Quarterly Market Insights SEPTEMBER QUARTER 2021
TABLE OF CONTENTS Foreword
04
National Highlights
08
VICTORIA Market Drivers
12
Land Market
16
Apartments and Townhouses
24
Development Sites
28
QUEENSLAND Market Drivers
34
Land Market
36
Apartments and Townhouses
50
FEATURE ARTICLES Working From Home and Housing Choices
54
Australia’s Landmark Submarine Deal and the South Australian Property Market
56
Demand For Detached Housing Proves Strong as Pandemic Changes Designs
58
1.0
Foreword There’s a growing sense of optimism as COVID-19 restrictions lift. Record high land sales volumes and rising prices, underpinned by strong demand, are hallmarks of the current market. The stage is set for greenfield and other residential property markets to continue to perform over the final months of the year. The positive momentum continued in the last quarter driven by many of the factors that have played a role over the last year. These include record low interest rates, government fiscal stimulus and improving confidence and optimism. Despite the major challenges faced since early 2020, the economic recovery and rebound occurred faster than previously forecast. In Victoria, land sales remain at record highs and price growth continues. Indeed, the September quarter saw greenfield residential land prices reach record highs. Momentum remains positive with Melbourne’s most recent lockdown coming to an end and buyer enquiry remaining strong in recent months. All of this bodes well for the remainder of 2021 and early 2022. Although first home buyers have steadily retreated over the last year, partly due to higher prices and fewer key government incentives, upgrader buyers remain active. In addition, we continue to observe a steady inflow of investors following an earlier hiatus. Investors are likely to be an increasingly important segment over the short to medium term. The Queensland market continues to see increasing levels of interest. Despite numerous lockdowns and other restrictions being implemented across the nation, to various degrees, Queensland continues to attract large numbers of interstate migrants with many choosing the greenfields to call home. Importantly, the Queensland greenfield market remains relatively affordable - just one of the many factors which has seen a surge in demand for new residential land in the Sunshine state. Indeed, strong demand has led to declining levels of stock which is available for sale and this has further intensified competition in the market. South East Queensland’s growth corridors, especially the Logan and Ipswich municipalities, are doing much of the heavy lifting in satisfying buyer demand.
4
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
COVID-19 has changed many aspects of the property market. In some cases, COVID-19 has led to an acceleration of trends which had been underway for many years. Working from home, now firmly entrenched across the economy, is just one example. On the policy front, the Australian Prudential Regulation Authority (APRA) has announced it will aim to reduce the maximum amount that households can borrow to slow credit growth. Tougher serviceability tests, however, are likely to have a modest impact on the market and it is possible that further measures might be introduced. Changes to lending conditions are important to the overall health of the market and Oliver Hume will be tracking the impact of APRA’s recent decision. Going forward, the gradual reopening of interstate and international borders, including the eventual full resumption of Australia’s migration program, will be a significant boost to the market. Importantly, it will also provide further evidence of how COVID-19 has affected buyer preferences on a more permanent basis. In such uncertain times, understanding current and emerging trends in the property market has never been more important. The latest Quarterly Market Insights analyses the multiple indicators we track to help us understand the greenfield and broader residential property markets. The report includes our own proprietary property intelligence and has been prepared by our expert inhouse research team. Delivering the latest data and intelligence to our clients, stakeholders and strategic partners empowers them to react to trends, anticipate the future and make strategic decisions. It’s all part of our commitment to providing leading market insights, forecasts and in-depth analysis of the Australian residential property market.
Julian Coppini Chief Executive Officer - Project Marketing j.coppini@oliverhume.com.au
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
SEPTEMBER QUARTER 2021
5
1.0
National Highlights
1.1
George Bougias
National Highlights
National Head of Research g.bougias@oliverhume.com.au
Cash Rate Target
Economic Growth
Inflation
0.1%
9.6%
3.8%
Unemployment Rate
Employment Growth
Wage Growth
4.5%
3.1%
1.7%
Average Weekly Earnings
Household Saving Ratio
Net Foreign Liabilities
$1,305
9.7%
44.5%
Conversion Rate
Population
Employment Ratio
A$1
25.7M
62.2%
Residential Dwellings
Household Wealth
Household Debt
$836K
895%
184%
Loan Repayment Deferrals
Housing Credit Growth
0.5% 0.3%
1.2% 6.4%
Commercial Property Risks Elevated
=US$0.73
of Housing Loans
of small and medium Business Loans
As a share of Income
Investor
of GDP
As a share of Income
6.0% But low share of banks’ assets
Owner Occupier
Sources: Reserve Bank of Australia (RBA), Australian Bureau of Statistics (ABS).
8
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
Australia’s population has remained largely stable throughout the pandemic due to COVID-19 related international border restrictions. Australia’s population increased by 21,000 people (0.1%) over the March quarter 2021 (to 25.7 million people). Annual population growth was 35,700 people (0.1%). Net overseas migration was negative in the March 2021 quarter (-14,700). Natural increase reached 35,700 in the March 2021 quarter (up 3,800 from the previous quarter). On an annual basis, while net overseas migration was negative (-95,300), it was more than offset by population growth via natural increase (131,000).
Components of Quarterly Population Change - Australia 140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
-20,000
-40,000
-60,000 Mar-17 Total growth
Mar-18 Net overseas migration
Mar-19 Natural increase
Mar-20
Mar-21
Source: ABS, National, state and territory population March 2021..
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
9
2.0
Victoria
2.1
Market Drivers
Economy The ending of Victoria’s most recent (sixth) lockdown is expected to see a sharp rebound in economic and labour market activity.
Unemployment is forecast to edge lower over the short to medium term, consistent with an improving labour market and economy.
Due to the lockdown and other restrictions, the state’s unemployment rate trended higher, in recent months, rising to 4.8% in September 2021. The unemployment rate is slightly higher than the national average (4.6% on a seasonally adjusted basis) but remains low overall.
State Unemployment Rates (%) %
8
7
6
5
4
3 2017 VIC SA
12
NSW TAS
2021 QLD WA
QUARTERLY MARKET INSIGHTS
2017
2021 Source: RBA, ABS.
SEPTEMBER QUARTER 2021
Carrington - New Oliver Hume project. Artist impression.
Labour Underutilisation Rates - Australia %
12
9
6
3 1996 Underemployment Rate*
2001 Unemployment Rate
2006
2011
2016
2021
* 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
SEPTEMBER QUARTER 2021
13
2.1
Market Drivers
Population Victoria’s population declined over the year (ending 31 March 2021) due to the combined impacts of lockdowns and international border closures.
Victoria was the only jurisdiction to record negative population growth (-0.6%) with the population decline driven by negative interstate migration (around 18,200 people) and negative overseas migration (around 53,400 people).
Components of Annual Population Growth 60,000
40,000
20,000
0
-20,000
-40,000
-60,000 NSW Natural increase
14
VIC Net interstate migration
QUARTERLY MARKET INSIGHTS
QLD
SA
Net overseas migration
SEPTEMBER QUARTER 2021
WA
TAS
NT
ACT
Source: ABS. Oliver Hume Research. Estimated Resident Population.
Population Change by State and Territory Preliminary Data
Population at 31 Mar 2021 (‘000)
Change over previous year (‘000)
Change over previous year (%)
New South Wales
8,176.4
11.7
0.1
Victoria
6,648.6
-42.9
-0.6
Queensland
5,206.4
43.9
0.9
South Australia
1,771.7
2.7
0.2
Western Australia
2,675.8
15.2
0.6
Tasmania
542.0
2.1
0.4
Northern Territory
247.0
1.2
0.5
Australian Capital Territory
431.8
1.7
0.4
25,704.3
35.7
0.1
Australia (a)
(a) Includes Other Territories comprising Jervis Bay Territory, Christmas Island, the Cocos (Keeling) Islands and Norfolk Island. Source: ABS, Oliver Hume Research.
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
15
2.2
Land Market
Prices New residential land prices continued to increase in the September quarter 2021 reaching record highs.
The median (gross) price of metropolitan Melbourne conventional lots increased from $324,000 to $334,900 (3.4%) in the September quarter 2021 (up 7.7% over the year).
All metropolitan Melbourne municipalities, except for the Casey local government area, recorded an increase.
Victorian Growth Area Median Land Prices $450,000
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
Cardinia Hume Mitchell
16
Casey Melton Geelong
Whittlesea Wyndham Metro Melbourne
QUARTERLY MARKET INSIGHTS
QIII. ‘21
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
QIII. ‘09
$0
Source: Oliver Hume Research. Sold Lots. Annual moving average. Median (all of VIC)
SEPTEMBER QUARTER 2021
Metropolitan Melbourne Growth Area Municipalities Median Land Prices $350,000 $330,000 $310,000 $290,000 $270,000 $250,000 $230,000 $210,000 $190,000 $175,000
QIII. ‘21
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.
Victorian Median Lot Prices QIII, ‘20
QIV, ‘20
QI, ‘21
QII, ‘21
QIII, ‘21
% Change (QoQ)
% Change (YoY)
Cardinia
$340,500
$349,000
$344,500
$347,500
$365,000
5.0%
7.2%
Casey
$340,900
$347,000
$355,500
$419,833
$404,000
-3.8%
18.5%
Geelong
$282,000
$275,000
$294,900
$288,767
$313,750
8.7%
11.3%
Hume
$323,000
$320,500
$315,000
$314,800
$326,000
3.6%
0.9%
Melton
$292,000
$304,500
$317,000
$321,667
$336,000
4.5%
15.1%
Mitchell
$270,000
$260,000
$265,000
$269,333
$280,000
4.0%
3.7%
Whittlesea
$300,500
$318,000
$330,450
$331,850
$334,000
0.6%
11.1%
Wyndham
$307,500
$315,200
$313,900
$311,250
$314,900
1.2%
2.4%
Metro Melbourne (All Growth Areas) - Conventional
$311,000
$319,000
$323,000
$324,000
$334,900
3.4%
7.7%
Metro Melbourne (All Growth Areas) - All Lots
$313,000
$319,000
$320,000
$321,667
$335,000
4.1%
7.0%
Median (All of Victoria)
$300,000
$308,000
$315,000
$311,000
$325,000
4.5%
8.3%
Municipality
Source: Oliver Hume Research. Sold Lots.
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
17
2.1
Land Market
Sales Volumes Continued lockdowns and other restrictions have done little to dampen buyer demand.
In addition, investors are playing an increasing important role in the market.
Land sales remain at record highs as buyers continue to enter the market driven by a range of factors.
Regional markets continue to see strong levels of demand with several locations seeing record levels of interest.
Record low interest rates, fear of missing out, expectations of future price growth and steady buyer and consumer confidence are some of the drivers which have supported robust sales volumes in recent months.
In addition to Geelong, a traditionally popular growth corridor, buyers are increasingly active across several other regional markets including across the Baw Baw and Macedon Ranges Shires, Ballarat and beyond.
Although first home buyers have retreated, due partly to higher prices and fewer government incentives, upgrader buyers remain active.
Monthly Land Sales - Metropolitan Melbourne 3,000
2,500
2,000
1,500
1,000
500
Sep-21
Mar-21
Sep-20
Mar-20
Sep-19
Mar-19
Sep-18
Sep-17
Mar-18
Mar-17
Sep-16
Mar-16
Sep-15
Sep-14
Mar-15
Sep-13
Mar-14
Mar-13
Sep-12
Sep-11
Mar-12
Mar-11
Sep-10
Mar-10
Sep-09
Mar-09
Sep-08
Sep-07
Mar-08
Mar-07
Sep-06
Mar-06
Sep-05
Sep-04
Mar-05
0
Source: Oliver Hume Research.
18
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
Monthly Land Sales - City of Greater Geelong 450
400
300
250
200
150
100
50
Sep-21
Sep-20
Sep-19
Sep-18
Sep-17
Sep-16
Sep-15
Sep-14
Sep-13
Sep-12
Sep-11
0 Sep-10
Monthly Sales (No.)
350
Source: Oliver Hume Research.
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
19
VICTORIA
Median Lot Prices by Suburb (Gross) 400 sqm and 488 sqm Lots September Quarter 2021
FRASER RISE $361,217 $401,924
MELTON SOUTH $307,333 n/a
WYNDHAM VALE $301,100 $348,380
TARNEIT $356,993 $388,615
MAMBOURIN $297,278 $326,050
LARA $299,224 $315,651
GEELONG CHARLEMONT $308,875 $324,444
MT DUNEED $334,733 $363,900 ARMSTRONG CREEK $339,833 $345,817
WERRIBEE $320,800 $343,833
TRUGANINA $364,181 $396,993
400 sqm Median Price
WALLAN $260,500 $288,375
MICKLEHAM $381,000 $413,400
448 sqm Median Price Source: Oliver Hume Research. Sold.
KALKALLO n/a $353,000
BEVERIDGE $288,466 $305,143
CRAIGIEBURN $415,667 $444,500
WOLLERT $376,109 $403,429
GREENVALE $435,000 $471,000
MELBOURNE
BERWICK $547,700 $574,647 OFFICER $376,968 $420,240
CLYDE n/a $404,500
VICTORIA
Metropolitan Melbourne September Quarter 2021
COMMONLY SOLD LOTS
12.5m x 28m 12.5m x 32m MEDIAN PRICE
$335,000 MEDIAN SIZE
392 sqm MEDIAN VALUE RATE
$895 per sqm
2.3
Apartments and Townhouses
Apartments One of the major trends throughout the pandemic has been the surge in buyer demand for detached dwellings (houses). The surge was partly due to shifting preferences with many buyers choosing to build new houses in both metropolitan and regional greenfield locations. However, record low interest rates and government incentives also allowed many purchasers to buy larger dwellings. In turn, the industry was able to respond quickly, ensuring supply could be brought to market. Market activity in higher density markets was much different. High-density (apartment) markets were heavily impacted by COVID-19 and, especially, the closure of international borders. As a result, vacancy rates increased and apartment prices (and rents) have generally lagged trends in the broader market. Some sub-markets, especially those in the inner suburbs of large capital cities, even experienced declines in price and rents initially and continue to experience only a relatively modest rebound. For example, the Real Estate Institute of Victoria (REIV) reports that unit and apartment prices for metropolitan Melbourne edged higher in the September quarter 2021 (up 0.4%) to be 5.6% higher on an annual basis.
24
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
However, overall prices were dragged down by softer conditions in the inner Melbourne market (0-10 km from the CBD) where unit and apartment prices rose by only 2.6%. In contrast, unit and apartment prices in the middle Melbourne (10-20 km) and outer Melbourne (20+ km) markets are up 6.8% and 10.1%, respectively, over the year. The apartment market is, however, steadily improving. Buyers are increasingly active in securing competitively priced apartments - especially when compared to detached housing which has experienced significant capital appreciation. Apartment tenant demand also appears to have stabilised, overall, with many tenants capitalising on the rare opportunity to lock-in good rental deals. It will take some time for new apartment stock to be brought to market with leading indicators of new supply in the pipeline, such as approvals, remaining relatively subdued (although above recent troughs). This is in contrast to the detached housing sector which saw new supply surge due, partly, to the HomeBuilder incentive. Apartment market fundamentals are expected to gradually improve as international borders are reopened.
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
25
2.3
Apartments and Townhouses
Townhouses Over the last few years townhouse have become increasingly popular.
Detached housing has becoming increasingly out of reach for many buyers with prices rising throughout the pandemic and reaching record highs.
More recently, throughout the pandemic, this trend has continued and demand for townhouses has remained strong.
This had made townhouses even more popular, including especially for first home buyers (looking at entering the market) and for downsizers (looking to stay in the same location).
A key reason has been affordability. Townhouses allow buyers to purchase a landed product at, generally, a more competitive price compared to detached housing.
Post-pandemic, townhouses are likely to become even more popular for many buyers as they seek value for money, a good location (close to amenities and transport) and the latest designs suitable for modern living.
Another reason has been the continued evolution of the townhouse market with new stock offering new, flexible and modern designs suitable for a diverse range of buyer groups (including upgraders, downsizers, first home buyers, families, couples and investors).
National dwellings approved, by building type, seasonally adjusted 17,500
No. of dwellings approved
15,000
12,500
10,000
7,500
5,000
Private sector houses
26
Private sector dwellings excluding houses
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
Aug-21
Aug-20
Aug-19
Aug-18
Aug-17
Aug-16
Aug-15
Aug-14
Aug-13
Aug-12
Aug-11
Aug-10
Aug-09
Aug-08
Aug-07
Aug-06
2,500
Source: ABS.
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
27
2.4
Peter Vassallo
Development Sites
Managing Director | Development Sites p.vassallo@oliverhume.com.au
Robust conditions in the retail greenfield residential market are being mirrored by an increasingly competitive development sites market. Although development site broadhectare values remained resilient in the early phase of the pandemic, since around early 2020 when COVID-19 first emerged in Australia, they have since increased and are currently at record highs.
Many developers are accepting lower returns (generally 10% to 15% although, in some cases, lower). Risks have also increased as with other property markets. A key risk is that future costs are not being fully accounted for.
Buyer enquiry and transactions activity remains strong.
This is especially the case if inflationary pressures are not transitory but continue to build, eventually flowing through to costs on a more permanent basis.
Many of the factors which drove the upswing in the broader greenfield residential market have also underpinned stronger conditions in the development site market.
This is already starting to occur across markets both in Australia and overseas.
These factors include record low interest rates, substantial government fiscal stimulus, a faster than expected economic rebound and increasing business and consumer confidence. However, the development site market has also been buoyed by specific factors, including, the weight of development capital looking for a return.
Regional markets continue to see strong interest with high levels of demand being reflected in broadacre prices. Of note is pricing in the Geelong growth corridor which is currently at levels seen in Melbourne not too long ago.
At a local level, this has been driven by a growing number of buyers investigating a limited number of residential greenfield opportunities. This more local trend has been underpinned by intense competition, globally and nationally, in the search for yield in an environment where returns have trended down. Of note is the increasing interest from interstate buyers looking at greenfield opportunities in Melbourne and, to a lesser degree, regional Victoria. Traditionally, Victorian developers have often played a leading role in examining opportunities beyond state borders. In contrast, the current market has seen a reversal of this long-standing trend with many interstate developers now active in Victoria. Intense competition, combined with greater optimism and confidence, have been reflected in declining hurdle rates and rising escalation rates.
28
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
Although development site broadhectare values remained resilient in the early phase of the pandemic, since around early 2020 when COVID-19 first emerged in Australia, they have since increased and are currently at record highs.
Lenders are also more competitive. For example, the differences between bank and non-bank offerings have narrowed, and non-banks are becoming even more competitive vis-à-vis banks.
These include - but are not limited to - the Victorian State Government’s controversial Windfall Gains Tax (WGT).
As we emerge from the pandemic - and the process of economic recovery and rebuild gathers pace - the development site market has entered a new phase.
In addition, the Australian Prudential Regulation Authority’s (APRA) recent decision to increase the minimum interest rate buffer, to be used by banks when assessing the serviceability of home loan applications, is expected to have a modest impact initially.
While the end of lockdowns and easing of many COVID-19 restrictions are important milestones, they are not the only ones marking this new phase.
However, the increase in the buffer interest rate might not be the last action in the regulator’s effort to slow credit growth.
Various policy changes will also be important drivers of market conditions having short, medium and longterm impacts.
Finally, the gradual reopening of interstate and overseas borders will be crucially important drivers of market activity over the medium to long-term.
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
29
3.0
Queensland
Queensland at a Glance September Quarter 2021
STATE FINAL DEMAND (Jun Qtr 21)
11.5% BUILDING APPROVALS (Aug 21)
4.0% EXPORTS (GOODS OVERSEAS) (Aug 21)
$62.5b EMPLOYMENT GROWTH (Sep 21)
1.2% UNEMPLOYMENT RATE (Sep 21)
4.9%
RETAIL TRADE (Aug 21)
0.9% BUSINESS INVESTMENT (Jun Qtr 21)
4.2% INFLATION (CPI) (Jun Qtr 21)
4.9% EMPLOYMENT PERSONS (Sep 21)
2.66m POPULATION (Mar Qtr 21)
5.21m
Source: Queensland Government Statistician’s Office.
3.1
Amanda Bittenbinder
Market Drivers
Queensland Research Manager a.bittenbinder@oliverhume.com.au
Economy The Queensland economy continues to improve with the economic recovery well underway amidst continuing impacts of the Covid-19 pandemic. Overall economic activity is up 11.9% on the decade average underpinned by retail and household spending. Population growth, driven especially by interstate migration, is also an increasingly important driver of growth.
A robust residential property market has seen housing finance commitments continue to increase, up around 65% on the 10-year average and 29% over the year. Dwelling starts are also increasing and are up around 52% over the year.
Housing Finace - 10 Year Average Comparison
NSW
VIC
ACT
QLD
SA
NT
TAS
WA
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
Source: ABS, CommSec State of States Report.
34
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
Net Interstate Migration (Quarterly) 12,000 10,00 8,000 6,000 4,000 2,000 0 -2,000 -4,000 -6,000
NSW
VIC
QLD
Sep-20
Mar-20
Sep-19
Mar-19
Sep-18
Mar-18
Sep-17
Mar-17
Sep-16
Mar-16
Sep-15
Mar-15
Sep-14
Mar-14
Sep-13
Mar-13
Sep-12
Mar-12
Sep-11
Mar-11
Sep-10
Mar-10
Sep-09
Mar-09
Sep-08
Mar-08
-8,000
Source: ABS.
Queensland Population Change | Growth Components 140,000
120,000
100,000
80,000
60,000
40,000
20,000
-
-20,000
Total Population Growth
Natural Increase
Net Overseas Migration
Net Interstate Migration
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
Sep-20
Dec-19
Mar-19
Jun-18
Sep-17
Dec-16
Mar-16
Jun-15
Sep-14
Dec-13
Mar-13
Jun-12
Sep-11
Dec-10
Mar-10
Jun-09
Sep-08
Dec-07
Mar-07
Jun-06
Sep-05
Dec-04
Mar-04
Jun-03
Sep-02
Dec-01
Sep-00
-40,000
Source: ABS.
35
3.2
Land Market
Land Market The South East Queensland (SEQ) market continues to record robust sale volumes despite ongoing concerns surrounding stock availability. Over the September quarter there were 1,672 sales. The sales rate moderated over the quarter but remained wellabove the long-term average.
Stock availability continues to dampen sales volumes. At the end of the September quarter there were around 380 lots remaining on the market (a decline of almost 70% over the year). The Gold Coast was the only market that didn’t record a sharp fall in available stock over the year. However, this was due to stock being released late in the quarter. Preliminary figures suggest that very little of this stock remains on market.
South East Queensland Project Land Sales 2,500
2,289
2,000
1,672
1,500
1,448
1,000
500
SEQ Total Quarterly Sales
36
SEQ Long Run Average
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
Jun-21
Sep-21
Mar-21
Dec-20
Sep-20
Jun-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
Sep-15
Jun-15
Dec-14
Mar-15
Jun-14
Sep-14
Dec-13
Mar-14
Jun-13
Sep-13
Dec-12
Mar-13
Sep-12
0
Source: Oliver Hume Research. Sold Lots.
Available Stock Comparison - Growth Corridors 1,400
1,200
1,000
800
600
400
200
0 Brisbane Sep-20
Gold Coast
Ipswich
Logan
Moreton Bay
Redland
SEQ Source: Oliver Hume Research.
Sep-21
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
37
3.2
Land Market
Market Share The Logan and Ipswich markets accounted for most sales over the September quarter due to affordability and the availability of stock. The Logan local government area represented around a third of sales over the quarter (over 540 transactions accounting for 32.5% of all sales).
Moreton Bay’s market share continues to moderate as the volume of new stock in the region continues to be constrained by delays in the development pipeline.
Growth Corridor Sales Market Share
Quarter
Brisbane Sales Market Share
Gold Coast Sales Market Share
Ipswich Sales Market Share
Logan Sales Market Share
Moreton Bay Sales Market Share
Redland Sales Market Share
Sep. '21
12.5%
10.8%
26.6%
32.5%
13.5%
4.2%
Mar. ‘21
9.9%
17.5%
19.8%
36.9%
13.4%
2.5% Source: Oliver Hume Research.
South East Queensland Project Land Sales | Market Share
BRISBANE
12.5%
GOLD COAST
10.8%
IPSWICH
26.6%
LOGAN
32.5%
MORETON BAY
70,590
REDLAND
13.5%
4.2% 24,123 Source: Oliver Hume Research.
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QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
39
3.2
Land Market
Median Price The median lot price for the South East Queensland region, although slightly higher over the year, has remained relatively stable in recent months. However, there is increased pressure on pricing in some markets due to very limited stock availability.
This is most evident in the Moreton Bay and Redland markets where a lack of stock, combined with pent-up demand, has led to significant price escalations. Gold Coast pricing continues to reflect mostly premium stock available for purchase.
South East Queensland Median Lot Prices by Local Government Area $500,000
$450,000
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0 Brisbane QIII.’20
40
QIV.’20
QI.’21
Gold Coast QII.’21
Ipswich
QIII.’21
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
Logan
Moreton Bay
Redland
SEQ
Source: Oliver Hume Research.
MORETON BAY
BRISBANE
REDLAND IPSWICH
LOGAN
GOLD COAST
South East Queensland Median Land Prices by Local Government Area LGA
QIII. ‘21
QII. ‘21
QIII. ‘20
QoQ
YoY
5yr Change
Brisbane (C)
$372,000
$369,725
$389,725
0.6%
-4.5%
-2.0%
Gold Coast (C)
$432,675
$412,675
$331,450
4.8%
30.5%
60.4%
Ipswich (C)
$220,800
$216,300
$214,563
2.1%
2.9%
9.8%
Logan (C)
$221,000
$219,000
$221,225
0.9%
-0.1%
6.4%
Moreton Bay (R)
$332,875
$280,000
$264,000
18.9%
26.1%
32.7%
Redland (C)
$346,688
$335,938
$307,500
3.2%
12.7%
8.1%
South East Queensland
$248,000
$249,000
$247,500
-0.4%
0.2%
3.6% Source: Oliver Hume Research.
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
41
3.2
Land Market
Median Lot Size Most transactions in the South East Queensland market over the September quarter occurred in the 301-500 sqm range (74% of all lots sold). Lots sized 401-500 sqm experienced the largest increase in market share over the past quarter (from 33% to 36% of sales).
Overall, median lot sizes declined slightly (down 0.2%) over the quarter to be down around 3% over the year. Moreton Bay was the only market where lot sizes did not decline over the year. This was due to the profile of new stock released to market.
South East Queensland Project Land Sales (0 - 1,000 sqm) Market Share by Product Type 100%
10%
10%
12%
10%
10%
14%
13%
9%
8%
7%
9%
10%
13%
33%
34%
10%
10%
11%
13%
36%
33%
90%
13%
15%
80%
15%
70%
60%
34% 36%
35%
33%
34%
31%
50%
40%
30%
41% 38%
34%
36%
34%
37%
37%
41% 38%
37%
20%
10%
0%
5%
6%
6%
7%
7%
8%
QIII. ‘19
QIV. ‘19
QI. ‘20
QII. ‘20
QIII. ‘20
QIV. ‘20
Less than 300 sqm
42
301-400 sqm
401-500 sqm
QUARTERLY MARKET INSIGHTS
501-600 sqm
601-1,000 sqm
SEPTEMBER QUARTER 2021
7%
7%
5%
7%
QI. ‘21
QII. ‘21
QIII. ‘21
Long-run Average
Source: Oliver Hume Research.
South East Queensland Median Lot Sizes by Local Government Area (sqm) LGA
QIII. '21
QII.'21
QIII.’20
QoQ
YoY
5 yr Change
Brisbane (C)
412
422
430
-2.4%
-4.1%
-7.8%
Gold Coast (C)
426
431
427
-1.2%
-0.2%
-14.3%
Ipswich (C)
418
422
432
-1.0%
-3.2%
-5.4%
Logan (C)
397
402
423
-1.2%
-6.1%
-7.0%
Moreton Bay (R)
421
413
412
1.9%
2.2%
-5.0%
Redland (C)
437
448
399
-2.5%
9.4%
-4.1%
SEQ
408
409
421
-0.2%
-3.0%
-7.8% Source: Oliver Hume Research.
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
43
3.2
Land Market
Value Rates Median value rates across all South East Queensland growth corridors increased over the quarter. The largest increase was recorded in the Moreton Bay market where the median value rate reached $791 per sqm, an increase of around 16% over the quarter, although this is expected to moderate as more traditional stock is released.
South East Queensland Project Land Sales (QIII. ‘21) | Median Value Rate ($ per sqm)
IPSWICH
$529
LOGAN
$557
SOUTH EAST QUEENSLAND
$608
MORETON BAY
$791
REDLAND
$794
BRISBANE
GOLD COAST
$902
$0
$200
$400
$600
$800
$1,016
$1,000
$1,200
Source: Oliver Hume Research.
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QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
Bellevue by HB Land - New Oliver Hume project. Artist impression.
South East Queensland Median Value Rates by Local Government Area ($/sqm) LGA
QIII. '21
QII. ‘21
QIII. ‘20
QoQ
$ Value Change (QoQ)
YoY
$ Value Change (YoY)
5 yr Change
$ Value Change (5Yr Change)
Brisbane (C)
$902
$876
$906
3.1%
$27
-0.4%
-$4
6.3%
$53
Gold Coast (C)
$1,016
$958
$777
6.1%
$58
30.8%
$240
87.2%
$473
Ipswich (C)
$529
$513
$497
3.1%
$16
6.4%
$32
16.0%
$73
Logan (C)
$557
$545
$523
2.1%
$12
6.4%
$34
14.4%
$70
Moreton Bay (R)
$791
$678
$641
16.7%
$113
23.4%
$150
39.6%
$224
Redland (C)
$794
$750
$770
5.9%
$44
3.1%
$24
12.6%
$89
SEQ
$608
$609
$589
-0.2%
-$1
3.3%
$19
12.4%
$67
Source: Oliver Hume Research.
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
45
3.2
Land Market
Time on Market The median time on market has decreased across all the growth corridors, with most lots selling within the same month of release.
Lots have not transacted this quickly since late 2018. This is largely attributed to the continued build up of buyer demand. As limited stock continues to enter the market this trend is likely to continue into the new year.
South East Queensland New Residential Land - Median Time on Market (Days) 140 122 115
120
100
90
91
89
90
80 59
59
61
61
61
61
40
31
31
QIV. ‘17
48
QIII. ‘17
60
45
31
31
20
QIII. ‘21
QII. ‘21
QI. ‘21
QIV. ‘20
QIII. ‘20
QII. ‘20
QI. ‘20
QIV. ‘19
QIII.’19
QII.’19
QI. ‘19
QIV. ‘18
QIII. ‘18
QII. ‘18
QI. ‘18
QII. ‘17
0
Source: Oliver Hume Research. Median data.
South East Queensland New Residential Land - Median Time on Market (Days) 100 90 80 70 60 50 40 40 30
30
31
31
31
BRISBANE
GOLD COAST
IPSWICH
LOGAN
MORETON BAY
31
30 20 10 0 REDLAND
SEQ Source: Oliver Hume Research.
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QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
47
QUEENSLAND
South East Queensland September Quarter 2021
COMMONLY SOLD LOTS
401-425 sqm (16%) & 351-375 sqm (14%) MEDIAN PRICE
$248,000 MEDIAN SIZE
408 sqm MEDIAN VALUE RATE
$608 per sqm
3.3
Apartments and Townhouses
Brisbane
Gold Coast
The Brisbane apartment market has mirrored trends in the broader Brisbane residential market in recent months and continues to improve. Brisbane unit prices are up over the year although the rate of price growth is well below that of houses. Off-theplan apartment sale volumes have also risen and remain above recent lows. The continued divergence between house and apartment prices has increased the relative affordability of apartments and should help to underpin new apartment sales over the short to medium term.
Gold Coast apartment market conditions continued to improve in the second half of 2021.
Apartment sales continues to be dominated by two bedroom stock followed by 3 bedroom stock. Around a third of all sales are in the $650,000 to $750,000 range. Premium apartments, priced over $900,0000, are increasingly popular and accounted for around one in five sales in the previous quarter.
The apartment market is experiencing increasing rents, very low vacancy rates and strong demand from both owner occupiers and investors. The reopening of interstate borders will be an important boost to an already strengthening Gold Coast apartment market. The Gold Coast is expected to see increased demand for apartments and other dwellings, once interstate travel restrictions are eased, placing further pressure on the limited supply of new apartments.
Higher construction costs continue to flow through into higher sales prices. Rawlinsons reports that, over the first quarter of 2021, prices for construction materials increased across all categories.
Increase in Brisbane Material Costs LVL, LAMINATED BEAMS
TIMBER FRAMING
15%
15%
MESH REINFORCEMENT
BAR REINFORCEMENT
10%
$150/T
ROOFING/PURLINS
STRUCTURAL STEEL
10%
10%
CONCRETE
$10/CUM 50
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
The Dawn Edition Helensvale. Artist impression.
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
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4.0
Feature Articles
FEATURE ARTICLE
Working From Home and Housing Choices
How Working From Home Is Changing Housing Choices The rise in working from home is playing a key role in the housing choices of Australians and is one of the major emerging trends affecting the residential property market. How working from home will ultimately change the property market in the long run is a key question facing the industry. However, governments and policy makers are also taking notice, not least because of what working from home means for our cities and regions and economic prosperity overall. For example, the Reserve Bank of Australia (RBA) recently told a parliamentary inquiry into housing affordability and supply that the ability to work from home, combined with lockdowns and record-low interest rates, might have increased the attractiveness of regional areas and shifted demand towards lower density dwellings (such as houses).
The ‘New Normal’ We are, potentially, only at the beginning of a period of major change given the transition to a ‘new normal’ has been hindered by extended lockdowns and other restrictions. Given the already significant adoption of working from home we could well see many buyers vote with their feet once freed of mobility restrictions and harsh lockdowns. This could result in further substantial changes to Australia’s property market. Although much of the evidence and research for such as view is preliminary it is, arguably, compelling. The Productivity Commission’s recent Working from Home report (September 2021) concludes, for example, that the ongoing shift to working from home is one of the most significant changes to how Australians have worked in the last half century.
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QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
As the Chair of the Productivity Commission, Michael Brennan, noted “in less than two years we have gone from less than 8 per cent of Australians working from home to 40 per cent. While this percentage may not always remain so high it is inevitable that more Australians will work from home.” Similarly, a University of Sydney Business School survey suggests that 75% of workers consider their employers will support future work from home plans and that many wish to work from home an average of two days per week.
Working from Home – A Global Phenomenon Working from home is now global and continues to increase. Experts from around the world are grappling to understand the scale of this trend and its impact. In the United States, for example, Stanford economist Nicholas Bloom suggests around 22% of all full workdays will be done from home in the future (up from just 5% before). The McKinsey Global Institute suggests that over 20% of the workforce could work remotely three to five days a week. Research from the World Bank suggests one in every five jobs could be done from home. An Organisation for Economic Co-operation and Development (OECD) study finds that, although the opportunity for remote working varies greatly between and within nations, between 40% and 50% of jobs could potentially be done from home in some countries.
Looking Forward Many factors – including business strategies, government policy, demographics and the technology – will shape the working from home phenomenon and its impact on the economy, property market and many other aspects of our economic and social lives.
At Oliver Hume we continue to track this and many other trends to better understand the property market of the future. Through our proprietary market intelligence and inhouse experts, we endeavour to understand not just where market currently is, but where it is heading and how opportunities can be maximised.
It appears, however, that working from home is here to stay. While it is very difficult to fully ascertain the scale and impact of this major trend in the future it is important that we remain focussed on trying to understand it.
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
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FEATURE ARTICLE
Australia’s Landmark Submarine Deal and the South Australian Property Market Australia’s landmark deal with the United States and Britain to acquire at least eight nuclear-powered submarines is tremendously significant for Adelaide and South Australia. The deal is part of a broader trilateral security partnership dubbed “AUKUS” - Australia, the United Kingdom, and the United States. Construction of the first submarines is due to commence in Adelaide this decade and will herald a new era of employment growth, manufacturing, innovation and economic development for South Australia. Adelaide’s economy and the local property market will be key beneficiaries of the new strategic AUKUS partnership - and the new hi-tech submarine manufacturing specifically - further strengthening South Australia’s status as the nation’s ‘defence state.’
In addition to the new submarines around $6.4 billion, supporting 1,300 jobs, will be invested for the Life-ofType Extension and Full-Cycle Docking to the existing Collins class submarine fleet at South Australia’s Osborne Naval Shipyard.
The recent announcement comes at a time when Adelaide is welcoming back many South Australians – due to a range of factors including COVID-19 and the city’s relative housing affordability - and is increasingly recognised globally for its lifestyle and other competitive advantages.
This process is the complete replacement of key systems, essentially rebuilding each submarine, and will extend the service life of the fleet.
For example, Adelaide was recently ranked the world’s third most liveable city and the most liveable city in Australia. The employment and other economic impacts of the new submarines and associated naval manufacturing will be significant. Around 5,000 workers could be employed in South Australia’s naval shipbuilding industry over the next decade. This includes many highly proficient and skilled professionals such as naval engineers, shipbuilders and designers. The skill and knowledge of these workers will be worldclass given the sophistication and technology required to build advanced nuclear-powered submarines which are amongst the most complex machines ever made.
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QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
The process will ensure Australia’s submarine capability is preserved until the new submarines are ready for service. South Australia’s status as the nation’s shipbuilding capital is furthered by an additional $5.1 billion in upgrades to the Hobart Class destroyers at Osborne. This investment is expected to create another 300 jobs in the state. The new AUKUS partnership will extend beyond the new submarines and will include significant technology and knowledge sharing between the three nations. This includes greater integration of many highly advanced security and defence-related science and technologies such as artificial intelligence, cyber, quantum technologies and other undersea capabilities. Greater integration across industrial capability and supply chains fields is also planned.
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
57
FEATURE ARTICLE
Demand For Detached Housing Proves Strong As Pandemic Changes Designs One of the questions heading into 2021 was what the end of HomeBuilder incentive would mean for the market.
Importantly, in addition to the quest for more space, many design and other features of homes being sought by buyers are changing.
Various alternative scenarios were being discussed.
It appears that COVID-19 has resulted in some buyers viewing their homes differently, due to the markedly different economic and health environment, and preferences are also changing.
Would demand moderate due to the end of the incentive? Or would demand continue to increase, buoyed by a rebounding economy and greater confidence?
Although this might appear novel, a quick glance into history suggests this is not a new phenomenon.
As we approach the end of 2021, the verdict is in. Although record low interest rates, higher household savings and other factors have played a major role throughout 2021, the second year of COVID-19 has showed that Australia’s appetite for residential property remains strong. Demand for detached housing, especially, is robust. The latest Housing Industry Association figures show national new home sales rose 5.8% in August from the previous month. Moreover, sales in recent months across the nation have continued to remain strong.
Pandemics, infections and related events have long been catalysts for changes in the built environment, architecture and design. For example, an outbreak of cholera in London led to carpets and drapes in bathrooms being replaced with surfaces that were easier to clean. Today, modern bathrooms now prioritise tiles or marble, creating smooth services which can be cleaned and disinfected. Similarly, powder rooms or bathrooms for guests are a common feature in modern house designs. However, the origin of this practice dates to the 1918 flu pandemic. Having a small bathroom in the main area meant guests weren’t required to walk through the entire dwelling to wash.
This is especially the case when compared to the period before COVID-19. For example, sales over the past three months have been stronger than the same periods in both 2019 and 2018 (15.4% and 4.5% higher). Similarly, Oliver Hume data shows new enquires for residential land in Victoria increased by 7% in August and 15% in July (from the previous month). Stronger demand for detached homes suggests that, for at least some market segments, we could be in the early phase of a structural shift towards lower density dwellings such as detached house and townhouses. Detached housing is clearly ticking boxes for many buyers because of this product’s capacity to deliver more space to live, work and play – space which has been increasingly sought after over the last year and a half as millions have been subject to lockdowns and other restrictions.
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QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
Pandemics, infections and related events have long been catalysts for changes in the built environment, architecture and design.
So how are designs changing in the era of COVID-19? House designs continue to evolve and it is likely that the impact of COVID-19 will continue to be felt for years. However, even though we are only beginning to see many aspects of house design change, it is clear change is underway. To date, some of the most distinctive design changes include: • Home offices: The rise in working from home means a dedicated space for a home office is increasingly highly sought after • Antimicrobial materials: The priority on health and safety could lead many people to choose easy-toclean materials and surfaces that are antimicrobial • Outdoor space emphasis: Integrating outdoor living into new homes are leading to more features like sprawling backyards, balconies and porches where people can play, cook, eat and exercise
• Multi-purpose spaces: More families spending more time at home is creating a need for spaces that can function for different purposes including as recreational space, gym, study or storage • Open space: People are sending more time at home. Seeking peace and comfort at home and larger living spaces can help them make the most of their leisure time. Of course, the degree to which these changes in home design are permanent or transitory remains to be seen. However, the growing recognition that a similar event could occur again in the future, suggests design changes will continue to flow through from the imaginations of architects and designers to the estates and suburbs of our cities and regions.
QUARTERLY MARKET INSIGHTS
SEPTEMBER QUARTER 2021
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BRISBANE OFFICE
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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.