J U N E
2 0 1 9
MARKET REVIEW
Q U A R T E R
RESIDENTIAL
RPM REAL ESTATE GROUP IS VICTORIA’S MOST SUCCESSFUL
WE ADVISE OUR CLIENTS ON ALL ASPECTS OF THE SALES
ADVISORY AGENCY. WE SPECIALISE IN SALES WITHIN
AND RISK MITIGATION THROUGH TO PRODUCT MIX, PRICING,
RESIDENTIAL DEVELOPMENT SALES, MARKETING AND
MASTER-PLANNED COMMUNITIES, MEDIUM AND HIGH-DENSITY DEVELOPMENTS, GREENFIELD AND INFILL DEVELOPMENT SITES AND INTERNATIONAL INVESTMENT SALES.
PROCESS FROM SITE DUE DILIGENCE, ACQUISITION, PLANNING LAUNCH, SALES AND SETTLEMENT. OUR RESEARCH-BACKED STRATEGIES DELIVER HIGHER REVENUES AND SALES RATES, AND BETTER RETURNS FOR OUR CLIENTS.
INSIDE
LEAD INDICATORS
DEVELOPMENT SITES
4 6
14
APARTMENTS / TOWNHOUSES
56
INTERNATIONAL
60
RESIDENTIAL INVESTMENT
Q2 MARKET OVERVIEW
FROM OUR CEO
50
FEATURE STORIES:
10
Industry Leaders Insights
COMMUNITIES
20
Legislative Updates: New duty on Development Agreements Amendments to Sale of Land Act 1962
18 48
Q2 RESIDENTIAL MARKE T RE VIE W
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J U N E Q U A R T E R 2 019
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FROM OUR CEO
WELCOME TO Q2 OF RPM REAL ESTATE
The median lot price fell 5.2% to $310,000 for
THIS ISSUE WE ANALYSE THE KEY TRENDS
months ago. Prices will likely ease another 5%, and,
Q2 MARKET OVERVIEW
GROUP’S RESIDENTIAL MARKET REVIEW. IN CHARACTERISING MELBOURNE AND GEELONG’S NEW HOUSING MARKET, UNDERPINNED BY OUR DATA-DRIVEN INSIGHTS.
Over the June quarter there was a positive shift in market sentiment following the announcement of
KEVIN BROWN
CHIEF EXECUTIVE OFFICER RPM REAL ESTATE GROUP
- potentially skewing the median lot size to 375sqm - will see a median lot price sub $300,000, which is
considered ‘fair value’ and better calibrated to first home buyer budgets.
In the greenfield development site space,
continuation of negative gearing and capital gains tax
a misalignment between developer and landowner
the removal of the 7.25% mortgage rate test and advantages following the Federal election.
momentum, with an uptick in monthly land sales volumes from April to June. We believe the land
market is nearing the bottom, with the pace of decline
transaction volumes remain subdued; there is still
price expectations, hence deals are taking longer to transact. However, with the baseline reset, there’s been a return of local players to the market who
are building pipelines on which to capitalise in the medium term.
in quarterly sales slowing. Lot sales for the June
In the infill market, many developers have shifted
quarter and 64% from the same quarter a year ago.
investments in the hunt for yield.
quarter fell 8.6% to 1,796 lots from the previous
R P M R E A L E S TAT E G R O U P
combined with new estates featuring smaller lot sizes
a range of stimulus including 2 interest rate cuts,
These incentives have generated a degree of sales
4
the quarter and 4.6% from the same quarter 12
focus from residential site acquisitions to secure
In the apartment and townhouse market, increased
MICHAEL STAEDLER
investors continued to impact demand both
m.staedler@rpmrealestate.com.au
stamp duty and taxes and lending curbs on
declining 17% from the March quarter and 32% from
Q2 MARKET OVERVIEW
locally and overseas, with other dwelling approvals
RESEARCH MANAGER +61 434 619 280
the June quarter last year. However, with townhouse approvals just 1.5% below the previous quarter,
medium density approvals may be approaching
The data contained within this report was prepared
apartments, however, with approvals down 27%
property experts and GIS analysts.
the bottom of the cycle. The same can’t be said for from the March quarter.
LOOKING AHEAD, WE EXPECT A GRADUAL RATHER THAN A SHARP RECOVERY IN THE LAND MARKET TOWARDS THE BACK HALF OF 2019 AND INTO 2020. THE VOLUME OF UNSOLD STOCK INCREASED OVER 2018/19 WHICH WILL LIKELY TAKE A YEAR TO ABSORB BEFORE SETTLING INTO MORE CONSISTENT LEVELS OF ACTIVITY. THE RECENT BOOST TO HOME BUYERS IN THE FORM OF INTEREST RATE CUTS AND IMPROVED BORROWING CAPACITY SHOULD HELP ABSORB THIS HIGH LEVEL OF STOCK OVERHANG.
by RPM’s research team consisting of economists,
Research underpins the core strategic decision
making capability at RPM, providing in-depth analysis on current economic and housing conditions,
sales rates and pricing, future supply and demand assessments, and buyer demographics. This rich intelligence enables clients to make informed
decisions that underscore the success of their
developments. RPM’s research is also highly valued in assisting clients to secure capital funding and
enhance their ongoing marketing and ROI strategies.
Q2 RESIDENTIAL MARKE T RE VIE W
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ECONOMIC ACTIVITY GROSS DOMESTIC PRODUCT (GDP)
2.51% 12 month change to Mar qtr. 2019
2.57%
5 year average
CONSUMER PRICE INDEX (CPI) Q 2L E M AA DR KI N ET D I OC VA ET RO VR ISE W
1.59% 2.08%
Jun-19
Source: ABS
Same month year earlier
VIC POPULATION
STATE FINAL DEMAND (SFD) - VIC
4.55% 4.14%
12 month change to Mar qtr. 2019
5 year average
RETAIL TURNOVER - VIC
4.14% 4.40% Jun-19
Same month year earlier
NATURAL INCREASE
8,984 Dec-18
9,591
Same qtr. year earlier
% change - same qtr. last year
6.3%
% change - 12 months earlier
4.3%
OVERSEAS MIGRATION
15,706 Dec-18
14,946 Same qtr. year earlier
CASH RATE
VARIABLE RATE
% change - 12 months earlier
1.3%
3,645
1.25 % 5.15% Jun-19
1.50% Mar-19
1.50% Jun-18
Source: RBA 6
R P M R E A L E S TAT E G R O U P
Jun-19
5.37% Mar-19
5.22% Jun-18
3 YEAR FIXED RATE
4.46% 3.92% Jun-19
Jun-19
4.68% 4.05% Mar-19
4.51% Jun-18
Mar-19
4.13% Jun-18
12 months to Dec-18 5.1%
Dec-18
DISCOUNTED RATE
85,965
% change - same qtr. last year
NET INTERSTATE MIGRATION
BORROWING RATES
40,256
12 months to Dec-18
4,421
Same qtr. year earlier
13,209
12 months to Dec-18
% change - same qtr. last year
17.6%
% change - 12 months earlier
19.4%
NATIONAL TOTAL CHANGE
VIC TOTAL CHANGE
404,783
139,430
1.63%
2.18%
change from Dec-17 to Dec-18 % change - same qtr. last year VIC share
34%
■ Negative change ■ Positive change
TOTAL POPULATION
AUS 25,180,234 VIC 6,526,413
VIC EMPLOYMENT EMPLOYMENT GROWTH (JOBS CREATED) Jobs (‘000s) TOTAL Mar-19 to Jun-19
FULL TIME Mar-19 to Jun-19 Last 12 months PART TIME Mar-19 to Jun-19 Last 12 months
-7.81 71.93 21.60 54.54
0.4% 15.7% 3.9% 42.7% 0.3% -31.3% 3.2% 29.2% 2.0% 34.4% 5.2% 109.6%
$1,666 $1,625 $1,607 Nov-18
2.5% Source: ABS
4.8% 4.6% 5.5% Jun-19
Source: ABS
Mar-19
Same time last year
CONSUMER SENTIMENT
100.7 Jun-19
102.1 Jun-18
Source: Westpac-Melb institute
BUSINESS SENTIMENT
1.4
Jun-19
12.9
Source: RBA/NAB
Jun-18
The Westpac-Melbourne Institute Consumer Sentiment
WAGES
May-19
UNEMPLOYMENT RATE
Q 2L M E AA D R KI E N TD IOC VA ET ROVR ISE W
Last 12 months
13.78 126.47
% Change
Vic contribution to AUS
May-18
Index is the most widely quoted barometer of consumer sentiment in Australia. A score of greater than 100 means that optimists outnumber pessimists, with readings of below 100 indicating that pessimistic consumers are in the majority.
NAB’s Business Survey has been tracking Australian
3.6%
business confidence levels for more than two decades. Businesses are approached quarterly, with two smaller
monthly surveys conducted in the intervening months to capture changes on a more regular basis. The panel now exceeds 2,700 businesses.
Q 2 R E S I D E N T I A L M A R K E T R E V I E W | J U N E Q U A R T E R 2 019
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VIC FINANCE NO. OF FHBS FINANCED
8,500 9,010 Jun-19
Same qtr. year earlier
NO. OF NON-FHBS FINANCED
18,415 22,455 Q 2L E M AA DR KI N ET D I OC VA ET RO VR ISE W
Jun-19
Same qtr. year earlier
FINANCE FOR NEW DWELLINGS
7,581 Jun-19
8,126
Same qtr. year earlier
VALUE OF LOANS - OWNER OCCUPIERS
$11.09B $12.58B Jun-19
Same qtr. year earlier
6% 18% 7% 12%
AVERAGE LOAN SIZE (FHBS)
$363,100 $366,000 Jun-19
Same qtr. year earlier
AVERAGE LOAN SIZE (NON-FHBS)
$434,600 $450,100 Jun-19
Same qtr. year earlier
FINANCE FOR ESTABLISHED DWELLINGS
19,334 Jun-19
23,398
Same qtr. year earlier
VALUE OF LOANS - INVESTORS
$3.85B Jun-19
$6.50B
Same qtr. year earlier
1% SHARE OF FHB LOANS
3% 17% 41%
31.6% 28.6% Jun-19
Same qtr. year earlier
Source: ABS
MELBOURNE PROPERTY MEDIAN HOUSE PRICE
$785,000 Previous qtr.
$839,000
Same qtr. year earlier Source: REIV 8
R P M R E A L E S TAT E G R O U P
MEDIAN LAND PRICE
Jun-19
Jun-19
$590,000
Jun-19
$794,000
MEDIAN UNIT PRICE
1.1% 6.4%
$586,500 Previous qtr.
$596,500
Same qtr. year earlier
AUCTIONS HELD
$310,000
0.6% 1.1%
$327,000 Previous qtr.
$325,000
Same qtr. year earlier
2,382
CLEARANCE
Jun-19 5.2% 4.6%
3,118 Mar-19
3,558
Same month year earlier
67% 56% 61%
VIC BUILDING DETACHED HOUSE APPROVALS 8,738 Jun-19 10,317 Same qtr. year earlier 36,747 Last 12 months
15.3% 7.1%
HOUSE COMMENCEMENTS
32.0% 36.2%
1.3% 0.2%
6,586 Mar-19 12,128 Same qtr. year earlier 27,821 Last 12 months
45.7% 17.7%
14.3%
Jun-19
17,437 22.1%
Same qtr. year earlier
59,724 21.0%
Last 12 months
15,488 Mar-19
21,147 26.8%
Same qtr. year earlier
27,821 17.7%
Last 12 months
TOTAL COMPLETIONS
OTHER COMPLETIONS
17.1%
13,583
TOTAL COMMENCEMENTS
OTHER COMMENCEMENTS
HOUSE COMPLETIONS 8,485 Mar-19 7,243 Same qtr. year earlier 40,070 Last 12 months
4,845 Jun-19 7,120 Same qtr. year earlier 22,977 Last 12 months
Q 2L M E AA D R KI E N TD IOC VA ET ROVR ISE W
8,902 Mar-19 9,019 Same qtr. year earlier 38,228 Last 12 months
TOTAL DWELLING APPROVALS
OTHER DWELLING APPROVALS
5,098 Mar-19 4,799 Same qtr. year earlier 26,024 Last 12 months
6.2% 9.2%
13,583 Mar-19
12,042 12.8%
Same qtr. year earlier
66,094 3.7%
Last 12 months
Source: ABS
MELBOURNE PROPERTY VACANCY RATE - MELB
2.2% 1.9% Jun-19
Jun-18
AVERAGE DAYS ON MARKET - METRO MELB
42
Jun-19
36
Jun-18
MEDIAN METRO HOUSE RENT
$460 Jun-19
$450 Jun-18
MEDIAN METRO OTHER DWELLING RENT
2.2%
$430 Jun-19
$420 Jun-18
2.4%
Source: REIV Q 2 R E S I D E N T I A L M A R K E T R E V I E W | J U N E Q U A R T E R 2 019
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FEATURE STORY:
INDUSTRY LEADERS INSIGHTS RPM: How would you describe the state of
That said, one of the biggest economic challenges in
factors have played into this?
has continued to worsen post GFC. It reflects the
Q2 MARKET OVERVIEW
Victoria’s residential property market and what
DG: There are definitely signs of life emerging. The DANIEL GRADWELL
ASSOCIATE DIRECTOR PROPERTY AT ANZ
market looks better now than it has for quite some time. We’ve had falling prices for 18 months and
building approvals have followed suit. We are getting close to the turning point in the cycle, the bottom is
fact there is a lot of spare capacity in the economy,
so businesses don’t need to compete for labour. The
headline unemployment rate masks the level of under employment – people who are working but not as much as they’d like.
in sight.
Because wages are weak, people are not spending
A LOT HAS CHANGED IN THE RESIDENTIAL
Some key economic and political factors have played
inflation remains weak. The Reserve Bank has a 2-3%
RPM SAT DOWN WITH DANIEL GRADWELL,
last couple of months. The federal election outcome
PROPERTY MARKET OVER THE LAST FEW MONTHS. ASSOCIATE DIRECTOR, PROPERTY, AT ANZ TO
UNPACK THE ECONOMIC AND LENDING DRIVERS UNDERPINNING THE MARKET.
into this. There’s been 2 interest rate cuts over the
has provided certainty regarding capital gains tax and negative gearing, and APRA’s reduction of the loan
serviceability calculation has really turned sentiment around quite quickly.
Victoria’s population story remains very important. Fundamentally population growth is still incredibly
strong – well above national growth rates and pretty much every other developed economy in the world. 10
Australia currently is very weak wages growth, which
R P M R E A L E S TAT E G R O U P
as much money or simply don’t have it. Hence overall target band, and the inflation rate has been below
that for a few years. They want to have a level of full
employment and inflation in that band. So with both of these measures being fairly weak, the RBA cut
interest rates to stimulate activity and encourage
investment which should absorb some of that spare wages capacity.
Banks now have the ability to see an applicant’s loan
DG: To briefly explain the changes, in 2014 APRA set
The HEM has recently been rebased in terms of how
to a bank for a loan it assumed you might one day have
vast majority of people it’s assumed their spend
have on demand?
a 7.25% serviceability buffer which means if you went
to pay 7.25% interest on that loan. It made sense at the time but now most people are paying a mortgage with an interest rate starting with a 3 (and if you’re not, go and talk to your bank).
situation at other financial institutions, for example.
much people spend on goods and services. For the will be higher therefore they’ll be able to borrow
less. For example, not many people have a landline
phone anymore but may spend more on subscription services like Netflix and Spotify.
So it doesn’t make sense to have it fixed at 7.25%.
While banks are trying to reduce their reliance on the
buffer. For most borrowers it will bring you to about
for a fair number of mortgage applications and will
Rather, it’s now set at the rate of interest plus a 2.5% 5.75% up to 6% - which is a pretty material difference from 7.25%. For most borrowers this means their
HEM and verify expenses themselves, it’s still used reduce the amount people can borrow.
maximum borrowing capacity is about 10-15% higher.
While overall credit availability will increase due to
However, it’s not all one way traffic for the borrower. As
2 measures. I think we’ve got pretty close to our
featured in your last report, the Comprehensive Credit
Reporting (CCR) regime and changes to the Household Expenditure Measure (HEM) gives banks much better visibility around potential borrowers.
APRA’s changes, some of it will be offset by these
‘new normal’. There may be some tweaks but not the
OUR MOST RECENT REPORT ON HOUSING AFFORDABILITY HIGHLIGHTED THAT FOR THE AVERAGE PERSON IN VICTORIA WITH A MORTGAGE, 40% OF THEIR INCOME GOES TOWARDS SERVICING THEIR LOAN. THAT SOUNDS LIKE A LOT, BUT IT’S IN LINE WITH AVERAGE HISTORICAL LEVELS.
Q2 MARKET OVERVIEW
RPM: How much of an effect will regulatory easing
throwback to a couple of years ago.
DANIEL GRADWELL Q2 RESIDENTIAL MARKE T RE VIE W
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Q2 MARKET OVERVIEW
ANZ’S HALF YEAR RESULTS PACK SHOWED THAT ON AVERAGE, OUR MORTGAGE BORROWERS CAN TAKE OUT 30% LESS DEBT COMPARED TO 2015. IT’S A BIG CHANGE AND SUGGESTS THAT CREDIT AVAILABILITY WON’T GO BACK TO WHERE IT WAS.
12
R P M R E A L E S TAT E G R O U P
FEATURE STORY: INDUSTRY LEADERS INSIGHTS
RPM: To what extent has housing affordability improved?
lost in the discussion is housing affordability is still really stretched. Despite prices having come off
about 11% from the peak, the challenge for first home buyers is still significant. While rate cuts are positive from a cash flow perspective for existing mortgage
ANZ’s half year results pack showed that on average,
to save for the deposit they need. Our report shows
compared to 2015. It’s a big change and suggests
savings is really weak, so it’s taking longer for them that for people on an average income, it now takes about 10 years to save for a 20% deposit, which
On the construction side, it’s important to again
interest rates are not helping.
people came to Victoria and we need to be building
that deposit hurdle has really worsened and lower
RPM: What’s the outlook?
their current savings base.
DG: As mentioned earlier, I think we are at or
Our most recent report on housing affordability (with
sharp rebound or V-shaped recovery, which is a
CoreLogic) highlighted that for the average person in Victoria with a mortgage, 40% of their income goes
very close to the bottom. But there won’t be a good outcome.
towards servicing their loan. That sounds like a lot,
Over the next couple of years we’ll see some
mortgage debit is still very high, it’s offset by record
rise in line with incomes which will help affordability.
but it’s in line with average historical levels. While low interest right now.
that credit availability won’t go back to where it was.
is a material increase from the early 2000s. So
holders, it doesn’t really help people saving for a
house right now. In fact it hinders them as it impacts
our mortgage borrowers can take out 30% less debt
Q2 MARKET OVERVIEW
DG: While prices have declined, one thing that gets
On the flipside, for first home buyers the return on
highlight population growth. Last year 140,000
about 60,000 dwellings each year to house them. While there is still a lot of dwellings under
construction, there will be a gap unless approvals start to pick up. If it does that now, there will be a
more seamless transition when they are completed.
stabilisation and moderate growth. Prices should
Stabilisation is much better than going through peaks and troughs.
Q2 RESIDENTIAL MARKE T RE VIE W
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OVERVIEW
DESPITE CONTINUED SUBDUED TRANSACTION
VOLUMES IN THE DEVELOPMENT SITE MARKET,
DEVELOPMENT SITES
THERE HAS BEEN RENEWED INTEREST IN
ACTIVITY BROUGHT ABOUT BY STABILISING
EVENTS IN THE RETAIL MARKET INCLUDING THE COALITION ELECTION VICTORY, INTEREST RATE CUTS AND A REDUCTION IN THE MORTGAGE SERVICEABILITY BUFFER.
In the greenfield space, there has been a return of local players to the market who in recent
years struggled to compete against big offshore developers, who are now more established with significant stock to sell through.
Given the market has bottomed and the baseline
reset, developers can better forecast what a project looks like and are structuring deals with greater
certainty. They are recognising opportunities on which to capitalise in the medium term.
14
R P M R E A L E S TAT E G R O U P
CHRISTIAN RANIERI
DIRECTOR, TRANSACTIONS & ADVISORY christian@rpmrealestate.com.au +61 416 445 078
Notwithstanding, there is still a misalignment
What is required is a steadier, more diverse supply
Already we are seeing some developers, including
expectations, with vendors not prepared to trade at a
stems from land supply – introducing new PSPs - and
to market. At best, the impost is a veiled swipe at
between landowner and developer price
discount, making some project feasibilities difficult. While deals are taking longer to transact, vendors
have eased on terms and structures and there is a genuine interest from both parties to cooperate.
There is pent up demand for new housing among first home buyers that needs to be met, which gives the greenfield market greater performance longevity. Moreover, the beauty of land lies in the ability for
product to change rapidly to meet market conditions such as smaller lot sizes and townhouses that first home buyers can afford.
and longer gestations of more moderate growth. This getting land to market quicker, with better delivery of infrastructure which will increase options for purchasers and keep pricing competitive.
The recent and unexpected State budget measure
QD2E V M EA LROK PE M T EONVT E S R IVTI EE SW
THE RECENT SERIES OF STABILISING EVENTS HAS BROUGHT A DEGREE OF CONFIDENCE BACK TO THE MARKET, WHICH WILL LIKELY SPEED UP THE HOUSING RECOVERY.
Resi Ventures*, walk away from bringing future lots taking money from a commercial venture. At worst
it will discourage development which will impact the supply of these projects coming to market – and affordability.
to bring forward and extend a stamp duty levy on
Development Agreements is a significant concern for the industry. It removes the incentive for landowners
and developers to enter into joint ventures as they are no longer economically attractive to landowners.
*Reported in Australian Financial Review, June 18, 2019 Q2 RESIDENTIAL MARKE T RE VIE W
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QD2E V M EA LROK PE M T EONVT E S R IVTI EE SW
INFILL In the infill market, many developers who got caught
The number of stalled projects due to the
The recent series of stabilising events has brought a
withdrawn from residential site acquisitions and
disincentives could well lead to an undersupply in
likely speed up the housing recovery. We should see
in the development cycle during the downturn have
switched focus to secure investments. We are seeing significant transaction activity in long term leased
investments such as boutique office buildings and retail as developers chase security and yield.
In anticipation of interest rates falling further, investors continue to flock to secure yield investments, where 2-3% will become the market norm.
16
OUTLOOK
R P M R E A L E S TAT E G R O U P
challenges of selling stock and ongoing investor
the apartment sector. Given there are not enough local players to pick up the volume of supply that
comes out of apartment projects due to the lack of depth in the market and increased surcharges on
overseas buyers, projects are not being launched and developers are looking at alternate uses for their sites.
degree of confidence back to the market, which will a return to strong activity in the development site
space and continued interest in yield investments in
the first quarter of 2020 as investors seek out shelter from low interest rates.
SOLD: MIXED-USE BRUNSWICK DEVELOPMENT SITE ATTRACTS INVESTORS CHASING YIELD
remains strong following the sale of a premium development site for $5 million in the heart of
Brunswick by RPM’s Transactions & Advisory team. Permit approved for 61 apartments over 7 storeys and designed by Rothelowman architects, the
1,170sqm site on Sydney Road currently trades as
QD2E V M EA LROK PE M T EONVT E S R IVTI EE SW
Demand for well-priced, high quality infill assets
THE SITE FEATURES AN EXISTING COMMERCIAL TENANCY BUT IS APPROVED FOR RESIDENTIAL. THIS MIXED USE ASSET APPEALED TO MULTIPLE PARTIES SEEKING A GOOD QUALITY YIELD AND FUTURE UPSIDE.
Northside Harley-Davidson, with a passing income of $270,000 +GST.
CHRISTIAN RANIERI
Head of RPM Transaction & Advisory Christian Ranieri said the campaign attracted significant interest from developers and commercial investors, generating more than 150 enquiries and 8 written offers.
Q 2 R E S I D E N T I A L M A R K E T R E V I E W | J U N E Q U A R T E R 2 019
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FEATURE STORY:
QD2E V M EA LROK PE M T EONVT E S R IVTI EE SW
LEGISLATIVE UPDATE: NEW DUTY ON DEVELOPMENT AGREEMENTS RPM: What are the new changes?
RPM: When will they be introduced/effective?
MT-S: The changes, announced in the 2019
MT-S: The new rules apply to arrangements entered
entitlement’ duty rules. They are significantly
into before this date are not subject to the new
Victorian State Budget, relate to the ‘economic MICHAEL TAYLOR-SANDS PARTNER
MADDOCKS LAW FIRM
THE VICTORIAN GOVERNMENT RECENTLY IMPOSED NEW STAMP DUTY RULES ON
DEVELOPMENT AGREEMENTS. TO EXPLAIN THE CHANGES AND IMPACT ON DEVELOPERS, WE
SOUGHT THE EXPERTISE OF MICHAEL TAYLORSANDS, PARTNER AT MADDOCKS LAW FIRM.
broader than the previous rules and effectively create a new type of duty.
The previous rules only imposed duty where the
entitlement rules in section 81 of the Duties Act 2000 (Vic).
RPM: How will the new rules operate?
in 50% or more of the proceeds of sale or profits
MT-S: Under the new rules a person who acquires
landowner (not just unit trusts and private companies)
duty and is effectively treated as having acquired
only where a person acquired a right to participate from land. The new rules can apply to any type of and there is no longer a 50% threshold for the entitlement acquired.
agreements are drafted, as they may impose a duty liability at the time the agreement is entered into
(well before the property is actually developed and eventually sold).
R P M R E A L E S TAT E G R O U P
rules but are still subject to the previous economic
landowner was a unit trust or private company, and
The changes will impact how development
18
into on or after 19 June 2019. Arrangements entered
an ‘economic entitlement’ will be liable to pay an interest in the land for duty purposes. An
economic entitlement for these purposes includes an arrangement where a person is entitled to
participate in the income, proceeds from sale, rents,
profits, or capital growth of land. The land must have
unencumbered value of more than $1 million, but this provides little relief for developers.
Where the agreement provides an entity with an
RPM: How will they affect developers and
supported by the legislation. Further, where the
percentage (e.g. 20% of proceeds from sale), the duty
intended and possible unintended consequences?
fee could be dutiable under the SRO guidance.
economic entitlement by reference to a stated
acquired based on the market value of the land at the date of the agreement.
However, where the agreement does not specify the percentage, the person is deemed to have acquired
a 100% interest in the land, unless the Commissioner of State Revenue exercises his discretion to
determine that a lesser percentage is appropriate.
THIS CREATES A GREAT DEAL OF UNCERTAINTY AND IS CLEARLY NOT A SATISFACTORY PRACTICAL OUTCOME FOR DEVELOPERS. MICHAEL TAYLOR-SANDS
service provider is associated with the developer, the
MT-S: The new rules create an upfront duty cost for
RPM: What should developers do?
where the development fee is referrable to the
MT-S: Developers must be cautious if they are
will significantly impact how feasible development
there may be an upfront duty cost when entering into
developers entering into a development agreement proceeds from the sale of land and/or profit. This
agreements are for developers and landowners now that the changes are in effect.
Further, consultants engaged as part of a
development with arrangements where the
fee payable is calculated with reference to the
proceeds of sale of land will need to be careful
they are not caught by the new rules. The State
considering using development agreements now, as the agreement. Further, development agreements
will need to be drafted carefully to ensure that duty is
not chargeable as though the developer has acquired a 100% interest in the relevant land. If the new rules are triggered, the developer will need to lodge the development agreement with the State Revenue Office for assessment of duty.
Revenue Office has issued guidance on its website
If a development agreement structure is no longer
intended to be captured by the new rules, but this
alternative structures will need to be explored.
confirming that service fee arrangements are not is an administrative view which is not necessarily
QD2E V M EA LROK PE M T EONVT E S R IVTI EE SW
is calculated as if a 20% interest in the land has been
landowners who enter into these agreements – both
feasible because of the upfront duty cost, other
Q2 RESIDENTIAL MARKE T RE VIE W
|
J U N E Q U A R T E R 2 019
19
OVERVIEW
IMPROVING BUYER SENTIMENT RESULTING FROM A RANGE OF STIMULUS APPLIED TO THE PROPERTY MARKET HAS GENERATED POSITIVE SALES
COMMUNITIES
MOMENTUM THROUGHOUT THE JUNE QUARTER
2019 FOR GREATER MELBOURNE AND GEELONG’S LAND MARKET.
Investor sentiment has been boosted due to the
removal of uncertainty around negative gearing and capital gains tax discounts, which, combined with 2 interest rate cuts, tax cuts and APRA’s lowering of
the 7.25% loan serviceability buffer, has improved borrowing capacity for buyers by around 10-15%. As an example, a family with one dependent and a household income of $90,000 can effectively
borrow 14% more ($63,000) following the change
in the serviceability variable rate test from 7.25% to 5.75%. This increase is conservative considering
the serviceability assessment rate test is 5.50% at
some major banks and lower again at other housing finance providers.
20
R P M R E A L E S TAT E G R O U P
LUKE KELLY
DIRECTOR, COMMUNITIES luke@rpmrealestate.com.au +61 400 688 520
RPM believes the land market is nearing the bottom,
Greater Melbourne’s median lot price fell 5.2%
The median lot size contracted to 392sqm from
slowing. For June quarter 2019, across all growth
(-$15,000) from the same quarter a year ago to
preceding quarterly periods. This is a result of many
with the pace of decline in quarterly sales volumes
sales from the previous quarter and 64% from the
same quarter in 2018. Notably, there was an uptick in
monthly sales volumes from April to June, increasing from 489 to 575 to 732 respectively, indicating a small sales upswing.
Nevertheless, the volume of stock returned to market increased to 760 lots in the June quarter, dropping net sales to just above 1,000 lots. Importantly, not
all stock put back on the market are cancellations. With cancellations remaining at around 5% which
is the industry norm, the vast majority of stock can be attributed to developers returning lots back to
$310,000. As RPM predicted, from the peak of around $325,000 in June quarter last year, the median land price has eased by approximately 5%, which we
believe will likely fall a further 5% over the next 6 or so months.
Combined with new masterplans featuring smaller lot
sizes of around 375sqm, the median land price should fall below $300,000 which will be considered ‘fair
value’ and more in line with average first home buyer budget capacity. With smaller lots on the market, greater yield along with higher sqm rates will be achieved from a developer standpoint.
the market after initially removing them or allocating
In terms of supply, there were 43 more active estates
returned to market.
in 2018. However, new releases declined 69% to
stock to referrers/builders which are then also
in June quarter 2019 compared to the same quarter
1,445 lots compared to the same quarter 12 months ago as developers’ slow releases to avoid higher unsold lots on the market.
400sqm which was recorded in each of the 5
Q 2 MCAORMK M ET U NOI V TE I ER SV I E W
corridors gross lot sales fell 8% to 1,796 gross lot
(-$17,000) from the previous quarter and 4.6%
new estates, along with existing estates re-cutting stages and creating further product diversity by
featuring a higher percentage of medium density and smaller conventional lots (under 300sqm). This has
subsequently brought the average land size down to around 350sqm. As an example, Whittlesea, Melton
and Hume all recorded below the Melbourne median of 392sqm.
5.2%
GREATER MELBOURNE’S MEDIAN LOT PRICE FELL 5.2% FROM THE PREVIOUS QUARTER AND 4.6% FROM THE SAME QUARTER A YEAR AGO.
4.6%
Q2 RESIDENTIAL MARKE T RE VIE W
|
J U N E Q U A R T E R 2 019
21
OVERVIEW
MELBOURNE GROWTH CORRIDORS
180
7,000
5,000
120 100
4,000
80
3,000
60 40
JUN 16
Active Estates
SEP 16
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
$325K>
1,000
$275K $300K
430 425
300,000
MEDIAN LOT PRICE �$�
420
250,000
415
200,000
410
150,000
405 400
100,000
395
50,000 0
$301K $325K
Gross Lot Sales
New Estates
350,000
390
JUN 16
Median Lot Size
22
% OF TOTAL GROSS LOT SALES
2,000
20 0
GROSS LOT SALES
6,000
140
SEP 16
DEC 16
Median Lot Price
R P M R E A L E S TAT E G R O U P
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
385
MEDIAN LOT SIZE �SQM�
Q 2 MCAORMK M EU T NOI V TE I ER SV I E W
NUMBER OF ESTATES
160
$251K $275K
<$250K
0%
10%
Jun Qtr 2019
20%
Jun Qtr 2018
30%
40%
Jun Qtr 2017
50%
60%
Source: RPM
JUN QUARTER 2018
CASEY CARDINIA HUME MITCHELL
14% 2% 10% 3%
WHITTLESEA 9%
JUN QUARTER 2019
Jun Quarter ‘19 Median Lot Price
CASEY
CARDINIA
18% 4%
% Change from Jun Quarter ‘18
HUME MITCHELL
16% 2%
MELTON
19%
GREATER GEELONG
15%
GREATER GEELONG
$299,000
$340,000
$280,000
-0.9%
-8.6%
-4.2%
8.7%
-$2,700
-$28,000
-$15,000
$22,500 452.0
% Change from Jun Quarter ‘18
-2.0%
-6.7%
-1.0%
0.9%
Jun Quarter ‘19 Gross Lot Sales
Change from Jun Quarter ‘18
-8.0 729
-1,574
-28.0
-4.0
477
-659
404
-399
% Change from Jun Quarter ‘18
-68.3%
-58.0%
Jun Quarter ‘19 sales contribution
40.6%
26.6% 22.7%
16.0%
83
45
Jun Quarter ‘19 Active Estates Change from Jun Quarter ‘18
% Change from Jun Quarter ‘18 Jun Quarter ‘19 No. of Trading Days Change from Jun Quarter ‘18
10%
$304,800
396.0
Change from Jun Quarter ‘18 WYNDHAM 20% MOORABOOL 2%
GREATER GEELONG
392.0
Jun Quarter ‘19 Lot Releases
WYNDHAM 21% MOORABOOL 3%
SOUTH EAST
392.0
Jun Quarter ‘18 sales contribution
22%
NORTHERN
Jun Quarter ‘19 Median Lot Size Change from Jun Quarter ‘18
WHITTLESEA 8%
MELTON
$ Change from Jun Quarter ‘18
WESTERN
% Change from Jun Quarter ‘18
45.9% 27
744
-1,697
186
-587
-75.9%
22.5%
10.4%
41
26
6
370
-954
4.0
-49.7%
10
15.4% 7
331
-559
191
-564
-69.5%
-72.1%
-62.8%
-74.7%
176
201
225
197
514%
348%
275%
749%
147
156
Q2 RESIDENTIAL MARKE T RE VIE W
165
|
Q 2 MCAORMK M ET U NOI V TE I ER SV I E W
% CONTRIBUTION TO TOTAL GROSS LOT SALES
174
J U N E Q U A R T E R 2 019
23
WESTERN GROWTH CORRIDOR THE WESTERN GROWTH CORRIDOR RECORDED
729 GROSS LOT SALES IN JUNE QUARTER 2019,
ACCOUNTING FOR 41% OF TOTAL SALES ACROSS ALL GROWTH CORRIDORS. WITH A GREATER
Q 2 MCAORMK M EU T NOI V TE I ER SV I E W
NUMBER OF ACTIVE ESTATES AND SUBSEQUENT HIGHER LOT SUPPLY, IT RETAINS THE HIGHEST SHARE OF SALES AMONG ALL 4 GROWTH
MOORABOOL
CORRIDORS. MELTON
However, in all 4 quarterly periods throughout
2018/19, all 3 growth areas in the Western growth
corridor recorded a decline in gross lot sales from the immediate previous quarterly period. This resulted in gross lot sales falling 68% from 2017/18.
Median lot prices remained steady through the first 9 months of 2018/19, although continued soft demand has led to an annual decline of 3.5% in Wyndham,
WYNDHAM
3.8% in Melton and 6.5% in Moorabool. Prices are now back to late 2017/early 2018 levels.
The volume of unsold stock increased to more than 2,000 lots by the end of June (almost entirely in PORT PHILLIP BAY
Melton and Wyndham), which was significantly higher than other growth corridors. This will limit and delay
an upturn in new lot releases as demand works its way through absorbing unsold lots on the market. 24
R P M R E A L E S TAT E G R O U P
PETER GRANT
WYNDHAM
DIRECTOR, COMMUNITIES
peterg@rpmrealestate.com.au
Wyndham added 3 new estates in June quarter 2019,
+61 411 494 499
which accounted for half of all new additions across all growth corridors throughout Melbourne and
Geelong. However, new lot supply still declined 6%
from the previous quarter to 351 lots. This equated
to under one-fifth of the peak in new releases 2 years ago which totaled almost 1,900 lots.
both declined 66% annually. This is a case of supply responding to weaker demand, rather than sales
25
10
0
unsold lots in each quarter since March quarter 2018.
Active Estates
Subdued demand has started to impact pricing, with
by only 1.2% from June quarter last year and
remained unchanged from March quarter this year,
resulting in declining per sqm lot prices which further underscores the weakness in demand.
MEDIAN LOT PRICE �$�
Moreover, the median lot size of 400sqm contracted
JUN 16
SEP 16
New Estates
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
414 412 410
250,000
408 406
200,000
404
150,000
402 400
100,000
398
50,000 0
Median Lot Size
0
Gross Lot Sales
300,000
lot prices in around 4 years. The median lot price of
3.5% below the previous quarter.
500
350,000
Wyndham recording its first annual decline in median
corresponding figure in the same quarter in 2018 and
1,000
15
5
being restricted by new supply given the increase in
$313,500 in June quarter 2019 was 4.4% below the
1,500
20
GROSS LOT SALES
and lot sales almost identical for the June quarter,
2,000
30
MEDIAN LOT SIZE �SQM�
satisfying new housing demand, with lot releases
NUMBER OF ESTATES
with 352 gross lot sales. While new lot supply is
35
Q 2 MCAORMK M ET U NOI V TE I ER SV I E W
gross sales across all growth areas for the quarter,
2,500
40
Notably, Wyndham recorded the highest number of
396 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
394
Source: RPM
Median Lot Price
Q2 RESIDENTIAL MARKE T RE VIE W
|
J U N E Q U A R T E R 2 019
25
WESTERN GROWTH CORRIDOR
MELTON Melton’s 42 active estates continue to be the highest
2015. Moreover, sales activity is at a 5 year low, with
346 gross lot sales for the June quarter. This reflects a fall of 15% from the previous quarter and 69% from the same quarter in 2018.
NUMBER OF ESTATES
Q 2 MCAORMK M EU T NOI V TE I ER SV I E W
373 lots was the lowest since September quarter
While Melton is generally an affordable area, the
relatively expensive, pushing more people to opt for
median lot prices, which fell 8.1% from the previous
quarter to $288,600. This was the biggest decline in
both absolute and percentage terms across Greater
Melbourne’s growth areas. Compared to June quarter 2018, median lot prices were down 3.8%. 26
R P M R E A L E S TAT E G R O U P
MEDIAN LOT PRICE �$�
a smaller dwelling. Consequently, the median lot size
The composition of smaller lots is also impacting
1,200
30
1,000
25
800
20
600
15
400
10
Active Estates
Deanside, where pricing for conventional lots is
period in 2018 to 375sqm.
1,400
35
0
total sales has increased. Most of these sales are
shrank 6.3% from the previous quarter and the same
1,600
40
200
5
number of small lots and medium density lots among occurring in the sub–markets of Fraser Rise and
45
JUN 16
SEP 16
New Estates
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
0
Gross Lot Sales
350,000
460
300,000
440
250,000
420
200,000
400
150,000
380
100,000
360
50,000
340
0
Median Lot Size
JUN 16
SEP 16 Median Lot Price
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
MEDIAN LOT SIZE �SQM�
quarter 2019. Nevertheless, new releases totaling
GROSS LOT SALES
among all growth areas, increasing by 2 over June
320
Source: RPM
ROD ANDERSON
DIRECTOR, COMMUNITIES rod@rpmrealestate.com.au +61 417 595 859
affordability advantage, on an annual basis new lot
releases and lot sales fell 89% and 78% respectively. This reduced new supply to just 20 lots and gross
140
6
120
5
100
4
80
3
60
2
0
Active Estates
falls of 4% from the previous quarter and 6.5% from
40 20 JUN 16
SEP 16
New Estates
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
0
Gross Lot Sales
530
250,000
the same quarter in 2018. This is partly attributed to
510
corresponding falls in the median lot size of 0.7% and
200,000
MEDIAN LOT PRICE �$�
7.3% respectively to 445sqm.
160
1
sales of 31 lots for the June quarter.
Subdued demand translated into median lot price
180
7
GROSS LOT SALES
of $215,000 in the June quarter. However, despite its
200
8
490 470
150,000
450 430
100,000
410 390
50,000
MEDIAN LOT SIZE �SQM�
affordable growth area, recording a median lot price
9
Q 2 MCAORMK M ET U NOI V TE I ER SV I E W
Moorabool is Greater Melbourne and Geelong’s most
NUMBER OF ESTATES
MOORABOOL
370 0
Median Lot Size
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
350
Source: RPM
Median Lot Price
Q2 RESIDENTIAL MARKE T RE VIE W
|
J U N E Q U A R T E R 2 019
27
NORTHERN GROWTH CORRIDOR
THE NORTHERN GROWTH CORRIDOR RECORDED
Median lot prices in both Hume and Whittlesea
DOWN 58% FROM THE SAME QUARTER LAST
highest fall across all growth areas. This is in
Q 2 MCAORMK M EU T NOI V TE I ER SV I E W
477 GROSS LOT SALES IN JUNE QUARTER 2019, YEAR. NEVERTHELESS, THE SHARE OF TOTAL
LOT SALES INCREASED FROM 23% TO 27% GIVEN THE SMALLER OVERALL DECLINE COMPARED TO
OTHER GROWTH CORRIDORS. HUME ACCOUNTED FOR 60% OF GROSS LOT SALES, WITH SALES
ACTIVITY IN WHITTLESEA AND MITCHELL AT LONG TERM LOWS.
New lot supply in the Northern growth corridor
remains flat. While active estate numbers were steady in Hume, the frequency and size of new lot releases in estates along Craigieburn Road in Wollert and
Donnybrook Road in Donnybrook fell away to enable delivery of sold lots. Consequently, new releases totaling 370 lots were identical to the previous quarterly period.
28
R P M R E A L E S TAT E G R O U P
dropped 11% annually in June quarter 2019, the response to smaller lot sizes and weaker demand, causing developers to discount lot prices to drive
sales activity. Conversely, Mitchell’s median lot price increased 2% over the same period to $284,000,
narrowing its once distinct affordability advantage.
LUKE KELLY
DIRECTOR, COMMUNITIES luke@rpmrealestate.com.au +61 400 688 520
HUME Gross sales in Hume continued to trend upwards in
25
year.
Active estates in Hume rose by just 1 over 2018/19 to a total of 15 estates. This relatively low number
0
June quarter 2019 reflecting a 66% decrease from
Active Estates
quarter the volume of unsold lots still increased in
5.5% from the previous quarter, falling to $310,000. Moreover, this correction was only partly the result
of smaller lot sales, with the median lot size reducing 1.8% to 392sqm. The price fall also accounted
for almost half of the 11.4% annual decline, which equated to the biggest annual fall in percentage terms across the growth areas.
200
JUN 16
SEP 16
New Estates
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
460 450 440
300,000
430
250,000
420
200,000
410 400
150,000
390
100,000
380
50,000 0
Median Lot Size
0
Gross Lot Sales
350,000
MEDIAN LOT PRICE �$�
Consequently, Hume’s median lot price declined
400
400,000
response to a higher return of lots back onto the market.
600 10
5
has impeded new supply, with 214 lots released in
the same quarter a year ago. Nevertheless, over the
800
15
GROSS LOT SALES
sales were still down 42% from the same period last
1,000
20
NUMBER OF ESTATES
largest quarterly increase in sales activity, gross
1,200
Q 2 MCAORMK M ET U NOI V TE I ER SV I E W
from the previous quarter. While this was the second
MEDIAN LOT SIZE �SQM�
June quarter 2019, increasing by 25 lots to 296 lots
370 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
360
Source: RPM
Median Lot Price
Q2 RESIDENTIAL MARKE T RE VIE W
|
J U N E Q U A R T E R 2 019
29
NORTHERN GROWTH CORRIDOR
MITCHELL
increasing new supply or sales activity, with new lot
releases declining 92% annually to remain negligible
at 10 lots, while gross sales plunged 78% annually to
100
3 2
Active Estates
50
JUN 16
SEP 16
New Estates
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
this was 2.4% below the peak median lot price in the
550 530
MEDIAN LOT PRICE �$�
300,000
510
250,000
490 470
200,000
450
150,000
430 410
100,000
390
50,000 0
Median Lot Size
30
R P M R E A L E S TAT E G R O U P
0
Gross Lot Sales
350,000
for the quarter, rising 2.3% to $284,000. However,
higher to 451sqm, which meant per sqm lot prices fell.
4
0
Melbourne to record annual median lot price growth
previous quarter, with the median lot size also edging
150
5
1
35 lots – the lowest sales activity in 5 years.
Mitchell was the only growth area in Greater
6
GROSS LOT SALES
in 2018. However, this has not translated into
200
7
MEDIAN LOT SIZE �SQM�
represented a 100% increase from the same quarter
8
NUMBER OF ESTATES
Q 2 MCAORMK M EU T NOI V TE I ER SV I E W
Mitchell’s 8 active estates in June quarter 2019
250
9
370 JUN 16
SEP 16 Median Lot Price
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
350
Source: RPM
PETER GRANT
DIRECTOR, COMMUNITIES
peterg@rpmrealestate.com.au +61 411 494 499
WHITTLESEA
is reflected in a 5.9% fall in the median lot size to 351 sqm for the June quarter – making it the smallest
Active Estates
stimulatory effect on sales activity and new supply, reflected in substantial annual declines of 75%
and 69% for new lot releases and gross lot sales
respectively in June quarter 2019, with both dropping to 146 lots.
MEDIAN LOT PRICE �$�
than 2 years.
2018/19 to a total of 22. However, it has not had a
300 200 100
time it has dropped below the $300,000 mark in more
highlighted by a net gain of 5 active estates over
400
10
0
5.6% quarterly decline, falling to $290,000 – the first
Active estate numbers in Whittlesea ticked up,
500
5
among all growth areas.
The median lot price experienced a commensurate
600
15
GROSS LOT SALES
lot and medium density lot sales in Whittlesea. This
700
JUN 16
SEP 16
New Estates
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
0
Gross Lot Sales
350,000
410
300,000
400 390
250,000
380
200,000
370
150,000
350
100,000
340
50,000 0
Median Lot Size
MEDIAN LOT SIZE �SQM�
in Wollert has underscored a growing share of small
800 20
NUMBER OF ESTATES
Mernda/Doreen region and deteriorating affordability
900
Q 2 MCAORMK M ET U NOI V TE I ER SV I E W
Scarcity of broadhectare subdivision land in the
25
330
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
320
Source: RPM
Median Lot Price
Q2 RESIDENTIAL MARKE T RE VIE W
|
J U N E Q U A R T E R 2 019
31
SOUTH EAST GROWTH CORRIDOR
THE SOUTH EAST GROWTH CORRIDOR RECORDED
With demand absorbing new lots brought to market,
THIS WAS HALF THE SALES VOLUME COMPARED
with other Greater Melbourne growth areas. This
Q 2 MCAORMK M EU T NOI V TE I ER SV I E W
404 LOT SALES IN JUNE QUARTER 2019. WHILE TO THE SAME QUARTER A YEAR AGO, THE
PROPORTION OF TOTAL GROSS LOT SALES
ACROSS ALL GROWTH CORRIDORS INCREASED
FROM 16% TO 22% — THE HIGHEST SHARE SINCE
the rate of lot price declines has been kept in line is significant considering, in June quarter 2019,
Cardinia contained the most expensive median lot
price of $340,000, followed by Casey at $338,800.
LATE 2016.
Both Casey and Cardinia saw a modest rise in active
estate numbers over 2018/19 but it has not boosted new lot supply, with lot releases falling annually by
66% and 47% respectively in the June quarter. This resulted in gross lot sales outpacing new supply in both Casey and Cardinia in the current quarter.
PORT PHILLIP BAY
CARDINIA
CASEY
32
R P M R E A L E S TAT E G R O U P
ROD ANDERSON
DIRECTOR, COMMUNITIES rod@rpmrealestate.com.au +61 417 595 859
CASEY 35
260 lots was also the highest outside of the small
market of Mitchell. This is contrary to the continuing
declining trend in sales and supply seen in most other
resultant median lot price of $338,800 is the lowest
in 2 years. With the median lot size contracting 1.9% to 393sqm, this price adjustment has, to a degree, restored ‘fair value’ of a house/land package.
JUN 16
SEP 16
New Estates
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
460 450 440
300,000
430
250,000
420 410
200,000
400
150,000
390
100,000
380
50,000 0
Median Lot Size
0
Gross Lot Sales
350,000
MEDIAN LOT PRICE �$�
median lot prices from the previous quarter. The
200
400,000
releases. The improvement in relative affordability
This improvement stems from a 5.9% decline in
400
10
Active Estates
which likely supported the small increase in new lot
recovery in sales activity.
600
15
0
the June quarter is a long term high for the area,
for a house/land package has supported an initial
800
20
5
growth areas in the June quarter.
Thirty-two active estates in Casey recorded in
25
GROSS LOT SALES
corresponding rise of 5 new lot releases totaling
1,000
MEDIAN LOT SIZE �SQM�
gross sales to 327 lots. Although marginal, a
30
NUMBER OF ESTATES
sales – 29 lots – in June quarter 2019, lifting total
1,200
Q 2 MCAORMK M ET U NOI V TE I ER SV I E W
Casey experienced the biggest increase in gross
370 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
360
Source: RPM
Median Lot Price
Q2 RESIDENTIAL MARKE T RE VIE W
|
J U N E Q U A R T E R 2 019
33
Q 2 MCAORMK M EU T NOI V TE I ER SV I E W
CASEY EXPERIENCED THE BIGGEST INCREASE IN GROSS SALES – 29 LOTS – IN JUNE QUARTER 2019, LIFTING TOTAL GROSS SALES TO 327 LOTS.
34
R P M R E A L E S TAT E G R O U P
LUKE KELLY
SOUTH EAST GROWTH CORRIDOR
DIRECTOR, COMMUNITIES luke@rpmrealestate.com.au +61 400 688 520
resulted in new supply falling 47% to 71 lot releases. Gross sales fell by just 3% to 77 lots, which was
generated from 9 active estates, the same number as March quarter 2019.
The increase in unsold lots placed downward
pressure on median lot prices, which dropped 2.7%
450
16
400
14
350
12
300
10
250
8
200
6
150
4
100
2
50
0
Active Estates
to $340,000 for the quarter and 0.6% annually. This
400,000
in the median lot size to 407sqm and 15% annually.
300,000
JUN 16
SEP 16
New Estates
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
MEDIAN LOT PRICE �$�
0
Gross Lot Sales
550
350,000
is further highlighted by an 8% quarterly reduction
500
250,000
450
200,000 400
150,000 100,000
350
50,000 0
Median Lot Size
GROSS LOT SALES
outpaced lot absorption in the previous quarter)
NUMBER OF ESTATES
June quarter 2019 (after lot releases significantly
500
18
Q 2 MCAORMK M ET U NOI V TE I ER SV I E W
The high volume of lots on the market entering
20
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
MEDIAN LOT SIZE �SQM�
CARDINIA
300
Source: RPM
Median Lot Price
Q2 RESIDENTIAL MARKE T RE VIE W
|
J U N E Q U A R T E R 2 019
35
GREATER GEELONG GROWTH CORRIDOR
THE GREATER GEELONG GROWTH CORRIDOR
ACCOUNTED FOR JUST 10% OF TOTAL LOT SALES
Q 2 MCAORMK M EU T NOI V TE I ER SV I E W
IN JUNE QUARTER 2019, THE LOWEST SHARE IN 3 YEARS AND HALF ITS PEAK CONTRIBUTION IN
DECEMBER QUARTER 2017. THIS WAS IN RESPONSE TO GROSS LOT SALES FALLING 76% TO 186 LOTS,
WHICH WAS THE HIGHEST CONTRACTION IN SALES ACTIVITY IN PERCENTAGE TERMS ACROSS ALL GROWTH CORRIDORS.
Weak demand has led to developers’ severely
restricting new lot supply. Overall, 191 lots were
released to market in June quarter 2019, which was a quarter of new supply the same time a year ago. Greater Geelong’s traditional affordability has
narrowed, with Melbourne lot prices contracting
GREATER GEELONG
compared to continued annual price growth in PORT PHILLIP BAY
Geelong. Consequently, lot prices in Greater
Geelong growth areas are now on par with values
in Melbourne’s western sub-markets of Wyndham and Melton.
36
R P M R E A L E S TAT E G R O U P
PETER GRANT
DIRECTOR, COMMUNITIES
peterg@rpmrealestate.com.au +61 411 494 499
7
by 22 lots or 19% from the previous quarter. This fall was attributed to a corresponding 40% decline in
increased 2.8% to $272,500 in June quarter 2019,
100
JUN 16
SEP 16
New Estates
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
460 450
250,000
440 430
200,000
420
150,000
410 400
100,000
390
50,000 0
Median Lot Size
0
Gross Lot Sales
300,000
MEDIAN LOT PRICE �$�
Greater Geelong.
200
2
Active Estates
size to 442sqm. Consequently, per sqm lot prices the most affordable new housing market within
3
0
underpinned by a 10.5% increase in the median lot declined. Nevertheless, Armstrong Creek is still
300
4
1
new releases to 97 lots also.
Despite subdued demand, the median lot price
400
5
GROSS LOT SALES
activity was a long term low, with gross sales down
NUMBER OF ESTATES
Geelong growth areas. However, this level of sales
500
6
Q 2 MCAORMK M ET U NOI V TE I ER SV I E W
Ninety-seven lot sales in Armstrong Creek in June quarter 2019 was the highest among all Greater
600
8
MEDIAN LOT SIZE �SQM�
ARMSTRONG CREEK
380
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
370
Source: RPM
Median Lot Price
Q2 RESIDENTIAL MARKE T RE VIE W
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J U N E Q U A R T E R 2 019
37
GREATER GEELONG GROWTH CORRIDOR
2019, falling 24% to 17 lots and 35% to 18 lots
respectively from the previous quarter, to a total of 54 lot releases and 34 gross lot sales.
350
12
300
10
250
8
200
6
150
4
0
the highest growth of 16.5% from the previous
sizeable price growth was achieved while the median
400
100
2
Still, Bellarine Peninsula’s median lot price recorded quarter, rising to a peak of $335,000. Notably, this
450
14
Active Estates
50
JUN 16
SEP 16
New Estates
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
550 530
MEDIAN LOT PRICE �$�
350,000
510
300,000
490
250,000
470
200,000
450 430
150,000
410
100,000
390
50,000 0
Median Lot Size
38
R P M R E A L E S TAT E G R O U P
0
Gross Lot Sales
400,000
lot size contracted 2.7% to 453sqm.
GROSS LOT SALES
sales activity deteriorate further in June quarter
NUMBER OF ESTATES
Q 2 MCAORMK M EU T NOI V TE I ER SV I E W
Bellarine Peninsula saw both new lot supply and
16
MEDIAN LOT SIZE �SQM�
BELLARINE PENINSULA
370 JUN 16
SEP 16 Median Lot Price
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
350
Source: RPM
ROD ANDERSON
DIRECTOR, COMMUNITIES rod@rpmrealestate.com.au +61 417 595 859
9
correction in the median lot price of 10.1% to
4
60
3
40
2
20
0
lot size increasing 15.4% to 774sqm, which is also
JUN 16 Active Estates
MEDIAN LOT PRICE �$�
growth areas within Greater Geelong.
80
5
1
$299,000. This decline occurred despite the median significantly larger than the median lot size in other
100
6
SEP 16
New Estates
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
0
Gross Lot Sales
400,000
800
350,000
750 700
300,000
650
250,000
600
200,000
550
150,000
500
100,000
450
50,000
400
0 JUN 16 Median Lot Size
GROSS LOT SALES
Consequently, lower demand has led to a quarterly
NUMBER OF ESTATES
sales activity fell by 36% to 27 gross lot sales.
120
7
Q 2 MCAORMK M ET U NOI V TE I ER SV I E W
New lot supply in the Geelong growth area declined 64% to 19 lot releases for the June quarter, while
140
8
MEDIAN LOT SIZE �SQM�
GEELONG
SEP 16
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
350
Source: RPM
Median Lot Price
Q2 RESIDENTIAL MARKE T RE VIE W
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J U N E Q U A R T E R 2 019
39
GREATER GEELONG GROWTH CORRIDOR
of 63% and a quarterly fall of 16%. New lot supply
slipped again after a brief recovery last quarter, falling 76% annually and 60% quarterly to a total of 21 lot
from the previous quarter, which was less than a 7.1%
60 2
40
1
releases.
The median lot price in Lara rose 1.7% to $274,000
80
3
0
Active Estates
20
JUN 16
SEP 16
New Estates
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
per sqm lot prices declined.
530 510
MEDIAN LOT PRICE �$�
250,000
490 470
200,000
450
150,000
430 410
100,000
390
50,000 0
Median Lot Size
40
R P M R E A L E S TAT E G R O U P
0
Gross Lot Sales
300,000
increase in the median lot size to 480sqm. As a result,
GROSS LOT SALES
quarter since 2014. This reflected an annual decline
100
4
NUMBER OF ESTATES
Q 2 MCAORMK M EU T NOI V TE I ER SV I E W
Lara recorded just 27 lot sales in June quarter 2019,
the lowest number of gross sales for a corresponding
120
5
MEDIAN LOT SIZE �SQM�
LARA
370
JUN 16
SEP 16 Median Lot Price
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
350
Source: RPM
LUKE KELLY
DIRECTOR, COMMUNITIES luke@rpmrealestate.com.au +61 400 688 520
5
price and size need to be viewed with caution given the small volume of sales.
120 100
3
80 2
60 40
1
20 0
Active Estates
JUN 16
SEP 16
New Estates
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
Gross Lot Sales
600
500,000 450,000
500
400,000 350,000
400
300,000
300
250,000 200,000
200
150,000 100,000
100
50,000 0
Median Lot Size
0
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
MEDIAN LOT SIZE �SQM�
quarterly and annual changes to both the median lot
NUMBER OF ESTATES
tag of $395,000 for a 392sqm block. Consequently,
MEDIAN LOT PRICE �$�
sale in Torquay during the June quarter, with a price
140
4
Q 2 MCAORMK M ET U NOI V TE I ER SV I E W
Sales activity remained negligible, with just 1 lot
160
GROSS LOT SALES
TORQUAY
0
Source: RPM
Median Lot Price
Q2 RESIDENTIAL MARKE T RE VIE W
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J U N E Q U A R T E R 2 019
41
OUTLOOK
We expect a gradual rather than a sharp recovery in
The volume of unsold stock has increased over
into 2020.
supply to the market given it could apply further
Q 2 MCAORMK M EU T NOI V TE I ER SV I E W
the vacant land market from the back half of 2019 and
Over the quarter first home buyers carried the lion’s share of owner occupier sales, with a share of 71%.
This level is unsustainable and not conducive to a well balanced land market. However, we don’t expect this
downward pressure on lot prices. We don’t believe
there will be any sharp reductions in price to speed
up sales, as this will only impact settlements from the previous period.
level to remain in the next quarter given the price falls
More so, RPM anticipates lot prices will decline
attractive to this buyer cohort along with stamp duty
2019 and into 2020 as pent up demand works its way
in the established housing market, making it more savings on properties under $600,000.
While we expect first home buyers to remain
dominant in the land market, the stabilisation in
the established market should provide confidence among second home buyers to sell their current dwelling and upgrade to a larger house and land package in the growth corridors. The increased
presence of upgraders along with downsizers should assist with sales volumes over the next 12 months.
42
2018/19, resulting in developers restricting new
R P M R E A L E S TAT E G R O U P
slightly further in the range of 5% in the back half of
through absorbing the high level of unsold lots, which will have the added benefit of being more conducive
to the affordability range of first home buyer budgets.
THE POSITIVE OUTCOMES FOR BUYERS IN THE FORM OF REDUCED INTEREST RATES AND APRA CHANGES WILL AID THE MARKET IN ABSORBING THE HIGH LEVEL OF STOCK OVERHANG. NEVERTHELESS, EVEN WITH THE FINANCIAL STIMULUS NOW IN PLAY, COUPLED WITH OVERALL STRONG ECONOMIC VARIABLES (POPULATION GROWTH, EMPLOYMENT GROWTH AND GOVERNMENT SPENDING), THE OVERHANG WILL TAKE THE MAJORITY OF 2020 TO BE ABSORBED BEFORE DEVELOPERS CAN GET BACK TO A LEVEL OF NORMALITY IN TERMS OF ACTIVITY.
Beveridge $278k
Sunbury $299k
Diggers Rest $302k
Bacchus Marsh
$198k
$351k
Thornhill Park
$258k
$320k
$270k
Deanside
$317k
Tarneit Wyndham
$331k
Craigieburn $349k
Donnybrook $298k
Wollert $357k
$337k
$364k
Rockbank
Kalkallo
$320k
Burnside $407k
WHAT DOES A 400SQM LOT COST?
Q 2 MCAORMK M ET U NOI V TE I ER SV I E W
Strathtulloh
Frasers Rise
Aintree
$302k
Weir Views
$397k
Brook
$250k
$344k
Greenvale
Bonnie
Kurunjang
Mickleham
3 months to June 2019
Truganina $365k
Vale
$303k
Manor Lakes $287k
Point Cook
Mambourin $289k
Werribee $309k
$467k
Lyndhurst $412k
Clyde North Cranbourne $320k East
$316k
Geelong Armstrong Creek
$265k
$300k
Bellarine $205k
Cranbourne South
$355k
Berwick $429k
Clyde
Botanic Ridge
$355k
Officer $340k
$350k
43
Q 2 MCAORMK M EU T NOI V TE I ER SV I E W
COMMUNITIES BUYER SURVEY DATA
RECENT ANNOUNCEMENTS REGARDING INTEREST
Nevertheless, investors are still finding it challenging
buyers compared to just 56% in the same quarter last
MORTGAGE SERVICEABILITY BUFFER SHOULD
are also experiencing difficulty selling in a weak
over these 2 periods, highlighting the tight line banks are
RATE CUTS AND APRA’S REDUCTION IN THE START TO TAKE EFFECT IN THE SEPTEMBER
QUARTER, WITH IMPROVED ENQUIRY LEVELS IN THE LAND MARKET. THIS COINCIDES WITH IMPROVED SENTIMENT IN THE ESTABLISHED MARKET
THROUGH HIGHER AUCTION CLEARANCE RATES.
to obtain loans in current conditions. Upgraders
established market and/or are taking out bridging
loans which banks have been reluctant to issue since the Royal Commission.
As a result, the share of owner occupiers increased to 72% in June quarter 2019, up from 68% a year earlier.
In addition, of the owner occupier cohort, a significantly higher proportion of buyers (71%) were first home
72%
OWNER OCCUPIERS INCREASED TO 72% IN JUNE QUARTER 2019
44
R P M R E A L E S TAT E G R O U P
31%
year. Subsequently, non-first home buyers have fallen
applying to upgraders, coupled with their unwillingness to sell due to falling prices in the established market.
This increasing share of first home buyers indicate they don’t carry additional debt, and if they have a deposit
and are buying within their means, they can successfully enter the property market. Therefore they are ‘good’ customers for the banks.
47%
THERE WAS A SIGNIFICANTLY LOWER
LARGER SHARE OF FIRST HOME BUYERS
LESS THAN A THIRD - IN JUNE QUARTER 2019
OF PURCHASE
PROPORTION OF COUPLES WITH CHILDREN –
WITH MORE BUYERS RENTING AT THE TIME
The June quarter data also revealed a change in
children – less than a third - in June quarter 2019
House and land packages were far more popular in
was a significantly lower proportion of couples with compared to 45% in the same period a year ago. Not surprisingly, buyers were also generally younger.
With a larger share of first home buyers, more buyers were either renting (47%) or living with parents (18%)
the type of housing product that people purchased. the current quarter (29%) compared to just 15% in the June quarter last year. In addition, the prominence of townhouses continues to grow, comprising 10% of sales compared to 2% a year earlier.
at the time of purchase compared to the same period last year with shares of 37% and 14% respectively.
29%
48%
HOUSE AND LAND PACKAGES WERE MORE
AN INCREASED SHARE OF BUYERS PURCHASING
THE JUNE QUARTER LAST YEAR
$500,000 INCREASED TO 48% THIS QUARTER.
POPULAR IN JUNE QUARTER 2019 COMPARED TO
HOUSE AND LAND OR A TOWNHOUSE FOR UNDER
THE LARGER PRESENCE OF FIRST HOME BUYERS ALONG WITH TIGHTER LENDING STANDARDS HAS RESULTED IN AN INCREASED SHARE OF BUYERS PURCHASING HOUSE AND LAND OR A TOWNHOUSE FOR UNDER $500,000, UP FROM 32% IN JUNE QUARTER 2018 TO 48% THIS QUARTER. Q2 RESIDENTIAL MARKE T RE VIE W
|
J U N E Q U A R T E R 2 019
Q 2 MCAORMK M ET U NOI V TE I ER SV I E W
With a higher number of first home buyers, there
45
Q2 2019 COMMUNITIES BUYER SURVEY DATA
Q 2 MCAORMK M EU T NOI V TE I ER SV I E W
June Quarter 2018
Investor OWNER OCCUPIER VS INVESTOR
Other
46
R P M R E A L E S TAT E G R O U P
2%
Investor
Other
28%
72%
Owner Occupier
0%
With Parents
0% 18%
Owner Occupier
45%
Owner Occupier
35%
Renting
37%
Other
3%
3rd Home
6%
2nd Home 1st Home
1%
34%
56%
Group
Renting
47%
Other
2%
3rd Home
7%
4th Home
2nd Home 1st Home
3% 17% 71%
Empty Nesters
2%
Empty Nesters
6%
Couple no Kids
28%
Couple no Kids
30%
21%
Single no Kids
Couple w/ Kids
HOUSEHOLD MAKEUP
Owner Occupier
With Parents
4th Home
OWNER OCCUPIER TYPE
68%
1% 14%
Group
LIVING CIRCUMSTANCES AT THE TIME OF PURCHASE
32%
June Quarter 2019
Single w/ Kids
Single no Kids
45% 3%
Couple w/ Kids Single w/ Kids
31% 7%
25%
June Quarter 2018 60>
18-24
8%
18-24
House & Land Land Only
2%
15% 83%
$600k>
27%
$500-$550k
21%
$550-$600k $450-$500k
BUDGET FOR HOME AND LAND PACKAGE
54%
$400-$450k
$350-$400k
$300-$350k <$300k
11%
10%
Townhouse
29% 61%
House & Land Land Only
$600k>
18%
$500-$550k
19%
$550-$600k
14%
$450-$500k
10%
$400-$450k
1%
$300-$350k
1%
53%
25-34
20%
6%
9% 23%
35-49
Q 2 MCAORMK M ET U NOI V TE I ER SV I E W
35-49
25-34
4%
60>
50-59
Townhouse
PURCHASE TYPE
2%
5% 31%
50-59
COMBINED AGE
June Quarter 2019
14%
22%
20% 5%
$350-$400k
1%
0%
<$300k
Source: RPM
Q2 RESIDENTIAL MARKE T RE VIE W
|
J U N E Q U A R T E R 2 019
47
FEATURE STORY:
Q 2 MCAORMK M EU T NOI V TE I ER SV I E W
LEGISLATIVE UPDATE: AMENDMENTS TO SALE OF LAND ACT 1962 THE VICTORIAN GOVERNMENT RECENTLY PASSED
Residential off-the-plan contracts that were validly
ONLY BE ABLE TO EXERCISE A SUNSET CLAUSE TO
23 August 2018 are not covered by the reforms.
NEW LAWS THAT SPECIFY DEVELOPERS WILL
RESCIND RESIDENTIAL OFF-THE-PLAN PROPERTY
rescinded by vendors under sunset clauses prior to
CONTRACTS BY OBTAINING WRITTEN CONSENT
Sunset clause provisions are commonly found in off-
SUPREME COURT OF VICTORIA.
the contract where the plan of subdivision has not
FROM THE BUYER, OR PERMISSION OF THE
The new laws on sunset clauses apply retrospectively from 23 August 2018 so that any existing and future off-the-plan contracts are protected.
As of 4 June 2019, a vendor may also seek an order from the Supreme Court of Victoria to allow them
to exercise a sunset clause. A rescission effectively
unwinds the contract as if it never existed and returns the parties to their original positions.
the-plan contracts to allow developers to terminate been registered by a specified date.
Consumer Affairs Victoria says the reforms “protect buyers … from developers deliberately postponing the completion of construction work in order to
terminate signed contracts under the sunset clause, and then sell the property at a higher price.”
While the new laws on sunset clauses apply from
23 August 2018, all other reforms in the Act will be implemented by no later than 1 March 2020. Source: Consumer Affairs Victoria
48
R P M R E A L E S TAT E G R O U P
Q 2 MCAORMK M ET U NOI V TE I ER SV I E W
Q2 RESIDENTIAL MARKE T RE VIE W
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J U N E Q U A R T E R 2 019
49
OVERVIEW
SINCE PEAKING AT APPROXIMATELY 13,100
OTHER DWELLINGS IN DECEMBER QUARTER 2017,
APARTMENTS & TOWNHOUSES
APPROVAL ACTIVITY FOR MEDIUM DENSITY AND HIGH DENSITY DWELLINGS HAS CONTINUALLY DECLINED IN THE 6 QUARTERLY PERIODS
SINCE, WITH OTHER DWELLING APPROVALS IN JUNE QUARTER 2019 63% BELOW THE PEAK.
BOTH TOWNHOUSES AND APARTMENTS HAVE EXPERIENCED SIGNIFICANT DECLINES IN
APPROVALS DURING THIS 18 MONTH PERIOD. The peak in established house prices in late 2017/ early 2018 would have normally driven a greater shift in demand to relatively more affordable
dwellings. However, weak purchaser sentiment has led to demand for townhouses and apartments to
soften, exacerbated by other factors including the
removal of off–the–plan stamp duty concession for local investors.
Artist impression of Kingston townhomes at Carter Place in Armstrong Creek. Builder: Porter Davis. Developer: APD Projects. 50
R P M R E A L E S TAT E G R O U P
LUKE KELLY
DIRECTOR, PROJECT MARKETING luke@rpmrealestate.com.au +61 400 688 520
The combination of increased stamp duty and taxes
townhouses and apartments) broadening from just
and severe lending curbs to overseas purchasers by
off–the–plan dwelling (which encompasses most new the land component price to the total contract price, including build. Hence it removed one of the main
advantages of purchasing a new dwelling compared to established housing.
LOCAL INVESTORS ALSO FACED TOUGHER BORROWING CONDITIONS FROM LENDERS FOCUSED ON REDUCING RISK ON THEIR RESIDENTIAL MORTGAGE BOOKS. THIS INVOLVED HIGHER STANDARD VARIABLE INTEREST RATES FOR RESIDENTIAL INVESTMENT LOANS AND INTEREST ONLY LOANS, WHICH ARE FAVOURED BY INVESTORS.
for offshore buyers, stricter Chinese capital controls local lenders has restricted demand from overseas
OTHER DWELLING APPROVALS
investors. This has mostly impacted approvals for
Victoria recorded 4,845 other dwelling approvals in
slowing of pre–sales leading to commencement
approval activity from the previous quarter and 32%
inner city apartment projects, with the subsequent of high rise developments either being delayed or abandoned altogether due to developers taking
longer or being unable to meet pre–commitment levels to secure construction finance.
In addition, the apartment market has been working through a considerable level of supply, raising the
prospect of an oversupply emerging in some pockets. This is applying further downward pressure on prices in an already weaker property market, with recent
June quarter 2019, representing a 17% decline in
from the same quarter in 2018. Notably, this is the
lowest volume for approvals in any year during the same 3 month period since 2013.
Approval activity for both the medium density and
high density dwelling sectors experienced significant annual falls in the June quarter. Compared to the
same quarter in 2018, approvals were down 33% to 2,317 townhouses and 31% to 2,528 apartments.
reports suggesting some settlement issues arising.
However, the weakening trend differed for
have changed use to commercial projects given
2019, townhouse approvals were just 1.5% below
Consequently, many inner-city development sites current office market vacancy rates are low.
A P AQR2T M E AN R TK SE T/ T OO VW E RN VH IOE UWS E S
This change resulted in stamp duty payable for an
townhouses and apartments. In June quarter
the corresponding figure in the previous quarter,
Q2 RESIDENTIAL MARKE T RE VIE W
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J U N E Q U A R T E R 2 019
51
OTHER DWELLING APPROVALS
A P AQR2T M E AN R TK SE T/ T OO VW E RN VH IOE UWS E S
indicating that medium density approvals may be
sizeable reduction in apartment approvals continued in the current quarter, with approvals 27% below the March quarter.
Additionally, from a longer term perspective,
approvals of 10,916 townhouses over 2018/19 was
still the third highest on record. The corresponding
TOWNHOUSE APPROVALS
approaching the bottom of the cycle. Conversely, the
figure for apartments - 12,061 approvals - was the
15,000 14,000 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0
lowest financial year total since 2010.
attributed to the growing prominence of townhouse
development in greenfield areas, which is helping to maintain relatively high approval activity.
Year to June 2018
21%
Year to June 2019
20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 0
49%
Year to June 2015
Source: ABS R P M R E A L E S TAT E G R O U P
Year to June 2017
19%
22,000
2,000
52
Year to June 2016
10%
24,000
APARTMENT APPROVALS
market downturn over the last 18 months. This is
Year to June 2015
11%
26,000
This highlights that demand for townhouses has
held up better compared to apartments through the
18%
15%
Year to June 2016
15%
Year to June 2017
26%
Year to June 2018
46%
Year to June 2019
KEY MEDIUM DENSITY BUILDING DATA
June qtr. 2019
% change from previous qtr.
TOWNHOUSES
APARTMENTS
2,317
2,528
-1.5%
-27.4%
TOTAL 4,845
-16.9%
% change from previous yr
-33.2%
-30.7%
-32.0%
% change 12 months earlier
-21.0%
-45.7%
-36.2%
12 months to June qtr. 2019
COMMENCEMENTS Mar qtr. 2019
% change from previous qtr.
10,916
OTHER DWELLINGS 6,586
14.0%
% change from previous yr
-45.7%
% change 12 months earlier
-17.7%
12 months to Mar qtr. 2019
TOTAL APARTMENT & UNIT PRICES
27,821
MEDIAN PRICE
Jun qtr. 2019
$590,000
Jun qtr. 2018
$596,500
Mar qtr. 2019
12,061
COMPLETIONS
22,977
OTHER DWELLINGS
Mar qtr. 2019
5,098
% change from previous qtr.
-22.0%
12 months to Mar qtr. 2019
26,024
% change from previous yr
% change 12 months earlier CHANGE FROM QTR.
$586,500
NOTE: Approvals are to the current quarter (June 2019). While commencements and completions are delayed by a quarter (March 2019).
A P AQR2T M E AN R TK SE T/ T OO VW E RN VH IOE UWS E S
APPROVALS
0.6%
6.2%
-9.2%
CHANGE FROM PREV. YR
1.1% Source: ABS, REIV Q 2 R E S I D E N T I A L M A R K E T R E V I E W | J U N E Q U A R T E R 2 019
53
A P AQR2T M E AN R TK SE T/ T OO VW E RN VH IOE UWS E S
OUTLOOK
Property market sentiment has received a much-
unaffordable, in particular in the inner and middle
rate of 3%, vacancy rates have stabilised - particularly
purchasers has increased markedly following the
in demand to less expensive townhouses in these
- with this trend likely to continue in the short term.
needed boost recently. Borrowing capacity for
25 basis point cut to interest rates in June and July and the change in the serviceability test applied by
lending institutions from a flat 7.25% interest rate to
an interest rate of 2.5% above the prevailing variable
rate. Investors have been buoyed by the continuation of negative gearing and capital gains tax advantages
areas, which will drive medium density development. Moreover, with townhouse prices also falling during
the downturn and recent improved borrowing power among buyers, townhouses in inner and middle ring suburbs have become more attainable.
following the Federal election.
In the outer/greenfield areas, townhouses will
Additional demand fundamentals for property,
buyers. Developers are increasingly offering more
on top of historically low borrowing costs, remain
strong, with high population growth and relatively
low unemployment. This should underpin both owner occupier and investor demand. Overall prospects for an improvement in activity for the remainder of 2019
and into 2020 are stronger for townhouses compared
to apartments, although any rebound for both sectors will be gradual.
Despite the price correction throughout 2018
and 2019, established houses remain relatively 54
ring suburbs. This should continue to support a shift
R P M R E A L E S TAT E G R O U P
continue to be a more realistic option for first home townhouse product in their estates to capture this demand after strong lot price growth and tough lending conditions in recent years priced out
many first home buyers in the traditional detached housing market.
In comparison, the outlook for the apartment market remains more subdued. High commencements
during the 4 years to 2018 is now translating into a
substantial amount of apartment stock being added to the market. Although below the balanced market
in the middle ring which has seen an improvement
The subsequent downward pressure on prices and
rents could discourage investors who have a short term view, with pre-sales continuing to struggle for momentum.
As a result, the pipeline of apartment projects is falling rapidly to allow for demand to absorb the current
high level of supply. This will lead to lower apartment
completions in coming years, and as pent–up demand builds, will set the scene for the next upswing in apartment activity.
This new project activity going through the pipeline
is vital given once supply is absorbed there will need to be ready-to-be-sold dwellings to meet demand.
Otherwise, a significant shortage will occur which will impact further on vacancy rates, rents and act as the catalyst for the next price upswing.
Image: Artist impression of Berkley townhomes by Soho Living.
LUKE KELLY
DIRECTOR, PROJECT MARKETING luke@rpmrealestate.com.au +61 400 688 520
A P AQR2T M E AN R TK SE T/ T OO VW E RN VH IOE UWS E S
Q2 RESIDENTIAL MARKE T RE VIE W
|
J U N E Q U A R T E R 2 019
55
OVERVIEW
IN VICTORIA, FOREIGN DEMAND FOR NEW
DWELLINGS IMPROVED IN JUNE QUARTER 2019,
ACCOUNTING FOR AN INCREASED SHARE OF 12%
INTERNATIONAL
OF ALL NEW DWELLING PURCHASES.
The correction in housing prices from early 2018 and weakening Australian dollar has made residential property relatively more affordable for foreign
buyers. Moreover, with signs the downturn in the
property market is bottoming out, offshore buyers
may increasingly feel it is the right time to purchase in Melbourne.
Nevertheless, with the Victorian Government
increasing the additional duty rate of the contract
price from 7% to 8% from July 2019, some foreign purchasers will have likely brought forward their
purchase decision into June quarter 2018. Coupled
with increased scrutiny from the Foreign Investment Review Board, these disincentives could lead to the
share of dwellings purchased by foreigners to decline
again in the short term. Also, the proportion of foreign buyers purchasing established dwellings remained 56
R P M R E A L E S TAT E G R O U P
low at 4% in the June quarter.
JINYIN ZHANG
DIRECTOR, RPM INTERNATIONAL jinyin@rpmrealestate.com.au +61 451 898 886
This conclusion is supported by recent reports from
leading Chinese property selling platforms including
26%
property. Buyers are now looking at markets that
don’t have such hurdles including Vanuatu, Portugal,
Ireland, Malta and Spain, which arguably offer greater value for money.
There is also interest in countries that offer a ‘golden visa’ such as Greece and the US. A golden visa is
a permanent residency visa granted to individuals
who invest a certain sum of money, often through a property purchase.
While Chinese activity is low, Chinese interest in
24%
% OF FOREIGN PURCHASES BY DWELLING TYPE
continued fall in Chinese appetite for Australian
Q 2 IMNAT RE KR ENTA TOIVOENRAVLI E W
investorist, Juwai and ACProperty highlighting the
Australian property won’t disappear altogether
22% 20% 18% 16% 14% 12% 10% 8% 6% 4% 2%
because of China’s continued interest in other
0%
Australian exports including tourism and education. ■ New
■ Established
JUN 16
SEP 16
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
22%
15%
19%
14%
21%
14%
14%
12%
12%
13%
8%
10%
9%
11%
7%
9%
8%
9%
8%
6%
6%
4%
MAR 19
JUN 19
5%
12%
5%
4%
Source: NAB Quarterly Residential Property Survey
Q2 RESIDENTIAL MARKE T RE VIE W
|
J U N E Q U A R T E R 2 019
57
AUSTRALIAN ECONOMIC OUTLOOK
The Australian economy has weakened through
However, despite recent positive stimulus, any
The adverse impacts on the residential property
Product (GDP) growth slowing from 2.8% over
investment is still anticipated to be a drag on
projected to slow employment growth during 2019/20
Q 2 IMNAT RE KR ENTA TOIVOENRAVLI E W
the first half of 2019, evident by Gross Domestic calendar 2018 to a projected 2.1% over fiscal 2019. Private consumption is expected to slow as high household debt and declining property prices
impact personal wealth and consumer confidence.
recovery is expected to be gradual. Dwelling
economic activity, as turnover activity of established dwellings and purchases of new dwellings remain
industry (a major employer across Australia) is
and keep economic growth steady at around 2.0%.
relatively weak.
Moreover, wages growth remains stubbornly low, which is also keeping the Consumer Price Index
(CPI) below the lower end of the Reserve Bank of Australia’s (RBA) inflation target of 2–3%.
Economic indicators (% change)
2018-19 f
2019-20 f
GDP
2.10
2.00
In response the RBA cut the cash rate by a total
Employment
2.40
1.40
Unemployment Rate
5.20
5.30
lower the cash rate to a historical low of just 0.75%.
Average Earnings
1.60
2.40
interest rates, increased borrowing capacity
Inflation
1.70
1.70
RBA Cash Rate
1.25
0.75
$A/US cents
0.70
0.75
of 50 basis points in mid-2019, with another 25
basis cut forecast by the end of the year. This will It is hoped subsequent falls to standard variable
following APRA’s removal of the 7.25% mortgage rate test and the first tranche of income tax cuts will lift consumer confidence.
58
AUSTRALIAN ECONOMY
R P M R E A L E S TAT E G R O U P
Source: NAB. The Forward View. f = forecast.
Q 2 R E S I D E N T I A L M A R K E T R E V I E W | J U N E Q U A R T E R 2 019
Q 2 IMNAT RE KR ENTA TOIVOENRAVLI E W
WITH THE FALLING AUSTRALIAN DOLLAR AND PRICES LIKELY TO HAVE BOTTOMED, OVERSEAS BUYERS MAY SEE THIS AS A PRIME TIME TO ENTER THE MARKET.
59
OVERVIEW
WHILE DWELLING PRICES HAVE EASED OVER THE LAST 12 MONTHS, THE HIGH NUMBER OF PEOPLE
RESIDENTIAL INVESTMENT
MOVING TO MELBOURNE FROM INTERSTATE AND OVERSEAS HAS UNDERSCORED CONTINUED
STRONG DEMAND FOR RENTAL ACCOMMODATION, WITH TOTAL MELBOURNE SITTING AT 2.2% -
THE SAME AS THE PREVIOUS QUARTER – AND
REMAINING BELOW THE ACCEPTABLE 3% TARGET. With ongoing low vacancy rates, modest annual
gains in rents across most defined areas for both
established houses, apartments and units, remained. In general, rental increases were most prominent in
the inner ring for houses, and the outer ring for units and apartments. This suggests there is a desire to
reside closer to Melbourne’s CBD and an increased demand for other dwellings (units and apartments)
in the outer areas – particularly near public transport options. In comparison to the previous quarter, the middle ring had the biggest rental increases for
houses and the outer ring remained the same for units and apartments.
60
R P M R E A L E S TAT E G R O U P
MEDIAN RENTS Houses
INNER
MIDDLE It should be noted that the volume of houses for rent
OUTER
ring are fairly low, creating excessive fluctuation. One-bedroom units and apartments in the outer
ring recorded the largest annual rental gain, with an
GEELONG
increase of 16.7%, followed closely by 4-bedroom
the past 12 months of $40 and $100 respectively.
Additionally, there has been robust rental increases in Melbourne’s outer ring and Geelong. This is not
Interestingly, there has been a slight decline in rents
INNER
MIDDLE
for both 4-bedroom houses and 3-bedroom units
and apartments in the outer ring. This suggests there is a desire for renters to reside in smaller and more affordable dwellings.
Jun-19
2
$565
$560
$570
4
$800
$800
3
$423
$440
3
2
4
2
$675
$378 $570
$340
$743
$700
$0
2.7%
3.2% 2.3%
$20
2.9%
$420
-$10
0.0%
$370
$20
4.3%
Change from previous year
$380
2
$310
$320
$320
$350
$360 $423
$430
Bedrooms
Jun-18
Mar-19
Jun-19
1
$380
$380
$390
3
$675
$670
$700
$420
4.0%
3.7%
$360
$380
3
$23 $28
$570
$430
3.8%
$450
$580
$380 $430
$25
$5
$100
$400
3 4
2 Year Average Annual Gain
$900
$380
$341
Change from previous year
$0
1.3%
$10
5.0%
$10
3.7%
Units & Apartments
surprising for Geelong given the level of development in recent years, contributing to demand in the area.
Mar-19
4
houses in the inner ring, with gains of 12.5%. This
increase is on the back of weekly rental growth over
Jun-18
R E QS 2I DME AN RT KI AE LT IONVVEERSVTI M EE WN T
in the inner ring along with apartments in the outer
Bedrooms
OUTER
GEELONG
2
1
2
$500 $330
$495 $320
$495
$330
2 Year Average Annual Gain
$10
2.7%
-$5
1.6%
$25
0.4%
$0
2.8%
$20
3.3%
$400
$403
$405
$240
$300
$280
$40
8.0%
3
$400
$400
$393
-$8
0.3%
2
$300
3
1 2 1
3
$510
$333 $220
$380
$503 $350 $220 $310
$398
$530
$345 $220
$320
$400
$5
1.3%
$13
2.2%
$0
2.4%
$20
5.5%
$20
2.6%
Source: REIV Q2 RESIDENTIAL MARKE T RE VIE W
|
J U N E Q U A R T E R 2 019
61
OVERVIEW
Melbourne’s outer ring has seen a significant
In Geelong, 2 bedroom units and apartments had
VACANCY RATES & YIELDS
1-bedroom units and apartments, reflecting a weekly
which represents a $20 increase in weekly rent
While vacancy rates have only modestly changed
second largest average annual increase, with rental
the board, most areas remain below the acceptable
R E QS 2I DME AN RT KI AE LT IONVVEERSVTI M EE WN T
16.7% increase in average annual rental gains for rental increase of $40 over the past 12 months.
However, it did fall by $40 from the previous quarter, highlighting the volatility of the dwelling type.
3.2%
over the past year. Three bedroom houses had the gains of 5.7%, also reflecting a weekly increase
of $20 over the past 12 months. Over the past 2
years, Geelong has averaged rental gains across
all dwelling types of between 2.4% and 5.5%, while the outer ring of Melbourne has averaged gains of between 0% and 8%.
MELBOURNE’S INNER RING HAS SEEN A 3.2%
Overall, across all regions, other dwellings performed
FOR 4 BEDROOM HOUSES
recorded in detached houses on a rolling 2-year
INCREASE OF 2 YEAR ANNUAL RENTAL GAINS
3.3%
IN THE MID-RING, 3 BEDROOM UNITS AND
APARTMENTS HAD A 2 YEAR AVERAGE ANNUAL RENTAL GAIN OF 3.3% 62
the largest average annual rental gain of 6.7%,
R P M R E A L E S TAT E G R O U P
slightly better when compared to the growth
average. Interestingly, 4-bedroom houses in the
inner ring had an annual average increase of 12.5% in comparison to the previous quarter which saw a significant reduction of 10.6%. This excessive
fluctuation once again highlights the low levels of rental properties available.
with either slight increases or decreases across
level of 3%. The exception is the middle ring, with
a vacancy rate of 3.4%, which is down from 3.6% in
the previous quarter. Consistently low vacancy rates
reinforce our view that there is no oversupply of stock in the market.
This being the case, rental growth has remained,
providing appealing yields for investors. For those
investing in detached housing in outer and regional areas, land value appreciation tends to be the
driving force in the earlier stages. However, with
vacancy rates at acute levels, and what seems to
be a movement from the middle to the outer ring for
renters, rental yields for detached houses, units and apartments in outer and regional areas top the list.
DAVID YANG
MANAGER, PROPERTY MANAGEMENT d.yang@rpmrealestate.com.au +61 402 446 058
Due to significant capital gains seen in both
the past 12 months, rental yields for all dwelling
quarter saw houses in regional areas reflect a yield
past 5 years, rental yields have been below long-
resulting in solid returns.
It’s important to note, units in the inner ring also
types across all regions have continued to increase,
term levels. Rental growth cannot compare to the
increases in capital gains. Nevertheless, with prices
Regional areas of Victoria continue to achieve
yields have picked up over the past 2 quarters with
coupled with robust rental prices given regional
moderating – particularly in other dwellings – rental
the highest yields due to lower purchase prices,
more modest overall gains in the June quarter. Over
Inner Total
Inner (0-4km)
Inner (4-10km)
Jun-18
Mar-19
Jun-19
2 Year Average
1.7
1.4
1.6
1.8
1.8 1.8
2.0 2.1
1.9
2.0
1.9
Geelong
Source: REIV
1.8
2.2 1.6
2.2 1.7
2.75%
2.85%
2.79%
Units
Jun-18
Mar-19
Jun-19
Middle
3.14%
3.24%
3.24%
1.6
1.9
2.62%
2.58%
4.08%
1.7
Melbourne Total
2.41%
2.32%
3.72%
1.5
2.5
2.28%
Regional
1.5
2.3
Middle
Inner
1.7
Outer (20+km exc. Mornington Peninsula)
3.3
Jun-19
3.08%
3.0
1.8
Mar-19
2.83%
3.4
1.6
Jun-18
Outer
3.6
1.6
Houses
2.0
2.4
Outer (Mornington Peninsula)
4.29% over the past 12 months.
YIELDS
Middle (10-20km)
Outer Total
continue to achieve high yields with an average of
areas are traditionally tightly held. The June
VACANCY RATE Melbourne
of 4.37%, with units and apartments at 4.97%.
R E QS 2I DME AN RT KI AE LT IONVVEERSVTI M EE WN T
detached houses and other dwellings over the
2.4 2.1
1.8
Metro
Inner
2.56%
4.15%
Outer
3.29%
Regional
4.09%
Metro
Source: REIV, RPM
3.71%
4.49%
3.18%
4.37%
4.37%
3.48%
3.62%
4.85%
4.97%
3.90%
Q2 RESIDENTIAL MARKE T RE VIE W
|
3.97%
J U N E Q U A R T E R 2 019
63
R E QS 2I DME AN RT KI AE LT IONVVEERSVTI M EE WN T
OUTLOOK Tighter lending conditions over the past 12 months
With supply generally sitting below demand levels,
Moreover, with pockets of apartments through
obtain finance. First home buyers have been
These positives provide key incentives for investors
completion, savvy investors with a medium to long
have made it increasingly difficult for buyers to
particularly affected in terms of reduced borrowing capacity coupled with a mandatory 10% deposit requirement. This has forced many ‘want-to-be’
homeowners to continue renting. Combined with strong population growth, vacancy rates have
remained at low levels – especially in suburbs with strong infrastructure and amenities.
64
R P M R E A L E S TAT E G R O U P
weekly rental prices and yields continue to increase. to enter the market, along with the removal of any changes to property taxes following the Federal election and recent interest rate cuts.
the middle ring looking to be discounted upon
term outlook can potentially pick up undervalued apartments in well-established and amenity-rich suburbs that offers solid returns.
R E QS 2I DME AN RT KI AE LT IONVVEERSVTI M EE WN T
A CAUTIONARY NOTE IS THAT FROM THE FEDERAL THE MIDDLE OFELECTION 2020, NEW RESULT RENTAL WILL LIFT UNCERTAINTY ABOUT NEGATIVE REGULATIONS WILL COME INTO PLAY WHICH HEAVILY RESTRICTGAINS LANDLORDS. GEARING AND CAPITAL AS A RESULT, ONCE THESE TAX, PROVIDING A IMPLEMENTED, MORE POSITIVE CHANGES COULD DISCOURAGE SOME OUTCOME FOR INVESTORS. INVESTORS FROM ENTERING THE MARKET.
Q 2 R E S I D E N T I A L M A R K E T R E V I E W | J U N E Q U A R T E R 2 019
65
RESIDENTIAL INVESTMENT BUYER SURVEY DATA
THE PROPORTION OF INVESTORS IN THE
The restrictive lending landscape is further reflected
DECLINE, FALLING FROM 32% IN JUNE QUARTER
Over the June quarter this year, 49% of lots were
R E QS 2I DME AN RT KI AE LT IONVVEERSVTI M EE WN T
GREENFIELD MARKET HAS CONTINUED TO
2018 TO 28% IN JUNE QUARTER 2019. ONGOING TIGHT CREDIT CONDITIONS HAS RESULTED IN INVESTORS MOVING AWAY FROM LAND-ONLY PURCHASES DUE TO GREATER UNCERTAINTY
AROUND BORROWING CAPACITY AT THE TIME OF SETTLEMENT. HENCE THIS TYPE OF PURCHASE HAS FALLEN FROM 82% TO 57% OVER THE 2 PERIODS. CONVERSELY, HOUSE AND LAND
in the size of land purchased between the 2 periods. 300sqm or under compared to 24% for the same period a year earlier. This indicates investors still
see property as a solid investment. However, their
mindset has changed in terms of moving away from
buying a traditional block and 3 to 4 bedroom house to a smaller lot or more so a townhouse due to financial constraints.
PURCHASES HAVE INCREASED, ALONG WITH
This uncertainty is reflected in the time period
SETTLEMENT TIMEFRAMES AND LOWER OVERALL
In June quarter 2018, 40% of investors wanted at
TOWNHOUSES WHICH COME WITH SHORTER PURCHASE PRICE.
regarding desire to settle (i.e. when to start to build). least 3 months before settlement to organise their
finances compared to just 13% in June quarter 2019. This means 87% wanted to start building within 3
months to limit uncertainty around their borrowing capacity. In fact, 71% wanted to start immediately.
WHILE THE LANDSCAPE FOR INVESTORS HAS CHANGED OVER THE PAST 12 MONTHS, SOME THINGS REMAIN THE SAME, INCLUDING THE NUMBER OF VISITS TO THE ESTATE PRIOR TO PURCHASE, WITH THE MAJORITY VISITING ONLY ONCE OR TWICE. IN ADDITION, THE KEY DECIDING FACTORS TO BUY IN A PARTICULAR ESTATE BY AN INVESTOR INCLUDES LOCATION, PRICE, AFFORDABILITY AND PROXIMITY TO AMENITY AND INFRASTRUCTURE. ALSO, THE MAIN SOURCE OF MARKETING IS STILL LARGELY THROUGH WORD OF MOUTH (BUILDER/FAMILY/FRIEND REFERRAL).
RPM surveys every buyer on its clients’ estates in the greenfield market. 28% of all buyers indicated they were investors. The following illustrates demographic and purchase intent changes amongst this cohort based on surveys from the June quarter 2019 compared to the same quarter in 2018. 66
R P M R E A L E S TAT E G R O U P
June Quarter 2018
June Quarter 2019 5%
Other
14%
Builder Referral
35%
Family or Friend Herald Sun Home Mag Newspaper: Local
0% 0%
16% 10%
Google Realestate.com
7%
Project Website
2% Over 12 months 6-12 Months
3-6 Months
TIME TO START BUILDING AFTER SETTLEMENT
Within 3 Months Immediately
4> 3
NUMBER OF ESTATES VISITED
2 1
House and Land
16%
Land Only
15% 17% 23% 37% 7%
10% 36% 47%
0% 0% 0%
TV
0%
Direct Mail
6%
Signage
3%
Radio
3%
Website: Other
0%
Mypackage.com
9% 17%
Google Realestate.com
0%
Project Website
11% 8%
0%
Newspaper: Metro
Townhouse
82%
17%
R E QS 2I DME AN RT KI AE LT IONVVEERSVTI M EE WN T
0%
Radio Website: Other Mypackage.com
PURCHASE TYPE
Newspaper: Local
13%
Signage
Townhouse
0% 0%
Direct Mail
ADVERTISEMENT SOURCE
0%
0%
TV
46%
Family or Friend Herald Sun Home Mag
0%
Newspaper: Metro
0%
Other Builder Referral
House and Land
Land Only
32%
57% 0%
Over 12 months
10% 3% 16%
6-12 Months 3-6 Months
Within 3 Months
71%
Immediately
0%
4>
6% 29% 65%
3 2 1
Q2 RESIDENTIAL MARKE T RE VIE W
|
J U N E Q U A R T E R 2 019
67
RESIDENTIAL INVESTMENT BUYER SURVEY DATA
June Quarter 2018 701SQM>
0%
651-675SQM
0%
0%
576-600SQM
1%
526-550SQM
4%
476-500SQM
13%
426-450SQM
27%
376-400SQM
14%
326-350SQM
276-300SQM
7%
276-300SQM
<250SQM
8%
<250SQM
551-575SQM
526-550SQM
501-525SQM
476-500SQM
R E QS 2I DME AN RT KI AE LT IONVVEERSVTI M EE WN T
0%
626-650SQM
576-600SQM
451-475SQM
426-450SQM
401-425SQM
376-400SQM
351-375SQM
326-350SQM
301-325SQM
251-275SQM
0% 1%
4% 1%
5% 4% 1%
9%
Facilities
3%
Investment
5%
Community Design
Schools Shops
Lot Size
Presentation Parks/Water Proximity
Affordability
Location/Area
R P M R E A L E S TAT E G R O U P
651-675SQM
0%
601-625SQM
68
0%
0%
626-650SQM
TOP 3 BEST FEATURES OF ESTATE
701SQM>
676-700SQM
676-700SQM
LOT SIZE
June Quarter 2019
601-625SQM
0%
451-475SQM
401-425SQM
351-375SQM
301-325SQM
251-275SQM
0% 9%
0% 2%
0%
22% 12%
7%
9%
33%
Investment
6%
Schools
6%
Lot Size
29 %
0%
0%
3%
21%
2%
Facilities
Design
11%
2%
501-525SQM
2%
7%
3%
0%
Community
3%
0%
551-575SQM
7%
6%
0%
Shops
Presentation Parks/Water Proximity
Affordability
Location/Area
1%
4%
5% 4%
5%
2% 4%
14%
23%
30%
OUR TEAM ERIC DICK
JINYIN ZHANG
eric@rpmrealestate.com.au
jinyin@rpmrealestate.com.au
EXECUTIVE CHAIRMAN +61 418 349 267
DIRECTOR, RPM INTERNATIONAL +61 451 898 886
KEVIN BROWN
CHRISTIAN RANIERI
kevin@rpmrealestate.com.au
christian@rpmrealestate.com.au
CHIEF EXECUTIVE OFFICER +61 418 397 577
DIRECTOR, TRANSACTIONS & ADVISORY +61 416 445 078
LUKE KELLY
MICHAEL STAEDLER
luke@rpmrealestate.com.au
m.staedler@rpmrealestate.com.au
DIRECTOR
+61 400 688 520
RESEARCH MANAGER +61 434 619 280
PETER GRANT
DAVID YANG
peterg@rpmrealestate.com.au
d.yang@rpmrealestate.com.au
DIRECTOR, COMMUNITIES +61 411 494 499
MANAGER, PROPERTY MANAGEMENT +61 402 446 058
ROD ANDERSON
DIRECTOR, COMMUNITIES rod@rpmrealestate.com.au +61 417 595 859
DISCLAIMER Although all reasonable care has been taken in the preparation of this document, RPM Real Estate Group Pty Ltd takes no responsibility for the accuracy of the information contained herein. It is recommended that all the information be verified if it is to be used for commercial purposes.
70
R P M R E A L E S TAT E G R O U P
T +61 3 9862 9555
Level 5, 52 York Street
South Melbourne VIC 3205 rpmrealestate.com.au