Quarterly Market Insights March Quarter 2019
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
1
2
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
TABLE OF CONTENTS Foreword
04
NATIONAL HIGHLIGHTS National Highlights
08
Buyer Profiles
10
VICTORIA Market Drivers
14
Land Market
16
Apartments and Townhouses
24
Development Sites
28
QUEENSLAND Market Drivers
32
Land Market
34
Apartments and Townhouses
38
FEATURE ARTICLES The Rise of Melbourne Townhouse - A New Era for Melbourne Housing
42
Australia’s Growing Population Underpins The Property Market
44
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
3
Julian Coppini Chief Operating Officer j.coppini@oliverhume.com.au
FOREWORD The Australian property market continues to weather the headwinds of tighter lending conditions, the ongoing impacts of election uncertainty and the inevitable aftermath of a property boom which saw residential property prices reach new heights. With enough time now elapsed to more accurately gauge where markets might be heading, two perspectives of likely future movements are now starting to take shape. The first perspective is that we are now entering into a prolonged downturn in the market. Notwithstanding the recent announcement by the Australian Prudential Regulation Authority (APRA) to ease serviceability requirements, the continued difficulties in finance, lack of affordability and downturn in construction are all cited as drivers of the new paradigm of a housing market in retreat. The second, more optimistic view, is that we are in a period of post-boom adjustment simply made more challenging by the well-known changes in finance and lending practices we have observed over several years. A tightly fought election, where the property market and home ownership have been central issues, has only complicated the outlook. This alternative perspective, however, also considers the many indicators which provide grounds for optimism. Lending conditions had already started to ease before the APRA announcement. The APRA announcement itself is a game-changer. In terms of the economy, the outlook has moderated recently, but growth is expected to remain steady and near trend over the medium term. The labour market remains essentially stable; there have been substantial increases in employment, and the unemployment rate remains low despite a recent uptick. While residential construction is expected to slow as we approach the end of the cycle, non-mining investment (including infrastructure spending) continues to support growth. Population growth remains strong. Queensland’s population continues to recover with the state
4
QUARTERLY MARKET INSIGHTS
continuing to attract an increasing level of interstate migrants. In Victoria, Melbourne and the larger regional cities continue to grow at near record rates. After several years of sustained population growth some commentators expect Melbourne will become Australia’s largest city before 2030. Turning to the property market, the adjustment in established and new housing market has generally seen some of the gains in prices come off and sales volumes decline. However, the adjustment is also leading to the return of some buyers, especially first home buyers, to the market. Further ahead, we foresee that the combined impact of lower prices and higher rents (leading to higher yields) will also see the gradual return of investors to the market. While the Victorian land market is adjusting, especially through lower sales volumes, the Queensland land market has remained relatively stable following a softening of the market over the later part of 2018. Medium and high-density markets across Australia also face their own unique opportunities and challenges. While apartment markets across Australia’s large capital cities, especially across the eastern seaboard, have moderated overall, high quality developments that are well-located and meet market needs remain in demand. As we have noted in our previous reports the structural shift to medium density continues, including in middle and outer suburban and greenfield markets, with townhouses becoming increasingly popular amongst a diverse range of buyers and market segments. Oliver Hume is committed to providing our clients and partners with the latest data, property intelligence and insights to make the right decisions. This latest quarterly market report is an invaluable tool for strategic decision making and understanding current and emerging trends in the property market. The report includes a diverse range of data sets, including our own proprietary intelligence, and is compiled by our specialist in-house research team.
MARCH QUARTER 2019
Perth
Darwin
NORTHERN TERRITORY QUEENSLAND Brisbane
WESTERN AUSTRALIA
Gold Coast
SOUTH AUSTRALIA NEW SOUTH WALES Sydney Adelaide Canberra
VICTORIA Melbourne
TASMANIA Hobart
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
5
NATIONAL HIGHLIGHTS
NATIONAL HIGHLIGHTS
NATIONAL HIGHLIGHTS
CASH RATE
ECONOMIC GROWTH
INFLATION
1.5%
2.3%
1.3%
UNEMPLOYMENT RATE
EMPLOYMENT GROWTH
WAGE GROWTH
5.0%
2.4%
2.3%
AVERAGE WEEKLY EARNINGS
HOUSEHOLD SAVING RATIO
NET FOREIGN LIABILITIES
$1,225
2.5%
52%
CONVERSION RATE
POPULATION
EMPLOYMENT RATIO
= US$0.70
1.6% ANNUAL GROWTH
RESIDENTIAL DWELLINGS
HOUSEHOLD WEALTH
HOUSEHOLD DEBT
$651K
738%
190%
AS A SHARE OF INCOME
AS A SHARE OF INCOME
RISKIER LENDING LOW
RISKIER LENDING LOW
NON-PERFORMING LOANS
7%
16%
0.9%
A$1
>90% LOAN TO VALUATION
25MIL
INTEREST ONLY
OF GDP
62%
RISING BUT LOW
Sources: Reserve Bank of Australia (RBA), Australian Bureau of Statistics (ABS).
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QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
Sep-1982 Sep-1984
Sep-2018
Sep-2017
Sep-2016
Sep-2015
Sep-2014
Sep-2013
Sep-2012
Sep-2011
Sep-2010
Sep-2009
Sep-2008
Sep-2007
Sep-2006
Sep-2005
Sep-2004
Sep-2003
Sep-2002
Sep-2001
Sep-2000
Sep-1999
Sep-1998
Sep-1997
Sep-1996
Sep-1995
Sep-1994
Sep-1993
Sep-1992
Sep-1991
Sep-1990
Sep-1989
Sep-1988
Sep-1987
Sep-1986
Sep-1985
300 1.5
250
200 1.0
100
0 Annual Growth (%)
400
Sep-2018
Sep-1982 Sep-1983
Annual Growth (000s) 500
Sep-2017
Sep-2016
Sep-2015
Sep-2014
Sep-2013
Sep-2012
Sep-2011
Annual Growth (%)
Sep-2010
Sep-2009
Sep-2008
Sep-2007
Sep-2006
Sep-2005
Sep-2004
Sep-2003
Sep-2002
Sep-2001
Sep-2000
Sep-1999
Sep-1998
Sep-1997
Sep-1996
Sep-1995
Sep-1994
Sep-1993
Sep-1992
Sep-1991
Sep-1990
Annual Growth (000s)
Sep-1989
Sep-1988
Sep-1987
Sep-1986
Sep-1985
Sep-1984
Sep-1983
Annual Net Overseas Migration (000s)
Australia’s population continues to grow at near record levels. Australia’s population grew by 1.6 per cent in the year ending 30 September 2018. Over 395,100 people were added to the population over the period. Overseas migration remains they key driver of population growth.
Australia - Annual Population Growth 2.5
450
2.0
350
150
0.5
50
0.0
Source: ABS, Oliver Hume Research.
Australia - Annual Net Overseas Migration
350
300
250
200
150
100
50
0
Source: ABS, Oliver Hume Research.
NATIONAL HIGHLIGHTS
Darren Blair
BUYER PROFILES
National Marketing Manager d.blair@oliverhume.com.au
PRODUCT MARKET FIT IN THE CURRENT LANDSCAPE
Current Living Circumstances 22%
It’s been quite a year. As the greenfield market is challenged to evolve and adapt to the current conditions, one of the ways to stay ahead of the competition will be for projects to better understand and define their target market. One of the key factors and trends to come out of 2019 will be ‘product market fit’. By product market fit we mean confirming that the products we offer meet the needs of specific target markets by anticipating their needs. Sales volumes have been stalled by headwinds of higher price points and the availability of debt. Taking into account the above challenge, there is an opportunity to having a deep understanding of a project’s intended target audience through qualitative and quantitative data. This may uncover the edge to developing a product that meets the market in terms of affordability, liveability and other expectations. A project that understands their buyers will be able to future proof their way through a challenging market and capitalise on the return to more stable conditions.
44%
ALL AGES
34%
Family
Couple
Families followed by couples remain key market segments. However, the proportions differ markedly across different demographic segments.
18%
58%
In a competitive environment it is important to change the way the industry introduces product that fits current and emerging market conditions. Product extends beyond just adjusting lot sizes, it talks to interesting placemaking, attractive open spaces and amenity which enhances the liveable nature of a new community. Oliver Hume’s 2019 data (year to date) data highlight the power of focusing on information which capture both buyer profiles and behaviour.
Single
35-49
24%
Family
Couple
Single
Families become increasingly important as buyers become older.
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QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
17%
22%
39% 40%
18-24
25-34
44%
Family
Couple
Single
38%
Family
Couples dominate younger age groups but singles also represent an important cohort.
Couple
Single
As buyers get older the proportions between families and couples becomes more evenly balanced.
15%
61%
50-59 24%
Family
Couple
Single
Although families become increasingly important couples represent a quarter of all sales.
Product extends beyond just adjusting lot sizes, it talks to interesting placemaking, attractive open spaces and amenity which enhances the liveable nature of a new community.
Source: Oliver Hume Research.
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
11
VICTORIA
VICTORIA
George Bougias
MARKET DRIVERS
National Head of Research g.bougias@oliverhume.com.au
Victoria remains one of Australia’s best performing economies supported by a range of factors including diverse industries, robust population growth and robust infrastructure spending. Victoria continues to have the strongest labour market, economic growth, retail trade and construction work done. • Economic activity is 26.9 per cent above its decade-average output (best nationally) • Wage growth was 2.7 per cent in the year to December (best nationally) • Construction work done was 33.1 per cent above decade average.
DWELLING COMMENCEMENTS
UNEMPLOYMENT
POPULATION GROWTH
ECONOMIC GROWTH
14,307 -3.1% Level this quarter
4.6% -18.7% Level this quarter
2.20% 5.5% Level this quarter
$420,563m 26.9%
Compared with decade average
Compared with decade average
Compared with decade average
Compared with decade average
Level this quarter
EQUIPMENT INVESTMENT
HOUSING FINANCE
RETAIL SPENDING
$3,169m 5.2% Level this quarter
14,326 5.0% Level this quarter
$20,962m $13,615m 17.7% 33.1% Level this quarter
Level this quarter
Compared with decade average
Compared with decade average
Compared with decade average
Compared with decade average
Source: https://www.commsec.com.au/stateofstates
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QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
CONSTRUCTION WORK
State Unemployment Rates
Victoria’s labour market remains one of the best in Australia. The trend unemployment rate reached 4.8% in April 2019, one of the lowest in Australia.
%
Trend
8
Victoria remains the national population growth leader.
7
6
In the year ending 30 September 2018, Victoria recorded the highest population growth rate of all states and territories at 2.2%.
5
4
3
2 2009
2014
NSW
2019
VIC
2009
QLD
2014
SA
2019
WA TAS Source: ABS, RBA.
September Qtr 2018 Key Figures Preliminary Data
Population at end Sep Qtr 2018 (‘000)
Change over previous year (‘000)
Change over previous year (%)
New South Wales
8,023.7
119.5
1.5
Victoria
6,497.7
139.7
2.2
Queensland
5,033.1
86.0
1.7
South Australia
1,740.7
13.7
0.8
Western Australia
2,602.4
22.6
0.9
Tasmania
529.9
6.0
1.2
Northern Territory
247.2
-0.4
-0.2
Australian Capital Territory
422.5
8.0
1.9
Australia
25,101.9
395.1
1.6 Source: ABS, Oliver Hume Research.
Population Growth - Selected States and Australia (%) 4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
NSW
VIC
QLD
WA
Australia
QUARTERLY MARKET INSIGHTS
Sep-2018
Sep-2017
Sep-2016
Sep-2014
Sep-2015
Sep-2012
Sep-2013
Sep-2011
Sep-2010
Sep-2009
Sep-2008
Sep-2007
Sep-2006
Sep-2005
Sep-2004
Sep-2003
Sep-2002
Sep-2001
Sep-2000
Sep-1999
Sep-1998
Sep-1997
Sep-1996
Sep-1994 SA
Sep-1995
Sep-1992
Sep-1993
Sep-1991
Sep-1990
Sep-1989
Sep-1988
Sep-1987
Sep-1986
Sep-1985
0%
Source: ABS, Oliver Hume Research.
MARCH QUARTER 2019
15
VICTORIA
LAND MARKET
The land market continues to moderate buffeted by uncertainty around finance and lending, the recent election and a more subdued general property market environment.
Gross lot prices remain below recent peaks and are expected to continue softening.
Lot prices continue to soften as the median prices remain below recent peaks. This trend is expected to continue for the next 6 -12 months at least.
Growth Area Median Land Price (Sold) $400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
Cardinia Hume Mitchell
16
Casey Melton Geelong
QUARTERLY MARKET INSIGHTS
QI. ‘19
QIII. '18
QIV. '18
QI. '18
QII. '18
QIII. '17
QIV. '17
QI. '17
QII. '17
QIII. '16
QIV. '16
QI. '16
QII. '16
QIII. '15
QIV. '15
QI. '15
QII. '15
QIII. '14
QIV. '14
QI. '14
QII. '14
QIII. '13
QIV. '13
QI. '13
QII. '13
QIII. '12
Whittlesea Wyndham Metro Melbourne
QIV. '12
QI. '12
QII. '12
QIII. '11
QIV. '11
QI. '11
QII. '11
QIII. '10
QIV. '10
QI. '10
QII. '10
QIII. '09
QIV. '09
$0
Source: Oliver Hume Sold Lots, Annual moving average. Median (all of VIC)
MARCH QUARTER 2019
Metropolitan Melbourne median lot prices QI, ‘18
QIV, ‘18
QI, ‘19
Time Series % Growth
Mitchell
$280,000
$268,250
$270,000
53%
0.7%
3.6%
Cardinia (S)
$344,500
$370,000
$349,500
79%
5.5%
1.5%
Casey (S)
$375,000
$377,000
$355,000
70%
5.8%
5.3%
Hume (N)
$328,000
$339,000
$326,000
59%
3.8%
0.6%
Melton (W)
$275,000
$300,000
$295,000
32%
1.7%
7.3%
Whittlesea (N)
$333,000
$320,000
$306,500
41%
4.2%
8.0%
Wyndham (W)
$316,000
$330,500
$325,000
35%
1.7%
2.8%
Geelong (W)
$235,000
$279,950
$275,000
54%
1.8%
17.0%
Surf Coast (W)
$347,000
$444,500
$392,500
57%
11.7%
13.1%
Metro Melbourne (All 7 Growth Areas) - Conventional
$313,000
$333,250
$325,000
51%
2.5%
3.8%
Metro Melbourne (All 7 Growth Areas) - All Lots
$314,000
$333,950
$325,000
NA
2.7%
3.5%
Median (All of Vic)
$293,000
$322,000
$310,000
50%
3.7%
5.8%
Municipality
QoQ
YoY
Source: Oliver Hume Research.
The median lot price for metropolitan Melbourne (gross prices, conventional lots) was $325,000 in the March quarter 2019, down 2.5% over the quarter and up 3.8% over the year (down $8,250 and $12,000 respectively). Increased levels of incentives have seen net prices decline further.
Gross median lot price - Metropolitan Melbourne 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5%
QI. ‘19
QIII. '18
QIV. '18
QI. '18
QII. '18
QIII. '17
QIV. '17
QI. '17
QII. '17
QIII. '16
QIV. '16
QI. '16
QII. '16
QIII. '15
QIV. '15
QI. '15
QII. '15
QIII. '14
QIV. '14
QI. '14
QII. '14
QIII. '13
QIV. '13
QI. '13
QII. '13
QIII. '12
QIV. '12
QI. '12
QII. '12
QIII. '11
QIV. '11
QI. '11
QII. '11
QIII. '10
QIV. '10
QI. '10
QII. '10
QIII. '09
QIV. '09
0%
Source: Oliver Hume Research. Sold Lots. Conventional.
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
17
VICTORIA
MARCH QUARTER 2019 MEDIAN LOT PRICES BY SUBURB (GROSS)
WALLAN $240,000 $265,500
400 SQM AND 488 SQM LOTS
KALKALLO $331,000 $353,000
MICKLEHAM $334,250 $354,450
CRAIGIEBURN $378,000 $403,200
ROXBURGH PARK $384,000 $416,500
GREENVALE $410,000 $440,500 MELTON SOUTH $252,500 $286,000
PLUMPTON $351,000 $380,500
FRASER RISE $340,000 $364,000
WYNDHAM VALE $253,000 $318,750
WEIR VIEWS $266,000 $285,000
TARNEIT $319,500 $357,000
MAMBOURIN $288,500 $319,250
LOVELY BANKS $254,500 $274,000
WERRIBEE $309,000 $350,000
MELBOURNE TRUGANINA $363,900 $385,000
POINT COOK $454,000 $519,000
LARA $258,000 $270,000
GEELONG CHARLEMONT $277,500 $287,000
MT DUNEED $256,900 $271,900 ARMSTRONG CREEK $314,200 $342,400
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QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
ST LEONARDS $219,950 $249,950
BEVERIDGE $280,000 $307,000
WOLLERT $384,950 $379,500
BERWICK $430,000 $459,000 OFFICER $340,000 $357,000
CLYDE $344,500 $370,000
CRANBOURNE EAST $362,000 $390,000
CRANBOURNE $355,000 $380,000
CLYDE NORTH $335,000 $383,500
BOTANIC RIDGE $371,000 $383,500
400 sqm Median Price 448 sqm Median Price Source: Oliver Hume Research. Sold.
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
19
VICTORIA
LAND MARKET
Sales volumes have troughed but should increase gradually over the short-term as lending conditions continue to ease.
Sales volumes remain low reflecting a range of factors not least the pull-forward effect of the property boom (where many buyers brought their purchases forward), tighter lending conditions and uncertainty (especially around policy towards the property industry post-election). We consider sales volumes have troughed and should gradually increase over the short-term as lending conditions continue to ease and buyer confidence improves.
Monthly Melbourne Growth Area Project Land Sales (Index) 450
400
350
300
250
200
150
100
50
Mar-19
Jun-18
Sep-17
Dec-16
Mar-16
Jun-15
Sep-14
Mar-13
Jun-12
Sep-11
Dec-10
Mar-10
Jun-09
Sep-08
Dec-07
Mar-07
Jun-06
Sep-05
Dec-04
0
Source: Oliver Hume Research. Moving Quarterly Average. Dec. 2004=100.
20
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
Despite the softer land market, lot sizes continue to decline reflecting long-run trends such as affordability pressures and shifting demographic and consumer preferences.
Metropolitan Melbourne median lot sizes (all lots) Municipality
QI, ‘18
QIV, ‘18
QI, ‘19
QoQ (%)
YoY (%)
QoQ ($)
YoY ($)
Mitchell
509
403
413
2.5%
3.6%
10
96
Cardinia (S)
473
500
404
9.7%
15.8%
46
71
Casey (S)
414
400
400
2.7%
8.4%
11
37
Hume (N)
420
400
392
3.3%
3.3%
14
14
Melton (W)
392
400
408
2.0%
0
8
Whittlesea (N)
392
400
378
0.0%
8
0
Wyndham (W)
400
410
400
0.0%
0
0
Geelong (W)
458
448
448
5.0%
7.4%
23
33
Surf Coast (W)
441
448
414
9.1%
5.5%
40
25
0.0% 2.0% 0.0%
Source: Oliver Hume Research.
Land clearance rates remain low due to low sales rates relative to stock currently on market. The clearance rate, however, has stabilised in recent months further suggesting that the market may have troughed and is consistent with broader trends in the established residential market.
Metropolitan Melbourne Growth Area Land Clearance Rate - Monthly 70%
60%
50%
40%
30%
20%
10%
Clearance Rate (Monthly)
Mar-19
Jan-19
Feb-19
Dec-18
Oct-18
Nov-18
Sep-18
Jul-18
Aug-18
Jun-18
Apr-18
Clearance Rate (Average)
May-18
Mar-18
Jan-18
Feb-18
Dec-17
Oct-17
Nov-17
Sep-17
Jul-17
Aug-17
Jun-17
Apr-17
May-17
Mar-17
Jan-17
Feb-17
Dec-16
Oct-16
Nov-16
Sep-16
Jul-16
Aug-16
Jun-16
Apr-16
May-16
Mar-16
Jan-16
Feb-16
0%
Source: Oliver Hume Research.
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
21
VICTORIA
LAND MARKET
Time on market (the time taken for an average lot to sell upon release) has increased and remains around equilibrium levels (around 90 days).
Metropolitan Melbourne, All Growth Area | Average Time on Market (Days) 200 180 160 140
Days
120 100 80 60 40 20
QI. ‘19
QIV. '18
QIII. '18
QII. '18
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
QIII. '12
QII. '12
0
Source: Oliver Hume Research.
Reflecting broader market trends investment sales have declined as a share of all sales.
Metropolitan Melbourne Land Sales - Owner Occupier and Investor Market Share (%) 100% 90% 80% 70% 60% 50%
87%
84%
81%
76%
78% 91%
40% 30% 20% 10%
13%
16%
19%
24%
22% 9%
0% 2014 Owner occupier
22
2015
2016
Investor
QUARTERLY MARKET INSIGHTS
2017
2018
Y.T.D 2019 Source: Oliver Hume Research.
MARCH QUARTER 2019
Opalia - Melton South QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
23
VICTORIA
APARTMENTS AND TOWNHOUSES
Melbourne unit and apartment prices remain resilient. The relative affordability of units and apartments has been a key factor supporting values of these dwelling types especially in the context of tighter lending conditions.
The relative affordability of units and apartments has been a key factor supporting values...
The Real Estate Institute of Victoria (REIV) reports that median unit and apartment prices were up over the year in the March quarter 2019 (up 0.4%). In contrast, house prices declined by 0.6% over the same period.
Metropolitan Melbourne Median Dwelling Prices $900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
House
24
Mar-19
Jul-18
Nov-18
Mar-18
Nov-17
Jul-17
Mar-17
Nov-16
Jul-16
Nov-15
Mar-16
Jul-15
Mar-15
Jul-14
Nov-14
Mar-14
Source: Oliver Hume Sold Lots.
Units and Apartments
QUARTERLY MARKET INSIGHTS
Nov-13
Jul-13
Mar-13
Nov-12
Jul-12
Nov-11
Mar-12
Jul-11
Mar-11
Jul-10
Nov-10
Mar-10
Nov-09
Jul-09
Mar-09
$200,000
MARCH QUARTER 2019
MELBOURNE
METROPOLITAN MELBOURNE HOUSE Quarterly growth Annual change UNIT & APARTMENT Quarterly growth Annual change
INNER MELBOURNE
$793,000 1.4% 0.6%
$586,500 0.5% 0.4%
MIDDLE MELBOURNE HOUSE Quarterly growth Annual change UNIT & APARTMENT Quarterly growth Annual change
Metropolitan Melbourne
$1,341,500
HOUSE Quarterly growth Annual change UNIT & APARTMENT Quarterly growth Annual change
4.3% 6.9% 1.9% 1.3%
The REIV ‘house’ classification includes: - Detached houses - Terraced houses - Semi-detached houses - Holiday houses - Duplexes - House and granny flat.
0.1% 6.9%
$639,000 0.9% 1.4%
$639,000
HOUSE Quarterly growth Annual change UNIT & APARTMENT Quarterly growth Annual change
Middle Melbourne (10-20km)
$579,000
OUTER MELBOURNE
$913,000
Inner Melbourne (<10km)
1.9% 0.3%
$501,500 3.1% 4.5%
QUARTERLY MARKET INSIGHTS
‘Units & apartments’ include: - Flats - Units - Apartments - Townhouses - Penthouses - Villas - Residential warehouse conversions - Bed-sits
Source: Real Estate Institute of Victoria.
MARCH QUARTER 2019
25
VICTORIA
APARTMENTS AND TOWNHOUSES In this quarter’s report we take a closer look at trends in new supply, specifically building approvals for townhouses and other medium density dwellings. Consistent with a general slowing in residential construction, non-house dwelling approvals continue to decline led by falls in apartment approvals.
Monthly Building Approvals By Type - Victoria 4,000
Total Number of dwelling units (No.)
3,500 3,000 2,500 2,000 1,500 1,000 500
Houses
Dwellings excluding houses
Mar-2019
Mar-2017
Mar-2018
Mar-2016
Mar-2014
Mar-2015
Mar-2012
Mar-2013
Mar-2011
Mar-2010
Mar-2009
Mar-2007
Mar-2008
Mar-2006
Mar-2005
Mar-2003
Mar-2004
Mar-2001
Mar-2002
Mar-2000
Mar-1999
Mar-1997
Mar-1998
Mar-1996
Mar-1995
Mar-1993
Mar-1994
Mar-1991
Mar-1992
Mar-1990
Mar-1989
Mar-1987
Mar-1988
Mar-1986
Mar-1984
Mar-1985
0
Source: ABS. Oliver Hume Research, Private sector.
Medium density dwellings (including semi-detached, row or terrace houses, townhouses) continue to represent a growing share of all dwelling approvals. This reflects a range of factors including the structural shift in consumer demand driven by demographic change and affordability. Despite recent softening, medium density dwellings approvals now represent around a much larger share of all approvals.
Annual Building Approvals By Type - Victoria 45,000 40,000
Total Number of dwelling units (No.)
35,000 30,000 25,000 20,000 15,000 10,000 5,000
Houses Semi-detached, row or terrace houses, townhouses Flats units or apartments
26
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
Mar-19
Mar-18
Mar-17
Mar-16
Mar-15
Mar-14
Mar-13
Mar-12
Mar-11
Mar-10
Mar-09
Mar-08
Mar-07
Mar-06
Mar-05
Mar-04
Mar-03
Mar-02
Mar-01
Mar-00
0
Source: ABS. Oliver Hume Research. Rolling sum.
In terms of approvals by specific type, semi-detached row or terrace houses and townhouses approvals (2+ storeys dwellings) have grown steadily over the last five years nearly overtaking the more volatile apartment (4+ storey blocks) segment.
Annual Building Approvals By Type - Victoria 25,000
Total Number of dwelling units (No.)
20,000
15,000
10,000
5,000
Semi-detached, row or terrace houses, townhouses - 1 storey Semi-detached, row or terrace houses, townhouses - 2+ storeys Flats units or apartments - 1 or 2 storey block Flats units or apartments - 3 storey block Flats units or apartments - 4+ storey block
Mar-19
Mar-18
Mar-17
Mar-16
Mar-15
Mar-14
Mar-13
Mar-12
Mar-11
Mar-10
Mar-09
Mar-08
Mar-07
Mar-06
Mar-05
Mar-04
Mar-03
Mar-02
Mar-01
Mar-00
0
Source: ABS. Oliver Hume Research. Rolling sum.
All other non-house dwelling segments have continued to decline in absolute terms and now represent only a fraction of new residential supply in the pipeline.
Annual Building Approvals By Type - Victoria 4,000
3,000
2,500
2,000
1,500
1,000
500
Semi-detached, row or terrace houses, townhouses - 1 storey Flats units or apartments - 1 or 2 storey block Flats units or apartments - 3 storey block
Mar-19
Mar-18
Mar-17
Mar-16
Mar-15
Mar-14
Mar-13
Mar-12
Mar-11
Mar-10
Mar-09
Mar-08
Mar-07
Mar-06
Mar-05
Mar-04
Mar-03
Mar-02
Mar-01
0 Mar-00
Total Number of dwelling units (No.)
3,500
Source: ABS. Oliver Hume Research. Rolling sum.
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
27
VICTORIA
DEVELOPMENT SITES Activity in the development sites market has slowed, and the market is currently in disequilibrium.
GISBORNE
$900,000
Buyers and sellers are seeking to understand future market conditions and the true level of key market indicators (such as price per hectare and retail lot prices). The figures on the right present indicative values based on the most recent transactions.
SUNBURY
$1,200,000 PLUMPTON MELTON SOUTH
$1,100,000
$1,700,000
TARNEIT
$1,650,000
WYNDHAM VALE
$1,650,000
GEELONG
ARMSTRONG CREEK
$1,100,000 28
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
INDICATIVE DEVELOPMENT SITE VALUES (PER HA)*
Peter Vassallo Managing Director | Development Sites p.vassallo@oliverhume.com.au
DONNYBROOK
$1,350,000 GREENVALE
$1,750,000
MELBOURNE
OFFICER
$1,800,000
*
Based on 3-5 year terms. Values are indicative only.
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
29
QUEENSLAND
QUEENSLAND
Amanda Bittenbinder
MARKET DRIVERS
Queensland Research Manager a.bittenbinder@oliverhume.com.au
State Share of Output
The Queensland economy continues to improve buoyed by gas exports, tourism and population growth.
% 35
The improvement is gradual helping to lift the state’s share of national output although scope remains to lift the state’s economic performance.
30 25
However, as in other jurisdictions subdued wages growth is weighing on consumption expenditure and retail spending.
20 15 10 5 0 1992-1993
1997-1998
NSW
2002-2003
VIC
2007-2008
QLD
2012-2013
SA
2017-2018
WA
TAS Source: ABS.
Population remains a key driver of Queensland’s economic growth. In the year ending 30 September 2018, Queensland’s population surpassed 5 million, growing by 86,000 people or 1.7 percent.
Annual Population Growth - Selected States 180,000 160,000
Annual Change (No.)
140,000 120,000 100,000 80,000 60,000 40,000 20,000
NSW
32
VIC
QLD
QUARTERLY MARKET INSIGHTS
WA
MARCH QUARTER 2019
Mar-2017
Mar-2018
Mar-2016
Mar-2014
Mar-2015
Mar-2013
Mar-2011
Mar-2012
Mar-2010
Mar-2009
Mar-2007
Mar-2008
Mar-2006
Mar-2005
Mar-2004
Mar-2003
Mar-2001
Mar-2002
Mar-1999
Mar-2000
Mar-1997
Mar-1998
Mar-1996
Mar-1995
Mar-1993 SA
Mar-1994
Mar-1991
Mar-1992
Mar-1990
Mar-1989
Mar-1987
Mar-1988
Mar-1986
Mar-1985
Mar-1984
0
Source: Australian Bureau of Statistics, Australian Demographic Statistics, September quarter 2018.
Net interstate migration continues to be a key driver of Queensland’s population and more broadly, economic growth. In the year ending 30 September 2018, Queensland had the highest net gain with 24,300 people (up from 19,700 people in the previous year). This was followed by Victoria (14,000 people). Affordability, employment and the movement of retirees remain key drivers of interstate migration to Queensland.
Interstate Migration, Arrivals, Departures and Net ACT
NT
TAS
WA
SA
QLD
VIC
NSW
-20 Interstate arrivals
0
20
Interstate departures
40
60
80
Net interstate migration
100
120
Source: ABS, Oliver Hume Research.
Queensland Annual Population Change - Growth Components 140,000
120,000
100,000
80,000
60,000
40,000
20,000
Mar-1995 Sep-1995 Mar-1996 Sep-1996 Mar-1997 Sep-1997 Mar-1998 Sep-1998 Mar-1999 Sep-1999 Mar-2000 Sep-2000 Mar-2001 Sep-2001 Mar-2002 Sep-2002 Mar-2003 Sep-2003 Mar-2004 Sep-2004 Mar-2005 Sep-2005 Mar-2006 Sep-2006 Mar-2007 Sep-2007 Mar-2008 Sep-2008 Mar-2009 Sep-2009 Mar-2010 Sep-2010 Mar-2011 Sep-2011 Mar-2012 Sep-2012 Mar-2013 Sep-2013 Mar-2014 Sep-2014 Mar-2015 Sep-2015 Mar-2016 Sep-2016 Mar-2017 Sep-2017 Mar-2018 Sep-2018
0
Total Population Growth Net Overseas Migration
Natural Increase Net Interstate Migration
Source: Oliver Hume Research.
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
33
QUEENSLAND
LAND MARKET
Across South East Queensland 300-400 sqm lots continue to represent the majority of lots sold.
In recent years an increasing share of smaller lots has been sold. For example, over the period from the December quarter 2017 to the March quarter 2019 the share of lots sold sized 601-1000 sqm has decreased from 14% to 9%. Over the same period, the share of lots sold sized below 300 sqm has increased from 6% to 10%.
SEQ Project Land Sales (0 - 1,000 sqm) Market Share by Product Type 100%
14%
12%
10%
11%
13%
31%
29%
11%
10%
14%
17%
9%
90%
80%
13%
15%
70%
60%
31%
32%
31%
32%
50%
40%
30%
38% 36%
41%
34%
10%
36%
34%
20%
10%
6%
8%
6%
QIV. ‘17
QI. ‘18
QII. ‘18
6%
10%
0%
Less than 300sqm
34
301-400sqm
401-500sqm
QUARTERLY MARKET INSIGHTS
501-600sqm
MARCH QUARTER 2019
QIII. ‘18 601-1,000sqm
QIV. ‘18
QI. ‘19 Source: Oliver Hume Research.
SEQ median prices have continued to edge higher in recent years. The median price for lots sold in the Brisbane local government area has experienced amongst the strongest growth increasing from $352,375 to $385,375 (9%) in the year to the March quarter.
South East Queensland Median Prices $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 Brisbane QI.’18
QII.’18
QIII.’18
Gold Coast QIV.’18
Ipswich
Logan
Moreton Bay
QI.’19
Redland
SEQ
Source: Oliver Hume Research.
As at the March quarter 2019, the average value rate of lots sold in the Brisbane local government areas was the highest ($961 per square metre). The Logan local government area was the most affordable location with an average of $524 per sqm.
SEQ Project Land Sales | Median Value Rate - March Quarter 2019
South East Queensland
Redland
Moreton Bay
Logan
Ipswich
Gold Coast
Brisbane
$0
$200
$400
$600
$800
$1,000
$1,200
Source: Oliver Hume Research.
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
35
QUEENSLAND
LAND MARKET
Continuing in recent trends, the South East Queensland market experienced rising prices and average value rates as well as declining lots sizes in the year to the March quarter 2019.
The South East Queensland market continues to experience rising prices and average value rates.
While the Brisbane local government area experienced the greatest increase in average value rates (11%), the Moreton Bay local government area experienced the greatest relative decline in lot sizes (down 8%).
Annual Change in Land Size and Value Rate -1.4%
South East Queensland
3.1% -1.0%
Redland
2.4% -7.5%
Moreton Bay
2.5% 2.9%
Logan
-0.4% -4.1%
Ipswich
7.9% -2.9%
Gold Coast
10.0% -1.2%
Brisbane
10.7% -10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
Source: Oliver Hume Research.
36
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
The Verge - Oliver Hume Property Funds project at Logan Reserve QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
37
QUEENSLAND
APARTMENTS AND TOWNHOUSES
BRISBANE APARTMENT MARKET The trends witnessed toward the end of 2018 have carried over to the first quarter of 2019. Lower density projects are still the winners as the Brisbane market continues to ride out the supply hike over the past several years. As demand has tapered off for the overall apartment market, the supply of new projects has been subdued. There is currently a considerable number of projects in the pipeline, but it is unlikely that all projects will eventuate due to prevailing market conditions. Of the approximate 32,000 units currently seeking development approval, nearly 13,000 have been deferred. Many of the projects that are moving forward have undergone alterations to deliver owner occupier targeted products as the investor pool continues to dissipate. The current market has seen a shift in focus from large scale developments to premium and boutique developments. This development type is the remaining heartbeat in the Brisbane apartment market as owner occupiers reject cookie-cutter style developments in favour of larger units with upmarket fittings and fixtures. A similar trend is also occurring in the townhouse market as smaller boutique townhouse projects are taking advantage of the rising prices of housing and offering a product in a smaller complex with fixtures and fittings tailored toward the owner occupier market. As a result, the moderation in the future supply pipeline has created an opportunity for the Brisbane market to recover in the medium term. In the short term, there is strong competition within the remaining projects.
Brisbane Local Government Area Off the Plan Apartment Market Future Pipeline Supply - Project Stage 35,000
30,000
Approximate No. of Apartments
25,000
20,000
32,124 15,000
10,000
12,857 5,000
5,062 0 Development Application
Development Approval
Development Approval - Deferred Source: Oliver Hume Research.
38
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
Brisbane Inner City Apartment Market - Future Stock Supply by Precincts 60
Approximate No. of Projects
50
40
30
48 20
36 10
19
16
10
11
0 Brisbane CBD
Inner North
Inner South
Inner West
Inner East
Future Pipeline Supply
Northshore Source: Oliver Hume Research.
GOLD COAST APARTMENT MARKET The Gold Coast market has found its success in the small to medium sized developments segment targeting owner occupiers and downsizers, and providing high quality larger units. After peaking in 2018 the Gold Coast market’s stock is starting to contract with a little over 3,000 units across 33 projects with development approval due to be delivered over the next three years. It appears that that supply is not likely to increase in the short term as still relatively tight credit conditions continue to plague pre-sales targets and funding difficulties creating feasibilities issues. There are currently 134 projects with a total yield of over 24,900 units in the development application process, of these 46 projects (around 11,800 units) have been deferred.
Gold Coast Local Government Area Off the Plan Apartment Market - Future Pipeline Supply | Project Stage 25,000
Approximate No. of Apartments
20,000
15,000
10,000
13,106 5,000
11,816
0 Development Approval
Development Approval - Deferred Source: Oliver Hume Research.
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
39
FEATURE ARTICLES
FEATURE ARTICLES
George Bougias
THE RISE OF THE TOWNHOUSE – A NEW ERA FOR MELBOURNE HOUSING
Continued growth in house prices, especially in inner and middle Melbourne, combined with changing lifestyle expectations and demographics, is leading to significant growth in demand for various medium density dwelling types, including townhouses. While Australians, and particularly Victorians, continue to build some of the biggest homes in the world, a report released by CommSec (using commissioned data from the Australian Bureau of Statistics (ABS)) showed that the average floor size of Australian homes (houses and apartments) fell to a 22-year low of around 186 square metres, the smallest since 1996. Smaller dwelling sizes reflect a range of factors including an increased number of apartments and townhouses. The report concluded, quite simply, that demographic change will continue to underpin structural changes in the housing market. As the average number of people in homes declines and the total population increases, there will be a need for an increasing number of smaller homes to be constructed. This requirement will present both opportunities and challenges for the property and finance industries and for owneroccupiers and investors alike. Traditional houses on a sizable block of land, including a backyard and front garden, have been the typical housing product (especially in greenfield markets) as well as being the aspiration of many who seek the great Australian dream. The increased prevalence of apartments saw this dwelling mix change over the last two decades with the aspirations of some market segments also changing.
42
QUARTERLY MARKET INSIGHTS
National Head of Research g.bougias@oliverhume.com.au
More recently the increased release frequency of townhouses has been part of the next wave reshaping the housing market, this is leading to both a supply response (as developers endeavour to respond to changing market conditions) and a demand response (as an increasing share of buyers opt for this type of dwelling product). There are several factors and trends driving townhouse demand all of which are expected to continue indefinitely into the future. The first is demographics. Australia’s population is growing rapidly and ageing and family and household sizes are getting smaller. Going forward, the expectation is that there will be sustained growth in one and two person households. The ABS projects that between 3.0 and 3.5 million people could be living alone in 2041. This is up from 2.3 million in 2016, representing an increase of 32% and 53% respectively. The second and related factor is lifestyle. The owners and renters of inner and middle suburban dwellings are increasingly market segments that place a major value on retail, entertainment, social and other amenities. In many cases, the demanding occupations and lifestyle preferences of these residents leave little time for home maintenance and gardening. Mowing the lawn, once a regular tradition in suburban Melbourne, has been replaced by a coffee at the local café. The third factor is design. Form and function harmoniously combined - creative, efficient and smart architecture both inside and out can provide townhouses with an attractive and modern appearance while also maximising available space.
MARCH QUARTER 2019
The fourth and fifth (related) factors are policy and pricing respectively. With an urban growth boundary that limits the physical expansion of urban development it is a given that land prices will continue to rise especially where population growth has been robust (as it has been in Melbourne). While apartments have increased the efficiency of urban land use, townhouses have also proven to be an important product option in the new dwelling mix especially in markets where traditional houses were once the only option for buyers (such as in outer suburban areas and greenfield markets). Indeed, an increasing number of townhouses and smaller lot products in the greenfield has been one of the reasons that median lot sizes have declined and the share of smaller lots have increased.
Share of Greenfield Lot Sales by Lot Size (Metropolitan Melbourne) 20% 18% 16% 14% 12% 10% 8% 6% 4% 2%
201-300sqm
0-200sqm
Mar-2019
Dec-2018
Sep-2018
Jun-2018
Mar-2018
Dec-2017
Sep-2017
Jun-2017
Mar-2017
Dec-2016
Sep-2016
Jun-2016
Mar-2016
Dec-2015
Sep-2015
Jun-2015
Mar-2015
Dec-2014
Sep-2014
Jun-2014
Mar-2014
0%
Source: Oliver Hume Research.
In many cases new townhouses are priced below that of new houses. This is because although a townhouse might have the same built area as a house (but distributed across multiple levels) the smaller average lot sizes in the case of townhouses can significantly reduce the overall price of the lot price. This is increasingly important in outer suburban areas and greenfield markets where a lower absolute price is important for various market segments especially first home buyers and those looking to enter the market for the first time.
And despite rising building costs, recent data from the ABS suggests that, commensurate with the smaller built size, townhouse construction costs remain much lower than that of a typical new house.
This makes the average built cost of a new townhouse around a fifth lower than that of a new house on build cost alone. Factor in the need for much smaller land sizes and the absolute price for a townhouse becomes even more affordable.
For example, ABS estimates suggest that the average cost of building a house in Australia increased by nearly 75%, increasing from around $179,500 in 2003-04 to around $313,800 in 2017-18. Over the same time, the average cost of building a new townhouse in Australia increased by less than 70%, increasing from around $147,300 in 2003-04 to around $250,200 in 2017-18.
New Home 2017-18
New Townhouse 2017-18
Average Cost (‘000)
Average Size
Cost/sqm
Average Cost (‘000)
Average Size
Cost/sqm
Australia
$313.8
231.9sqm
$1,353
$250.2
147.7sqm
$1,694
Victoria
$316.5
246.4sqm
$1,284
$258.3
151.6sqm
$1,704
Source: ABS - Characteristics of new residential dwellings - a 15 year summary. 8752.0 - Building Activity, Australia, Dec 2018.
With the surge in Melbourne’s house prices over the recent cycle, the pivot to townhouses from first home buyers, investors and other buyers in recent years is not surprising as townhouses have continued to provide a lower absolute entry price to established housing. Access to finance has also played a key role. A few years ago, buyers with a $100,000 deposit were able to have their pick of homes as lenders competed heavily to grow their loan books.
Now, tighter lending conditions, higher serviceability requirements and a Royal Commission means the same $100,000 deposit doesn’t create the same borrowing power. With less borrowing available, buyers have had to settle for properties with lower prices. Moreover, with less land required coupled with lower build costs, townhouses are now often the preferred option for buyers less interested in apartments or houses but with around $500,000 to $800,000 to spend.
From affordability to smart designs and buyers’ lifestyles, it is little wonder that demand is growing rapidly for townhouses. Although traditional houses and apartments will remain important townhouses will increasingly be the preferred option for a growing pool of buyers.
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
43
FEATURE ARTICLES
George Bougias
AUSTRALIA’S GROWING POPULATION UNDERPINS THE PROPERTY MARKET
2018 was an important year for the residential property market. The moderation in Australia’s largest property markets of Sydney and Melbourne, especially, provided a timely reminder that, like the economic cycle, the property cycle is as inevitable as the setting sun.
Of all the factors that drive the supply and demand for property, population stands alone for its degree of influence. An invaluable and timely resource in this regard is the Australian Bureau of Statistics’ (ABS) most recent population projections (released in November 2018).
The year also provided a reminder that while the fundamentals of supply and demand still drive the property market, in the short and medium term, human emotion and market sentiment can exacerbate the natural ups and downs of the cycle.
The population projections, which cover the period 2018 to 2066, contain several important insights.
An opportunity to refocus The beginning of a new year provides the opportunity to reflect on the year just gone and think about the future. More specifically, this is perhaps the best time to think beyond short-term volatility and more about the medium and longterm future and health of the market which will be shaped, ultimately, by the underlying fundamentals of the property market.
This is because residential real estate is a long-term game, including especially for ‘buy and hold’ investors, and identifying and understanding current and emerging trends in population is one of the keys ways you can capitalise on strategic shifts in the market and capitalise on major opportunities.
National Head of Research g.bougias@oliverhume.com.au
Growth Under a range of scenarios, Australia’s estimated resident population (ERP) of over 24.6 million people (as at June 2017) could reach 30 million in 11 to 15 years (between the years 2029 and 2033). A further 10 million people (or approximately the equivalent of two cities the size of Melbourne) could be added to Australia’s population in the following decade (to 2043). Further ahead, Australia’s estimated resident population could grow to between 37 million and 49 million people by 2066. In the latter scenario this could mean Australia’s population almost doubles within the next half century.
The ABS projections are based on different assumptions about the future levels of fertility, mortality, overseas migration and internal migration. The projections provide some important takeaways that anyone interested in property should know and understand.
Historical & Projected Population, Australia 50 48 46 44 42 40 38 Million
36 34 32 30 28 26 24 22 20 18 16 1996 ERP
44
2006 Series A
2016 Series B
QUARTERLY MARKET INSIGHTS
2026 Series C
MARCH QUARTER 2019
2036
2046
2056
2066
Source: ABS, Oliver Hume Research.
Population growth is expected to remain generally strong in the medium and high growth scenarios modelled by the ABS while growth in the other scenario is still expected to remain stable. Population growth rates and key sources of population of growth are expected to differ over the various future periods. For example, in the decade to June 2027, Australia’s population is projected to increase by between 1.4%, 1.6% or 1.8% per annum. This compares to the 1.7% per annum growth in the decade to June 2017.
States and Territories New South Wales is expected to remain Australia’s largest state reaching a population of 10 million as early as 2033 potentially. By 2066 the population of NSW could reach almost 15 million people.
Queensland’s population could increase by 1 million people from June 2017 to reach 5.9 million people by 2027. By 2066 Queensland’s population could reach almost 10.5 million people.
However, continuing recent trends, Victoria is expected to have the largest and fastest population increase. Under one scenario, Victoria’s population (currently around 6.3 million people) could more than double by 2066 (growing faster than the national average) to exceed 14.5 million.
Projected Population, States and Territories, at 30 June 2066 Series A (‘000)
Series B (‘000)
Series C (‘000)
New South Wales
14,796
13,088
11,754
Victoria
14,525
12,030
10,091
Queensland
10,469
8,718
7,507
South Australia
2,437
2,214
2,040
Western Australia
4,926
4,760
4,493
Tasmania
744
581
453
Northern Territory
386
439
490
Australian Capital Territory
939
775
612
Australia (a)
49,226
42,608
37,444
(a) Includes Other Territories comprising Jervis Bay Territory, Christmas Island, the Cocos (Keeling) Islands and Norfolk Island.
Source: Oliver Hume Research.
Urbanisation Australia’s population is expected to be increasingly urbanised and the share of Australians living in capital cities could increase, over the medium term, from 67% (2017) to 70% (2027). The urbanisation trend is expected to be observed in all jurisdictions. For example, Melbourne’s share of Victoria’s population could increase from 77% in 2017 to 85% in 2066. Melbourne to be Australia’s largest city Australia’s largest city could be Melbourne with the city’s population potentially exceeding that of Sydney, potentially, by 2031.
Sydney’s population could increase from 5.1 million (June 2017) to 11.2 million by 2066. Outlook and Considerations Despite the overwhelming shortterm focus of the media and the constant demands for day to day analysis, it is important to remember that property is a long-term game. While population projections and forecasts are never likely to be perfect, the ABS population projections are one of the best tools for seeing over the horizon into Australia’s future and understanding what may occur under different assumptions and scenarios.
So, what do the projections tell us? In a nutshell, Australia is likely to continue enjoying stable, if not robust, population growth. Overseas migration is likely to continue to play an important role in driving our population growth. Our cities and towns will continue to experience the highest level of population growth as urbanisation, now a truly global phenomenon, also shapes our nation. Above all, Australia’s population growth is likely to remain the key driver of our property markets creating many future opportunities.
By 2066 Melbourne could have a population of between 12.2 million (more than double the current population) and 8.6 million people. QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2019
45
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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.