, good schools, local jobs or proximity to employment hubs, public transport and a vibrant ‘village’ atmosphere are key factors in driving prices skyward.

Factors Driving Price Growth McGrath Report 2017

Figures compiled by CoreLogic RP Data reveal the suburbs with the greatest house and apartment price growth over the 12 months to June 30, 2016*.

A key element in the price growth of many suburbs this year has been a lack of stock, which has intensified competition.

In Sydney, Westmead recorded the strongest house price growth for FY2016 at 33.2%. We attribute this to the $900 million Westmead Hospital redevelopment project currently underway and a growing resident population of well-paid health service professionals.

In Melbourne, St Kilda East house prices rose 35.4% due to improved amenities, a changing residential profile, gentrification and increased demand from buyers priced out of Albert Park, Middle Park and Elwood.

Carlisle Street in Balaclava, a small suburb in the St Kilda East postcode, has been transformed over the past decade into a buzzy café village where locals love to hang out.

Westmead is also home to an expanding campus of the University of Western Sydney and is situated right next door to Parramatta, Sydney’s second CBD.

There are shops, major supermarkets, schools, the recently upgraded train station and easy access to the city and St Kilda foreshore. There are beautiful period houses and apartments protected by heritage order.

It’s a great place to live and gaining appeal as a destination suburb.

Fairlight recorded the strongest apartment price growth at a staggering 46%. A shortage of stock combined with a large difference between house and apartment prices and the ripple effect from its beachside neighbour, Manly all contributed to this phenomenal price rise.

Brighton had the second highest apartment price growth at 27.3%, reflecting demand from downsizers who have lived and loved the location for 30 years and are now selling their family homes and moving into apartments and townhouses in the same area.

Top 5 House Growth 1

St Kilda East

(VIC)

2

Westmead

(NSW) 33.2%

35.4%

3

Ormond

(VIC)

31.6%

4

Fairfield

(VIC)

30.3%

5

Londonderry

(NSW) 29.9%

Factors Driving Price Growth

Identifying Price Growth Hot Spots

Macro Factors • Strong population growth • Good local employment or access to job hubs • Gentrification of housing stock • Growing household incomes • Lifestyle amenities – cafes, shops, entertainment and recreation • Schools and catchment zones • Presence of big retail brands

In Brisbane, house price growth was greatest in Robertson at 25.6%; while beachside Woody Point on the Redcliffe peninsula achieved the best apartment price growth at 24.2%.

Wilston recorded the third best house price growth at 20.3% over FY2016. Wilston is a highly regarded area with a great café village, excellent schools and spectacular homes – many with city views due to the suburb’s elevated position.

Camp Hill enjoyed the second best apartment price growth at 18.9% due to strong demand from first home buyers.

In the nation’s capital, it’s all about O’Connor, which had the highest price growth for both houses at 21.5% and apartments at 15.3% in FY2016.

Market Factors

O’Connor is close to everything and has a great café and shopping precinct. Families love the tree-lined streets and good sized blocks and it is in the catchment areas for Turner School and Lyneham Primary School.

Being walking distance to the CBD and the Australian National University is also a major drawcard for young buyers and investors.

• R ising tenant and buyer demand

*

• P ublic transport and walkability

• Low or falling days on market • Low or falling vacancy rates • More auctions and rising clearance rates • Reduced vendor discounting • Limited supply of future housing

Top 5 Apartment Growth 1

Fairlight

(NSW) 46.0%

2

Ultimo

(NSW) 40.7%

3

Chipping Norton (NSW) 38.6%

4

Kirribilli

(NSW) 34.0%

5

Waverton

(NSW) 27.8%

McGrath Report 2017

CoreLogic RP Data; 12 months to June 30, 2016; suburbs with a minimum of 40 sales during the year

Top 5 Suburbs for Price Growth by Capital City Houses SUBURB

Apartments MEDIAN PRICE

12 MONTH CHANGE IN

SUBURB

MEDIAN PRICE

MEDIAN PRICE NSW

12 MONTH CHANGE IN MEDIAN PRICE

NSW

Westmead

$1,225,000

33.2%

Fairlight

$1,285,000

46.0%

Londonderry

$1,150,000

29.9%

Ultimo

$735,000

40.7%

Millers Point

$2,475,000

29.5%

Chipping Norton

$582,000

38.6%

Canterbury

$1,247,500

28.9%

Kirribilli

$1,195,000

34.0%

Croydon Park

$1,380,000

28.0%

Waverton

$1,150,000

27.8%

QLD

QLD

Robertson

$1,005,000

25.6%

Woody Point

$410,000

24.2%

Darra

$440,000

23.9%

Camp Hill

$541,000

18.9%

Wilston

$1,007,500

20.3%

Scarborough

$475,000

14.1%

Chelmer

$1,127,500

19.0%

Newstead

$595,000

11.7%

Banyo

$521,750

17.2%

Teneriffe

$629,500

11.6%

VIC

VIC

St Kilda East

$1,422,000

35.4%

Hampton East

$662,000

27.4%

Ormond

$1,500,000

31.6%

Brighton

$910,000

27.3%

Fairfield

$1,205,000

30.3%

Braybrook

$454,250

23.7%

Carlton

$945,000

29.3%

Mooroolbark

$480,000

23.1%

Keysborough

$624,000

28.7%

Balaclava

$550,000

20.6%

ACT

ACT

O’Connor

$960,000

21.5%

O’Connor

$490,000

15.3%

Ainslie

$925,000

21.4%

Bonython

$455,000

11.9%

Deakin

$1,145,500

19.6%

City

$532,500

11.8%

Narrabundah

$821,000

17.0%

Cook

$502,500

6.9%

Hackett

$790,000

16.2%

Bruce

$425,000

5.7%

Source: CoreLogic RP Data; 12 months to June 30, 2016; suburbs with a minimum of 40 sales during the year

Factors Driving Price Growth

Brisbane & Surrounds South-East Queensland continues to offer outstanding opportunity for growth but a sluggish economy, political upheaval, low population growth and an impending apartment oversupply is delaying significant price growth overdue in Brisbane today.

The end of the mining boom has hit Queensland hard.

Brisbane is no longer experiencing the strong flow of money that came from regional areas where mining workers earning big salaries were investing in Brisbane real estate or buying family homes in Brisbane for a fly-in fly-out lifestyle.

But through all this, the property market is showing resilience. According to CoreLogic RP Data, median property values (houses and apartments) along the Brisbane to Gold Coast corridor rose by 5.7% to $482,000 in FY2016^ compared to 3.5% growth in FY2015 and 6.7% in FY2014.

Latest statistics from the ABS and CoreLogic RP Data show Brisbane’s population growth is at its lowest point since 2001*. Continuously strong economic conditions in New South Wales and Victoria and uninspired state management following the Liberal National Party’s removal after one term and now a minority Labor Government provides no incentive for big business to set up and expand into Brisbane.

Despite all the big picture challenges, the market is currently seen as affordable, safe, steady, reliable and doing well in tough economic conditions.

McGrath Report 2017

As always, some suburbs have exhibited exceptional results. Those with more than 15% house price growth in FY2016 include Robertson (25.6%), Darra (23.9%), Wilston (20.3%), Chelmer (19%), Banyo (17.2%), New Farm (16.8%), Sandgate (16.8%) and Carina Heights (16.2%)#.

In the apartment market, Brisbane is facing an oversupply with a two-year pipeline of 44,511 dwellings to be completed, according to CoreLogic RP Data**. This is significant when ordinarily about 30,000 apartments would be sold in this timeframe and that includes a combination of old and new.

ladder through a buy, renovate, sell and repeat strategy.

In the more affordable suburbs, a huge range of buyers including local upgraders, downsizers, renovators, first home buyers and some Sydney and Melbourne lifestyle buyers are targeting up-and-coming areas particularly on the southern Gold Coast.

The oversupply will be primarily around the city and inner ring areas. Investors are increasingly wary of this and some developers have delayed their projects. However, it does present an opportunity for owner-occupiers with a long term view. The newly boosted First Home Owners’ Grant, up from $15,000 to $20,000 until June 30, 2017 should help young buyers in this market.

Buyers are especially drawn to areas such as Miami, Palm Beach and Tugun where good quality houses that are walking distance to the beach are selling for well below $1 million.

On the Gold Coast, plenty is happening and it’s all positive.

These suburbs offer exceptional value and opportunities for growth. A Palm Beach home worth $600,000 is worth $1 million just 9 km up the road in Mermaid Beach. On the beachfront, Palm Beach buyers are paying $2.5-$3 million compared to $5-5.5 million in Mermaid Beach.

Locals who bought highly discounted properties in prime areas post-GFC have now renovated or re-built and are selling with a view to buying again in a better location. They are making money and moving up the

In the prestige market, there have been very few sales above $10 million since 2009 but this year six were recorded over the first three quarters alone, reflecting rising confidence particularly among locals.

Audi Benchmark As they often say, “Follow the smart money if you want to get ahead”. So what better barometer than taking a peek at where the smart drivers garage their Audis each night.

1

Fortitude Valley

2

Southport

3

Indooroopilly

4

Slacks Creek

5

Currimundi

6

Townsville

7

Springwood

8

Cairns

9

Toowoomba

10

Hamilton

S ource: Audi Australia

Brisbane & Surrounds

The biggest deal was the $25 million sale of a Mermaid Beach mansion in September. There was also the $15.5 million sale of a riverfront Isle of Capri residence to Chinese buyers and two other sales in Mermaid Beach for $13.25 million and $11.45 million. There was also an $11 million sale on Cronin Island and a $10.9 million sale at Sanctuary Cove.

* Melbourne leads population growth, CoreLogic RP Data, published April 11, 2016 and Regional Population Growth, Australia 2014-15, Australian Bureau of Statistics, published March 30, 2016

We remain very optimistic about the Gold Coast. In the lead-up to the 2018 Commonwealth Games, billions is being spent on infrastructure and the economy is becoming more diversified with health and education jobs supplementing the more volatile retail, tourism and construction industries.

# CoreLogic RP Data; 12 months to June 30, 2016; suburbs with a minimum of 40 sales in the year

^ Hedonic Home Value Index, CoreLogic RP Data, published July 1, 2016

** Record high unit construction increases settlement risk, CoreLogic RP Data, published May 16, 2016

On the Sunshine Coast, there is a lot of demand at the upper end in Noosa and Sunshine Beach. Local upgraders and lifestyle buyers from Queensland, Sydney and Melbourne are spending up to $5 million for properties to either occupy now or use as holiday homes ahead of retirement. A new record for beachfront homes on the coast was set in September with a $9.3 million sale at Sunshine Beach.

John McGrath’s Top Picks

1

Gordon Park

3

Mermaid Waters

Maroochydore

Brisbane’s smallest suburb, Gordon

This suburb offers very good

This is a town on the move with its

Park offers fantastic value and great

value and a mix of waterfront and

CBD undergoing a complete

infrastructure. Access to the CBD

non-waterfront homes. We are see-

makeover. Just 2 km from the

has become much easier with the

ing at least 4-5 registered bidders

ocean, there is already a fresh,

Clem7 and Inner City Bypass. New

across all auctions in this suburb.

exciting new vibe on the main

cafes are popping up and a ripple

This is an ideal location for second

street with lots of new roads, retail,

effect is occurring from the more

home buyers who don’t have the

commercial spaces and community

established and pricier neighbouring

budget for Mermaid Beach. A lot

facilities on the way.

suburbs of Grange and Wilston.

of buyers are renovating so the suburb is undergoing a facelift.

2

Taringa

4

Sunrise Beach

Situated next to St Lucia and Indo-

With a median house price of

oroopilly, Taringa has access to all

$675,000, it offers better value

the same amenities as its blue chip

than neighbouring Sunshine Beach

neighbours but offers better value

(median $1,015,000) but probably

for buyers. According to CoreLogic

not for long! Just a few minutes

RP Data, Taringa house prices rose

outside Noosa, Sunrise Beach has

10.2% in FY2016* but we think

had a noticeable kick in activity

there is more growth to come.

and 12.5% house price growth in FY2016*.

McGrath Report 2017

5

4

5

1

2

3

Brisbane & Surrounds