Oliver Hume Quarterly Market Insights - December 2020

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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DARWIN OFFICE

GOLD COAST OFFICE

129 Asche Street Muirhead NT 0810

Suite 19C, Level 19 50 Cavill Avenue Surfers Paradise, QLD 4217

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+617 5564 3200

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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.