Oliver Hume Quarterly Market Insights - March Quarter 2018

Quarterly Market Insights March Quarter 2018

Oliver Hume Quarterly Market Insights - March Quarter 2018 | oliverhume.com.au | +61 3 9669 5999

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TABLE OF CONTENTS Foreword

04

VICTORIA Market Overview

08

New Communities

12

Apartments and Townhouses

18

Development Sites

22

QUEENSLAND Market Overview

26

New Communities

28

Apartments and Townhouses

34

Julian Coppini Chief Operating Officer j.coppini@oliverhume.com.au

Welcome to Oliver Hume's March Quarter 2018 Market Insights Report 2018 promises to be an important year for the Australian property market with the residential sector across the nation at varying stages of the market cycle.

The output of this market intelligence and insights is a competitive advantage for our clients, buyers and all those who we interact with daily.

Some markets are reaching a turning point following years of exceptional price growth and activity levels, while others continue to set new records.

This report is the latest instalment of our regular Quarterly Market Insights series which is an example of how our research goes behind the numbers to provide you with the latest market insights.

With Australia now experiencing record population growth and the economy continuing to strengthen it is important to understand what comes next and to understand the evolving and rapidly changing property market landscape.

I am sure this update will be a valuable resource for you in better understanding the market and planning for the future.

Oliver Hume has a thorough understanding of the Australian residential property market.

Our understanding has been built up over several decades of experience and from dealing with both buyers and sellers of property at all stages of the market cycle.

Importantly, our team of specialist economists, real estate analysts, mathematicians and others work hard to analyse current and emerging market trends using both proprietary data and a wide range of other information sources.

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Oliver Hume Quarterly Market Insights - March Quarter 2018 | oliverhume.com.au | +61 3 9669 5999

Perth

Nanjing

CHINA Shanghai

Fuzhou

Darwin

NORTHERN TERRITORY QUEENSLAND Brisbane

WESTERN AUSTRALIA

Gold Coast

SOUTH AUSTRALIA NEW SOUTH WALES Sydney Adelaide Canberra

VICTORIA Melbourne

TASMANIA Hobart

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MARCH QUARTER 2018

VICTORIA

VICTORIA George Bougias

MARKET OVERVIEW

AS UNEMPLOYMENT MOVES TOWARDS LEVELS REGARDED AS ‘FULL EMPLOYMENT’...

LABOUR MARKET AND OVERALL ECONOMIC SENTIMENT SHOULD CONTINUE TO IMPROVE HELPING TO UNDERPIN RESIDENTIAL DWELLING DEMAND.

Head of Research g.bougias@oliverhume.com.au

Victoria’s Strengthening Economy to Underpin Growth Victoria’s land markets continue to be driven by strong property market fundamentals helping to sustain buyer demand.

Victoria’s level of unemployment in April 2018 was 5.3% (on a seasonally adjusted basis), below the national average of 5.6%.

The Melbourne and Geelong markets remain buoyed by record population growth.

In April 2018, Victoria recorded the second highest level of trend employment (up 2,100 persons) after New South Wales (up 9,400 persons).

In 2016-17 Melbourne had the largest population growth of all Australian capital cities (125,400) with growth exceeding Sydney (101,600) and more than double that of Brisbane (48,000).

Melbourne also recorded the fastest population growth over the period (2.7%), greater than Brisbane and Sydney (both 2.0%) and significantly more than the national average for all capital cities (1.9%).

Melbourne’s land prices continue to increase although price growth now appears to be slowing as affordability constraints are becoming increasingly important.

The reduction in lot size continues, helping to alleviate affordability somewhat, while also meeting the needs of a diverse group of buyers including first home buyers, singles, couples and families with children.

Continued economic growth is increasingly a major driver.

However, sluggish wage growth remains a key challenge with most economists expecting wage growth will remain low. This will cap accessibility to finance especially in the context of continued land price growth.

Labour force participation continues to climb reaching levels well above that achieved in recent decades.

Greater labour force participation will help underpin demand in the residential land market.

As unemployment moves towards levels regarded as ‘full employment’ (around 5.0%), labour market and overall economic sentiment should continue to improve helping to underpin residential dwelling demand.

Importantly, interest rates are expected to remain low with any increase now expected sometime away.

Higher levels of government investment and consumer spending, supported by dwelling investment, are ensuring economic growth remains robust and unemployment continues to decline.

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Unemployment Rate - Victoria 7.5

7

6.5

6

5.5

5

4.5

4 Mar-2013

Mar-2014

Mar-2015

Victoria Unemployment Rate (Seasonally Adjusted)

Mar-2016

Mar-2017

5-Year Average

Mar-2018

Source: ABS, Oliver Hume Research.

Participation Rate - Victoria 80%

75%

70%

65%

60%

55%

50%

45%

Male

Female

Overall

Overall Participation Rate

Mar 2018

Mar 2016

Mar 2014

Mar 2012

Mar 2010

Mar 2008

Mar 2006

Mar 2004

Mar 2002

Mar 2000

Mar 1998

Mar 1996

Mar 1994

Mar 1992

Mar 1990

Mar 1988

Mar 1986

Mar 1984

Mar 1982

Mar 1980

Mar 1978

40%

Source: ABS, Oliver Hume Research.

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VICTORIA

MARKET OVERVIEW (cont.)

Population Growth Remains Robust

VICTORIA’S POPULATION HAS NOW EXCEEDED 6.3 MILLION PEOPLE.

Victoria’s population growth continues to exceed expectations.

Victoria’s population growth in the year ending 30 September 2017 was 147,000 (2.4%) representing over a third of Australia’s population growth (37%).

Victoria’s population has now exceeded 6.3 million people.

W h i l e i n te r s t a te m i g r a t i o n remains important, overseas migration remains the main driver of population growth and the residential land market.

In the year ending 30 September 2017, net overseas migration to Victoria increased by 15.3% (11,700 people) to exceed 88,000 people.

Net interstate migration was nearly 17,000 remaining at near record highs with the state attracting people from across the country.

Despite higher land prices Melbourne’s relative affordability, especially when compared to Sydney, remains a key driver of overseas and interstate migration and underlying residential demand.

Buyers born in India, China, Vietnam, Sri Lanka and Philippines are amongst the most important and growing buyer segments.

Annual Population Growth (Year Ending September 2017) 2.5%

2.0%

1.5%

1.0%

0.5%

0%

VIC

ACT

National Population Growth

10

QLD

NSW

WA

TAS

SA

NT

Source: ABS, Oliver Hume Research.

Oliver Hume Quarterly Market Insights - March Quarter 2018 | oliverhume.com.au | +61 3 9669 5999

New Communities Market The trends observed in the second half of 2017 extended into the March quarter 2018 with continued price growth and volumes remaining below recent peaks.

However, increased competition between developers and buyers’ preferences for more affordable stock, including smaller lots, has seen price growth slow.

Lower sale volumes are due to a range of reasons including fewer lots being offered to the market by developers and decreasing affordability.

This suggests prices are now softening and that we might be approaching the market’s peak.

Nevertheless, market conditions remain robust with clearance rates remaining at record highs and time on market remaining at record lows.

"...CLEARANCE RATES REMAINING AT RECORD HIGHS AND TIME ON MARKET REMAINING AT RECORD LOWS."

New Lots Sold and Available - Metropolitan Melbourne 5,000

70%

4,500 60% 4,000 50%

40%

3,000 2,500

30%

2,000 20% 1,500 10%

1,000

0%

Sold

Available on Market

Percentage Sold

Mar 18

Feb 18

Jan 18

Dec 17

Nov 17

Oct 17

Sep 17

Aug 17

Jul 17

Jun 17

May 17

Apr 17

Mar 17

Feb 17

Jan 17

Dec 16

Nov 16

Oct 16

Sep 16

Aug 16

Jul 16

Jun 16

May 16

Apr 16

Mar 16

Feb 16

Jan 16

0

Source: Oliver Hume Research.

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Percentage Sold

Number of Lots

3,500

VICTORIA Gerrard Ellis

NEW COMMUNITIES

Director g.ellis@oliverhume.com.au

Paul Ciprian Director p.ciprian@oliverhume.com.au

PROJECT AND CORRIDOR DATA

THE MARCH QUARTER 2018 SAW A DECREASE IN THE TOTAL NUMBER OF SALES ... FROM THE PREVIOUS QUARTER.

Active Projects

Total Lots Released

The number of active projects in Victoria grew to a total of 177 in the March quarter 2018, representing a 4.1% increase from the previous quarter.

Lots released onto the market fell in the March quarter 2018 by nearly 4%.

March Quarter 2018

March Quarter 2018

177

4,596

4.1% from previous quarter

Total Sales

Total Unsold

The March quarter 2018 saw a decrease in the total number of sales by 15.4% from the previous quarter.

The number of lots remaining unsold at the end of the March quarter 2018 increased by 13.5% from the previous quarter.

March Quarter 2018

March Quarter 2018

4,471

1,776

15.4% from previous quarter

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3.8% from previous quarter

13.5% from previous quarter

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Active Projects - Metropolitan Melbourne and Greater Geelong

MITCHELL

WHITTLESEA

HUME

MELTON

MELBOURNE

WYNDHAM

GREATER GEELONG

PORT PHILLIP BAY

CARDINIA CASEY GEELONG

Number of Projects:

1-5

6-10 11-15 16-20 21-25 26-30 31-35

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VICTORIA

NEW COMMUNITIES (cont.)

Lot Sizes ACROSS METROPOLITAN MELBOURNE, LOT SIZES SHRUNK BY 1.2% ON AVERAGE OVER THE QUARTER AND BY 4.8% COMPARED WITH THE FIRST QUARTER OF 2017.

Lot sizes continue to decline across metropolitan Melbourne.

Across metropolitan Melbourne, lot sizes decreased by 1.2% on average over the quarter and by 4.8% compared with the first quarter of 2017.

In addition to smaller lots for the traditional house and land package, estates are increasingly including medium density products to cater for preferences.

Large reductions were observed in Melbourne’s south-east, where prices are highest, suggesting affordability constraints are leading buyers to purchase smaller lots.

Metropolitan Melbourne - Change in Median Lot Sizes Sold (March Quarter 2018)

4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% Metro Melbourne Quarterly Change

14

Cardinia Annual Change

Casey

Hume

Melton

Mitchell

Whittlesea

Wyndham

Source: Oliver Hume Research.

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Lot Prices THE MEDIAN LOT PRICE IN METROPOLITAN MELBOURNE NOW SITS AT $314,000.

The median lot price in metropolitan Melbourne is now $314,000.

Overall, price growth is now softening as affordability constraints become more important and competition intensifies between developers.

Median prices increased by 4.1% in the March quarter 2018 to be around 23% higher over the year.

Historically there has also been a strong relationship between residential land and established markets.

Land remains relatively affordable in Melbourne's western region while the south-east remains the most expensive market.

METRO MELBOURNE

23.1% Annual Growth

CARDINIA

41.2% Annual Growth

4.1%

9.0%

With the established market now slowing it is to be expected that the greenfield market will also moderate over the short to medium term.

CASEY

HUME

27.6%

28.6%

Annual Growth

Annual Growth

0.5%

1.5%

Quarter Growth

Quarter Growth

Quarter Growth

Quarter Growth

MELTON

MITCHELL

WHITTLESEA

WYNDHAM

41.6% Annual Growth

1.6% Quarter Growth

45.1% Annual Growth

10.2% Quarter Growth

33.2%

19.2%

Annual Growth

Annual Growth

5.4%

5.3%

Quarter Growth

Quarter Growth

Median Land Price Metro Melbourne

Cardinia

$314,000

$344,500

Casey

Hume

$333,888

Melton

$280,438

Mitchell

$280,000

Whittlesea

Wyndham

$375,000

$333,000 $316,000

Metropolitan Melbourne Median Price

Source: Oliver Hume Research.

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VICTORIA

NEW COMMUNITIES (cont.)

PURCHASER PROFILES First Home Buyer Segment Falling

First Home Buyer Market Shares March Qtr 2017

50%

June Qtr 2017

49%

September Qtr 2017

49%

December Qtr 2017

46%

March Qtr 2018

45%

Source: Oliver Hume Research.

Continued price growth continues to challenge first home buyers (FHBs).

The market share of FHBs in the metropolitan Melbourne greenfield market has declined this year despite significant policy commitment by the both Federal and State Governments.

These trends are part of the broader decline in affordability and home ownership we have observed in recent decades.

Greenfield land developers have been adjusting with an increased focus on offering smaller lots to the market with an increasing number of townhouse and other medium density product being offered.

This smaller lot product is attracting a range of market segments including FHBs, renters and others finding it difficult to enter the market. In addition, downsizers and empty nesters are also increasingly attracted to this type of product.

Over the past two decades home ownership rates have generally decreased in all age categories except those aged 65+.

Previous Living Circumstances - Wyndham 1%

8%

17%

2%

43% 48%

Lots >300sqm

Year ending March 2018

Lots <300sqm

53%

28%

Owner-Occupier

16

Renting

Living with Parents

Other

Source: Oliver Hume Research.

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Sales Volume by Country of Birth 1. Australia

45.7%

2. India

34.8%

3. Phillipines

5.6%

12.6% from previous quarter

8.5% from previous quarter

2.3% from previous quarter

4. Sri Lanka

5. China

6. Pakistan

4.2% 0.8% from previous quarter

3.2% 0.2% from previous quarter

2.0% 0.7% from previous quarter Source: Oliver Hume Research.

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VICTORIA Christine McCollam

APARTMENT AND TOWNHOUSES

General Manager | Apartments c.mccollam@oliverhume.com.au

MARKET OVERVIEW

INNER AND MIDDLE RING TOWNHOUSES CONTINUE TO REMAIN POPULAR WHILE TOWNHOUSES IN GROWTH AREAS AND BEYOND (GENERALLY 20KM FROM THE CBD) ARE NOW EMERGING AS INCREASINGLY POPULAR.

Owner-Occupiers Filling The Void Melbourneâ&#x20AC;&#x2122;s medium and highdensity market is transitioning following the peak of the apartment supply cycle and the significant increase in overall property prices observed in the current cycle.

Demand for medium density continues to increase as many buyers are priced out of the (separate) housing market.

These buyers are opting for low maintenance dwellings with a land component.

Inner and middle ring townhouses continue to remain popular while townhouses in growth areas and beyond (generally 20km from the CBD) are now emerging as increasingly popular.

In terms of buyer segments, townhouses and other mediumdensity forms of accommodation remain popular with owneroccupiers and, increasingly, with investors with this product often well-located in terms of transport infrastructure, access to employment, retail and other amenities.

The recent decision by the Australian Prudential Regulatory Authority (APRA) to remove the 10% annual cap on investor housing credit growth may provide some stimulus to the market overall but especially the medium density market given the higher yields on this type of product and the lower entry price.

Apartment market conditions remain the softest with the market continuing to digest the above average levels of dwellings delivered in the recent supply cycle.

Nevertheless, various indicators suggest underlying demand and broader market conditions for apartments are now improving.

These indicators include tentative signs of an upswing in apartment prices and continued declines in inner city market vacancy rates.

Median Unit and Apartment Prices - March Quarter 2018 Median Price

Annual Growth

Quarter Growth

Metro Melbourne

$607,000

8.8%

2.4%

Inner Melbourne

$600,500

4.2%

0.3%

Middle Melbourne

$674,000

8.6%

1.6%

Outer Melbourne

$518,500

13.4%

2.3%

Source: Real Estate Institute of Victoria (REIV).

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19

VICTORIA

APARTMENT AND TOWNHOUSES (cont.)

SUBURB SPOTLIGHT WEST MELBOURNE / NORTH MELBOURNE Active Projects North Melbourne

31

NORTH MELBOURNE

West Melbourne

21

WEST MELBOURNE

Source: BCI, Oliver Hume Research.

Median Size Comparison West Melbourne

North Melbourne

51

51

73

73

110

98

64

74

One Bedroom

20

Two Bedroom

Three Bedroom

Combined

Source: Oliver Hume Research.

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West and North Melbourne Livability West and North Melbourne are increasingly important markets continuing to see both medium and high density development. Demand drivers include prime location with proximity to the CBD, access to

employment, excellent transport and infrastructure, local retail and entertainment amenities, whilst providing a mix of lifestyle and dwelling options.

Median $/m2 Comparison

One Bedroom

Two Bedroom

Three Bedroom

Combined $0 West Melbourne

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

Source: Oliver Hume Research.

North Melbourne

Median Price Comparison

One Bedroom

Two Bedroom

Three Bedroom

Combined $0 West Melbourne

$200,000 North Melbourne

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

Source: Oliver Hume Research.

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VICTORIA Peter Vassallo

DEVELOPMENT SITE

Managing Director | Development Sites p.vassallo@oliverhume.com.au

Competition For Greenfield Sites Remains High Apart from the general factors influencing property markets, competition for greenfield sites is also driven by conditions in the inner and middle ring medium and high-density markets both of which are substitute markets for some greenfield developers.

It is worth recalling that the Melbourne apartment market, especially in the inner city, remains weighed down by the dual challenges of retail finance availability (that is, investors are increasingly unable to obtain finance for off-the-plan purchases) and developers are unable to get the required number of sales to secure funding.

Although the Australian Prudential Regulation Authority’s recent decision to remove the 10% investor loan growth benchmark may see a partial rebound in investor activity, there are few factors of sufficient weight to suggest the apartment market will return to more balanced conditions in the short or medium term.

In addition, the medium density development site market continues to undergo a resurgence, itself driven by a shift in developer a t t e n t i o n fr o m t h e i n n e rcity apartment market and by fundamental shifts in consumer demand and demographics (for example: the retreat of investors and emergence of owner-occupiers, the move to lower maintenance dwelling options, ageing and downsizing).

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However, here too competition for medium-density sites (and middlering apartment projects more broadly) remains intense.

This is especially the case for well-located sites with access to transport, infrastructure and amenities.

Melbourne’s greenfield market remains a key focus for both domestic and overseas developers with the latter attracted to the city’s continued strong economic and population growth, international status as a gateway city to the rest of Australia and, importantly, rapid growth in lot prices observed in recent years.

Overseas developers represent a large and increasing buyer segment in the greenfield market despite various challenges such as stricter capital measures from the Chinese Government.

While Melbourne remains a key focus, overseas developers are increasingly considering options outside of Melbourne and Sydney, for example in large regional cities and in Queensland, as their confidence and understanding of other markets increases.

These factors include record population growth, the greenfield market’s relative affordability, record low interest rates and a policy framework favouring first home buyers and home ownership.

The new wave of record infrastructure investment, much of it directly or indirectly affecting Melbourne’s outer suburbs and therefore the greenfield market, will also play an increasingly significant role in ensuring high levels of developer interest.

All of Melbourne’s growth corridor locations are currently receiving strong interest from developers especially those where a broader product mix can be offered (for example medium-density).

Finally, the emerging realisation amongst market participants and policy makers alike that a greater number of dwellings are required throughout Melbourne and that we are ‘playing catch up’ in the greenfields market (despite recent record house construction) will help ensure developers maintain a positive view and interest in the market for the medium-long term.

C o m p e t i t i o n fo r M e l b o u r n e greenfield sites is expected to remain strong, buoyed by many of the factors that have played a significant role to date.

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DEVELOPMENT SITE TRANSACTIONS

Value Rate Per Hectare (Millions) - 2017 and 2018 Y.T.D.

Mitchell $0.2 -$1.0 $0.2 -$0.9

Whittlesea $0.5 -$1.3

Hume

Melton

$0.4 -$0.9

$0.3 -$1.4 $0.2 -$1.3

$0.6 -$1.4 $0.4 -$1.1

MELBOURNE

Wyndham $1.2 -$3.0 $1.0 -$1.6

Cardinia

Casey $0.8 -$1.7

$0.7 -$1.6

$0.8 -$1.5

$/ha (NDA)

$/ha (NDA) Cash Equivalent (CE) Source: Oliver Hume Research.

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23

MARCH QUARTER 2018

QUEENSLAND

QUEENSLAND Amanda Bittenbinder

MARKET OVERVIEW

THE SOUTH EAST QUEENSLAND PROPERTY MARKET HAS CONTINUED TO STRENGTHEN.

Senior Research Analyst a.bittenbinder@oliverhume.com.au

People and Jobs Point To Positive Future The South-East Queensland property market has continued to strengthen as a result, primarily, of increased underlying demand from a growing population.

After many years in the shadow of its southern counterparts, Queensland’s improving property fundamentals will see it continue to take more of the spotlight in 2018 and beyond.

Queensland’s population grew 1.7% over the year to September 2017, with growth of over 81,000 residents bringing the number close to five million. Net interstate migration contributed over 19,300 new residents while around 31,000 new residents migrated to Queensland from overseas.

Queensland experienced the highest level of net interstate migration of any State or territory in the country.

26

The surge in new Queensland residents over the year to September 2017 was fuelled by the state’s improving economy, with employment growth rising strongly reflecting the sharp increase in demand for labour and growth in job opportunities. Above average employment growth is expected to remain strong in the short to medium term as economic conditions improve.

A range of big budget infrastructure projects ramping up across Queensland will also ensure economic growth continues to strengthen.

Jobs and population growth are helping to underpin new seperate home building approvals with the number of new seperate housing approvals now outpacing attached dwelling approvals for the first time since early 2017.

Oliver Hume Quarterly Market Insights - March Quarter 2018 | oliverhume.com.au | +61 3 9669 5999

Annual Population Growth - Queensland

100,000

80,000

60,000

40,000

20,000

Total Population Increase

Net Interstate Migration

Natural Increase

Net Overseas Migration

2017

2016

2014

2015

2012

2013

2011

2010

2009

2008

2007

2006

2004

2005

2002

2003

2001

2000

1999

1998

1997

1996

1994

1995

1992

1993

1991

1990

1989

1988

1987

1986

1985

0

Source: ABS, Oliver Hume Research.

Annual Employment Growth (Year Ending March) - Queensland 6.00%

5.00%

4.00%

3.00%

2.00%

1.00%

0

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

-1.00%

Source: ABS, Oliver Hume Research.

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27

QUEENSLAND Matt Barr

NEW COMMUNITIES

Project Director- QLD m.barr@oliverhume.com.au

PROJECT AND CORRIDOR DATA Active Projects

Total Lots Released

The number of active projects in all South-East Queensland municipalities in the March quarter rose to 130, representing an increase of 1.6% compared with the previous quarter. Despite multiple projects selling out in the quarter, there were a number of new projects launched, bringing the overall total of active land estates up to 130.

The number of lots released over the quarter decreased significantly compared to the previous quarter.

The 39.4% drop in released stock was in part due to an active effort to absorb the stock released late in the December quarter 2017. Late stock registration also kept many developments from releasing stock over the quarter.

March Quarter 2018

March Quarter 2018

130

1,164

1.6% from previous quarter

39.4% from previous quarter

Project Land Sales

Logan

24%

Ipswich

22%

Moreton Bay

18%

Brisbane

17%

13%

Total Sales

Total Unsold

Gold Coast

The March Quarter 2018 saw reduced sales across SouthEast Queensland, as the market comes off the back of the quietest quarters of the year (December and March quarters). Lots sales decreased by 33% within the March quarter. This may also be attributed to a reduction of saleable lot supply within the market, which is likely to ramp up as the market heads into the middle of the year.

Total lots available at the end of March quarter 2018 is 3.2% less than that of the previous quarter.

The reduced number of lot released over the quarter has allowed the market to correct and absorb the residual stock from some major releases late 2017.

Redland

Source: Oliver Hume Research (Land sales between 0 - 1,000 Sqm.)

Ipswich and Logan recorded the highest quarterly sales rate within SEQ (22% and 24% respectively), with sales in Moreton Bay slowing down as stock begins to dissipate.

March Quarter 2018

March Quarter 2018

1,312

1,933

33% from previous quarter 28

6%

3.2% from previous quarter

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MORETON BAY

BRISBANE

REDLAND IPSWICH

LOGAN

GOLD COAST

Key Corridors - Number of Active Projects Moreton Bay

28

Ipswich

28

Logan

27

3.4% from previous quarter

7.7% from previous quarter

3.8% from previous quarter

Gold Coast

Brisbane

Redland

23

Unchanged from previous quarter

19

5.5% from previous quarter

5

16.7% from previous quarter Source: Oliver Hume Research.

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29

QUEENSLAND

NEW COMMUNITIES (cont.)

Lot Sizes THE SOUTH-EAST QUEENSLAND MARKET OFFERS A DIVERSE RANGE OF LOT SIZES SUITING A RANGE OF MARKET SEGMENTS.

The South-East Queensland market offers a diverse range of lot sizes suiting a range of market segments.

T h e B r i s b a n e a n d Re d l a n d markets are typically made up of small to medium sized products.

The Ipswich and Logan markets remains two of the most affordable regions within South-East Queensland, primarily due to the fact that all product ranges are reasonably priced to match growing demands.

The Gold Coast market on the other hand is characterised by premium products, either being waterfront or acreage, as affordable stock supply within the region dwindles.

Queensland Lot Sizes - Sold 1%

4%

10%

18%

18% 49% 23%

43%

34%

Brisbane

44%

Gold Coast

Ipswich

31%

23%

6%

6%

10% 29%

32%

24%

36%

Moreton Bay

Logan

8%

63%

38%

Redland

23%

27%

0-300sqm

301-400sqm

30

401-500sqm

>500sqm

Source: Oliver Hume Research.

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Lot Prices Low retail land supply coupled with strengthening demand has driven retail lot prices higher. Overall, the median retail land price currently sits at $242,000 (annual growth +6.1%).

The growth in median price and shrinking lot size continues to characterize the South-East Queensland market, with the average value rate continually increasing. The average value rate in South-East Queensland has risen 14.3% when compared to the same period in 2017.

South East Queensland Median Land Price (Retail Lots) $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Brisbane Q1 2017

Gold Coast Q2 2017

Ipswich

Q3 2017

Q4 2017

Logan

Moreton Bay

Redland

SEQ

Source: Oliver Hume Research.

Q1 2018

South East Queensland Median Land Size and Value Rate (Retail Lots) $581/Sqm

600

500

400

300

200

100

SEQ Median Land Size

SEQ Median Value Rate ($/m2)

QI 18

QIV 17

QIII 17

QII 17

QI 17

QIV 16

QIII 16

QII 16

QI 16

QIV 15

QIII 15

QII 15

QI 15

QIV 14

QIII 14

QII 14

QI 14

QIV 13

QIII 13

QII 13

QI 13

QIV 12

0

Source: Oliver Hume Research.

Oliver Hume Quarterly Market Insights - March Quarter 2018 | oliverhume.com.au | +61 3 9669 5999

31

QUEENSLAND

NEW COMMUNITIES (cont.)

PURCHASER PROFILES Queensland Purchaser Profiles

OWNER-OCCUPIERS REMAIN THE KEY BUYER SEGMENT .

Owner-occupiers remain the key buyer segment in the South-East Queensland greenfield market, with only a slight decrease from 95% to 94% over December and March quarters. The proportion of

first home buyers, though accounting for the majority of the buyer pool, also decreased slightly from 78% to 72% in the December and March quarters respectively.

Current Purchaser Profiles 2%

11%

8% 9%

9%

December Quarter 2017

78%

11% March Quarter 2018

72%

First Home Buyer Second Home Buyer 3+ Home Buyer Other

5%

6%

95% December Quarter 2017

94% March Quarter 2018

Investor Owner-Occupier Source: Oliver Hume Research.

32

Oliver Hume Quarterly Market Insights - March Quarter 2018 | oliverhume.com.au | +61 3 9669 5999

QUEENSLAND

APARTMENT AND TOWNHOUSES

MARKET OVERVIEW Queenslandâ&#x20AC;&#x2122;s apartment market has seen significant levels of new supply delivered in recent years leading to softer property market conditions - a situation which has been exacerbated by the retreat of investors and offshore buyers given changes to lending and overseas investment policy.

Queensland is expected to see 8,300 apartments completed over the 2017-2018 period with an additional 5,000 in the pipeline for 2019. However, concerns around supply levels and continued increases in construction costs

could see the number of apartments to be completed decline. Over 50 projects have already been recorded as being deferred or abandoned over the 2017-18 period.

GENEROUS GOVERNMENT INCENTIVES TARGETING FIRST HOME BUYERS HAS ALSO SUPPORTED THIS BUYER SEGMENT.

High levels of new supply has been positive for FHBs with many capitalising on opportunities to enter the market at a more affordable price point and in an environment where developers are increasingly eager to move stock.

Generous government incentives targeting first home buyers has also supported this buyer segment.

Building Approvals Queensland (Biannual) 10,000

8,000

6,000

4,000

2,000

Housing Approvals

Dwellings Excluding Houses

Mar 18

Sep 17

Mar 17

Sep 16

Mar 16

Sep 15

Mar 15

Sep 14

Mar 14

Sep 13

Mar 13

Sep 12

Mar 12

Sep 11

Mar 11

Sep 10

Mar 10

Sep 09

Mar 09

Sep 08

Mar 08

0

Source: ABS, Oliver Hume Research.

Oliver Hume Quarterly Market Insights - March Quarter 2018 | oliverhume.com.au | +61 3 9669 5999

33

QUEENSLAND

APARTMENT AND TOWNHOUSES (cont.)

Active Projects THERE IS CURRENTLY CLOSE TO 220 PROJECTS EITHER AT PRE-CONSTRUCTION, UNDER CONSTRUCTION OR COMPLETED WITH RESIDUAL PRODUCT.

Moderate conditions in the offthe-plan apartment market has seen a decrease in the number of new projects released and number of projects currently active in the Brisbane and Gold Coast markets.

There is currently close to 220 projects either at preconstruction, under construction or completed with residual product. This represents a 20% decrease in the number of active projects monitored, compared to the March quarter 2016. Across all projects, there will be around 25,000 units upon completion.

OTP Bedroom Breakdown and Value Rate (Price per Sqm.)

Gold Coast LGA

North Shore

Inner West

Inner South

Inner North

Inner East

Brisbane CBD

$ One Bed

34

$1,000 Two Bed

$2,000 Three Bed

$3,000

$4,000

Median Price per Sqm

$5,000

$6,000

$7,000

$8,000

$9,000

Source: Oliver Hume Research.

Oliver Hume Quarterly Market Insights - March Quarter 2018 | oliverhume.com.au | +61 3 9669 5999

NORTH SHORE INNER NORTH

INNER WEST BRISBANE CBD INNER EAST

INNER SOUTH

GOLD COAST

OTP Median Price and Value Rates Brisbane CBD Apartment Price Price per Sqm Active Projects

Inner East

$613,000 $8,173 3

Inner South Apartment Price Price per Sqm Active Projects

Apartment Price Price per Sqm Active Projects

Inner West

$470,000 $5,802 9

Inner North

$477,000 $6,403 33

Apartment Price Price per Sqm Active Projects

$585,000 $6,158 15

Apartment Price Price per Sqm Active Projects

North Shore

$530,500 $6,890 19

$464,500 $5,401 12

Apartment Price Price per Sqm Active Projects

Gold Coast Apartment Price Price per Sqm Active Projects

$509,900 $5,203 76

Source: Oliver Hume Research.

Oliver Hume Quarterly Market Insights - March Quarter 2018 | oliverhume.com.au | +61 3 9669 5999

35

NATIONAL HEAD OFFICE Level 2, 4 Riverside Quay Southbank VIC 3006 +61 3 9669 5999 oliverhume.com.au

Important: The information in this document has been prepared a general guide only and does not constitute advice. We have relied upon information from sources generally regarded as authoritative.

Whilst the information has been prepared in good faith and with due care, no representation is made in relation to the accuracy of the whole or any part of the publication. No liability for negligence or otherwise is assumed for any loss or damage suffered by any party resulting from their use of this publication. The whole or any part of this publication must not be mirrored, reproduced or copied, without written consent. The document may contain future forecasts of a range of variables, which can be affected by a significant number of unpredictable factors, including social and economic conditions. It only represents the best judgements and estimates, made by Oliver Hume Research. No assurances can be given that the forecasts will be achieved. This document should be read in conjunction with any other documentation prepared by the marketing agent and associated consultants.