Quarterly Market Insights March Quarter 2020
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
1
2
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
TABLE OF CONTENTS Foreword
04
NATIONAL AND BUYER HIGHLIGHTS National Highlights
08
Buyer Profiles
10
VICTORIA Market Drivers
16
Land Market
20
Apartments and Townhouses
26
Development Sites
30
QUEENSLAND Market Drivers
34
Land Market
36
Apartments and Townhouses
42
FEATURE ARTICLE India in the 21st Century - Implications and Opportunities for Australia
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
46
3
Julian Coppini Chief Operating Officer j.coppini@oliverhume.com.au
FOREWORD The Australian property market is currently experiencing amongst its most challenging conditions in decades due to the COVID-19 outbreak.
While current events present major challenges, it is now possible to chart a path forward and to start thinking beyond the immediate impacts of COVID-19.
COVID-19 is, first and foremost, a health crisis and it has also led to some of the most extraordinary and challenging economic circumstances we have seen in decades including affecting the property market.
The rapid adjustment of the property industry and other sectors has done much to mitigate some of the most adverse effects of COVID-19 and continue working. A diverse range of measures - from working from home to greater use of technology to social distancing - has ensured that where deals could occur, they have done so.
COVID-19 has been most acutely felt in sales volumes, amongst other indicators, although prices have remained relatively resilient to date. Consumer and business confidence have been affected significantly, not least due to the uncertainty and the unprecedented lockdowns on non-essential services. The Federal and State/Territory Governments have intervened significantly to help bridge the gap in demand while lockdowns are in force. Measures such as the Federal Government’s JobKeeper payment have been especially instrumental in supporting the economy. These actions have been supported by the Reserve Bank of Australia (RBA) which has, among other measures, reduced interest rates to new record lows. Australia’s borders are effectively closed meaning that migration, for long a key driver of the Australian property market, has been effectively turned off. With Australia now being well-advanced in our efforts to ‘flatten the curve’ and stop the spread of COVID-19 attention is now turning to, gradually but carefully, re-opening the economy while we continue the fight against COVID-19.
In addition, a range of measures such as the First Home Loan Deposit Scheme, which commenced earlier this year to support first home buyers, has meant that specific buyer groups have had a level of support. Of course, more will need to be done to ensure that demand recovers. Going forward much will also depend on the economic recovery including where unemployment ultimately reaches and how quickly our trading partners (and international economy) can recover and, more broadly, defeat the virus. Although there have been virus outbreaks before, including in recent decades, COVID-19 has, arguably, changed the world forever and it is not too early to consider how we might respond. Providing our clients with the latest data and insights to better anticipate the future and make the right strategic decisions is a key priority for Oliver Hume. In these uncertain times this latest quarterly report is an invaluable tool for understanding current and emerging trends in the property market. The report includes a range of data and indicators, including our own proprietary property intelligence, compiled and analysed by our specialist in-house research team.
In Victoria and Queensland, land sales enquiry and sales levels held firm in January and February but began to show the first signs of softness in March. The brunt of the impact from COVID-19 was felt after the March quarter as Australia reached peak infections and lockdowns were in force for some time.
4
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
Perth
Darwin
NORTHERN TERRITORY QUEENSLAND WESTERN AUSTRALIA
Brisbane Gold Coast
SOUTH AUSTRALIA NEW SOUTH WALES Sydney Adelaide Canberra
VICTORIA Melbourne
TASMANIA Hobart
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
5
1.0 NATIONAL AND BUYER HIGHLIGHTS
1.0 NATIONAL AND BUYER HIGHLIGHTS
1.1
NATIONAL HIGHLIGHTS CASH RATE
ECONOMIC GROWTH
INFLATION
0.25%
2.2%
1.8%
UNEMPLOYMENT RATE
EMPLOYMENT GROWTH
WAGE GROWTH
5.1%
2.0%
2.2%
AVERAGE WEEKLY EARNINGS
HOUSEHOLD SAVING RATIO
NET FOREIGN LIABILITIES
$1,257
3.6%
45.2%
CONVERSION RATE
POPULATION
EMPLOYMENT RATIO
= US$0.61
1.5% ANNUAL GROWTH
RESIDENTIAL DWELLINGS
HOUSEHOLD WEALTH
HOUSEHOLD DEBT
$691K
798%
187%
AS A SHARE OF INCOME
AS A SHARE OF INCOME
BUSINESS INCOME
HOUSING RISKS
NON-PERFORMING LOANS
20% 91%
3%
1.0%
A$1
GEARING LOW
25MIL
LIQUIDITY HIGH
NEGATIVE EQUITY
OF GDP
63%
LOW BUT WILL RISE
Sources: Reserve Bank of Australia (RBA), Australian Bureau of Statistics (ABS). Released 11 May 2020.
8
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
Australia’s preliminary estimated resident population increased by over 371,000 (1.5%) in the year ending 30 September 2019. Overseas migration remained the key driver of population growth. This level of growth was down from recent record highs but follows an extended period of high population and migration growth. Due to border closures overseas migration is expected to fall sharply, albeit temporarily, in the current and next financial year. Although the reduction in migration is significant it will be felt over several years in the property market. This is due to most migrants not purchasing a property in their first year but instead taking several years to save and eventually purchase. Demand in the current and next financial year will be supported, to some extent, by previous strong migration intakes.
Australia - Annual Population Growth 2.5
500 450
2.0
400
1.5
300 250
1.0
200 150
Annual Growth (%)
Annual Growth (000s)
350
0.5
100 50
0.0
Annual Growth (000s)
Annual Growth (%)
Sep-2019
Sep-2017
Sep-2018
Sep-2016
Sep-2014
Sep-2015
Sep-2013
Sep-2011
Sep-2012
Sep-2010
Sep-2009
Sep-2007
Sep-2008
Sep-2006
Sep-2005
Sep-2003
Sep-2004
Sep-2001
Sep-2002
Sep-1999
Sep-2000
Sep-1997
Sep-1998
Sep-1996
Sep-1995
Sep-1993
Sep-1994
Sep-1991
Sep-1992
Sep-1990
Sep-1989
Sep-1987
Sep-1988
Sep-1986
Sep-1984
Sep-1985
Sep-1982
Sep-1983
0
Source: ABS, Oliver Hume Research.
Australia - Annual Net Overseas Migration 350
250
200
150
100
50
0 Sep-1986 Jun-1987 Mar-1988 Dec-1988 Sep-1989 Jun-1990 Mar-1991 Dec-1991 Sep-1992 Jun-1993 Mar-1994 Dec-1994 Sep-1995 Jun-1996 Mar-1997 Dec-1997 Sep-1998 Jun-1999 Mar-2000 Dec-2000 Sep-2001 Jun-2002 Mar-2003 Dec-2003 Sep-2004 Jun-2005 Mar-2006 Dec-2006 Sep-2007 Jun-2008 Mar-2009 Dec-2009 Sep-2010 Jun-2011 Mar-2012 Dec-2012 Sep-2013 Jun-2014 Mar-2015 Dec-2015 Sep-2016 Jun-2017 Mar-2018 Dec-2018 Sep-2019
Annual Net Overseas Migration (000s)
300
Source: ABS, Oliver Hume Research.
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
9
1.0 NATIONAL AND BUYER HIGHLIGHTS
Darren Blair National Marketing Manager d.blair@oliverhume.com.au
1.2
BUYER PROFILES
The March Quarter will go down in history as the tale of two halves. The first half showed strong market conditions, underpinned by low-interest rates and buyer demand, followed by the second half which ushered in the COVID-19 global shock in March. During this time, real estate, like many other industries went on the back burner while the consumer market came to grips with this new reality we were faced with.
Although there was a noticeable change in buyer behaviour, it is important to note when someone enters the latter stages of purchasing by entering an enquiry with a project, they are acting on it within a stringent time frame. This remained a constant even through a tumultuous March. Over 60% of purchasers purchased within 21 days of making an enquiry on the project
Owner Occupiers and Investors – Signed Contracts March Quarter 2020 40% 36.95% 35%
30%
25%
23.29%
20%
14.86%
15%
10%
8.43% 5.62%
5%
3.21%
3.21%
2.41%
1.20%
0.80%
0% 8 to 21 Days
2 to 7 Days
30 to 60 Days
22 to 30 Days
60 to 90 Days
181 to 365 Days
90 to 180 Days
366 to 730 Days
731 Days+
Other
Source: Oliver Hume Data.
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QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
QUARTERLY MARKET INSIGHTS
0.28%
0.28%
$540,000
$555,000
2.54%
1.98%
1.41%
0.85%
0.56%
0.28%
0%
$525,000
$480,000
$450,000
$435,000
$420,000
$405,000
$390,000
$375,000
$360,000
$345,000
$330,000
$315,000
$300,000
$285,000
3.95%
6.21%
5.65%
5.65%
5.37%
5.37%
5.08%
7.91%
8.76%
9%
$270,000
8% 7.06%
6.50%
1.94%
MARCH QUARTER 2020
$570,000
$510,000
$495,000
$465,000
$450,000
$435,000
$420,000
0.49%
0.49%
0.97% 2.43%
1.94%
1.46%
3.40%
$390,000 $405,000
3.40%
4.85%
4.85%
$360,000 $375,000
4.85%
3.88%
4.85%
5.83%
6.31%
5.34%
$345,000
$330,000
$315,000
$300,000
$285,000
$270,000
$255,000
$240,000
$225,000
2.91%
8.74%
10.68%
9.71%
12%
$255,000
5.37%
6%
$240,000
1.69%
$210,000
0.97%
5.83%
10%
$225,000
$210,000
3.11%
6.21%
$195,000
$180,000
1.46%
$165,000
4%
$195,000
3.11%
7%
$180,000
4%
$165,000
0.28%
0.97% 1.46%
0% $150,000
$135,000
6%
$150,000
2.54%
3%
$135,000
1.69%
2%
$120,000
1%
0.28%
2%
$105,000
Important to note, when comparing with 12 months prior, March Quarter 2020 saw a significant jump in the median purchase price with close to half of all signed contracts during the quarter exceeding $300,000. The median purchase price in 2020 was $297,900 vs $280,000 in 2019, this change is most likely attributed to the increased borrowing power for those looking to purchase a block of land.
Median Purchase Price - March Quarter 2019
8%
Source: Oliver Hume Data.
Median Purchase Price - March Quarter 2020
5%
Source: Oliver Hume Data.
11
1.0 NATIONAL AND BUYER HIGHLIGHTS
1.2
BUYER PROFILES (CONT.)
In the March quarter purchasers were dominated by those that identify as Australian born as well as Indian born. This was a significant change as Indian born purchasers entered the market again after a hiatus the same time last year.
Purchaser Country of Birth - March Quarter 2019 60.0% 60%
50%
40%
30%
20% 13.0% 10%
1.0%
1.0%
1.0%
1.0%
1.0%
1.0% Turkey
1.0%
Singapore
Italy
1.0%
Macedonia
Iraq
1.5%
Iran
1.5%
Ethiopia
1.5%
China
1.5%
Cambodia
2.0%
Bangladesh
3.5%
Pakistan
6.5% 1.0% United Kingdom of Great Britain and Northern Ireland
New Zealand
Malta
Sri Lanka
Philippines
India
Australia
0%
Source: Oliver Hume Data.
Purchaser Country of Birth - March Quarter 2020 60%
48.82%
50%
40%
29.41%
30%
1.18%
0.88%
0.88%
0.88%
0.88%
Fiji
Iraq
Liberia
0.88%
0.88% United Kingdom of Great Britain and Northern Ireland
1.47%
Turkey
2.06%
Cambodia
2.94%
Vietnam
4.41%
New Zealand
10%
China
20%
Philippines
Sri Lanka
Pakistan
India
Australia
0%
Source: Oliver Hume Data.
12
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
13
2.0 VICTORIA
2.0 VICTORIA
George Bougias National Head of Research g.bougias@oliverhume.com.au
2.1
MARKET DRIVERS Economy Before COVID-19 emerged the Victorian economy was in a relatively robust position. The state was one of the leading economies with a range of strengths and good fundamentals including economic and population growth, low unemployment and a sound labour market and good retail trade and construction work areas of activity.
DWELLING COMMENCEMENTS
UNEMPLOYMENT
POPULATION GROWTH
ECONOMIC GROWTH
13,201 12.4% Level this quarter
5.2% 6.9% Level this quarter
1.99% 4.0%
Level this quarter
$442,955m 27.0%
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
CONSTRUCTION WORK
$2,998m 0.2% Level this quarter
$4,401M 35.1% Level this quarter
$20,921m $13,815m 14.1% 24.9% 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
However, Victoria’s economy is expected to be significantly affected by COVID-19 due to a range of factors including the state’s exposure to international education, tourism and migration / population growth. The Victorian Department of Treasury and Finance recently released the details of economic modelling which provides a snapshot of forecast economic activity. It is noted, however, that the modelling assumes restrictions remain in place for an extended period.
16
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
Key highlights of the modelling include: •
Over 250,000 jobs lost, and unemployment forecast to rise to 11%
•
A fall in the participation rate
•
Property prices declining
•
The state’s output declining by up to 14% (compared to previous forecasts).
State Unemployment Rates 14%
12%
10%
8%
COVID-19 (forecast) +6.4 %pts
GFC +1.7 %pts +1.6 %pts
2%
‘Dot com’ bust +0.8 %pts +0.9 %pts
4%
Early 90s recession +7.8 %pts +5.1 %pts
Early 80s recession +3.9 %pts +4.7 %pts
6%
Victoria
Australia
Jun-18
Jun-14
Jun-10
Jun-06
Jun-02
Jun-98
Jun-94
Jun-90
Jun-86
Jun-82
Jun-78
0
Source: Department of Treasury and Finance, Victorian State Government. Australian Bureau of Statistics. Oliver Hume Research.
There is significant uncertainty about the path of the Victorian economy over the coming months.
example, education is Victoria’s largest service export and its prospects will depend on the extent to which other destinations are affected (for example the United States and Europe)
Given Victoria’s reliance on global markets much will depend on the Australian dollar vis-à-vis other currencies. A lower Australian dollar could help mitigate the impacts of COVID-19 and boost the recovery.
The speed with which the state’s economy can be released from lockdowns, gaining some of the momentum lost, will also be important.
Much will also depend on the relative impact of COVID-19 on the Australian economy vis-à-vis other countries including our key trading partners. For
Forecast Dwelling Prices 200 180 160 140 120 100 80 60 40 20 0 Jun-05 No-coronavirus
Jun-07
Jun-09
Jun-11
Jun-13
Jun-15
Jun-17
Coronavirus
Jun-19
Jun-21
Source: Oliver Hume Research.
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
17
2.0 VICTORIA
2.1
MARKET DRIVERS (CONT.) Population The state’s population levels will be affected as international and interstate borders face restrictions. The latest population statistics, reflecting conditions before COVID-19, showed that Victoria’s population growth remained the fastest in the country with absolute population growth greater than other states.
Victoria’s growth represented almost 35% of the nation’s growth even though the state represents 26% of the population. The state’s population was estimated over 6.6 million people as at 30 Sep 2019.
Victoria’s population growth (2.0%) remained the fastest in Australia with the state’s population increasing by more than any other jurisdiction (129,600).
March Quarter 2020 Key Figures Preliminary Data
Population at end Dec Qtr 2018 (‘000)
Change over previous year (‘000)
Change over previous year (%)
New South Wales
8,118.0
102.0
1.3
Victoria
6,629.9
129.6
2.0
Queensland
5,115.5
84.7
1.7
South Australia
1,756.5
15.4
0.9
Western Australia
2,630.6
29.3
1.1
Tasmania
535.5
5.3
1.0
Northern Territory
245.6
-1.4
–0.6
Australian Capital Territory
428.1
6.2
1.5
25,464.1
371.1
1.5
Australia
(a) Includes Other Territories comprising Jervis Bay Territory, Christmas Island, the Cocos (Keeling) Islands and Norfolk Island. Source: ABS, Oliver Hume Research.
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QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
NSW
VIC
QLD
SA
WA
Australia
Mar-2007
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
Mar-2019
Mar-2018
Mar-2017
Mar-2016
Mar-2015
Mar-2014
Mar-2013
Mar-2012
Mar-2011
Mar-2010
Mar-2009
Mar-2008
WA
Mar-2006
Mar-2005
Mar-2004
Mar-2003
Mar-2002
Mar-2001
Mar-2000
Mar-1999
SA
Mar-1998
Mar-1997
Mar-1996
QLD
Mar-1995
Sep-1994
Mar-1993
VIC
Mar-1992
Mar-1991
Mar-1990
NSW
Mar-1989
Mar-1988
Mar-1987
Mar-1986
Sep-1983
Sep-2019
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
Sep-1984
Population Growth - Selected States 180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
Source: ABS. Oliver Hume Research. Estimated Resident Population.
Population Growth - Selected States and Australia (%)
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0%
Source: ABS. Oliver Hume Research. Estimated Resident Population.
19
2.0 VICTORIA
2.2
LAND MARKET
Prices Monthly data suggests that some markets may have moderated in the month of March although no clear trend was observed. For example, while the Mitchell, Hume, Whittlesea and Wyndham municipalities all recorded lower prices in the month of March, the opposite was true for the Cardinia, Casey, Melton, Geelong and the Surf Coast municipalities.
Residential land prices remained stable over the March quarter 2020 with conventional lot (gross) prices stabilising at $316,000 (although down 2.8% over the year). Across all lots (including irregular, premium etc) there was a slight moderation with prices down 0.9% over the quarter and down 2.5% over the year ($317,000). The impact of COVID-19 began to emerge at the end of the quarter and prices were yet to be significantly affected.
Growth Area Median Land Price (Sold) $400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
20
Casey Melton Geelong
Whittlesea Wyndham Metro Melbourne
QUARTERLY MARKET INSIGHTS
QI. ‘20
QIII. ‘19
QI. ‘19
QII. ‘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 Cardinia Hume Mitchell
QIV. ‘09
$0
Source: Oliver Hume Sold Lots, Annual moving average. Median (all of VIC)
MARCH QUARTER 2020
Metro. Melbourne Growth Area Municipalities Median Land Price (Sold) 350,000 330,000 310,000 290,000 270,000 250,000 230,000 210,000 190,000 175,000
QI. ‘20
QIII. ‘19
QI. ‘19
QII. ‘19
QIII. ‘18
QIV. ‘18
QI. ‘18
QII. ‘18
QIII. ‘17
QIV. ‘17
QI. ‘17
Net prices (higher est.)
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
Metro Melbourne (All 7 Growth Areas) - Conventional
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
150,000
Source: Oliver Hume Research. Sold Lots.
Metropolitan Melbourne Median Lot Prices QIII, ‘19
QIV, ‘19
QI, ‘20
QoQ
$ Value Change (QoQ)
YoY
$ Value Change (YoY)
Mitchell
$285,000
$261,000
$269,000
3.1%
$8,000
-0.4%
($1,000)
Cardinia (S)
$340,000
$336,250
$360,000
7.1%
$23,750
3.0%
$10,500
Casey (S)
$338,000
$335,000
$334,000
-0.3%
($1,000)
-5.9%
($21,000)
Hume (N)
$323,000
$310,000
$319,000
2.9%
$9,000
-2.1%
($7,000)
Melton (W)
$287,950
$283,800
$290,000
2.2%
$6,200
-1.7%
($5,000)
Whittlesea (N)
$318,000
$310,000
$329,450
6.3%
$19,450
7.5%
$22,950
Wyndham (W)
$314,150
$326,750
$320,000
-2.1%
($6,750)
-1.5%
($5,000)
Geelong (W)
$277,250
$270,950
$277,900
2.6%
$6,950
1.1%
$2,900
Surf Coast (W)
$425,000
$355,500
$456,000
28.3%
$100,500
16.2%
$63,500
Metro Melbourne (All 7 Growth Areas) - Conventional
$320,000
$316,000
$316,000
0.0%
$0
-2.8%
($9,000)
Metro Melbourne (All 7 Growth Areas) - All Lots
$321,000
$320,000
$317,000
-0.9%
($3,000)
-2.5%
($8,000)
Median (All of Vic)
$314,000
$309,000
$310,000
0.3%
$1,000
0.0%
$0
Municipality
Source: Oliver Hume Research.
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
21
2.0 VICTORIA
2.2
LAND MARKET (CONT.)
Sales Volumes Monthly land sales fell in March, reaching nearly a third below the previous month, as the initial impacts of COVID-19 began to emerge. The March 2020 sales volume result was the lowest since December 2019. The March 2020 sales volume result was, however, almost a fifth higher than the same time last year (March 2019) when concerns about the post-Federal election property market policy and regulatory landscape impacted buyer sentiment significantly.
Different buyer groups have been affected in a variety of ways. For example, although many potential younger first home buyers (FHB) have lost their job (or have experienced a reduction in working hours) the Federal Government’s First Home Loan Deposit Scheme, which commenced in January this year, has provided some support. Second, third and fourth home buyer (upgraders/ downgraders etc.) activity has slowed. However, activity in this segment has been supported by a pool of buyers who had already sold their home prior to the virus outbreak or were still able to transact.
Sales are expected to remain below the long-term average over the coming months as the economic fallout from COVID-19 continues.
Monthly Melbourne Growth Area Project Land Sales 1,900 1,800 1,700 1,600 1,500 1,400 1,300 1,200 1,100 1,000 900 800 700 600 500 400 300 200 100
Monthly Project Land Sales (LHS) Moving Quarterly Average
22
QUARTERLY MARKET INSIGHTS
4 Qtr. Moving Ave.
MARCH QUARTER 2020
Mar-20
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
0
Source: Oliver Hume Sold Lots. Selected estates.
Sales Rate Sales rates are expected to remain at relatively low levels over the coming months before trending higher later in the year depending on overall economic and labour market conditions.
Sales rates remained low in the March quarter 2020 across most municipalities. Although some municipalities saw sale rates trend higher in the March quarter 2020 this was up from the traditionally slower December quarter (affected by the Christmas/New Year periods).
Growth Area LGAs Median Land Price (Sold) $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000
QI. ‘20
QIII. ‘19
QIV. ‘19
QI. ‘19
QII. ‘19
QIII. ‘18
QIV. ‘18
QI. ‘18
Melton Whittlesea Wyndham Mitchell Metro Melbourne (All 7 Growth Areas) - Gross Price (Conventional)
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
Hume Geelong
QII. ‘12
QIII. ‘11
Casey
QIV. ‘11
QI. ‘11
QII. ‘11
QIII. ‘10
Cardania Median (All of VIC)
QIV. ‘10
QI. ‘10
QII. ‘10
QIII. ‘09
QIV. ‘09
0
Source: Oliver Hume Research.
Time on Market Median (and average) sales rates for new land in the March quarter 2020 increased as sales began to be affected in the month of March.
New Residential Land - Median Time on Market (Days) Metropolitan Melbourne Growth Area Municipalities 160
153
140 123
122 121 122
122
120 106 100
92
92
60 60 60 60
61
61 62 61
QII. ‘19
63
QI. ‘19
80
60
15 15
15
15 15
15
QII. ‘18
QIII. ‘18
20
30
QI. ‘18
30 28
QIV. ‘17
31 31 30 31 31 31
QIII. ‘17
40
QI. ‘20
QIII. ‘19
QIV. ‘19
QIV. ‘18
QII. ‘17
QI. ‘17
QIV. ‘16
QIII. ‘16
QII. ‘16
QI. ‘16
QIII. ‘15
QIV. ‘15
QII. ‘15
QI. ‘15
QIV. ‘14
QIII. ‘14
QII. ‘14
QI. ‘14
QIV. ‘13
QII. ‘13
QIII. ‘13
QI. ‘13
QIV. ‘12
QIII. ‘12
QII. ‘12
QI. ‘12
0
Source: Oliver Hume Research.
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
23
VICTORIA
MARCH QUARTER 2020 MEDIAN LOT PRICES BY SUBURB (GROSS)
WALLAN $230,000 $257,000
400 SQM AND 488 SQM LOTS
KALKALLO $310,000 $338,000
MICKLEHAM $290,000 $315,000
CRAIGIEBURN $370,000 $372,000
ROXBURGH PARK n/a $385,500
GREENVALE $410,000 n/a MELTON SOUTH $268,000 $290,000
PLUMPTON $347,000 $365,500
FRASER RISE $337,000 $378,900
WYNDHAM VALE $288,000 $335,000
WEIR VIEWS $259,000 $290,750
TARNEIT $319,500 $361,000
MAMBOURIN $291,750 $319,250
LOVELY BANKS n/a n/a
WERRIBEE $298,000 $320,000
MELBOURNE TRUGANINA $336,200 $381,250
POINT COOK n/a $510,000
LARA $257,900 $277,900
GEELONG CHARLEMONT $270,000 $289,000
MT DUNEED $271,900 $291,900 ARMSTRONG CREEK $275,000 $297,500
24
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
ST LEONARDS n/a n/a
METROPOLITAN MELBOURNE MARCH QUARTER 2020 BEVERIDGE $277,500 $302,500
MOST COMMONLY SOLD LOT
376-400 sqm WOLLERT $337,000 $364,000
MEDIAN SIZE
MEDIAN PRICE
400 sqm $317,000 VALUE RATE
$799 per sqm
BERWICK $428,000 $496,500 OFFICER $349,000 $367,000
CLYDE $330,000 $362,000
CRANBOURNE EAST $326,000 $372,000
CRANBOURNE $362,750 $399,000
CLYDE NORTH $316,000 $349,000
BOTANIC RIDGE $325,000 $345,000
400 sqm Median Price 448 sqm Median Price Source: Oliver Hume Research. Sold.
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
25
2.0 VICTORIA
2.3
APARTMENTS AND TOWNHOUSES Market Indicators The Real Estate Institute of Victoria (REIV) reports that metropolitan Melbourne unit and apartment median prices rose by 0.6% in the March quarter (up 4.6% over the year) to reach $641,000 (from $637,000 in the previous quarter). In contrast, median house prices rose by 3.7% in the March quarter (up 2.3% over the year) to reach $893,000 (from $861,500 in the previous quarter).  
Based on the CoreLogic Home Value Index, Melbourne unit prices rose by 0.1% in the month of April 2020 to be up 1.5% over the quarter (up 2.3% on an annual basis). House prices showed a small decline in April 2020 (down 0.4%) although up 1.3% over the quarter and higher on an annual basis (12.8%). By comparison, Sydney recorded slightly faster growth with unit prices increasing by 0.6% in the month of April 2020 to be up 3.2% over the quarter (up 11% on an annual basis).
Metropolitan Melbourne Median Prices $900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0 2010 Metro House
26
2012 Metro Unit
QUARTERLY MARKET INSIGHTS
Regional House
2014 Regional Unit
MARCH QUARTER 2020
2016
2018
2020
Source: Oliver Hume Sold Lots. Selected estates.
Unit and apartment price growth was higher for middle (1.9%) and outer (1.3%) Melbourne over the quarter. Inner Melbourne prices also rose slightly (0.3%). On an annual basis unit and apartment prices was greater than that of houses across all metropolitan regions led by middle Melbourne (6.6%), inner Melbourne (4.2%) and outer Melbourne (2.1%).
Various measures, including record lower interest rates and the Federal Government’s First Home Deposit Scheme, have provided some support to unit and apartment prices. This is especially given the level of the price caps under the scheme excludes most of the traditional detached housing stock.
March Quarter 2020 Median Prices Mar-20 Quarter
Dec-19 Quarter
Quarterly Change
Annual Change
House
$893,000
$861,500
3.7%
2.3%
Unit and Apartment
$641,000
$637,000
0.6%
4.6%
House
$419,000
$421,000
-0.5%
2.5%
Unit and Apartment
$297,500
$307,500
-3.3%
0.0%
$1,485,000
$1,513,500
-1.9%
-1.0%
$635,500
$633,500
0.3%
4.2%
$1,024,500
$1,032,500
-0.8%
3.1%
Unit and Apartment
$724,500
$711,000
1.9%
6.6%
House
$695,500
$677,500
2.7%
0.3%
Unit and Apartment
$550,000
$543,000
1.3%
2.1%
Metropolitan Melbourne
Regional Victoria
Inner Melbourne House Unit and Apartment Middle Melbourne House
Outer Melbourne
Source: REIV, Oliver Hume Research. Seasonally adjusted.
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
27
2.0 VICTORIA
2.3
APARTMENTS AND TOWNHOUSES (CONT.) Market Trends Leading into the current COVID-19 affected period, apartment and townhouse demand was improving due to the relatively affordability of these product types vis-à-vis detached houses (which had seen strong price growth) and continued shifts in customer demographics and preferences. The Federal Government’s First Home Loan Deposit Scheme had also buoyed interest with first home buyers looking for apartments and units. COVID-19 has affected demand for both apartments and townhouses. Demand has been affected for both product types for general reasons (including restrictions on property inspections and auctions for example) and more specific factors affecting certain market segments (for example first home buyers and investors). Migration declines are expected to affect key apartment market segments while investors might also be concerned about increasing rental stock levels, higher vacancy rates and softening rents. On the latter issue, the apartment sector is expected to be affected by an increasing number of holiday (and Airbnb) rentals joining the long-term residential rental market. Various factors, however, might help alleviate some issues in these markets.
28
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
Record low interest rates continue to provide an important level of support as does the significant economic stimulus announced of Federal and State Governments. Also, the Federal Government’s First Home Loan Deposit Scheme, which had buoyed interest in first home buyer seeking looking for apartments and units, is also expected to continue to provide some support to demand (albeit at lower levels). On the supply side, the sudden emergence of COVID-19 has added extra impetus to the broader decline in residential construction which was occurring due to the cyclical end of the construction cycle and exacerbated by various issues (including flammable cladding and construction standards). The number of new approvals continues to moderate for all residential property types especially for highdensity approvals (flats, units and apartments).
Given that construction continues to decline, however, it is not expected we will see a fundamental market oversupply in the medium to long-term.
Annual Building Approvals By Type - Victoria 45,000
40,000
30,000
25,000
20,000
15,000
10,000
5,000
Houses
Flats units or apartments
Semi-detached, row or terrace houses, townhouses
QUARTERLY MARKET INSIGHTS
Mar-2019
Mar-2018
Mar-2017
Mar-2016
Mar-2015
Mar-2014
Mar-2013
Mar-2012
Mar-2011
Mar-2010
0 Mar-2009
Total Number of dwelling units (No.)
35,000
Source: ABS. Oliver Hume Research.
MARCH QUARTER 2020
29
2.0 VICTORIA
Peter Vassallo Managing Director | Development Sites p.vassallo@oliverhume.com.au
2.4
DEVELOPMENT SITES Although greenfield residential development site activity and enquiry levels have slowed due to COVID-19 some potential buyers are looking for opportunistic transactions. The number of publicly advertised development sites remains relatively low. However, there has been a small increase in enquiry levels about off-market opportunities and potential buyers/vendors sounding out opportunities. It remains to be seen if there will be distressed sales, especially for those who transacted at the top of the market and/or who might be under funding pressures. Banks remain a key funding source. However, while some non-banks have seen reduced enquiry levels, others remain busy but focussed on current relationships.
12
Depending on the path of the economy and unemployment we expect development site enquiries – and subsequently transaction levels – to increase in the latter half of the year. This is especially the case if the broader residential market stabilises and retail land transaction sales volumes show improvement.
SUBURBS
DEVELOPMENT SITE INDICATIVE VALUE (PER HA)
1
Tarneit
1,650,000
2
Clyde North
1,500,000
3
Sunbury
1,200,000
4
Plumpton
1,700,000
5
Melton
800,000
6
Greenvale
1,750,000
7
Gisborne
900,000
8
Donnybrook
1,350,000
9
Deanside
1,600,000
10
Bonnie Brook
1,400,000
11
Armstrong Creek
1,100,000
12
Aintree
1,200,000
Based on 2-5 year terms. These are indicative only as values can vary widely depending on factors such as PSP status, development sequencing and servicing etc. *
30
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
GEELONG
11
7
8 3 6 10
4 5
9
1
MELBOURNE
2
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
31
3.0 QUEENSLAND
3.0 QUEENSLAND
Amanda Bittenbinder Queensland Research Manager a.bittenbinder@oliverhume.com.au
3.1
MARKET DRIVERS Economy Weaknesses included dwelling starts, real wage growth, equipment investment, retail spending, business confidence and construction work.
Before COVID-19 the Queensland economy was facing challenging conditions but was improving. On the upside, population growth was increasing and there were some areas of relative strength (including housing finance and unemployment).
DWELLING COMMENCEMENTS
UNEMPLOYMENT
POPULATION GROWTH
ECONOMIC GROWTH
7,376 21.4% Level this quarter
5.7% 4.5%
Level this quarter
1.68% 1.8% Level this quarter
$404,562m 20.0%
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
CONSTRUCTION WORK
$2,817m 3.4% Level this quarter
$2,570m 19.0% Level this quarter
$16,224m $9,528m 9.6% 25.2% 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
Queensland has a relatively high degree of exposure to global markets including through tourism, education and resources. A key issue for Queensland is the fate of Virgin Australia - one of the state’s largest employers. Around half of the airline’s workforce is based in Queensland and the airline is a major economic driver of the local tourism and hospitality industries. Demand has been relatively resilient for Queensland’s resources and will provide some support. Once domestic travel bans are removed it can be expected that the Queensland economy should benefit from Australians undertaking local travel (overseas travel is not likely to be permitted for some time).
34
QUARTERLY MARKET INSIGHTS
MARCH QUARTER SEPTEMBER QUARTER 2020 2019
As with Melbourne and Victoria, the Brisbane and the broader South-East Queensland (SEQ) markets have good long-term fundamentals. These include affordability, liveability, a large and growing population (hence scale and critical mass) and good economic prospects driven by a diverse range of industries. Queensland ‘s economy should also benefit from several major projects. These include Queen’s Wharf, TradeCoast, Cross River Rail, the Adani coal mine and second airport runway.
Population Queensland’s population growth had been improving driven by affordability and migration. Queensland’s population increased by 84,700 people over the year ending 30 September 2019 (1.7%).
Queensland Population Change | Growth Components 140,000
120,000
100,000
80,000
60,000
40,000
20,000
Total Population Growth Net Overseas Migration
Sep-19
Sep-18
Mar-19
Sep-17
Mar-18
Mar-17
Sep-16
Sep-15
Natural Increase Net Interstate Migration
Mar-16
Sep-14
Mar-15
Sep-13
Mar-14
Sep-12
Mar-13
Sep-11
Mar-12
Mar-11
Sep-10
Mar-10
Sep-09
Sep-08
Mar-09
Sep-07
Mar-08
Mar-07
Sep-06
Sep-05
Mar-06
Sep-04
Mar-05
Sep-03
Mar-04
Sep-02
Mar-03
Sep-01
Mar-02
Mar-01
Sep-00
-
Source: Oliver Hume Research.
Net Interstate Migration (Qtrly) 10,000 8,000 6,000 4,000 2,000 -2,000 -4,000 -6,000
NSW
VIC
Sep-2019
Jun-2019
Mar-2019
Sep-2018
Mar-2018
Sep-2017
Mar-2017
Sep-2016
Mar-2016
Sep-2015
Mar-2015
Sep-2014
Mar-2014
Sep-2013
Mar-2013
Sep-2012
Mar-2012
Sep-2011
Mar-2011
Sep-2010
Mar-2010
Sep-2009
Mar-2009
Sep-2008
Mar-2008
-8,000
Source: Oliver Hume Research.
QLD
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
35
3.0 QUEENSLAND
3.2
LAND MARKET Land Market Prior to the COVID-19 outbreak, the SEQ residential land market continued to improve in the early part of 2020 buoyed by the momentum gained in late 2019.
compared to the same period last year and a 10% increase on the long run average. Outside of the irregular figures recorded in September 2019, the March quarter 2020 result was the highest sales rate since mid-2018.
Over the March quarter 2020, over 1,500 lots were sold in the SEQ market. This was a 24% increase
South East Queensland Project Land Sales 2,500
2,000
1,500
1,000
500
SEQ Total Sales
Mar-20
Dec-19
Jun-19
Sep-19
Mar-19
Dec-18
Sep-18
Jun-18
Mar-18
Dec-17
Sep-17
Jun-17
Mar-17
Dec-16
Sep-16
Jun-16
Mar-16
Dec-15
Sep-15
Jun-15
Mar-15
Dec-14
Jun-14
Sep-14
Mar-14
Dec-13
Sep-13
Jun-13
Mar-13
Dec-12
Sep-12
0
Source: Oliver Hume Sold Lots, Annual moving average.
SEQ Long Run Average
Market Share Ipswich has retaken its position as the market share leader after Logan lead the market for the past two quarters. Logan and Ipswich continue to take the largest portion of the market sharing a combined 49% of all sales.
2% 23%
SEQ Project Land Sales Market Share QI.’20
Moreton Bay has edged closer to the two leaders taking 23% market share, the highest since March 2016 and the first time over 20% since June 2016. Gold Coast sales numbers continue to be affected by availability.
15%
24%
25%
11% Brisbane Gold Coast Ipswich Logan Moreton Bay Redland Source: Oliver Hume Research.
36
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
Change in Market Share Brisbane Quarterly Land Sales
Gold Coast Quarterly Land Sales
Ipswich Quarterly Land Sales
Logan Quarterly Land Sales
Moreton Bay Quarterly Land Sales
Redland Quarterly Land Sales
Mar-19
12%
19%
30%
24%
14%
1%
Mar-20
15%
11%
25%
24%
23%
2% Source: Oliver Hume Research.
Median Price Over the March 2020 quarter SEQ median prices increased by 0.9% while, annually, median price increased by 3.4%.
The Gold Coast market continues to be affected by availability. There has been a 42% drop in the number of available lots since March last year and a 61% drop in available lots over the past 5 years.
Most of the price growth occurred at the end of the quarter due to the type of stock released to the market.
Market share is being taken up by more affordable areas as availability decreases in premium areas.
Brisbane prices have remained flat for the past 12 to 18 months until the most recent quarter which saw several premium lots sold.
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.’19
QII.’19
QIII.’19
Gold Coast QIV.’19
Ipswich
Logan
Moreton Bay
Redland
QI.’20
SEQ
Source: Oliver Hume Research.
Median Lot Prices by Local Government Area LGA
QI. ‘19
QIV. '19
QI.'20
5yr Change
QoQ
YoY
Brisbane (C)
$385,375
$388,000
$403,250
3.6%
3.9%
4.6%
Gold Coast (C)
$341,200
$317,850
$311,850
29.6%
-1.9%
-8.6%
Ipswich (C)
$212,975
$221,775
$220,613
18.8%
-0.5%
3.6%
Logan (C)
$219,188
$221,038
$221,038
23.3%
0.0%
0.8%
Moreton Bay (R)
$246,500
$249,500
$254,813
14.8%
2.1%
3.4%
Redland (C)
$306,875
$321,000
$307,250
6.5%
-4.3%
0.1%
SEQ
$241,750
$247,875
$250,000
13.2%
0.9%
3.4% Source: Oliver Hume Research.
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
37
3.0 QUEENSLAND
3.2
LAND MARKET (CONT.) Median Lot Size Lot sizes continue to edge gradually lower. However, the SEQ market has been generally resistant to smaller lots with these lots typically spending a longer time on market.
Most of the stock sold in the SEQ market was in the 300-500 sqm range (around 67% of all sold stock).
SEQ Project Land Sales (0 - 1,000 sqm) Market Share by Product Type 100%
90%
80%
11%
10%
11%
10%
9%
17%
15%
7%
10%
10%
12%
11%
15%
15%
14%
36%
31%
32%
38%
34%
36%
37%
5%
5%
6%
6%
6%
QII. ‘19
QIII. ‘19
QIV. ‘19
QI. ‘20
Long-run Average
11% 12%
13% 14%
13%
70%
34%
31% 60%
29%
31%
31%
34%
29%
50%
40%
30%
34%
38%
36%
34%
43%
41%
20%
10%
0%
8%
6%
QI. ‘18
QII. ‘18
Less than 300sqm
301-400sqm
10%
6%
10%
QIII. ‘18
QIV. ‘18
QI. ‘19
401-500sqm
501-600sqm
601-1,000sqm
Source: Oliver Hume Research.
Median Lot Sizes by Local Government Area (sqm) LGA
QI.’19
QIV. '19
QI.'20
5yr Change
QoQ
YoY
Brisbane (C)
401
403
404
-17.9%
0.4%
0.8%
Gold Coast (C)
462
451
438
-7.7%
-3.0%
-5.4%
Ipswich (C)
428
425
433
-3.9%
1.8%
1.2%
Logan (C)
418
424
422
-10.4%
-0.4%
1.0%
Moreton Bay (R)
394
393
411
-8.2%
4.7%
4.2%
Redland (C)
415
425
390
-23.1%
-8.2%
-6.1%
SEQ
424
419
419
-10.3%
0.0%
-1.2% Source: Oliver Hume Research.
38
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
Value Rates The median value rate continued to increase in the SEQ market increasing on a quarterly (0.9%) and annual (4.7%) basis.
South East Queensland Project Land Sales | Median Value Rate (QI. ‘20) SOUTH EAST QUEENSLAND
$597
REDLAND
MORETON BAY
$788
$620
LOGAN
$523
IPSWICH
$509
GOLD COAST
BRISBANE
$713
$0
$200
$400
$600
$998
$800
$1,000
$1,200
Source: Oliver Hume Research.
Median Value Rates by Local Government Area ($/sqm) LGA
QIII. '18
QII. '19
QIII. '19
5yr Change
$ Value Change QoQ (5yr Change)
$ Value Change (QoQ)
YoY
$ Value Change (YoY)
Brisbane (C)
$961
$963
$998
26.2%
$207
3.5%
$34
3.8%
$36
Gold Coast (C)
$738
$704
$713
40.4%
$205
1.2%
$8
-3.4%
-$25
Ipswich (C)
$498
$522
$509
23.6%
$97
-2.3%
-$12
2.4%
$12
Logan (C)
$524
$521
$523
37.5%
$143
0.4%
$2
-0.2%
-$1
Moreton Bay (R)
$625
$636
$620
25.1%
$124
-2.5%
-$16
-0.8%
-$5
Redland (C)
$739
$755
$788
38.4%
$219
4.3%
$33
6.6%
$49
SEQ
$570
$592
$597
26.2%
$124
0.9%
$5
4.7%
$27
Source: Oliver Hume Research.
South East Queensland Median Price, Size and Value Rate
Median Price- Rolling Annual
Median Size - Rolling Annual
Average Value Rate ($/m2)
QUARTERLY MARKET INSIGHTS
QI. ‘20
QIV. ‘19
QIII.’19
QII.’19
QI. ‘19
QIII. ‘18
QIV. ‘18
QII. ‘18
QI. ‘18
QIV. ‘17
QII. ‘17
QIII. ‘17
QI. ‘17
QIII. ‘16
QIV. ‘16
0 QI. ‘16
$190,000 QII. ‘16
100
QIV. ‘15
$200,000
QII. ‘15
200
QIII. ‘15
$210,000
QI. ‘15
300
QIV. ‘14
$220,000
QIII. ‘14
400
QI. ‘14
$230,000
QII. ‘14
500
QIII. ‘13
$240,000
QIV. ‘13
600
QII. ‘13
$250,000
QI. ‘13
700
QIV. ‘12
$260,000
Source: Oliver Hume Research.
MARCH QUARTER 2020
39
3.0 QUEENSLAND
3.2
LAND MARKET (CONT.) Time on Market Time on market stayed relatively stable over the quarter with all municipalities recording a similar timeframe for sales. It is likely that time on market will increase in the coming months as new lots released to the market will take some time to be absorbed.
New Residential Land - Median Time on Market (Days) - South East Queensland Municipalities 140 122 120
100
90
91
89
90
80 60
31
31
QIV. ‘17
40
59
QIII. ‘17
59
60
61
61
31
20
QI. ‘20
QIV. ‘19
QIII.’19
QII.’19
QI. ‘19
QIV. ‘18
QIII. ‘18
QII. ‘18
QI. ‘18
QI. ‘17
QII. ‘17
0
Source: Oliver Hume Research. Median data.
New Residential Land - Median Time on Market (Days) - South East Queensland Municipalities 250 92 200
91
92
91
90
90
150
100
50
0 BRISBANE
GOLD COAST
IPSWICH
LOGAN
MORETON BAY
REDLAND Source: Oliver Hume Research.
40
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
SOUTH EAST QUEENSLAND MARCH QUARTER 2020 MOST COMMONLY SOLD LOT
376-400 sqm MEDIAN SIZE
MEDIAN PRICE
419 sqm $250,000 VALUE RATE
$597 per sqm
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
41
3.0 QUEENSLAND
3.3
APARTMENTS AND TOWNHOUSES Brisbane
Gold Coast
COVID-19 presents an additional range of challenges the Brisbane apartment and townhouse market.
The Gold Coast market had been in a strong position, with sales rates and price growth remaining consistent, but has been impacted by COVID-19 outbreak.
Prior to the COVID-19 outbreak the Brisbane apartment market was poised to start losing some of the negative sentiment affecting the market.
This has been the case especially due to the Gold Coast’s reliance on the tourism and hospitality sector.
Pricing was improving and had experienced modest growth in recent months and over the year.
Beyond COVID-19, underlying fundamentals are expected to improve with several key Gold Coast sub-markets having limited stock remaining and little to offer in terms of future projects.
While some inner-city areas were working through supply issues, which had complicated pricing and sales on newly completed projects as well as the resale market, locations which offered larger products had seen renewed interest and sale activity. In terms of supply, the pipeline is reducing but a large amount of stock remains unsold in the local market. This is especially the case for smaller one and two bedroom apartments.
Building Approvals | Gold Coast and Greater Brisbane 3000
2500
2000
1500
1000
500
0
Greater Brisbane | Unit
42
Gold Coast | Unit
QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
Oct-19
Jul-19
Apr-19
Jan-19
Oct-18
Jul-18
Apr-18
Jan-18
Oct-17
Jul-17
Apr-17
Jan-17
Oct-16
Jul-16
Apr-16
Jan-16
Oct-15
Jul-15
Apr-15
Jan-15
Oct-14
Jul-14
Apr-14
Jan-14
Oct-13
Jul-13
Apr-13
Jan-13
Oct-12
Jul-12
-500
Source: Oliver Hume Research.
The Surrounds - Oliver Hume project at Helensvale, Queensland QUARTERLY MARKET INSIGHTS
MARCH QUARTER 2020
43
4.0 FEATURE ARTICLE
4.0 FEATURE ARTICLE
George Bougias National Head of Research g.bougias@oliverhume.com.au
INDIA IN THE 21ST CENTURY
IMPLICATIONS AND OPPORTUNITIES FOR AUSTRALIA
46
QUARTERLY MARKET INSIGHTS
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Australia’s recent economic growth owes a great deal to the contribution of Indian migrants, one of our largest migrant groups, and our relationship with India, one of the world’s largest economies.
When this process of transformation began few could have foreseen where India would be today. Where India might be in the coming decades is an increasingly important question.
Going forward, both will be important for our post COVID-19 recovery and future prosperity.
The answer is of vital importance at a range of levels for Australia as a whole and, specifically, the Australian property market.
The property industry is well-aware of the impact of Indian migration. For most of the last decade robust population growth, driven by skilled immigration especially from India, has been one of the defining trends in the Australian real estate market. There are many reasons why Indian migrants have been attracted to Australia. These include employment and career development (especially for skilled migrants), lifestyle and liveability considerations, education opportunities (especially in the higher education sector), similar time zones and common institutions (legal systems and parliamentary democracy). Indian-born migrants have been a major source of demand in greenfield land markets and have played an important role in reshaping the market.
While most political leaders are focused on managing the immediate and short-term health and economic implications of the COVID-19 pandemic, this focus will need to move quickly once again to the long-term and maximising opportunities in the global economy, especially those afforded to us by the growth of developing nations. In a post-COVID-19 world, we will also need to ensure we minimise our economic and other risks. This includes, for example, diversifying our trading relationships in the sourcing and supply of critical health and related equipment, medicines and pharmaceuticals. Given Australia’s strategic partnership with India, this key relationship seems to offer a recipe for future development.
The impact of India and Indian-born migrants on the local real estate market is part of a broader global trend that began some decades ago as the country emerged from its outdated, largely centrally-planned and inward-looking socialist economic model, to one that is more open, internationalised and focused on innovation.
Overseas-born — top 10 countries of birth — Australia — 2009, 2014 and 2019 1,000
800
Thousands
600
400
200
0 ENGLAND 2009
2014
CHINA
INDIA
NEW ZEALAND
PHILIPPINES
VIETNAM
SOUTH AFRICA
ITALY
MALAYSIA
SRI LANKA
Source: Oliver Hume Research.
2019
(a) Top 10 countries of birth for overseas-born are at 30 June 2019. (b) Population estimates are preliminary.
QUARTERLY MARKET INSIGHTS
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4.0 FEATURE ARTICLE
INDIA IN THE 21ST CENTURY IMPLICATIONS AND OPPORTUNITIES FOR AUSTRALIA (CONT.) India Today and in the Future India is a success story on many levels. The rate and scale of change in recent decades has been extraordinary and continues. India is the second most populous country in the world with an estimated population of over 1.3 billion people. This represents around 17% of the global population (7.8 billion people) or one in six people. Within a decade, however, India is expected to be the most populous country in the world and have the largest workforce. Moreover, India is a very young country with around half of the population under 25 years and around two thirds under 35 years. It is the largest democracy in the world with more than 900 million eligible voters. India is already one of the largest economies in the world. When ranked by nominal output (Gross Domestic Product) India is the fifth largest economy. Over the last two decades India’s economy has increased seven times and now exceeds $US3 trillion. As in the case of China and many other developing economies, India’s economic growth has been driven by a range of factors including economic reforms (liberalising markets and increasing competition) and urbanisation. However, although hundreds of millions of people have seen dramatic shifts in their standard of living and many millions have escaped poverty, India’s economic growth remains uneven and the country’s potential continues to remain untapped. The Indian Government is pursuing an ambitious economic reform agenda and aims for India to become a $US5 trillion economy by 2024. Although COVID-19 might impact the timing of this goal, it will not diminish the will or ambition of Indians to join the ranks of the world’s leading economies. A key factor will be India’s relentless focus on innovation, technology and knowledge-driven economic growth. This is critically important given the “global shift towards knowledge-based forms of competitiveness” and efforts by nations to move up the value-chain (Kulkarni, 2019). 48
QUARTERLY MARKET INSIGHTS
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This focus on innovation has led to India becoming globally renowned as an outsourcing destination, especially for technology firms, and for software development. India increasingly excels in many other innovation and technology areas including the number of graduates in science and engineering, quality of innovation, information and communication technology exports, elite education and training institutions in the engineering and physical sciences fields and grass roots innovation. There is also a growing start-up culture, an increasing focus on overall exports (including higher value manufacturing) and increasing participation in global value chains. Bangalore (officially known as Bengaluru), the information technology capital of India, has been called the next Silicon Valley. In addition to Bangalore, Mumbai and New Delhi have been ranked in the world’s top science and technology clusters. A considerable driver of India’s economic success and innovation leadership is the reach of India’s diaspora – the largest in the world – with around 18 million of India’s citizens living in other countries. Many of the global Indian diaspora are amongst the most successful migrants. For example, in the United States Indian migrants are amongst the most successful and wealthiest immigrants. An increasing number of CEOs of Silicon Valley and big tech firms are Indian born. While discussing India’s success, it is also important to recognise the challenges which will have to be overcome. These include sustainability, infrastructure, a sizeable proportion of people living below the poverty line, education, natural environment challenges, job creation and labour force participation.
Australia’s population by country of birth - 2019(a) Country of Birth (b)
‘000
%(c)
England
986
3.9
China
677
2.7
India
660
2.6
New Zealand
570
2.2
Philippines
294
1.2
Vietnam
263
1.0
South Africa
194
0.8
Italy
183
0.7
Malaysia
176
0.7
Sri Lanka
140
0.6
All overseas-born
7 530
29.7
Australia-born
17 836
70.3
(a) Estimates are preliminary. (b) Top 10 countries of birth for overseas-born are at 30 June 2019. (c) Proportion of the total population of Australia.
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4.0 FEATURE ARTICLE
INDIA IN THE 21ST CENTURY IMPLICATIONS AND OPPORTUNITIES FOR AUSTRALIA (CONT.) The Australia India Relationship – Opportunities for Collaboration Australia and India have a growing and significant economic, trade and cultural bilateral relationship. India is Australia’s eighth-largest trading partner and fifth-largest export market. Bilateral trade with India was over $30 billion while bilateral investment was also over $30 billion in 2018. Over the next few decades and beyond a growing India will require an increasing share of Australia’s exports (goods and services). Australian agriculture, education and skills training, professional services and healthcare, to name a few industries, will be critical to the continued evolution and success of India.
Non-business links between India and Australia are also important. The extensive and important people to people links between Australia and India and some of our shared values and institutions are important and solid foundations for a growing relationship. A key element of these people to people links (and indeed economic links) is the large and growing Indian community in Australia. Of the over 7.5 million migrants living in Australia it is estimated that around 660,000 were born in India (2.6%). Importantly, India remains Australia’s largest source of skilled migrants.
Although the Australia-India relationship continues to evolve it has remained below its potential. As a result, the last few years have seen an acceleration of efforts from both countries to renew and grow economic, cultural and other links.
The Australian information and communication technologies, health and social services and professional services industries are amongst the key domestic sector beneficiaries of Indian migration to Australia.
The India Economic Strategy (IES) – a landmark report released in July 2018 and endorsed by the Australian Government – was one of the few times a major economic strategy was prepared in Australia focusing on bilateral relations with another country.
India’s skilled migration to Australia has helped address key skills shortages in specific sectors.
The IES places India at the forefront of Australia’s many international partnerships and aims to upgrade the Indian and Australian bilateral relationship consistent with India’s strong growth. The IES identifies ten key industries as best matching Australia’s competitive advantages with Indian priorities. The IES proposes ten key Indian states to focus on and forwards a range of economic targets including lifting India into Australia’s top three export markets and increasing Australian investment to India significantly.
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It is noteworthy that many Indian students who studied in Australia and who returned to India have achieved great success in their home country. This group represents another important and growing link between the two countries. In terms of our shared values and institutions India and Australia share democratic and judicial systems. We also have a shared history and membership of the Commonwealth. And there is also, of course, our shared love of sports, especially cricket.
Looking Ahead The global economy continues to transform and change. India will continue to grow and prosper and its immense scale and focus on innovation, to name but two factors, should ensure India becomes an increasingly important nation on the global stage. As the world emerges from COVID-19 we have a renewed opportunity to grow our global relationships.
The property industry is just one sector of many that has seen first-hand the great benefits that can be created by a strong and mutually beneficial relationship with India and the Indian diaspora. My hope and expectation are that we will capitalise on the current and emerging opportunities and that both India and Australia will be better for it.
Re-thinking India’s place in our future and further expanding our deep economic, social and other ties has the potential to accelerate the recovery and growth for both countries.
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