Quarterly Market Insights December Quarter 2020
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
1
TABLE OF CONTENTS Foreword
04
NATIONAL AND BUYER HIGHLIGHTS National Highlights
08
Buyer Profiles
10
VICTORIA Market Drivers
14
Land Market
18
Apartments and Townhouses
24
Development Sites
28
QUEENSLAND Market Drivers
32
Land Market
34
Apartments and Townhouses
40
Development Sites
42
Julian Coppini Chief Executive Officer - Project Marketing j.coppini@oliverhume.com.au
FOREWORD It is now becoming increasingly clear that the COVID-19 global pandemic will be recorded in history as one of those events, few and far between but not altogether uncommon, that will reshape many aspects our economy, society and technology.
Indeed, some capital cities have reached new dwelling value peaks or were close reaching new highs.
To be sure, the end of 2020 and the beginning of the new year appear altogether different to the promise of early 2020.
The Victorian and Queensland land markets saw rising sales volumes in the December quarter as buyers rushed to take advantage of the Federal Government’s HomeBuilder program, low interest rates and the first home loan deposit scheme.
However, in some respects, perhaps some things are not all that different. For the property market, at least, early 2021 finds us in a position similar to that of early 2020. In early 2020, before COVID-19 had emerged in a major way, the outlook was one of optimism and growth. This was especially the case after a period of moderation in prices and activity which followed an earlier boom and significant changes in the lending and regulatory environment. Similarly, early 2021 can be characterised as period of cautious optimism. While COVID-19 is still with us, Australia has managed the pandemic relatively well although important lessons have been learnt. Undoubtedly, we are now better prepared for the next pandemic and, if history is any guide, a similar event can be expected in the future. On the economic front, a clear observation is the need for timely and intelligent Government economic support. In this respect Australian Federal and State Governments, together with the Reserve Bank of Australia (RBA), have played a pivotal role ensuring that activity and confidence can return more quickly than previously forecast. The Australian property market property has remained relatively resilient in 2020, despite unprecedented challenges, and 2021 is set to be a year of consolidation and stabilisation. At the time of writing, the Australian property market was characterised by rising sales volumes and prices.
4
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
Residential land markets are also seeing greater strength and confidence.
Each of these markets is responding to its own unique opportunities and challenges. For example, the Victorian market is rebounding strongly having undergone two extended lockdowns. The Queensland market also remains solid given its relative affordability and significant impact of HomeBuilder. Since the last QMI was released – and indeed throughout 2020 as the impact of COVID-19 was felt most acutely – we have continued to monitor the impact of digital and other technologies on the market. If anything, the evidence continues to suggest that the intersection between property and technology will be a critically important component and driver of the post pandemic property market. Having access to real-time data - combined with the skill set, knowledge and wisdom to interpret and understand information and analysis, is arguably – more important today than ever before. Providing our clients, stakeholders and strategic partners 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.
Darwin
NORTHERN TERRITORY QUEENSLAND WESTERN AUSTRALIA
Brisbane Gold Coast
SOUTH AUSTRALIA NEW SOUTH WALES
Perth
Sydney Adelaide Canberra
VICTORIA Melbourne
TASMANIA Hobart
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
5
1.0 NATIONAL AND BUYER HIGHLIGHTS
1.0 NATIONAL AND BUYER HIGHLIGHTS
George Bougias National Head of Research g.bougias@oliverhume.com.au
1.1
NATIONAL HIGHLIGHTS CASH RATE
ECONOMIC GROWTH
INFLATION
0.1%
-3.8%
0.9%
UNEMPLOYMENT RATE
EMPLOYMENT GROWTH
WAGE GROWTH
6.6%
-0.5%
1.4%
AVERAGE WEEKLY EARNINGS
HOUSEHOLD SAVING RATIO
NET FOREIGN LIABILITIES
$1,305
18.9%
48%
CONVERSION RATE
POPULATION
EMPLOYMENT RATIO
= US$0.77
1.3% ANNUAL GROWTH
RESIDENTIAL DWELLINGS
HOUSEHOLD WEALTH
HOUSEHOLD DEBT
$690K
765%
180%
AS A SHARE OF INCOME
AS A SHARE OF INCOME
LOAN REPAYMENTS DEFERRALS
HOUSING RISKS
NON-PERFORMING LOANS
7% 11%
3%
1.0%
A$1
OF HOUSING LOANS
26MIL
OF SMALL AND MEDIUM BUSINESS LOANS
NEGATIVE EQUITY
OF GDP
62%
LOW BUT WILL RISE
Sources: Reserve Bank of Australia (RBA), Australian Bureau of Statistics (ABS).
8
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
Australia’s population was over 25.6 million people as at 30 June 2020 with annual growth of over 321,000 people (1.3%). While migration has fallen sharply this has been offset by a significant number of Australians returning home to avoid the worst of the coronavirus pandemic.
Australia - Annual Population Growth 2.4%
2.0%
1.6%
1.2%
Jun-20
Jun-19
Jun-18
Jun-17
Jun-16
Jun-15
Jun-14
Jun-13
Jun-12
Jun-11
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
0.8%
(a) Annual growth calculated at the end of each quarter. (b) All data after 30 June 2016 is subject to revision. Source: ABS, Oliver Hume Research.
Components of Annual Population Change - Australia 500,000
400,000
300,000
200,000
100,000
Total growth
Net overseas migration
Natural increase
Jun-20
Jun-19
Jun-18
Jun-17
Jun-16
Jun-15
Jun-14
Jun-13
Jun-12
Jun-11
Jun-10
Jun-09
Jun-08
Jun-07
Jun-06
Jun-05
Jun-04
Jun-03
Jun-02
Jun-01
Jun-00
0
(a) Annual components calculated at the end of each quarter. Source: ABS, Oliver Hume Research
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
9
1.0 NATIONAL AND BUYER HIGHLIGHTS
Darren Blair National Marketing Manager d.blair@oliverhume.com.au
1.2
BUYER PROFILES Strong end to a tumultuous year As traffic in sales offices and online declined during the first half of the year, various stimuli, including the successful HomeBuilder, started the market engines again. By June, the land sales market was in full swing, and there was no looking back.
2020 is a year that many people would like to forget. The year started with COVID-19 sending shockwaves worldwide by the end of the first quarter, followed by the plethora of unknowns surrounding the virus. Impending lockdowns and a swift move globally to embrace digital processes were the themes by June and July. And, while most states started to emerge from the lockdown slumber, Victoria found itself back facing movement limitations and opening the economy back up.
We witnessed an elongated selling season, with sales remaining strong through to the end of December.
Oliver Hume Signed Contracts per Week 5.14% 4.91%
5% 4.57% 4.31%
4.41%
4.27%
4.01% 4%
3.94%
3.84%
3.24%
3.50%
3.44%
3.34%
3.04%
2.97%
3%
4.27%
2.84%
2.74% 2.47%
2.34%
2.37%
2.24% 1.97%
2%
1.94%
1.44%
1.30% 1%
0.47%
28/12/2020
21/12/2020
07/12/2020
14/12/2020
30/11/2020
23/11/2020
16/11/2020
09/11/2020
02/11/2020
26/10/2020
19/10/2020
12/10/2020
05/10/2020
28/09/2020
14/09/2020
21/09/2020
07/09/2020
31/08/2020
24/08/2020
17/08/2020
10/08/2020
03/08/2020
27/07/2020
20/07/2020
13/07/2020
06/07/2020
22/06/2020
29/06/2020
15/06/2020
08/06/2020
01/06/2020
0
Source: Oliver Hume Data - June 1st 2020 – December 31st 2020.
10
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
Buyers visiting Alamora, Oliver Hume’s latest project.
First Home Buyers made their comeback as Investors interest wained due to market uncertainty.
Oliver Hume Buyer Type
43.87%
In summary, the year ended on a far more positive note than we saw through some of the more challenging times in the year. Any continuation of this sentiment, and we should see a healthy 2021, barring any significant global or national shocks to the economy. Although, as grants and other government draws to a close, and international immigration remains at record low levels, the impact on the market in the medium term will remain to be seen.
56.13%
First Home Buyer
Others
QUARTERLY MARKET INSIGHTS
Source: Oliver Hume Data.
DECEMBER QUARTER 2020
11
2.0 VICTORIA
2.0 VICTORIA
George Bougias National Head of Research g.bougias@oliverhume.com.au
2.1
MARKET DRIVERS Economy The Victorian economy continues to rebound. The state’s unemployment declined slightly in January 2021 (to 6.3% on a seasonally adjusted basis) from the previous month. The unemployment rate is expected to continue declining as economic growth strengthens
The improvement in the state’s unemployment rate mirrors a broader improvement in the national economy and unemployment rate (also down in January 2021 to 6.4% on a seasonally adjusted basis) and in other measures of labour utilisation (such as underemployment).
State Unemployment Rates (%) %
8
7
6
5
4
3 2016 VIC SA
14
NSW TAS
2020 QLD WA
QUARTERLY MARKET INSIGHTS
2016
2020 Source: RBA, ABS.
DECEMBER QUARTER 2020
Alamora’s entry view. Artist impression.
Labour Underutilisation Rates %
12
9
6
3 2016 Underemployment Rate*
2020 Unemployment Rate
2016
2020
Full-time workers on reduced hours for economic reasons and part-time workers who would like, and are available, to work more hours Source: RBA, ABS.
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
15
2.0 VICTORIA
2.1
MARKET DRIVERS (CONT.) Population Population growth continues to be restrained by border closures. Over the year ending 30 June 2020 Victoria’s population increased by around 98,000 people (1.5%), well below levels observed over recent years.
Population growth was led by net overseas migration (59,549) and natural increase (36,212). Net interstate migration-remained minimal (2,243) reflecting interstate border closures during 2020.
Population Change by State and Territory Preliminary Data
Population at 31 Mar 2020 (‘000)
Change over previous year (‘000)
Change over previous year (%)
New South Wales
8,164.1
76.7
0.9
Victoria
6,694.9
98.0
1.5
Queensland
5,174.4
80.6
1.6
South Australia
1,769.3
16.6
0.9
Western Australia
2,661.9
38.7
1.5
Tasmania
540.6
6.0
1.1
Northern Territory
246.0
-0.2
-0.1
Australian Capital Territory
431.1
4.8
1.1
25,687.0
321.3
1.3
Australia (a)
(a) Includes Other Territories comprising Jervis Bay Territory, Christmas Island, the Cocos (Keeling) Islands and Norfolk Island. Source: ABS, Oliver Hume Research.
16
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
Components of Annual Population Growth 75,000
50,000
25,000
0
-25,000 NSW Natural increase
VIC
QLD
Net interstate migration
SA
WA
TAS
NT
ACT
Source: ABS. Oliver Hume Research. Estimated Resident Population.
Net overseas migration
Natural Increase by State and Territory NSW
VIC
QLD
SA
WA
TAS
NT
ACT
Births
97,946
78,323
61,155
18,911
32,699
5,871
3,605
5,566
Deaths
55,233
42,111
32,826
13,994
14,956
4,557
1,080
2,189
Natural increase
42,713
36,212
28,329
4,917
17,743
1,314
2,525
3,377
Interstate Migration by State and Territory NSW
VIC
QLD
SA
WA
TAS
NT
ACT
Interstate arrivals
89,873
77,197
101,789
23,726
29,211
12,962
13,517
20,394
Interstate departures
110,760
74,954
76,441
25,886
31,621
11,749
16,214
21,044
Net interstate migration
-20,887
2,243
25,348
-2,160
-2,410
1,213
-2,697
-650
Overseas Migration by State and Territory NSW
VIC
QLD
SA
WA
TAS
NT
ACT
Overseas arrivals
165,058
145,619
82,721
26,332
47,799
6,267
3,867
9,049
Overseas departures
110,135
86,070
55,845
12,451
24,455
2,800
3,858
6,947
Net overseas migration
54,923
59,549
26,876
13,881
23,344
3,467
9
2,102
Source: ABS. Oliver Hume Research.
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
17
2.0 VICTORIA
2.2
LAND MARKET
Prices New residential land prices increased in the December quarter 2020 from the previous quarter with most municipalities recording price increases over the quarter.
Across all lots, the median (gross) price lots increased from $313,000 to $319,000. Prices are slightly below the same time a year ago.
The median (gross) price of metropolitan Melbourne conventional lots increased from $311,000 to $319,000.
Growth Area Median Land Prices (Sold) $400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
QIII. ‘09 QIV. ‘09 QI. '10 QII. '10 QIII. '10 QIV. '10 QI. '11 QII. '11 QIII. '11 QIV. '11 QI. '12 QII. '12 QIII. '12 QIV. '12 QI. '13 QII. '13 QIII. '13 QIV. '13 QI. '14 QII. '14 QIII. '14 QIV. '14 QI. '15 QII. '15 QIII. '15 QIV. '15 QI. '16 QII. '16 QIII. '16 QIV. '16 QI. '17 QII. '17 QIII. '17 QIV. '17 QI. '18 QII. '18 QIII. '18 QIV. '18 QI. ‘19 QII. ‘19 QIII. ‘19 QI. ‘20 QII. ‘20 QIII. ‘20 QIV. ‘20 QI. ‘21
$0
Cardinia Hume Mitchell
18
Casey Melton Geelong
Whittlesea Wyndham Metro Melbourne
QUARTERLY MARKET INSIGHTS
Source: Oliver Hume Sold Lots, Annual moving average. Median (all of VIC)
DECEMBER QUARTER 2020
Metropolitan Melbourne Growth Area Municipalities Median Land Prices (Sold) $350,000 $330,000 $310,000 $290,000 $270,000 $250,000 $230,000 $210,000 $190,000 $175,000
QI. ‘21
QIII. ‘20
QI. ‘20
QIII. ‘19
QI. ‘19
QIII. ‘18
QI. ‘18
QIII. ‘17
QI. ‘17
QIII. ‘16
QI. ‘16
QIII. ‘15
QI. ‘15
QIII. ‘14
QI. ‘14
QIII. ‘13
QI. ‘13
QIII. ‘12
QI. ‘12
QIII. ‘11
QI. ‘11
QIII. ‘10
QI. ‘10
$150,000
Source: Oliver Hume Research. Sold Lots.
Metropolitan Melbourne Median Lot Prices QIV, ‘19
QI, ‘20
QII, ‘20
QIII, ‘20
QIV, ‘20
% Change (QoQ)
% Change (YoY)
Cardinia (S)
$336,250
$360,000
$354,500
$340,500
$349,000
2.5%
3.8%
Casey (S)
$335,000
$334,000
$345,000
$340,900
$347,000
1.8%
3.6%
Geelong (W)
$270,950
$277,900
$294,000
$282,000
$275,000
-2.5%
1.5%
Hume (N)
$310,000
$319,000
$329,000
$323,000
$320,500
-0.8%
3.4%
Melton (W)
$283,800
$290,000
$288,000
$292,000
$304,500
4.3%
7.3%
Mitchell
$261,000
$269,000
$259,000
$270,000
$260,000
-3.7%
-0.4%
Whittlesea (N)
$310,000
$329,450
$337,000
$300,500
$318,000
5.8%
2.6%
Wyndham (W)
$326,750
$320,000
$320,000
$307,500
$315,200
2.5%
-3.5%
Metro Melbourne (All 7 Growth Areas) - Conventional
$316,000
$316,000
$325,000
$311,000
$319,000
2.6%
0.9%
Metro Melbourne (All 7 Growth Areas) - All Lots
$320,000
$317,000
$325,000
$313,000
$319,000
1.9%
-0.3%
Median (All of Vic)
$309,000
$310,000
$318,000
$300,000
$308,000
2.7%
-0.3%
Municipality
Source: Oliver Hume Research.
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
19
2.0 VICTORIA
2.2
LAND MARKET (CONT.) Sales Volumes Monthly land sales continued to rebound in the December quarter 2020 exceeding 4,360.
September quarter 2020) and the same time last year (nearly 2,400 in the December quarter 2019).
On a monthly basis, sales averaged over 1,450, well above the long-term average of nearly 900 sales per month.
The HomeBuilder program and low interest rates have been key drivers of the robust result with continued improvement in the economy and labour market expected to underpin demand in 2021.
Sales in the December quarter were well above levels reached in the previous quarter (nearly 3,000 in the
Monthly Melbourne Growth Area Project Land Sales 1,900 1,700
Monthly Sales (No.)
1,500 1,300 1,100 900 700 500 300
Metro Melbourne | Moving Quarterly Average
Metro Melbourne (Long-Term Average)
Dec-20
Dec-19
Dec-18
Dec-17
Dec-16
Dec-15
Dec-14
Dec-13
Dec-12
Dec-11
Dec-10
Dec-09
Dec-08
Dec-07
Dec-06
Dec-05
Dec-04
100
Source: Oliver Hume Research.
Monthly Land Sales by Local Government Area - Metropolitan Melbourne 1,900 1,800 1,700 1,600 Monthly Land Sales (No.)
1,500 1,400 1,300 1,200 1,100 1,000 900 800 700 600 500 400 300 200 100 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20
0
Mitchell Cardinia
20
Casey Hume
Melton Whittlesea
QUARTERLY MARKET INSIGHTS
Wyndham
DECEMBER QUARTER 2020
Source: Oliver Hume Research.
Regional markets, including Geelong, have been amongst the strongest performers in recent months being driven by a range of factors including increasing interest from these buyers for these locations.
Overseas buyers (migrants) continue to retreat as a share of all buyers as local (Australian born) purchasers, especially first or second home buyers, increase their market share.
Overseas and Australian Born Buyers - Victorian Greenfield Markets 80%
70%
60%
50%
40%
30%
20% Jan-10
Jan-11
Jan-12
Overseas Born Buyers
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Australian Born Buyers
Jan-19
Jan-20
Jan-21
Source: Oliver Hume Research (3 month smoothed).
Greater Geelong Land Sales (Monthly) 300
200
150
100
50
Geelong (G)
4 per. Mov. Avg (Geelong (G))
Geelong (G) | Long Run Average
QUARTERLY MARKET INSIGHTS
Dec-20
Jun-20
Sep-20
Dec-19
Mar-20
Jun-19
Sep-19
Dec-18
Mar-19
Jun-18
Sep-18
Dec-17
Mar-18
Jun-17
Sep-17
Mar-17
Dec-16
Jun-16
Sep-16
Dec-15
Mar-16
Jun-15
Sep-15
Dec-14
Mar-15
Jun-14
Sep-14
Dec-13
Mar-14
Jun-13
Sep-13
Dec-12
Mar-13
Jun-12
Sep-12
Dec-11
Mar-12
Jun-11
Sep-11
Mar-11
0 Dec-10
Monthly Sales (No.)
250
Source: Oliver Hume Research.
DECEMBER QUARTER 2020
21
VICTORIA
DECEMBER QUARTER 2020 MEDIAN LOT PRICES BY SUBURB (GROSS)
WALLAN $240,000 $255,000
400 SQM AND 488 SQM LOTS
KALKALLO n/a $352,000
MICKLEHAM $279,000 $314,000
CRAIGIEBURN $369,000 n/a
ROXBURGH PARK n/a $412,000
GREENVALE $402,500 n/a FRASER RISE $352,200 $378,900
MELTON SOUTH $266,000 $289,000
WYNDHAM VALE $291,500 $321,250
WEIR VIEWS $259,500 $289,000
TARNEIT $314,000 $336,000
MAMBOURIN $288,500 $325,000
LARA $263,900 $300,450
GEELONG CHARLEMONT $274,000 $318,000
MT DUNEED $271,900 $296,900 ARMSTRONG CREEK $281,500 $295,750
22
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
WERRIBEE $310,000 $359,500
MELBOURNE TRUGANINA $355,100 $375,700
METROPOLITAN MELBOURNE DECEMBER QUARTER 2020 BEVERIDGE $270,000 $305,000
MOST COMMONLY SOLD LOT
376-400 sqm WOLLERT $344,000 $354,000
MEDIAN SIZE
MEDIAN PRICE
400 sqm
$313,000
VALUE RATE
$801 per sqm
BERWICK $468,000 $495,000 OFFICER $349,000 $375,000
CRANBOURNE EAST $326,000 n/a
CLYDE $334,000 $378,000 CRANBOURNE $374,000 $400,000
CLYDE NORTH $350,000 $374,450
400 sqm Median Price 448 sqm Median Price Source: Oliver Hume Research. Sold.
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
23
2.0 VICTORIA
2.3
APARTMENTS AND TOWNHOUSES Market Indicators The Real Estate Institute of Victoria (REIV) reports that unit and apartment prices for metropolitan Melbourne increased slightly over the December quarter (2.5%) to be higher on an annual basis (3.8%).
Metropolitan Melbourne Median Prices $900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$0 2011 Metro House
24
2012 Metro Unit
QUARTERLY MARKET INSIGHTS
2013
2014
Regional House
2015 Regional Unit
DECEMBER QUARTER 2020
2016
2017
2018
2019
2020
2021 Source: REIV.
December Quarter 2020 Median Prices Dec-20 Quarter
Sep-20 Quarter
Quarterly Change
Annual Change
Metropolitan Melbourne House
$941,000
$859,500
9.5%
8.4%
Unit and Apartment
$639,500
$624,000
2.5%
3.8%
House
$485,500
$444,500
9.2%
7.5%
Unit and Apartment
$342,500
$331,000
3.5%
10.3%
$1,533,500
$1,513,000
1.4%
6.3%
$629,500
$624,500
0.8%
2.7%
$1,066,500
$987,500
8.0%
7.3%
$715,000
$690,000
3.6%
3.5%
House
$723,500
$688,000
5.2%
6.9%
Unit and Apartment
$570,500
$539,000
5.8%
6.9%
Regional Victoria
Inner Melbourne House Unit and Apartment Middle Melbourne House Unit and Apartment Outer Melbourne
Auctions $1,138,500
$1,000,000
13.9%
8.8%
Unit and Apartment
House
$705,000
$689,500
2.2%
2.2%
House
$859,000
$822,000
4.5%
12.2%
Unit and Apartment
$618,500
$602,000
2.7%
8.1%
Private Sale
Source: REIV, Oliver Hume Research. Seasonally adjusted.
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
25
2.0 VICTORIA
2.3
APARTMENTS AND TOWNHOUSES (CONT.) Market Trends Various indicators, such as declining building approvals, continue to point to weakness in Victorian highdensity residential construction. This is consistent with national property market trends which suggest that, while house approvals increased in the latter half of 2020, approvals for other dwellings (excluding houses) remain well below recent peaks.
Dwellings approved, by building type, seasonally adjusted 15,000
No. of dwellings approved
12,500
10,000
7,500
5,000
2,500
Private sector houses
26
Private sector dwellings excluding houses
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
Jan-21
Jan-20
Jan-19
Jan-18
Jan-17
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
Jan-06
0
Source: RBA, ABS.
The impact of the pandemic is expected to exacerbate the existing moderation in Melbourne apartment supply. A range of headwinds are likely to see new apartment supply remain well-below long-term average levels given the decision by many developers to defer or cancel projects. These headwinds include international border closures (which has especially affected tenant demand and led to higher vacancy rates and lower prices in inner city apartment markets), higher unemployment and construction delays. Overseas migration (and population growth more broadly) plays an important role for property markets and especially for the inner-city apartment market. It is important to note that the impact of this factor is lagged given the time needed to bring new apartment developments to the market. Hence, while weaker demand during the pandemic and recovery period will be offset by reduced apartment supply, it will take some time for higher levels of migration (when they are restored) to flow through to higher prices (and rents) and lower vacancy rates – all important signals which should confirm the beginning of the next apartment construction cycle.
Currently, while off-the-plan apartment sales rates remain soft overall, not all submarkets face the same conditions. Smaller owner-occupier projects which are reliant on local/domestic purchasers and located in inner-city lifestyle locations have fared relatively better. These project submarkets have been bolstered by specific submarket buyer groups including downsizers and, to a lesser extent, first home buyers. While apartment construction is likely to remain weak for some time, the strong increase in house approvals suggests a robust pick-up in lower density residential construction, especially over the next year. This has been driven to a significant degree by the Federal Government’s HomeBuilder program and some state government measures.
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
27
2.0 VICTORIA
Peter Vassallo Managing Director | Development Sites p.vassallo@oliverhume.com.au
2.4
DEVELOPMENT SITES The development site market continues to rebound consistent with improvements in the residential greenfield and broader property markets, the economy and confidence more generally.
Enquiry levels for off-market opportunities remains high while the number of publicly advertised sites also continues to increase. Non-banks continue to strengthen their position in this lending space although banks remain a major and preferred funding source.
Appetite for lending continues to shift from apartment sites to residential land development sites. Residential land projects are expected to remain amongst the most preferred developments given a range of issues in the apartment sector in the short to medium term.
Existing relationships and planning certainty remain the key to business. All lenders are becoming more selective with respect to projects and sponsors.
Of key importance to the residential greenfield property market will be the Australian Prudential Regulation Authority’s (APRA) regulatory approach to loans and banks’ reporting policies after 31 March 2021. In 2020 APRA had implemented a range of measures to support the recovery of the Australian economy. With many of these measures being unwound post 31 March 2021, we could see the level of distress increase in the market.
Lending conditions are expected to be determined by a range of factors including trends in the residential (retail) greenfield market and, from 31 March 2021, the level of distress and risk in the broader development lending space.
DEVELOPMENT SITE INDICATIVE VALUE (PER HA)
SUBURBS
*
While interest rates remain low, lending had become tighter overall during the peak of the pandemic (higher loan to valuation ratios etc).
1
Tarneit
$1.55 million - $1.75 million
2
Clyde North
$1.4 million - $1.6 million
3
Sunbury
$1.1 million - $1.3 million
4
Plumpton
$1.6 million - $1.8 million
5
Melton
$700,000 - $900,000
6
Greenvale
$1.65 million - $1.85 million
7
Gisborne
$800,000 - $1 million
8
Donnybrook
$1.25 million - $1.45 million
9
Deanside
$1.5 million - $1.7 million
10
Bonnie Brook
$1.3 million - $1.5 million
11
Armstrong Creek
$1 million - $1.2 million
12
Aintree
$1.1 million - $1.3 million
13
Officer
$1.5 million - $2 million
14
Torquay
$1.5 million - $2 million
15
Lucas / Winter Valley / Bonshaw (Ballarat)
$400,000 - $600,000
Based on 12 months to 7 year terms. These are indicative only as values can vary widely depending on factors such as PSP status, development sequencing and servicing etc.
28
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
15
7
8
3 6 5 12
10
WHITTLESEA
HUME
4 9
MELTON
1
MELBOURNE
WYNDHAM
BELLARINE
13 CARDINIA
2
GEELONG
CASEY
11
14
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
29
3.0 QUEENSLAND
3.0 QUEENSLAND
Amanda Bittenbinder Queensland Research Manager a.bittenbinder@oliverhume.com.au
3.1
MARKET DRIVERS Economy The 2020-21 state budget forecasts a positive, albeit small (0.25%), return to economic growth over 2020-21 for Queensland. Economic growth is forecast to help generate positive employment growth, at around 1% over the year, in stark contrast to the initial forecast of -3% in early September. The state’s unemployment rate continues to decline.
Queensland ended the year in a relatively good position considering the substantial impact that the COVID-19 pandemic had on the Queensland, Australian and global economies. Several major economic indicators improved in December although business investment declined.
Queensland Unemployment Rate (%) 9.5 9.0 8.5 8.0 7.5 7.0 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5
Jul-20
Dec-20
Feb-20
Sep-19
Apr-19
Nov-18
Jun-18
Jan-18
Aug-17
Mar-17
Oct-16
May-16
Jul-15
Dec-15
Feb-15
Sep-14
Apr-14
Nov-13
Jun-13
Jan-13
Aug-12
Mar-12
Oct-11
May-11
Jul-10
Dec-10
Feb-10
Sep-09
Apr-09
Nov-08
Jun-08
Jan-08
0
Source: Queensland Treasury.
32
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
QUEENSLAND AT A GLANCE
STATE FINAL DEMAND (Sep Qtr 20)
0.7% BUILDING APPROVALS (Dec 20)
24.0% EXPORTS (GOODS OVERSEAS) (Dec 20)
$63.1b EMPLOYMENT GROWTH (Dec 20)
1.4% UNEMPLOYMENT RATE (Dec 20)
7.5%
RETAIL TRADE (Nov 20)
4.5% BUSINESS INVESTMENT (Sep Qtr 20)
8.7% INFLATION (CPI) (Dec Qtr 20)
1.0% EMPLOYED PERSONS (Dec 20)
2.58m POPULATION (Jun Qtr 20)
5.17m
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
33
3.0 QUEENSLAND
3.2
LAND MARKET Land Market 2020 was on track to record the highest number of project land sales dating back to 2012 after a very strong third quarter. Sales softened over the December quarter, partly due to the amount of stock available, with many new stage releases slated for early 2021 rather than a forced launch late in the year. Several new projects have (or are) due to be launched
over the March quarter 2021. The additional stock should help boost numbers, higher than what was achieved in the December quarter 2020. Sales figures in the March quarter 2021 are also likely to be impacted by the looming deadline for the HomeBuilder scheme, with many buyers looking to purchase available land while the grant is still active.
South East Queensland Project Land Sales 2,500
2,000
1,500
1,000
500
SEQ Total Quarterly Sales
SEQ Long Run Average
Dec-20
Sep-20
Jun-20
Mar-20
Dec-19
Jun-19
Sep-19
Dec-18
Mar-19
Jun-18
Sep-18
Dec-17
Mar-18
Jun-17
Sep-17
Mar-17
Dec-16
Jun-16
Sep-16
Mar-16
Dec-15
Sep-15
Jun-15
Mar-15
Dec-14
Sep-14
Jun-14
Mar-14
Dec-13
Sep-13
Jun-13
Mar-13
Dec-12
Sep-12
0
Source: Oliver Hume Sold Lots, Annual moving average.
Moving Quarterly Average
Market Share
1.0%
The Logan region recorded north of 540 sales over the quarter, accounting for nearly a third of all sales in SEQ. This represents a significant increase compared to the same period in 2019. Ipswich regained the second largest portion of market share (25%) after Moreton Bay sales slowed during the November and December period. The Gold Coast’s market share continued to soften due to relatively low stock levels.
13.9% 21.3% 5.0%
SEQ Project Land Sales Market Share QIV.’20 33.9%
25.0%
Brisbane Gold Coast Ipswich Logan Moreton Bay Redland
Source: Oliver Hume Research.
34
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
Change in Market Share Brisbane Quarterly Market Share
Gold Coast Quarterly Market Share
Ipswich Quarterly Market Share
Logan Quarterly Market Share
Moreton Bay Quarterly Market Share
Redland Quarterly Market Share
Dec-20
13.9%
5.0%
25.0%
33.9%
21.3%
1.0%
Dec-19
16.1%
17.6%
22.3%
23.3%
17.1%
3.5%
Annual Change
-2.2%
-12.7%
2.7%
10.6%
4.2%
-2.5% Source: Oliver Hume Research.
Median Price The Gold Coast market once again saw the largest shift in median prices over both the quarter (6.0%) and the year (10.6%) due in large to the shifting lot availability from affordable home sites to premium
and waterfront stock. The Redland local government area is the only other market to record growth above 1.0% over the quarter, although price growth in this market softened over the year (-1.8%).
SEQ Median Lot Prices by Local Government Area $450,000
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0 Brisbane QIV.’19
QI.’20
QII.’20
Gold Coast QIII.’20
Ipswich
Logan
Moreton Bay
Redland
QIV.’20
SEQ
Source: Oliver Hume Research.
SEQ Median Land Prices by Local Government Area LGA
QIV. '20
QIII.'20
QIV. '19
QoQ
YoY
5yr Change
Brisbane (C)
$380,475
$389,725
$388,000
-2.4%
-1.9%
-6.4%
Gold Coast (C)
$351,450
$331,450
$317,850
6.0%
10.6%
44.7%
Ipswich (C)
$215,063
$214,563
$221,775
0.2%
-3.0%
9.1%
Logan (C)
$219,250
$221,225
$221,038
-0.9%
-0.8%
17.8%
Moreton Bay (R)
$264,500
$264,000
$249,500
0.2%
6.0%
17.4%
Redland (C)
$315,313
$307,500
$321,000
2.5%
-1.8%
4.2%
South East Queensland
$242,500
$247,500
$247,875
-2.0%
-2.2%
4.4% Source: Oliver Hume Research.
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
35
3.0 QUEENSLAND
3.2
LAND MARKET (CONT.) Median Lot Size Overall, the median land sizes decreased across South East Queensland with lot sizes reducing around -1% over the quarter. The biggest shift in median size was recorded in Redland although this, however, is a result of the small volume of lots being sold over the period.
301 – 400sqm lots accounted for 41% of project land sales in South East Queensland over the quarter, a 4% increase compared to the September quarter 2020.
SEQ Project Land Sales (0 - 1,000 sqm) Market Share by Product Type 100%
10%
9%
17%
15%
90% 80%
7% 11%
10%
10%
12%
12%
15%
15%
10% 14%
10%
9%
12%
9%
11% 13%
70% 60%
33%
31%
34%
32%
33%
36%
32%
31%
35%
34%
36%
34%
37%
41%
34%
37%
50% 40% 30%
34%
36%
38%
43%
20% 10% 0%
10%
6% QIV. ‘18
Less than 300sqm
QI. ‘19 301-400sqm
5%
5%
6%
6%
7%
7%
8%
7%
QII. ‘19
QIII. ‘19
QIV. ‘19
QI. ‘20
QII. ‘20
QIII. ‘20
QIV. ‘20
Long-run Average
401-500sqm
501-600sqm
601-1,000sqm
Source: Oliver Hume Research.
SEQ Median Lot Sizes by Local Government Area (sqm) LGA
QIV. '20
QIII.'20
QIV. '19
QoQ
YoY
5 yr Change
Brisbane (C)
423
430
403
-1.7%
5.0%
-7.2%
Gold Coast (C)
430
427
451
0.7%
-4.8%
-8.8%
Ipswich (C)
428
432
425
-1.0%
0.5%
-5.4%
Logan (C)
416
423
424
-1.7%
-1.9%
-2.7%
Moreton Bay (R)
413
412
393
0.2%
5.2%
-10.2%
Redland (C)
415
399
425
4.0%
-2.3%
-15.7%
SEQ
416
421
419
-1.0%
-0.6%
-8.4% Source: Oliver Hume Research.
36
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
Value Rates The median South East Queensland value rate tightened over the quarter due, partly, to a reduction in lot sizes and softening of median prices. The greatest increase in median value rates was recorded in the Gold Coast LGA (up 5.3% over the quarter). This, like median pricing overall is influenced by the limited stock available.
SEQ Project Land Sales (QIV. ‘20) | Median Value Rate ($ per sqm)
SOUTH EAST QUEENSLAND
$582
REDLAND
MORETON BAY
$759
LOGAN
$641
$527
IPSWICH
$503
GOLD COAST
BRISBANE
$818
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$900
$1,000
Source: Oliver Hume Research.
SEQ Median Value Rates by Local Government Area ($/sqm) LGA
QIV. '20
QIII.'20
QIV. '19
QoQ
$ Value Change (QoQ)
YoY
$ Value Change (YoY)
5 yr Change
$ Value Change (5Yr Change)
Brisbane (C)
$900
$906
$963
-0.7%
-$7
-6.6%
-$64
0.9%
$8
Gold Coast (C)
$818
$777
$704
5.3%
$41
16.1%
$114
58.7%
$303
Ipswich (C)
$503
$497
$522
1.2%
$6
-3.5%
-$18
15.3%
$67
Logan (C)
$527
$523
$521
0.8%
$4
1.1%
$6
21.0%
$92
Moreton Bay (R)
$641
$641
$636
0.0%
$0
0.8%
$5
30.7%
$150
Redland (C)
$759
$770
$755
-1.4%
-$11
0.6%
$4
23.6%
$145
SEQ
$582
$589
$592
-1.0%
-$6
-1.5%
-$9
13.9%
$71
Source: Oliver Hume Research.
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
37
3.0 QUEENSLAND
3.2
LAND MARKET (CONT.) Time on Market Across all municipalities time on market indicators are suggesting that most lots are selling within two months of entering the market. This is a promising sign for newly launched and upcoming projects.
The median time on market remained stable over the quarter with lots remaining on market for approximately 61 days. Lots in the Logan corridor remained on market for the shortest period after release (on average these lots were released and sold within the same month).
SEQ New Residential Land - Median Time on Market (Days) 140 122 115
120
100
90
91
89
90
31
31
61
61
61
61
QIV. ‘20
40
59
QIV. ‘17
59
QIII. ‘17
60 60
QIII. ‘20
80
31
20
QII. ‘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.
SEQ New Residential Land - Median Time on Market (Days) 100
92
92
90 80 70
66 61
61
60 50 40 30
30 20 10 0 BRISBANE
GOLD COAST
IPSWICH
LOGAN
MORETON BAY
REDLAND Source: Oliver Hume Research.
38
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
SOUTH EAST QUEENSLAND DECEMBER QUARTER 2020 MOST COMMONLY SOLD LOT
376-400 sqm MEDIAN SIZE
MEDIAN PRICE
416 sqm $242,500 VALUE RATE
$582 per sqm
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
39
3.0 QUEENSLAND
3.3
APARTMENTS AND TOWNHOUSES Brisbane
Gold Coast
The Brisbane apartment market is showing early signs of recovery from the COVID-19 pandemic. Government incentives, low interest rates and improved confidence have encouraged buyers to progress with their decision to purchase.
The Gold Coast apartment market has seen a sharp decline in vacancy rates, the current rate has tightened to 1.6%. Some suburbs have vacancy rates as low as 0.2%. These low vacancy rates are due to the combination of, first, migration from southern states and, second, a reduction in investment lending which dampened the supply of new investment properties.
Buyer confidence in the Brisbane property market has increased and is evident by the rate at which current stock is being absorbed. The most popular configuration continues to be the two-bedroom (58% of sales). Three-bedroom units were the next biggest sellers in terms of market share (25% of sales). Onebedroom apartments have seen a fall in popularity as the investment market has not yet seen a return in confidence.
First home buyer loan applications remain robust assisting demand in the Gold Coast market and leading to suburbs recording strong price growth (as high as over 11% price growth on a year on year in 2020). Interstate arrivals to Southeast Queensland and in particular the Gold Coast have been strong especially from both New South Wales and in Victoria. This has helped Queensland record the highest level of net interstate migration in Australia.
The inner Brisbane apartment market has seen a ‘rubber-band’ like effect in terms of the relationship between supply and demand of new apartments. During 2017, the Brisbane market saw the peak of new apartments being completed and delivered with around 6,100 new apartments being added into the market. Since this peak, both buyers and developers have been reluctant to enter the market as they awaited more favourable conditions. However, current estimates suggest that additional apartment developments are required to satisfy the pent-up demand created by a surge in buyer interest during the pandemic.
Some developers, especially those with high-end owneroccupier targeted apartments, are struggling to keep up with the surge in demand for new apartments. Forecasts suggest that demand is expected to increase with the continued easing of border restrictions into 2021.
Inner Brisbane Off the Plan Apartment Completions 7000
6000
5000
4000
3000
2000
1000
0 2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Source: Oliver Hume Research.
40
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
41
3.0 QUEENSLAND
Nick Price Business Development Manager n.price@oliverhume.com.au
3.4
DEVELOPMENT SITES Demand for greenfield and infill development sites continues to increase across South East Queensland. A considerable supply of developable land has diminished due to higher sales rates over the second half of 2020. Further pressures on developable land are expected with market conditions improving in South East Queensland, most COVID-19 restrictions being eased, the labour market improving and interstate migration beginning to increase.
Demand for development sites is weighted largely in favour of land subdivisions. These projects have benefited most from various Government support measures including, especially, the Federal Government HomeBuilder stimulus package. Townhouse sites are also increasingly in high demand although demand for these projects is very dependent on suitable zoning, supporting local infrastructure and other lifestyle considerations. Apartment sites are beginning to re-emerge as long-term prospects for experienced developers.
An increasing number of public campaigns and offmarket transactions are being observed consistent with higher demand for development sites. Queensland is re-emerging as a strategic target for several national developers who are seeking to capitalise on a range of trends including increases in interstate migration, the ongoing shift to working from home and decentralisation from major city centres.
LOCAL GOVERNMENT AREA
INDICATIVE SITE VALUE PER HECTARE - LAND
INDICATIVE SITE VALUE PER HECTARE - TOWNHOMES
1
Brisbane
$1,500,000 - $2,000,000
$3,000,000 - $3,500,000
2
Gold Coast
$1,125,000 - $1,500,000
$2,800,000 - $3,200,000
3
Logan
$750,000 - $850,000
$2,000,000 - $2,400,000
4
Moreton Bay
$825,000 - $990,000
$2,250,000 - $2,750,000
5
Ipswich
$675,000 - $810,000
$1,800,000 - $2,000,000
6
Sunshine Coast
$800,000 - $950,000
$2,600,000 - $3,000,000
7
Redland
$850,000 - $1,000,000
$2,400,000 - $2,900,000
42
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
6
4
1
7 5
3
2
QUARTERLY MARKET INSIGHTS
DECEMBER QUARTER 2020
43
NATIONAL HEAD OFFICE
BRISBANE OFFICE
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Shop 9, Gasworks Precinct 26 Reddacliff Street Newstead, QLD 4006
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GOLD COAST OFFICE
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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.