S E P T E M B E R
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,
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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
54
INTERNATIONAL
58
RESIDENTIAL INVESTMENT
Q3 MARKET OVERVIEW
FROM OUR CEO
44
FEATURE STORIES:
COMMUNITIES
16
10
Industry Leaders Insights Townhouses get the tick of approval
from buyers
50
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
3
FROM OUR CEO
WELCOME TO RPM REAL ESTATE GROUP’S Q3
Greater Melbourne’s median lot price edged only
PLEASED TO PROVIDE A COMPREHENSIVE UPDATE
due to a corresponding 1% rise in the median lot size
Q3 MARKET OVERVIEW
RESIDENTIAL MARKET REVIEW. ONCE AGAIN WE’RE AND ANALYSIS OF VICTORIA’S NEW HOUSING AND INVESTMENT MARKET.
The September quarter marked a strengthening in
buyer sentiment, with the recovery in the land market well underway. Various recent stimulus measures
have started to flow through to the numbers, with KEVIN BROWN
CHIEF EXECUTIVE OFFICER RPM REAL ESTATE GROUP
4
R P M R E A L E S TAT E G R O U P
month-on-month lot sales increasing for the sixth
consecutive month. On a quarterly basis, gross lot sales climbed 48% from the previous quarter to 2,657.
slightly higher to $315,500 from the previous quarter to 395 sqm.
Buyers are highly price sensitive, with developers
re-cutting stages to feature more medium density
stock, reflected in a rising proportion of townhouse purchases, up from 4% a year ago to 19% in the September quarter.
In the development site space, the uptick in retail lot sales volumes is generating renewed transaction
activity among developers, many of whom sat out of the market for the past 12 months but are now
re-stocking their pipelines. In the infill market, smaller boutique developments ranging between $1m and $5m continue to perform well.
Volume apartment sites continue to struggle, with
MICHAEL STAEDLER
quarter falling 43% from the same time a year
m.staedler@rpmrealestate.com.au
approval activity for apartments in September
RESEARCH MANAGER
ago. Prospects for an improvement in activity is
+61 434 619 280
Q3 MARKET OVERVIEW
IF SALES VOLUMES CONTINUE TO TREND UPWARDS AT CURRENT RATES, THE LAND MARKET SHOULD RETURN TO A DESIRED SUSTAINABLE LEVEL OF APPROXIMATELY 16,000 LOTS PER ANNUM IN THE NEXT 6 TO 9 MONTHS.
far stronger for townhouses than apartments,
particularly with solid gains in housing values in
recent months which will steer buyers towards quality townhouses in the middle and outer rings.
The data contained within this report was prepared
The weak spot in building approvals is perhaps the
property experts and GIS analysts.
next few years. The industry needs to keep building
Research underpins the core strategic decision
or face a looming undersupply and subsequent
on current economic and housing conditions,
key challenge for the new housing market over the
by RPM’s research team consisting of economists,
more housing to absorb ongoing population growth
making capability at RPM, providing in-depth analysis
price pressures.
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.
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
5
ECONOMIC ACTIVITY GROSS DOMESTIC PRODUCT (GDP)
1.96% 2.48% 12 month change to June qtr. 2019
5 year average
CONSUMER PRICE INDEX (CPI) Q 3L E M AA DR KI N ET D I OC VA ET RO VR ISE W
1.67%
Sep-19
Source: ABS
1.89%
Same month year earlier
VIC POPULATION
STATE FINAL DEMAND (SFD) - VIC
3.43% 4.10%
12 month change to June qtr. 2019
5 year average
RETAIL TURNOVER - VIC
3.05% 4.95% Sep-19
Same month year earlier
NATURAL INCREASE
5,107 Mar-19
10,655
Same qtr. year earlier
% change - same qtr. last year
52.1%
% change - 12 months earlier
12.0%
OVERSEAS MIGRATION
31,709 Mar-19
30,962 Same qtr. year earlier
CASH RATE
0.75 % Sep-19
1.25% Jun-19
1.50% Sep-18
Source: RBA 6
R P M R E A L E S TAT E G R O U P
VARIABLE RATE
% change - 12 months earlier
0.5%
3,518
4.94% Sep-19
5.15% Jun-19
5.31% Sep-18
3 YEAR FIXED RATE
4.25% 3.36% Sep-19
Sep-19
4.46% 3.88% Jun-19
Jun-19
4.62% 4.11% Sep-18
Sep-18
12 months to Mar-19 2.4%
Mar-19
DISCOUNTED RATE
86,706
% change - same qtr. last year
NET INTERSTATE MIGRATION
BORROWING RATES
34,029
12 months to Mar-19
3,947
Same qtr. year earlier
12,780
12 months to Mar-19
% change - same qtr. last year
10.9%
% change - 12 months earlier
15.4%
NATIONAL TOTAL CHANGE
VIC TOTAL CHANGE
388,763
133,515
1.56%
2.08%
change from Mar-18 to Mar-19 % change - same qtr. last year VIC share
34%
■ Negative change ■ Positive change
TOTAL POPULATION
AUS 25,287,394 VIC 6,566,170
VIC EMPLOYMENT EMPLOYMENT GROWTH (JOBS CREATED) Jobs (‘000s) TOTAL Jun-19 to Sep-19
FULL TIME Jun-19 to Sep-19 Last 12 months PART TIME Jun-19 to Sep-19 Last 12 months
15.41 41.12 17.10 62.10
1.0% 37.1% 3.1% 33.1% 0.7% 34.0% 1.8% 21.5% 1.6% 40.4% 5.9% 51.8%
$1,666 $1,625 $1,607 Nov-18
2.5% Source: ABS
4.7% 4.8% 4.6% Sep-19
Source: ABS
Jun-19
Same time last year
CONSUMER SENTIMENT
98.2 Sep-19
100.5 Sep-18
Source: Westpac-Melb institute
BUSINESS SENTIMENT
-0.4 Sep-19
11.9
Source: RBA/NAB
Sep-18
The Westpac-Melbourne Institute Consumer Sentiment
WAGES
May-19
UNEMPLOYMENT RATE
Q 3L M E AA D R KI E N TD IOC VA ET ROVR ISE W
Last 12 months
32.51 103.22
% 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 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
7
VIC FINANCE NO. OF FHBS FINANCED
9,395
8,623
Sep-19
Same qtr. year earlier
NO. OF NON-FHBS FINANCED
19,851 21,502 Q 3L E M AA DR KI N ET D I OC VA ET RO VR ISE W
Sep-19
Same qtr. year earlier
FINANCE FOR NEW DWELLINGS
7,887 Sep-19
8,002
Same qtr. year earlier
VALUE OF LOANS - OWNER OCCUPIERS
$12.47B $12.64B Sep-19
Same qtr. year earlier
9% 8% 1% 1%
AVERAGE LOAN SIZE (FHBS)
$379,200 $360,900 Sep-19
Same qtr. year earlier
AVERAGE LOAN SIZE (NON-FHBS)
$448,600 $443,000 Sep-19
Same qtr. year earlier
FINANCE FOR ESTABLISHED DWELLINGS
21,359 Sep-19
22,123
Same qtr. year earlier
VALUE OF LOANS - INVESTORS
$4.30B Sep-19
$4.82B
Same qtr. year earlier
5% SHARE OF FHB LOANS
1% 3% 11%
32.1% 28.6% Sep-19
Same qtr. year earlier
Source: ABS
MELBOURNE PROPERTY MEDIAN HOUSE PRICE
$830,000 Previous qtr.
$829,000
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
Sep-19
Sep-19
$613,500
Sep-19
$794,000
MEDIAN UNIT PRICE
4.5% 0.1%
$590,500 Previous qtr.
$599,500
Same qtr. year earlier
AUCTIONS HELD
$315,500
3.9% 2.3%
$310,000 Previous qtr.
$321,000
Same qtr. year earlier
2,421
CLEARANCE
Sep-19 1.8% 1.7%
2,382 Jun-19
3,398
Same month year earlier
78% 67% 58%
VIC BUILDING DETACHED HOUSE APPROVALS 8,856 Sep-19 10,019 Same qtr. year earlier 35,582 Last 12 months
11.6% 10.1%
HOUSE COMMENCEMENTS
36.0% 40.1%
15.0% 5.5%
6,808 Jun-19 8,811 Same qtr. year earlier 25,310 Last 12 months
22.7% 31.1%
7.7%
Sep-19
16,325 21.0%
Same qtr. year earlier
56,784 24.3%
Last 12 months
15,371 Jun-19
18,884 18.6%
Same qtr. year earlier
25,310 31.1%
Last 12 months
TOTAL COMPLETIONS
OTHER COMPLETIONS
6.6%
12,894
TOTAL COMMENCEMENTS
OTHER COMMENCEMENTS
HOUSE COMPLETIONS 9,756 Jun-19 10,442 Same qtr. year earlier 39,384 Last 12 months
4,038 Sep-19 6,306 Same qtr. year earlier 21,202 Last 12 months
Q 3L M E AA D R KI E N TD IOC VA ET ROVR ISE W
8,563 Jun-19 10,073 Same qtr. year earlier 36,452 Last 12 months
TOTAL DWELLING APPROVALS
OTHER DWELLING APPROVALS
7,895 Jun-19 8,325 Same qtr. year earlier 25,329 Last 12 months
17,651
5.2% 12.9%
Jun-19
18,767 5.9%
Same qtr. year earlier
64,713 1.4%
Last 12 months
Source: ABS
MELBOURNE PROPERTY VACANCY RATE - MELB
2.2% 2.0% Sep-19
Sep-18
AVERAGE DAYS ON MARKET - METRO MELB
33
Sep-19
38
Sep-18
MEDIAN METRO HOUSE RENT
$460 Sep-19
$460 Sep-18
0.0%
MEDIAN METRO OTHER DWELLING RENT
$430 Sep-19
$420 Sep-18
2.4%
Source: REIV Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
9
FEATURE STORY:
INDUSTRY LEADERS INSIGHTS RPM: Since the last quarter, what have been the
So prices are rising on one hand but it’s hard to get
property market?
to high density sales. Pre-sales are really hard to
Q3 MARKET OVERVIEW
key developments in Victoria’s residential
DG: I think there are 2 key developments worth DANIEL GRADWELL
ASSOCIATE DIRECTOR PROPERTY AT ANZ
WITH THE MARKET SHOWING SIGNS OF RECOVERY
highlighting, and that is the differences in supply and
come by. It reflects people’s concerns over building quality and cladding issues, especially in Sydney.
demand. On the demand side, house prices in the
We’re not building as much as we need to absorb still
up about 3% in Melbourne and Sydney. So it’s a fairly
to turn the tap on overnight. Large lead times are
established market are rising at a pretty solid rate, material turnaround.
rapid population growth. Remembering also it’s hard required to get projects off the ground.
FOLLOWING A RANGE OF STIMULUS, RPM
The latest rate cut announced in early October will
Construction – whether it’s housing or infrastructure
DANIEL GRADWELL, ASSOCIATE DIRECTOR,
further support. It shows everything being talked
terms of flow through to the rest of the economy,
CONTINUES ITS INDUSTRY LEADERS Q&A WITH PROPERTY AT ANZ TO FIND OUT WHAT EFFECT
THESE MEASURES ARE HAVING ON THE ECONOMY, THE PROPERTY MARKET AND BUYERS.
also start to flow through the market, providing about in the last 3 months about improved
borrowing power and interest rates is having the intended impact.
The opposite of that strength is weakness on the
R P M R E A L E S TAT E G R O U P
or commercial property – has large multipliers in
which is part of the overall weakness we are seeing. RPM: Has the market actually bottomed/are we in recovery?
construction side. Building approvals have been
DG: I think we’ve passed the bottom now. There’s no
level since 2012, with further declines likely.
are broadening. Initially it was higher-end product,
falling for the last 3 quarters and are at the lowest
10
building approvals off the ground – especially medium
sign of prices slowing down. In fact, price increases
but price increases are starting to flow through at the lower end of the market and regional centres too.
10
10 0
Expected to decrease
commodity prices are still quite high, and with a weak
20
20
0
�10
�10
�20 �30
�20
�40 �50
plenty of international tourists visiting our shores,
Y�Y % CHANGE �TREND�
Expected to increase
30
12
13
Debt finance availability expectations (LHS)
14
15
16
17
Quarterly residential building approvals (RHS)
RPM: What are the key economic indicators telling us?
DG: Again I think it’s a couple of things.
18
19
20
�30
Source: ANZ-Property Council
job ads) it suggests the labour market is going to be
are still looking good.
RPM: How much of an effect has regulatory easing actually had?
DG: There are still issues working in a downward
direction including the HEMs and CCR measures I mentioned last quarter, but the impact of lower
interest rates and APRA changes are by far having the stronger overall effect.
The number of loans being approved has really
and wages growth anytime soon.
nationally the growth in new investment mortgage
muddling through. We won’t be seeing employment
Secondly, regarding the international outlook, global
indicators including capital expenditure plans and
at Australia’s relationship with the rest of the world
hiring intentions (based on ANZ Research’s series of
international exposures directly relevant to Australia
weak for a while. So the metrics suggest we are just
Firstly, the labour market. There’s still a lot of spare capacity. If you add in a bunch of forward-looking
Australian dollar we’re running a trade surplus. The
risks haven’t translated in Australia yet. If you look - particularly our external sector – there are still
Q3 MARKET OVERVIEW
DEBT FINANCE AVAILABILITY EXPECTATIONS IN YEAR AHEAD �NET BALANCE�
30
40
stepped up in the last few months. In August,
loans was the highest in 3 years (increasing 5.7%), coming off a pretty strong July result. So it looks
like investors are really starting to come back into the market.
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
11
Q3 MARKET OVERVIEW
FEATURE STORY: INDUSTRY LEADERS INSIGHTS
OVERALL FINANCE APPROVALS IN VICTORIA WERE UP MORE THAN 10% OVER THE LAST 2 MONTHS, WITH EACH OF THE INVESTOR, OWNER OCCUPIER AND FIRST HOME BUYER SEGMENTS INCREASING. DANIEL GRADWELL
12
R P M R E A L E S TAT E G R O U P
The broader improvement in the market is coming through in the types of buyers also, with first
population growth.
concessions. This broadening theme is true in
One thing to note is household debt is something to
were up more than 10% over the last 2 months, with
still rose faster than incomes. But on the flipside, we
Victoria as well. Overall finance approvals in Victoria each of the investor, owner occupiers and first home buyer segments increasing.
But if I’m looking at approval numbers, one of the
downsides is that this growth is limited to purchases of existing dwellings, not new dwellings. Finance for construction of new homes remains weak. In terms
keep an eye on. Even with the downturn, credit growth also have very high net wealth if you consider house
prices versus your debt on it. Just because we have a
lot of debt, that in itself doesn’t mean the economy or
RPM: What’s the outlook for the remainder of the year? DG: I think prices will keep rising through the remainder of the year. The key reason is there’s fairly solid sentiment
in the market. And that’s before the October rate cut will start to flow through the system. ANZ Research’s latest
Housing Update report forecasts annual price growth in
Melbourne peaking in mid-2020 in the low double digits.
prices are going to crash, because we have a higher
A key issue is there is still a real shortage of supply. While
slowdown.
this time of year, which adds to price pressures. I do think
level of wealth backing that. But we are vulnerable to a
the number of listings is picking up, it’s still really low for we will eventually start to see new listings and turnover
of lending to developers - and ANZ is strong in this
The broad macro indicators are valuable in this
but the problem is we need pre-sales coverage.
a real concern. Debt isn’t a huge issue and the economy
On the construction side, in the next 6 months we
shows there is a real importance on regulators and
speaking, every time we’ve seen access to finance
market - there is appetite to lend, especially in Victoria,
It comes back to the end purchaser. If no-one is
buying off the plan apartments or in the greenfields
– even if developers are confident their projects will sell once built – regulatory requirements make it
difficult for banks to lend. It can be tricky to find the
equilibrium between responsible lending and making
instance. If unemployment was much higher it would be is still growing, but we could become vulnerable. It
the Reserve Bank to ensure the Australian economy continues to expand through job creation, including
new additions from migration growth, and that we start to see some improvement in wages.
Q3 MARKET OVERVIEW
home buyers taking advantage of stamp duty
sure that we build enough housing to absorb our
get back to historical normal numbers.
should start to see approvals tick up again. Historicallyimprove it filters through to a pick-up in approvals.
Given ongoing population growth, especially in Victoria, we have to keep building more housing.
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
13
OVERVIEW
OVER THE SEPTEMBER QUARTER THE DEVELOPMENT SITE MARKET EXPERIENCED AN INCREASE IN
DEVELOPMENT SITES
TRANSACTION ACTIVITY ACROSS BOTH THE GREENFIELD
AND INFILL SEGMENTS ON THE BACK OF RENEWED BUYER CONFIDENCE AND A POSITIVE SHIFT IN MOMENTUM.
The market is also responding to pent up demand, with many developers who, having sat out of the market for the past 12
months, are now moving to capitalise on opportunities to set them up for the return to stabilised market conditions over the next 12 to 36 months.
A combination of macro-prudential measures and an
uptick in sales has also given developers confidence to acquire sites.
In the greenfield space, pent up demand from first home buyers is driving retail sales activity which is translating
into confidence among developers at a wholesale level. The market is also nearing the end of the valuation risk period,
with lots sold at the peak in 2017 now settling. This provides
a baseline for developers to model and build a project profile.
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
There is a growing preference towards more mature,
Developers with existing stock have also had time
In addition, while access to credit has improved, the
prepared to take a risk. The recent boom placed
particularly medium density, which has underscored
applicants means the entry point for apartments at
PSP-approved assets, with many developers not
in significant delays to planning approvals at both a
state and local level. That said, quality opportunities without a PSP are still attractive for certain
developers, subject to favourable terms aligned to planning outcomes.
AS SOME GROWTH CORRIDORS START TO FILL OUT, WE ARE SEEING RENEWED DEMAND FROM INDUSTRIAL PLAYERS ENTERING THE MARKET CHASING YIELDS OF AROUND 5% - 6%, WHICH IS PARTICULARLY ATTRACTIVE AS INTEREST RATES CONTINUE TO FALL.
a growing proportion of sales. This trend is expected to continue, with average lot sizes in the greenfield corridors expected to reduce to an average of 350 sqm.
banks’ still tight scrutiny on expenditure for mortgage around $450,000 is still out of reach for many buyers whose borrowing capacity has been diminished.
The infill market has seen increased activity in smaller
OUTLOOK
These developments comprising around 15-20
market, which may well experience some ‘hyper
boutique developments ranging from $1m and $5m.
apartments, townhouses or mixed use spaces, offer less risk and faster project turnarounds.
Volume apartment sites continue to struggle
given the absence of investors due to continuing
There is renewed energy in the development site activity’ in the short term from pent up demand and
lack of transactions prior to the current quarter. This will likely moderate over the medium term to normal transaction activity and stable market conditions.
disincentives and lack of depth in the market to
It is unlikely we will see a sharp rebound given the
are finding it difficult to see value due to the cost
economic indicators including static wages and
soak up large apartment supply. Many developers of construction.
QD3E V M EA LROK PE M T EONVT E S R IVTI EE SW
immense pressure on authority resources, resulting
to adjust their plans and offer a diversity of product,
continuing retreat of investors and sluggish broader employment growth.
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
15
OVERVIEW
THE REBOUND IN BUYER SENTIMENT
STRENGTHENED THROUGH SEPTEMBER
QUARTER 2019, WHICH HAS TRANSLATED TO AN
COMMUNITIES
IMPROVEMENT IN THE NUMBERS WITH MONTH-
ON-MONTH GROSS SALES INCREASES, RISING TO 981 LOTS IN SEPTEMBER.
The stimulus measures including relaxed lending restrictions and 2 mid-year interest rate cuts
have given buyers confidence and more certainty around their borrowing capacity and subsequent
overall house/land budget. Improved loan approval
timeframes are also allowing potential purchasers to act more swiftly with their buying decision.
Buyers continue to take advantage of the attractive
incentives, rebates and deposit terms still available,
with discounts totaling around 10% of the retail listed lot price. The ongoing incentives aim to move a still substantial amount of unsold lots on the market,
which increased to a total of 5,800 lots at the end of the quarter.
16
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
Greater Melbourne’s median lot price increased
increase in lots on the market can be attributed to
quarter but remains 1.7% (-$5,500) down from the
supply in September quarter 2019, however the
the volume of stock returning to market, rising to
963 lots. Of note is that 24% of all stock sold was
titled lots, compared to 12% last quarter. This titled stock is being put back on the market at attractive
rates, which provides an appealing option to buyers who don’t want to wait 12-18 months to start building their home.
1.8% (+$5,500) to $315,500 from the previous
same quarter a year ago. This marginal quarterly growth is due to a corresponding 1% rise in
median lot sizes to 395sqm. The median lot size
remained below 400sqm as a result of many new
and existing estates re-cutting stages to feature a higher percentage of medium density and smaller conventional lots (under 300sqm).
Our prediction in the last quarterly report that the
While strengthening, purchaser demand remains
September quarter, the growth areas of Melbourne
product (lot size) at the right price point is still the
land market has bottomed out, has eventuated. In the and Geelong recorded 2,657 gross lot sales, an
increase of 861 lot sales or 48% from the previous quarter. This halts the run of quarter-on-quarter
declines in gross lot sales over the last 12 months.
However, the recovery in sales activity is mild, with gross lot sales still 35% down annually.
highly sensitive to affordability. Supplying the right
48%
THE GROWTH AREAS OF MELBOURNE AND
GEELONG RECORDED 2,657 GROSS LOT SALES,
AN INCREASE OF 861 LOT SALES OR 48% FROM THE PREVIOUS QUARTER.
1.8%
biggest driver of sales activity. Demonstrative of this,
GREATER MELBOURNE’S MEDIAN LOT PRICE
among all LGAs in the September quarter. It came off
PREVIOUS QUARTER.
Casey recorded the highest number of gross lot sales
Q 3 MCAORMK M ET U NOI V TE I ER SV I E W
Encouragingly, gross lot sales outpaced new lot
INCREASED 1.8% (+$5,500) TO $315,500 FROM THE
the back of an 8.3% annual median price correction, which was somewhat larger than the corresponding 2% fall in the median lot size.
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
17
OVERVIEW
MELBOURNE GROWTH CORRIDORS
200
7,000
180
5,000
120
4,000
100 80
3,000
60 40
0
SEP 16
Active Estates
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
$325K>
$301K $325K
430
$275K $300K
425
300,000
420
MEDIAN LOT PRICE �$�
415
250,000
410
200,000
405 400
150,000
395
100,000
390 385
50,000 0
1,000
Gross Lot Sales
New Estates
350,000
$251K $275K
<$250K
380 SEP 16
Median Lot Size
18
% OF TOTAL GROSS LOT SALES
2,000
20
MEDIAN LOT SIZE �SQM�
NUMBER OF ESTATES
Q 3 MCAORMK M EU T NOI V TE I ER SV I E W
140
GROSS LOT SALES
6,000
160
DEC 16
MAR 17
Median Lot Price
R P M R E A L E S TAT E G R O U P
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
375
0%
10%
Sep Qtr 2019
20%
Sep Qtr 2018
30%
Sep Qtr 2017
40%
50%
Source: RPM
SEP QUARTER 2018
CASEY
10%
CARDINIA
5%
HUME MITCHELL
9% 2%
SEP QUARTER 2019
Sep Quarter ‘19 Median Lot Price
Change from Sep Quarter ‘18 CASEY
22%
CARDINIA
5%
WHITTLESEA 10% HUME MITCHELL
14% 1%
WHITTLESEA 8% MELTON
MELTON
19%
Change from Sep Quarter ‘18
GREATER GEELONG
15%
GREATER GEELONG
11%
GREATER GEELONG
$311,200
$302,000
$330,000
$280,000
1.2%
-6.4%
-7.0%
2.8%
-$20,500
-$25,000
$7,550
398.0
400.0
392.0
448.0
Change from Sep Quarter ‘18
-0.5%
0.0%
-3.6%
0.0%
Change from Sep Quarter ‘18
-2.0
Sep Quarter ‘19 Gross Lot Sales
1,019
Change from Sep Quarter ‘18
-1,001
Change from Sep Quarter ‘18
-49.6%
Sep Quarter ‘19 sales contribution
38.4%
Sep Quarter ‘19 Active Estates
Change from Sep Quarter ‘18
Change from Sep Quarter ‘18 Change from Sep Quarter ‘18
-25.4% 24.1%
718
108
0.0
279
-323
17.7%
-53.7%
14.9%
27.0%
10.5%
86
47
41
26
855
Sep Quarter ‘19 No. of Trading Days
641
-218
-14.5
21.0%
-1,492
Change from Sep Quarter ‘18
0.0
49.4% 23
Change from Sep Quarter ‘18
WYNDHAM 19% MOORABOOL 1%
SOUTH EAST
Sep Quarter ‘19 Median Lot Size
Sep Quarter ‘19 Lot Releases WYNDHAM 23% MOORABOOL 2%
NORTHERN
$3,700
Sep Quarter ‘18 sales contribution
24%
WESTERN
8
437
-572
3
560
-258
14.7% 3
184
-552
-63.6%
-56.7%
-31.5%
-75.0%
233
232
223
220
336%
214%
117%
372%
180
158
120
Q 3 MCAORMK M ET U NOI V TE I ER SV I E W
% CONTRIBUTION TO TOTAL GROSS LOT SALES
173
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
19
WESTERN GROWTH CORRIDOR AFTER DROPPING BELOW THE 1,000-LOT MARK IN
THE PREVIOUS 2 QUARTERS, GROSS SALES IN THE
WESTERN GROWTH CORRIDOR TICKED UP TO 1,019 LOTS IN SEPTEMBER QUARTER 2019. THE WEST
REMAINS THE DOMINANT GROWTH CORRIDOR GIVEN
Q 3 MCAORMK M EU T NOI V TE I ER SV I E W
THE GREATER NUMBER OF ACTIVE ESTATES AND
SUBSEQUENT HIGHER LOT SUPPLY, ACCOUNTING FOR 38% OF TOTAL LOT SALES.
MOORABOOL
This is despite the September quarter marking the lowest
MELTON
share of total gross lot sales in 4 years, and somewhat below its peak share of 49%. Increased competition
from other growth corridors and reduced affordability,
highlighted by strong price growth in Moorabool (13.5%)
and Melton (4.0%), has seen lot sales shift to other regions. At almost 2,500 lots, the volume of unsold stock across
the Western growth corridor remains significantly higher than other growth corridors, with the majority evenly
WYNDHAM
split between Melton and Wyndham. However this has
not impeded lot price growth. In fact, quarterly gains of 2.8% and 4.0% were recorded in Melton and Wyndham respectively over the quarter. PORT PHILLIP BAY
From June quarter to September quarter, gross lot sales
increased by just over 40% in both municipalities, although new lot releases only recorded a commensurate increase in Wyndham, compared to remaining flat in Melton. 20
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
WYNDHAM
Wyndham recorded 504 gross lot sales in September
quarter 2019, which was the second highest among all
improved demand, new releases rose 35% to 479 lots,
gross lot sales compared to new lot supply has applied some upward pressure on lot prices. The median lot value increased 2.8% from the previous quarter to
$322,250 despite the median lot size remaining static at 400sqm, resulting in greater per sqm price growth.
10
GROSS LOT SALES
1,000
15
500
SEP 16
DEC 16
New Estates
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
414 412
300,000
410
250,000
408 406
200,000
404
150,000
402 400
100,000
398
50,000 0
Median Lot Size
0
Gross Lot Sales
350,000
MEDIAN LOT PRICE �$�
of unsold lots entering the September quarter, higher
20
Active Estates
estates in Wyndham during September quarter 2019,
Although Wyndham contained a relatively high volume
1,500
25
0
with this growth also aided by the addition of 2 new lifting to a total of 39 active estates.
30
5
growth areas. This also represented a 43% increase in
sales activity from the previous quarter. Responding to
2,000
35
MEDIAN LOT SIZE �SQM�
entering a recovery phase.
NUMBER OF ESTATES
market was then also coming out of a downturn and
Q 3 MCAORMK M ET U NOI V TE I ER SV I E W
40
Both demand (gross lot sales) and new lot supply in
Wyndham are at parallel levels to 6 years ago when the
2,500
45
396 SEP 16
DEC 16 Median Lot Price
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
394
Source: RPM
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
21
WESTERN GROWTH CORRIDOR
MELTON Melton’s 44 active estates continues to be the
50
Melton contains the highest level of unsold lots on
the market, which was able to absorb a 42% quarterly increase in gross sales to 492 lots without the need
$300,000 from the previous quarter, despite the
rising proportion of smaller lots among gross sales.
As a result, per sqm lot prices grew, providing another sign of improving sentiment in the new house market. 22
R P M R E A L E S TAT E G R O U P
600
15
400 200
SEP 16
DEC 16
New Estates
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
440
300,000
MEDIAN LOT PRICE �$�
420
250,000
400
200,000
380
150,000
360
100,000
340
50,000 0
Median Lot Size
0
Gross Lot Sales
350,000
has increased. Most of these sales are occurring in
Melton’s median lot price still increased 4% to
800
20
Active Estates
of small and medium density lots among total sales
pushing more people to opt for a smaller lot.
25
0
Melton is generally an affordable area, the number
pricing for conventional lots is relatively expensive,
1,000
30
5
Notably, Melton’s median lot size of 357sqm was
the sub–markets of Fraser Rise and Deanside, where
1,200
35
10
to add a comparable level of new supply.
significantly smaller than all other growth areas. While
1,400
40
GROSS LOT SALES
than a 1% increase in new releases to 376 lots.
1,600
45
NUMBER OF ESTATES
Q 3 MCAORMK M EU T NOI V TE I ER SV I E W
September quarter 2019 – despite recording less
SEP 16
DEC 16 Median Lot Price
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
MEDIAN LOT SIZE �SQM�
highest among all growth areas, increasing by 2 over
320
Source: RPM
ROD ANDERSON
DIRECTOR, COMMUNITIES rod@rpmrealestate.com.au +61 417 595 859
affordability advantage, gross sales declined 26% to just 23 lots for the quarter, making it the only
Melbourne growth area where gross lot sales fell.
120
5
100
4
80
3
60
2
Active Estates
40 20 SEP 16
DEC 16
New Estates
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
with the median lot size recording corresponding
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
0
Gross Lot Sales
300,000
median lot price was due to the sale of larger lots,
growth corridors.
140
6
0
Furthermore, a 13.5% quarterly increase in the
growth of 15.1% to 512sqm – the largest among all
160
1
Subdued demand also negated any new lot releases, with no new supply added in the September quarter.
180
7
GROSS LOT SALES
$244,000 in September quarter 2019. Despite its
200
8
MEDIAN LOT SIZE �SQM�
growth corridors, recording a median lot price of
9
Q 3 MCAORMK M ET U NOI V TE I ER SV I E W
Moorabool is the most affordable area among all
NUMBER OF ESTATES
MOORABOOL
370
SEP 16
DEC 16 Median Lot Price
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
350
Source: RPM
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
23
NORTHERN GROWTH CORRIDOR
THE NORTHERN GROWTH CORRIDOR RECORDED
The quarterly increase in sales activity in September
2019, AN INCREASE OF 34% FROM THE PREVIOUS
adjustment for existing stock. This is highlighted
Q 3 MCAORMK M EU T NOI V TE I ER SV I E W
641 GROSS LOT SALES IN SEPTEMBER QUARTER QUARTER. HOWEVER, THIS GROWTH WAS THE LOWEST AMONG THE 4 MAJOR CORRIDORS,
RESULTING IN THE PROPORTION OF TOTAL GROSS LOT SALES FALLING TO 24% FOR THE QUARTER.
New lot supply has been less responsive to the upturn in demand in Hume, restrained by relatively low active estate numbers, leading to a slight fall in new lot
releases. Although containing more active estates,
new supply in Whittlesea remains considerably lower than in Hume, with the frequency and volume of new lot releases in estates along Craigieburn Road in
Wollert and Donnybrook Road in Donnybrook falling to enable delivery of sold lots.
24
R P M R E A L E S TAT E G R O U P
quarter 2019 was generated mostly by the price by the median per sqm lot price for lots sold in
September quarter 2019 declining 9% in Whittlesea and 2% in Hume.
LUKE KELLY
DIRECTOR, COMMUNITIES luke@rpmrealestate.com.au +61 400 688 520
HUME Active estates in Hume remain relatively low, edging higher by only 1 over September quarter 2019 to a total of 16 estates. Consequently, new supply
is being constrained, with the 205 lots released
25
June quarter 2019, further highlighting the shortage of active estates.
Conversely, gross sales in Hume have continued
0
September quarter, increasing by 85 lots or 29%
Active Estates
has also resulted in gross lot sales being marginally
Nevertheless, Hume’s median lot price remained
steady at $310,000 from the previous quarter, despite demand outpacing new supply and the median lot
size increasing 2% to 400sqm. Moreover, the median lot price remains 11.4% below its previous peak in
June quarter 2018, representing the largest fall from peak lot prices.
200
SEP 16
DEC 16
New Estates
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
460 450 440
300,000
430
250,000
420
200,000
410 400
150,000
390
100,000
380
50,000 0
Median Lot Size
0
Gross Lot Sales
350,000
MEDIAN LOT PRICE �$�
in gross lot sales.
400
400,000
higher on an annual basis, with Casey the only other
Melbourne growth area to record an annual increase
600 10
5
its upward trajectory through 2019 including the
from the previous quarter to a total of 381 lots. This
800
15
GROSS LOT SALES
areas to record a reduction in new lot releases from
1,000
20
NUMBER OF ESTATES
only area among the 6 major Melbourne growth
1,200
Q 3 MCAORMK M ET U NOI V TE I ER SV I E W
previous quarter. Although minor, Hume was the
MEDIAN LOT SIZE �SQM�
over the quarter reflecting a 4% decrease from the
370 SEP 16
DEC 16 Median Lot Price
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
360
Source: RPM
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
25
NORTHERN GROWTH CORRIDOR
MITCHELL
and Whittlesea given its affordability advantage over these 2 areas.
recorded for September quarter 2019 only 8%
50
SEP 16
DEC 16
New Estates
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
550 530 510
250,000
490 470
200,000
450
150,000
430 410
100,000
390
50,000 0
Median Lot Size
26
R P M R E A L E S TAT E G R O U P
0
Gross Lot Sales
300,000
MEDIAN LOT PRICE �$�
lots and 39 lots respectively.
2
350,000
advantage, with the median lot price of $285,000
and gross sales for the quarter were negligible at 26
100
3
Active Estates
prices has eroded much of Mitchell’s affordability
Consequently, despite increasing, both new supply
4
0
median lot size of 400sqm was the same as Hume
more affordable than Hume and 5% for Whittlesea.
150
5
1
However, in September quarter 2019, Mitchell’s
and Whittlesea. Moreover, the wider correction in lot
6
GROSS LOT SALES
of stock sold are generally larger compared to Hume
200
7
MEDIAN LOT SIZE �SQM�
Metropolitan Melbourne usually means that lot sizes
8
NUMBER OF ESTATES
Q 3 MCAORMK M EU T NOI V TE I ER SV I E W
Mitchell’s location on the northern outskirts of
250
9
370 SEP 16
DEC 16 Median Lot Price
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
350
Source: RPM
PETER GRANT
DIRECTOR, COMMUNITIES
peterg@rpmrealestate.com.au +61 411 494 499
WHITTLESEA
in demand to larger lots has been driven by price
reductions for these lots to better reflect what the
Active Estates
respectively. This equated to new supply of 206 lots and 221 gross sales.
MEDIAN LOT PRICE �$�
3.4% to $300,000.
new lot releases and gross lot sales of 41% and 51%
300 200 100
with the median lot price increasing by a moderate
Whittlesea recorded considerable quarterly growth in
400
10
0
9.4% from the June quarter to the September quarter,
Combined with an improvement in buyer sentiment,
500
5
market is willing to pay.
This is highlighted in the per sqm lot price declining
600
15
GROSS LOT SALES
capacity has improved in recent months, the shift
700
SEP 16
DEC 16
New Estates
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 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�
previous quarter. While purchasers’ borrowing
800 20
NUMBER OF ESTATES
to 400sqm in September quarter 2019 from the
900
Q 3 MCAORMK M ET U NOI V TE I ER SV I E W
The median lot size in Whittlesea increased 14%
25
330
SEP 16
DEC 16 Median Lot Price
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
320
Source: RPM
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
27
SOUTH EAST GROWTH CORRIDOR
THE SOUTH EAST GROWTH CORRIDOR RECORDED
This has also enabled new lot releases to increase,
SIGNIFICANTLY, IT WAS THE ONLY GROWTH
South East growth corridor is leading the recovery in
Q 3 MCAORMK M EU T NOI V TE I ER SV I E W
718 LOT SALES IN SEPTEMBER QUARTER 2019. CORRIDOR TO ACHIEVE ANNUAL GROWTH IN
SALES ACTIVITY, LEADING TO A 27% SHARE OF
and with price points becoming more attractive, the demand through escalating lot sales.
TOTAL GROSS LOT SALES, WHICH WAS ABOVE
THE NORTHERN GROWTH CORRIDOR’S OVERALL PROPORTION OF SALES.
While median lot prices in Casey and Cardinia are
still the most expensive at $330,000 and $340,000 respectively, the higher number of active estates has led to increased competition and falling per sqm lot prices.
PORT PHILLIP BAY
CARDINIA
CASEY
28
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
for all growth corridors – the first time in 4 and a half years.
As such, new supply could not keep up with the
or $30,000 over the last 6 months, decreasing to
$330,000 in September quarter 2019 – the lowest in over 2 years. Comparatively, the median lot size has fallen by a smaller rate of 2% to 392sqm, indicating more attractive price points for lot sizes.
200
SEP 16
DEC 16
New Estates
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
460 450 440
300,000
430
250,000
420 410
200,000
400
150,000
390
100,000
380
50,000 0
Median Lot Size
0
Gross Lot Sales
350,000
MEDIAN LOT PRICE �$�
in gross lot sales. Median lot prices have fallen 8.3%
400
10
400,000
growing demand.
package in Casey, further supporting the increase
600
15
Active Estates
with 31 active estates enabling Casey to respond to
improvement in relative affordability for a house/land
800
20
0
by a considerable 72% to 441 lots. Nevertheless,
Increased competition has also led to an
25
5
spike in demand, despite releases also increasing this was also the highest volume of new lot releases,
1,000
GROSS LOT SALES
sales, Casey topped the highest number of sales
30
NUMBER OF ESTATES
from the same quarter in 2018. With 595 gross lot
1,200
Q 3 MCAORMK M ET U NOI V TE I ER SV I E W
gross lot sales from the previous quarter and 42%
MEDIAN LOT SIZE �SQM�
Casey experienced a substantial 82% increase in
370 SEP 16
DEC 16 Median Lot Price
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
360
Source: RPM
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
29
Q 3 MCAORMK M EU T NOI V TE I ER SV I E W
CASEY EXPERIENCED A SUBSTANTIAL 82% INCREASE IN GROSS LOT SALES FROM THE PREVIOUS QUARTER AND 42% FROM THE SAME QUARTER IN 2018.
30
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
growth area. However, median lot sizes rose 2.9% to 419sqm, resulting in improved relative affordability. With 10 active estates – the highest in over 2 years
250
10
200
8
150
6 4
100
2
50
Active Estates
SEP 16
DEC 16
New Estates
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
0
Gross Lot Sales
400,000
550
350,000
MEDIAN LOT PRICE �$�
increased 60% to 119 lots and 123 lots respectively.
300
12
0
– new releases also grew 68% and gross sales
350
14
500
300,000 250,000
450
200,000 400
150,000 100,000
350
50,000 0
Median Lot Size
GROSS LOT SALES
greater Melbourne and Geelong’s most expensive
400
16
NUMBER OF ESTATES
$340,000 from the previous quarter, Cardinia is still
450
18
Q 3 MCAORMK M ET U NOI V TE I ER SV I E W
Although the median lot price remained static at
20
SEP 16
DEC 16 Median Lot Price
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
MEDIAN LOT SIZE �SQM�
CARDINIA
300
Source: RPM
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
31
GREATER GEELONG GROWTH CORRIDOR
THE GREATER GEELONG GROWTH CORRIDOR ACCOUNTED FOR A RELATIVELY LOW 11% OF
Q 3 MCAORMK M EU T NOI V TE I ER SV I E W
TOTAL LOT SALES IN SEPTEMBER QUARTER 2019, NOTABLY DOWN ON 2017 AND 2018 LEVELS. THIS
WAS IN RESPONSE TO GROSS LOT SALES FALLING 54% ON AN ANNUAL BASIS TO 279 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. While the 3 other major
growth corridors recorded an increase in new supply from the previous quarter, in Greater Geelong new releases declined 4% to 184 lots.
Greater Geelong’s traditional affordability advantage
GREATER GEELONG
has narrowed, with Melbourne lot prices contracting PORT PHILLIP BAY
compared to continued annual price growth in
Geelong in recent years. Consequently, lot prices in Greater Geelong growth areas are now on par
with values in Melbourne’s western sub-markets of Wyndham and Melton. 32
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
remain weak overall, evidenced by a 78% drop in lot sales from the same quarter in 2018.
to just 82 lots. Weak demand has also led to a
housing market within Greater Geelong with a median lot price of $272,500.
100
SEP 16
DEC 16
New Estates
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
460 450
250,000
440 430
200,000
420
150,000
410 400
100,000
390
50,000 0
Median Lot Size
0
Gross Lot Sales
300,000
MEDIAN LOT PRICE �$�
Armstrong Creek is the most affordable new
200
2
Active Estates
quarterly increase in the median lot price well median lot sizes.
3
0
contraction in per sqm lot prices, with the 2.8% below the corresponding 10.5% increase in
300
4
1
Soft demand has impacted new supply, with
releases declining 15% from the previous quarter
400
5
GROSS LOT SALES
in the previous quarter. As such, gross lot sales
NUMBER OF ESTATES
growth came off a long term low in sales activity
500
6
Q 3 MCAORMK M ET U NOI V TE I ER SV I E W
Gross sales in Armstrong Creek increased 56% to 151 lots in September quarter 2019. However, this
600
8
MEDIAN LOT SIZE �SQM�
ARMSTRONG CREEK
380
SEP 16
DEC 16 Median Lot Price
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
370
Source: RPM
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
33
GREATER GEELONG GROWTH CORRIDOR
14
55 gross lot sales.
250
6
200 150
4
0
highest growth (16.5%) among all growth corridors, price growth was achieved while the median lot size
300
8
100
2
Bellarine Peninsula’s median lot price recorded the rising to a peak of $335,000. Notably, this sizeable
350
10
Active Estates
50
SEP 16
DEC 16
New Estates
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
550 530
MEDIAN LOT PRICE �$�
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
34
R P M R E A L E S TAT E G R O U P
0
Gross Lot Sales
400,000
contracted 2.7% to 453 sqm.
GROSS LOT SALES
previous quarter to a total of 72 lot releases and
NUMBER OF ESTATES
Q 3 MCAORMK M EU T NOI V TE I ER SV I E W
2019, rising 33% and 62% respectively from the
400
12
Bellarine Peninsula saw both new lot supply and sales activity rebound in September quarter
450
MEDIAN LOT SIZE �SQM�
BELLARINE PENINSULA
370 SEP 16
DEC 16 Median Lot Price
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
350
Source: RPM
ROD ANDERSON
DIRECTOR, COMMUNITIES rod@rpmrealestate.com.au +61 417 595 859
lot sales.
Nevertheless, the median lot price recorded
80
4
60
3
40
2
0
This decline occurred despite the median lot
significantly larger than the median lot size in other
100
5
20
1
a quarterly correction of 10.1% to $299,000.
size increasing 15.4% to 774sqm, which is also
120
6
Active Estates
MEDIAN LOT PRICE �$�
growth areas within Greater Geelong.
SEP 16
DEC 16
New Estates
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 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 SEP 16 Median Lot Size
GROSS LOT SALES
although sales activity improved by 19% to 32 gross
NUMBER OF ESTATES
21% to 15 lot releases for September quarter 2019,
140
7
Q 3 MCAORMK M ET U NOI V TE I ER SV I E W
New lot supply in the Geelong growth area declined
8
MEDIAN LOT SIZE �SQM�
GEELONG
DEC 16 Median Lot Price
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
350
Source: RPM
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
35
GREATER GEELONG GROWTH CORRIDOR
an annual decline of 75% and a quarterly fall of 22%.
Moreover, new lot supply fell a substantial 52% for the quarter to a total of 10 lot releases, and 90% on an
from the previous quarter, which was less than the
60 2
40
1
annual basis.
The median lot price in Lara rose 1.7% to $274,000
80
3
0
Active Estates
20
SEP 16
DEC 16
New Estates
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
result, per sqm lot prices declined.
530 510
MEDIAN LOT PRICE �$�
250,000
490 470
200,000
450
150,000
430 410
100,000
390
50,000 0
Median Lot Size
36
R P M R E A L E S TAT E G R O U P
0
Gross Lot Sales
300,000
7.1% increase in median lot size to 480sqm. As a
GROSS LOT SALES
a corresponding quarter since 2014. This reflected
100
4
NUMBER OF ESTATES
Q 3 MCAORMK M EU T NOI V TE I ER SV I E W
Lara recorded just 21 lot sales in September
quarter 2019, the lowest number of gross sales for
120
5
MEDIAN LOT SIZE �SQM�
LARA
370
SEP 16
DEC 16 Median Lot Price
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
350
Source: RPM
LUKE KELLY
DIRECTOR, COMMUNITIES luke@rpmrealestate.com.au +61 400 688 520
5
$430,000.
120 100
3
80 2
60 40
1
20 0
Active Estates
SEP 16
DEC 16
New Estates
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
Gross Lot Sales
600
500,000 450,000
500
400,000 350,000
400
300,000
300
250,000 200,000
200
150,000 100,000
100
50,000 0
Median Lot Size
0
SEP 16
DEC 16 Median Lot Price
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
MEDIAN LOT SIZE �SQM�
drove a 9% increase in the median lot price to
NUMBER OF ESTATES
The larger median lot size for these sales of 448sqm
MEDIAN LOT PRICE �$�
lot sales recorded during September quarter 2019.
140
4
Q 3 MCAORMK M ET U NOI V TE I ER SV I E W
Sales activity increased in Torquay, with 20 gross
160
GROSS LOT SALES
TORQUAY
0
Source: RPM
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
37
OUTLOOK
Boosted by a further interest rate reduction in
Notwithstanding, the recovery is still in an early
the foreseeable future, buyer sentiment and resulting
trajectory, it will take approximately 6 to 9 months
Q 3 MCAORMK M EU T NOI V TE I ER SV I E W
October and likely ongoing low borrowing costs in
sales activity is expected to continue to strengthen through 2019/20 (albeit seasonal factors will come into play over the next 2 quarters).
The rebound in established house prices during September quarter 2019 provides another
confidence boost to the new housing market. This price growth may well encourage second home
buyers to sell their existing property and upgrade to a larger home in the growth corridors, and also spur
empty nesters to trade down to ever more prominent townhomes. Combined, this diverse mix of buyers should also help drive higher sales activity.
38
R P M R E A L E S TAT E G R O U P
phase. If monthly sales volumes continue its upward for the market to return to a sustainable equilibrium of approximately 16,000 lots per annum. Long term historical averages indicate this is the desired
threshold to be able to meet demand while delivering lots in a reasonable timeframe.
FROM A PRICE PERSPECTIVE, SOLID GAINS IN LOT SUPPLY IN SOME GROWTH AREAS PLUS A STILL HIGH VOLUME OF UNSOLD LOTS SHOULD CURB ANY SHARP PRICE INCREASE. AN INCREASING NUMBER OF SMALLER LOTS FEATURED IN MASTERPLANS SHOULD SEE THE MEDIAN PRICE FALL BELOW $300,000, WHICH IS GOOD NEWS FOR FIRST HOME BUYER BUDGETS.
Wallan $230k Beveridge $270k Diggers Rest $302k Bacchus Marsh $209k
Kurunjang $250k
Thornhill Park $242k
Aintree $307k
Strathtulloh Rockbank $260k $317k Mt Atkinson $343k
Tarneit $315k
Kalkallo $310k
Mickleham $295k Craigieburn $355k Greenvale $351k
Donnybrook $288k Wollert $376k
Fraser Rise $337k
Deanside $346k
Burnside $407k
WHAT DOES A 400SQM LOT COST?
Q 3 MCAORMK M ET U NOI V TE I ER SV I E W
Weir Views Melton South $250k $200k
Bonnie Brook $348k
Sunbury $292k
3 months to September 2019
Truganina $365k
Manor Lakes $285k Wyndham Vale $289k
Mambourin $289k
Werribee $300k Point Cook $460k
Lyndhurst $412k
Lara $258k
Armstrong Creek $280k
Berwick Clyde North $428k $316k Cranbourne East Junction Clyde $362k Village $335k $355k Cranbourne Botanic Ridge South $345k $355k
Officer $340k Officer South $335k 39
COMMUNITIES BUYER SURVEY DATA
THE 2 INTEREST RATE REDUCTIONS IN JUNE
Nevertheless, consumer sentiment improved over
With a high proportion of first home buyers, there is
SERVICEABILITY TEST HAS TRANSLATED
through higher auction clearance rates on the back
a relationship as opposed to couples with children.
Q 3 MCAORMK M EU T NOI V TE I ER SV I E W
AND JULY, ALONG WITH APRA’S REDUCED INTO IMPROVED ENQUIRY LEVELS IN THE
SEPTEMBER QUARTER IN MELBOURNE AND GEELONG’S LAND MARKET.
This slight uptick in sales numbers - as opposed to a sharp increase - is likely due to still rigorous
the quarter, particularly in the established market of stabilising prices and in the increasing number
of pockets seeing price growth. As a result, owner
occupiers have largely maintained a fairly dominant
share of 65%, down slightly from 67% from the same quarter a year ago.
assessment banks are applying to potential
In addition, of this buyer cohort, a significant
more so with first home buyers than other purchasers
of purchasers compared to 63% in the September
customers’ expenses. This tends to be magnified due to their lower income bracket.
proportion were first home buyers, making up 68% quarter a year earlier.
Likewise, investors are still finding it difficult to obtain
This increasing share of first home buyers indicates
exposed to carrying excessive debt - albeit it seems
don’t carry the same additional debt as subsequent
loans in the current market – particularly if they’ll be to be improving in recent months.
total buyers which was up from 13% a year earlier.
This illustrates that buyers are looking at the growth corridors as a way to enter the market given they’re largely priced out of established housing in the
middle ring and potentially have lost confidence in the quality of apartment developments.
Subsequently, families recorded a share of 43% for the September quarter 2019, which was down from 53% in the corresponding quarter a year earlier.
Through the recent downturn, the share of buyers
buyers. Also, if they have a deposit and are buying
quarter 2019, up from 53% in the previous
within their means, they can enter the market. In
townhouses where the price at completion sits well below $450,000. R P M R E A L E S TAT E G R O U P
Over the quarter, single buyers comprised 21% of
that while their expenses are heavily scrutinised, they
particular they’re snapping up lots under 300sqm or
40
subsequently a significant share who are single or in
born in Australia increased to 64% in September corresponding period a year earlier. Indian born
buyers, who were extremely prominent from 2016 to the first part of 2018, have fallen to just 21%.
While first home buyers make up over two-thirds of
While the land market has seen prices moderate, they
While the average priced lot remains out of reach
have a higher than average household income. Over
and conducive to an active market. Affordability
rather than slashing prices which would impact on
the September quarter, 48% of buyers recorded a
household income of over $100,000 – up from 40%
from the same quarter a year ago. Despite this upper income threshold, many buyers are still being priced
are still above what RPM would consider ‘fair value’ constraints are still front and centre for many
buyers – underscored by the increased appetite for townhouses and smaller lots.
out of the middle established market and see the
This is supported by RPM surveys indicating that
the home they want but also a long term asset.
value and affordability are also prominent. Over the
greenfields market as not only an opportunity to build
Reflective of the high level of first home buyer
activity is the increasing presence of townhouse
sales through the growth corridors. Over the current
apart from the usual key driver – location - price,
September quarter, 29% suggested affordability as
among the most important purchase considerations,
for many buyers, particularly first home buyers,
Q 3 MCAORMK M ET U NOI V TE I ER SV I E W
owner occupier purchasers, those who are buying
settlements on previously sold lots, developers are meeting buyer demand through well-designed and
built townhouses in key locations within an estate (i.e. overlooking a park or waterway). In general, there’s
been an increasing volume of lots that fit under the
Small Lot Housing Code which subsequently allows for products to be brought to market at a more affordable price point.
up from 19% in the same quarter a year earlier.
quarter, 19% of buyers bought a townhouse, up from just 4% in the same quarter a year earlier. Likewise,
house and land purchases also increased from 19% to 29% over the same period.
THE LARGER PRESENCE OF FIRST HOME BUYERS ALONG WITH TIGHTER LENDING STANDARDS HAS RESULTED IN AN INCREASED SHARE OF BUYERS PURCHASING A TOWNHOUSE INCREASING FROM 4% IN SEPTEMBER QUARTER 2018 TO 19% IN SEPTEMBER QUARTER 2019. Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
41
COMMUNITIES BUYER SURVEY DATA
Q 3 MCAORMK M EU T NOI V TE I ER SV I E W
September Quarter 2018
Investor OWNER OCCUPIER VS INVESTOR
3rd Home
4%
2nd Home 1st Home
Single
Couple
Family
Colombia
Iran
Pakistan
United Kingdom
Sri Lanka China
COUNTRY OF PERSON 1&2 TOP 10
Nepal
Philippines India
Australia 42
R P M R E A L E S TAT E G R O U P
Owner Occupier
4%
Group/Friends
HOUSEHOLD TYPE
67%
Other
4th Home
OWNER OCCUPIER TYPE
33%
September Quarter 2019
2% 27%
63% 2%
13%
Investor
Other
4th Home
3rd Home
2nd Home 1st Home
Group/Friends
Single
35%
65%
Owner Occupier
1%
1%
5%
25%
68% 1%
21%
32%
Couple
35%
1% 1% 2% 2% 3% 3% 3% 6% 26% 53%
New Zealand
1% 1% 1% 1% 2% 2% 3% 3% 21% 64%
53%
Family
Nepal
Malaysia Ireland
Zimbabwe
Iran
Philippines China
India
Australia
43%
September Quarter 2018 21%
$80-$100k
28%
$60-$80k
PURCHASE TYPE
24%
$60-$80k
24%
Townhouse
4%
Land Only
1%
19% 77%
Facilities
1%
Investment
1%
Community Design
Schools Shops
TOP 3 BEST FEATURES OF ESTATE
23%
7%
House & Land
Lot Size
Presentation Parks/Water Proximity
Affordability
Location/Area
25%
19%
$40-$60k <$40k
$120k>
$101-$120k
$80-$100k $40-$60k <$40k
Townhouse
House & Land Land Only
2%
Schools
3%
Lot Size
10% 19%
37%
19%
29% 52%
2%
Design
11%
3%
Investment
2%
5%
9%
1%
Community
3%
16%
Facilities
6%
Shops
Presentation Parks/Water Proximity
Affordability
Location/Area
Q 3 MCAORMK M ET U NOI V TE I ER SV I E W
$120k>
$101-$120k
HOUSEHOLD INCOME
September Quarter 2019
8% 2% 1%
2%
0% 8% 8%
6%
29% 32%
Source: RPM Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
43
OVERVIEW
VARIOUS STIMULUS MEASURES OVER THE LAST FEW MONTHS HAVE UNDERPINNED IMPROVING
APARTMENTS & TOWNHOUSES
CONDITIONS FOR VICTORIA’S HOUSING MARKET.
AUCTION CLEARANCE RATES IN SEPTEMBER ALSO REACHED 77% WHICH CONTRASTS WITH 60% THE SAME TIME A YEAR EARLIER.
A cautionary note, however, is the current limited
supply on the market, with the number of auctions down by roughly half from last year. This lack of
supply and increasing demand is placing upward
pressure on prices, which is further highlighted when examining the average time on market for property.
In September 2019 the average time on market was
33 days – 5 days less than this time last year. These
indicators all point to a recovery in the market and set the course for the next price upswing.
44
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
Despite recent price growth, the market is in a
to households has resulted in property price
delivery of housing – building approvals – continues
since 1958, and an improvement in lending volumes gains exceeding losses from 12 months ago, with
detached houses up 0.1% and unit prices up 2.3%. Even more robust price activity took place over
September quarter 2019, with the detached housing market increasing 4.5% and units up 3.9% from the
precarious position. The best lead indicator for future to crash. The September results show approvals for
the detached housing market down 12% from a year earlier, with a more pronounced 36% reduction in approvals in other dwellings.
previous quarter.
Since peaking at approximately 13,100 other
Until recently, lending experts were suggesting a flat
activity for medium and high density dwellings has
market at best for 2020, but more than likely a modest fall. However, many banks and property forecasters
dwellings in December quarter 2017, approval
continually declined in the 7 quarterly periods since.
have reassessed their housing forecasts, with some
As with past cycles, the most recent peak in
digits by the end of 2020. This outcome could reflect
would have normally driven a greater shift in
suggesting price growth pushing up towards double 2015/16 where cash rates were reduced to kickstart
the economy – which worked – however a side effect was the price growth surge that followed. The only
difference this time around is that household debt is already at a record high.
established house prices in late 2017/early 2018
4.5%
A P AQR3T M E AN R TK SE T/ T OO VW E RN VH IOE UWS E S
On the back of a variable interest rate not seen
DETACHED HOUSING MARKET INCREASED 4.5%
OVER THE SEPTEMBER QUARTER 2019 FROM THE PREVIOUS QUARTER.
3.9%
UNITS MARKET UP 3.9% OVER THE SEPTEMBER
QUARTER 2019 FROM THE PREVIOUS QUARTER.
demand to relatively more affordable dwellings – townhouses and apartments. However, weak
purchaser sentiment has led to demand for these dwelling types to soften, exacerbated by other
factors including the removal of off–the–plan stamp duty concession for local investors and increased charges for overseas investors.
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
45
OVERVIEW
OUTLOOK A P AQR3T M E AN R TK SE T/ T OO VW E RN VH IOE UWS E S
The RBA is actively trying to stimulate the economy through lower cash rates. However, as stated in
previous official minutes, this stimulus is likely to
push up property prices, which will almost certainly increase affordability concerns.
To complicate matters further, cuts in the cash rate have not had the intended impact on household
spending unlike previous reductions given inflation remains anemic and the unemployment rate
stubbornly sits above 5%, with little prospect of it moving to the RBA’s desired 4.5% target.
Long lead times for high density construction
The numerous positive boosts in property market
sentiment in recent months should continue to drive both owner occupier and rental demand. Overall,
prospects for an improvement in activity for financial year 2019/20 are far stronger for townhouses than
apartments, although we believe the recovery will still be gradual rather than rapid and prolonged growth. Despite the Melbourne median house price falling by roughly 11% from peak to trough, prices have
not only bottomed out but are now very much on the increase, with a solid gain recorded over the September quarter.
projects means the supply response to increase
While positive for current owners, it will do little
for existing stock. There is also growing concern of an
unaffordable for many. Broadly speaking, lower
housing demand can be slow, leading to higher prices undersupply of new dwellings to meet demand in the
apartment market in the near future – which is in stark contrast to commentary for most of the past 3 years.
46
WHILE THERE COULD POSSIBLY BE A SHORT-TERM OVERSUPPLY IN CERTAIN SUBURBS OF MELBOURNE IN THE NEXT 6 TO 12 MONTHS AS PROJECTS MOVE FROM CONSTRUCTION TO DELIVERY, THIS SUPPLY IS LIKELY TO BE ABSORBED RELATIVELY QUICKLY BY MELBOURNE’S CONTINUED STRONG POPULATION GROWTH.
R P M R E A L E S TAT E G R O U P
to assist a market that has become increasingly lending rates have offset recent price growth,
however the inner and middle ring suburbs remain increasing out of reach for many buyers.
to less expensive townhouse in these areas, which will drive medium density development. Moreover, with townhouse prices also falling during the
downturn and recent improved borrowing power,
townhouses in inner and middle ring suburbs have become more attainable.
In the outer/greenfield areas, townhouses will
continue to appeal to first home buyers and budget conscious buyers.
In comparison, the outlook for the apartment market remains far more subdued. High
commencements during the 4 years to 2018 is now translating into a substantial amount of apartment stock on the market. This will hopefully have a
material effect on renters in the short term and help ease an acute vacancy rate in general.
HOWEVER, ANY IMPROVEMENT IN VACANCY RATES ARE LIKELY TO BE SHORT LIVED GIVEN THE PIPELINE OF APARTMENT PROJECTS IS DRASTICALLY REDUCING. IN THE COMING YEARS THIS LACK OF NEW SUPPLY IN THE PIPELINE WILL LEAD TO LOWER APARTMENT COMPLETIONS, AND AS PENT–UP DEMAND BUILDS, WILL FACILITATE THE NEXT UPSWING IN APARTMENT PRICING AND RENT. A highly active apartment market needs an expanding
We believe there will be supply concerns across
needs a mix of local and overseas investors along
underscored by low approval numbers and rapidly
economy in which to operate successfully. The sector with downsizers and first home buyers. While first
home buyers have been holding up, downsizers have been missing due to weakness in the established market. Further still, investors—both local and
overseas—are actively discouraged to purchase due
the apartment market in the medium term
depleted pipeline activity. In addition, concerns
around construction quality and remediation costs will likely continue to dampen buyer confidence in the short term.
to continued disincentives.
That said, what looks to be a short term imbalance it
The apartment sector in general is anticipated to
and increasing activity by local investors along with
remain under pressure to get projects underway due
to build quality issues and recent cladding concerns.
And while lending restrictions have eased, developers are still finding it difficult to source finance for large
scale developments in a soft pre-sales environment.
A P AQR3T M E AN R TK SE T/ T OO VW E RN VH IOE UWS E S
This should continue to support a shift in demand
is unlikely to remain for long. Improved lending criteria continued strong fundamentals including strong
population growth, low unemployment and relatively low vacancy rates will support a gradual recovery in new housing demand, including medium density.
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
47
OTHER DWELLING APPROVALS
in September quarter 2019, representing a 19% decline in approval activity from the previous
1,863 apartments.
However, the weakening trend differed between
for approvals in any quarter since December
2019, townhouse approvals were down 11% from
quarter 2011.
Approval activity for both the medium density
This highlights that demand for townhouses has
the previous quarter, while apartment approvals
the market downturn over the last 18 months. This of townhouse development in greenfield areas,
Compared to the same quarter in 2018, approvals
to September 2019 was still the fourth highest on
TOWNHOUSE APPROVALS
held up better compared to apartments through is largely attributed to the growing prominence
recorded a more sizeable 27% reduction.
Additionally, from a longer-term perspective,
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
11,013 approvals - was the lowest financial year total
townhouses and apartments. In September quarter
and high density dwelling sectors experienced
significant annual falls in the September quarter.
record. The corresponding figure for apartments since 2009.
quarter and a significant 36% from the same
quarter in 2018. Notably, this is the lowest volume
48
were down 29% to 2,175 townhouses and 43% to
approvals of 10,186 townhouses over the 12 months
which is helping to maintain relatively high approval activity.
28,000
7%
Year to Sep 2015
R P M R E A L E S TAT E G R O U P
16%
Year to Sep 2016
17%
Year to Sep 2017
4%
Year to Sep 2018
23%
Year to Sep 2019
APARTMENT APPROVALS
A P AQR3T M E AN R TK SE T/ T OO VW E RN VH IOE UWS E S
Victoria recorded 4,038 other dwelling approvals
26,000 24,000 22,000 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0
60%
Year to Sep 2015
20%
Year to Sep 2016
27%
Year to Sep 2017
47%
Year to Sep 2018
50%
Year to Sep 2019
Source: ABS
KEY MEDIUM DENSITY BUILDING DATA
TOTAL TOWNHOUSES
TOTAL APARTMENTS
TOTAL
Sep qtr. 2019
2,175
1,863
4,038
% change from previous qtr.
-10.9%
-27.4%
-19.4%
% change from previous yr.
-28.7%
-42.8%
-36.0%
12 months to Sep qtr. 2019
10,186
11,013
21,199
% change 12 months earlier
-22.7%
-50.5%
-40.2%
COMMENCEMENTS
OTHER DWELLINGS
COMPLETIONS
OTHER DWELLINGS
June qtr. 2019
6,808
June qtr. 2019
7,895
% change from previous qtr.
12.0%
% change from previous qtr.
63.4%
% change from previous yr.
-22.7%
% change from previous yr.
-5.2%
12 months to June qtr. 2019
25,310
12 months to June qtr. 2019
25,329
% change 12 months earlier
-31.1%
% change 12 months earlier
-12.9%
TOTAL APARTMENT & UNIT PRICES
MEDIAN PRICE
Sep qtr. 2019
$613,500
June qtr. 2019
$590,500
Sep qtr. 2018
$599,500
CHANGE FROM QTR.
3.9%
NOTE: Approvals are to the current quarter (Sep 2019), while commencements and completions are delayed by a quarter (June 2019). Source: ABS, REIV
A P AQR3T M E AN R TK SE T/ T OO VW E RN VH IOE UWS E S
APPROVALS
CHANGE FROM PREV. YR.
2.3% Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
49
FEATURE STORY:
TOWNHOUSES GET THE TICK OF APPROVAL FROM BUYERS A P AQR3T M E AN R TK SE T/ T OO VW E RN VH IOE UWS E S
TOWNHOUSES HAVE COME A LONG WAY IN COMMUNITY MASTERPLANS – AND IN
MATURING BUYER MINDSETS ABOUT HOW THEY WANT TO LIVE.
While townhouses have been around for some time,
“The percentage of total lots sold up to 300 sqm
“Medium density really gained traction during the last
has evolved significantly over the last 4 years. Once
corridors has increased from an average of 11%
smaller house and land packages when prices were
the perception and indeed quality of townhomes
considered boxy, compact and cheap, the diversity, innovation and quality of townhouses today has
made them a popular choice among buyers of all types including first home buyers, downsizers, families and couples.
to 12% to 18% last year,” he said. “While this
comprises both smaller house and land packages
today is about 15%.”
maintenance living, townhouses offer a very
of townhouse stock in master-planned communities
greenfields.
magnitude of our medium density projects is quite
the last 3 years the number of townhouses featuring on estates has continued to steadily grow.
R P M R E A L E S TAT E G R O U P
going up,” he said.
“In parallel with shifting demographic and lifestyle
He added: “Currently there is medium density
Head of Project Marketing at RPM Luke Kelly said over
property boom a few years ago as an alternative to
and townhouses, we estimate the total proportion
RPM has been at the forefront of the development
and growth of the townhouse market in Melbourne’s
50
throughout Melbourne and Geelong’s growth
product on 24 active RPM-marketed estates. So the significant. Townhouses are here to stay.”
Mr Kelly also said the key driver of townhouse demand is not just affordability, but also quality of living.
trends including an ageing population and low desirable way to live – particularly as the size,
design and diversity of medium density product continues to evolve.”
According to Mr Kelly, the quality of the external
facades and internal design has improved significantly. Pictured: Deanside Village by developer Moremac
He said some buyers also like buying into a precinct
but not their quality of living. They want a feeling of
Carlton and East Melbourne but in a modern context.
buyers are prepared to trade on the size of their home living in luxury, with features like stone benchtops,
of homes that evoke old-style terraces in suburbs like
timber flooring, split systems, fast broadband,
“This symmetry also creates a sense of place in a
natural lighting and blinds throughout.
certainty about what’s being built next to you.
900mm cooktops and ovens, walk-in laundries,
master-planned community as well as providing
“They also want a practical floorplan that maximises
“We’ve built a strong capability in medium-density in
storage, an outdoor area and a double lock up garage.
buyer surveys and the volume of townhouse product
space that takes into consideration ceiling heights,
“It’s about understanding how a resident wants to live and bringing a well-designed, high quality medium
terms of product design and product mix through our
A P AQR3T M E AN R TK SE T/ T OO VW E RN VH IOE UWS E S
“Our expertise in this type of product tells us many
IT’S ABOUT UNDERSTANDING HOW A RESIDENT WANTS TO LIVE AND PROVIDING A WELL-DESIGNED, HIGH QUALITY MEDIUM DENSITY PRODUCT TO MARKET AT AN AFFORDABLE RATE.
we’ve introduced to the market,” he said. “It’s a real point of difference for us and our clients.”
density product to market at an affordable rate.”
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
51
FEATURE STORY: TOWNHOUSES
DIVERSITY THE KEY TO SUCCESS FOR TOWNHOUSES The diversity of townhouse design today reflects
Deanside Village by developer Moremac and built
variety of buyers and their needs – which is key
and 1 and 2 garage options on 18.7 squares for
A P AQR3T M E AN R TK SE T/ T OO VW E RN VH IOE UWS E S
the broad appeal of townhomes to suit a wide to achieving strong sales velocity and helps developers to de-risk their projects.
The following active medium density estates reflect
the range of quality townhomes on the market today, with varying configurations, size and price points.
Eliston Estate in Clyde North by developer National
Pacific Properties and built by Sienna Homes features 3 bedrooms, 2 bathrooms, 2 living areas and a 2 car garage on 20 squares for $397,000. These turnkey packages – including landscaping, driveway and
fencing - offer a no fuss solution, premium fixtures
by Sienna Homes features 4 bedrooms, 2 bathrooms $429,000 and 21.3 squares for $459,000. The homes feature a light filled, open plan living zone and guests bedroom downstairs with other bedrooms upstairs. Showcasing a larger-style townhome, Alira Estate in Berwick by developer Moremac and built by
Shape Homes features 3 bedrooms, 2 living areas, 2 bathrooms and 2 garages on 27 squares for
$664,000. This latest addition to the estate includes 7 architecturally designed townhouse dwellings with luxury finishes, natural wood façade and waterfront views.
and fittings and a low maintenance style of living. Kinsford Estate is the newest community from
developer and builder SOHO Living in Deanside in
Melbourne’s North West. It features a collection of
architecturally-designed townhomes encompassing 3 bedrooms, 2 living spaces, 2 bathrooms and 2 car garage on 18.9 squares for $404,950. 52
R P M R E A L E S TAT E G R O U P
Pictures from top to bottom: 1. Deanside Village - Moremac 2. Tulliallan Estate - Sienna Homes 3. Alira Estate - Shape Homes 4. Aurora Estate - Soho Living
Estate: Kallo Townhouse price: $389,900 Median h&l price: $614,500 Difference: Estate: Rosenthal Townhouse price: $445,000 Median h&l price: $569,000 Difference:
-$124,000
Estate: Kinbrook Townhouse price: $379,900 Median h&l price: $569,000
-$224,600
Difference:
Estate: Highlands Townhouse price: $399,000 Median h&l price: $585,000 Difference:
Estate: The Ivy Townhouse price: $399,950 Median h&l price: N/A
-$186,000
Difference: Estate: Kerani Heights Townhouse price: $399,850 Median h&l price: $590,531 Difference: Estate: Atherstone Townhouse price: $372,550 Median h&l price: $556,000 Difference:
-$183,450
Estate: Westwood Townhouse price: $391,900 Median h&l price: $588,500
-$190,681
Difference:
Estate: Kinsford Townhouse price: $404,950 Median h&l price: $467,220
N/A
Estate: Aurora Townhouse price: $459,320 Median h&l price: $609,000 Difference:
-$149,680
Estate: Rosewood Townhouse price: $399,000 Median h&l price: $667,000
-$62,270
Difference:
TOWNHOUSE / HOUSE & LAND PRICE COMPARISON AVERAGES
-$268,000
Estate: Deanside Village Townhouse price: $419,760 Median h&l price: $634,000 Difference:
-$214,240
Estate: Orchard Townhouse price: $359,900 Median h&l price: $587,000 Difference:
Townhouse price: $432,822 Median H&L price: $596,010 Difference: -$163,188
Estate: Rothwell Townhouse price: $449,957 Median h&l price: $577,500 Difference:
A P AQR3T M E AN R TK SE T/ T OO VW E RN VH IOE UWS E S
Difference:
-$196,600
-$189,100
h&l = house & land
-$127,543
-$227,100
* House construction cost is fixed at $270,000.
Land price is based on the median for the estate in Q3 2019. Estate: Harpley Townhouse price: $411,591 Median h&l price: $570,000 Difference:
10 K M S
-$158,409
20 K M S PORT PHILLIP BAY
Estate: Ironwood Townhouse price: $559,900 Median h&l price: $625,000
Estate: Alira Townhouse price: $439,000 Median h&l price: $775,000
Estate: Lochaven Townhouse price: $385,000 Median h&l price: $592,000
Estate: St Germain Townhouse price: $499,900 Median h&l price: $584,000
Estate: Octave Townhouse price: $435,900 Median h&l price: $627,000
Estate: Eliston Townhouse price: $397,000 Median h&l price: $597,500
Difference:
Difference:
30K M S Estate: Carter Place Townhouse price: $359,000 Median h&l price: $488,000 Difference:
-$129,000
Estate: Glenlee Townhouse price: $427,500 Median h&l price: $488,000 Difference:
-$60,500
Difference:
Estate: The Point Townhouse price: $780,000 Median h&l price: $747,478 Difference:
+32,522
-$65,100
-$207,000
-$191,100
Difference:
Difference:
Difference:
-$336,000
-$84,100
-$200,500
4 0 KM S
53
OVERVIEW
THE INCREASE IN THE FOREIGN PURCHASER
ADDITIONAL DUTY RATE FROM 7% TO 8% OF THE CONTRACT PRICE FROM JULY 2019 IN VICTORIA
INTERNATIONAL
HAS HAD THE INTENDED EFFECT OF DISCOURAGING
DEMAND. THIS IS HIGHLIGHTED BY THE PROPORTION OF NEW DWELLINGS IN VICTORIA PURCHASED BY FOREIGN BUYERS DECLINING FROM 12% IN JUNE QUARTER 2019 TO 7% IN THE SEPTEMBER QUARTER. MOREOVER, THE PROPORTION OF FOREIGN PERSONS PURCHASING
ESTABLISHED DWELLINGS REMAINED LOW AT 4% FOR THE CURRENT QUARTER.
The rebound in residential property markets - particularly
Melbourne and Sydney - has increased the possibility of a shortfall in dwellings in 2020. However, given the long lag between pre–sales and commencements, the response
from supply to improving demand is likely to be subdued initially, with dwelling starts projected to fall further and
bottom out in 2020. This could result in upward pressure on dwelling prices and lead to further affordability
concerns from already relatively constrained levels. One possible way to accelerate the supply of new 54
R P M R E A L E S TAT E G R O U P
dwellings onto the market is for State Governments to
JINYIN ZHANG
DIRECTOR, RPM INTERNATIONAL jinyin@rpmrealestate.com.au +61 451 898 886
allow foreign purchaser additional duties to be
more reactive to cyclical conditions to reduce the
26%
softer economic activity, encouraging foreign buyers can boost residential construction activity, which is
a significant segment of the economy and has one of the largest multiplier effects.
This in part is being done in countries such as
Portugal, Ireland, Malta and Spain who are all trying to kickstart their economy.
Closer to home, the Western Australia Government has gone down this path by announcing in October that all purchasers will receive a 75% rebate on
24%
% OF FOREIGN PURCHASES BY DWELLING TYPE
affordability in check. Furthermore, in periods of
stamp duty (up to $50,000) for the next 2 years.
market and the state economy more broadly, which
have both performed relatively poorly for most of the last 5 years.
20% 18% 16% 14% 12% 10% 8% 6% 4%
0%
offsets the 7% increase to foreign buyers which
measure will improve conditions in Perth’s residential
22%
2%
This includes foreign buyers which, with this rule, was implemented in October 2018. It is hoped this
Q 3 IMNAT RE KR ENTA TOIVOENRAVLI E W
imbalance between supply and demand and keep
■ New
■ Established
SEP 16
DEC 16
MAR 17
JUN 17
SEP 17
DEC 17
MAR 18
JUN 18
SEP 18
DEC 18
MAR 19
JUN 19
SEP 19
15%
19%
14%
21%
14%
14%
12%
12%
13%
8%
5%
12%
7%
9%
11%
7%
9%
8%
9%
8%
6%
6%
4%
5%
4%
4%
Source: NAB Quarterly Residential Property Survey
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
55
AUSTRALIAN ECONOMIC OUTLOOK
The Australian economy is expected to weaken
The Reserve Bank of Australia (RBA) has stated that
Despite 3 interest rate reductions since June,
Product (GDP) slowing to 1.70% over the calendar
sufficient level of wage growth to increase the rate
coming through, this stimulus is not anticipated to
Q 3 IMNAT RE KR ENTA TOIVOENRAVLI E W
through the second half of 2019, with Gross Domestic
unemployment needs to be closer to 4.5% to drive a
year, down from 2.0% over financial year 2019.
of inflation to within its target range of between 2%
Consequently, unemployment is projected to edge
and 3%. However, with growth in the Consumer Price
higher to 5.4% by the end of 2019, with the resultant
Index continuing to remain below this target range,
spare capacity in labour markets limiting wages
the RBA acted by reducing the cash rate by a further
growth to around 2%.
25 basis points in October to a historical low level of just 0.75%.
56
2019-20 f
GDP
1.70
2.20
Employment
2.00
0.80
Unemployment Rate
5.30
5.50
Average Earnings
2.30
2.60
Inflation
1.60
1.90
RBA Cash Rate
0.50
0.50
$A/US cents
0.65
0.70
R P M R E A L E S TAT E G R O U P
the Christmas period, which is forecast to increase
by a mild 1.4% over calendar 2019. In addition, while interest rate cuts have underpinned increased
turnover activity in the established dwelling market,
this rebound needs to translate into higher residential impact on economic growth.
2018-19 f
Source: NAB. The Forward View. f = forecast.
buoy private consumption expenditure leading into
construction activity for it to have a meaningful
AUSTRALIAN ECONOMY Economic indicators (% change)
combined with the first tranche of income tax cuts
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
Q 3 IMNAT RE KR ENTA TOIVOENRAVLI E W
ENCOURAGING FOREIGN PURCHASERS DURING A DOWNTURN WILL ASSIST IN BRINGING PROJECTS TO MARKET QUICKER WHICH WILL HELP WITH THE IMBALANCE IN THE MARKET.
57
OVERVIEW
ON THE BACK OF CERTAINTY AROUND NEGATIVE GEARING POLICIES COMBINED WITH MULTIPLE
RESIDENTIAL INVESTMENT
CASH RATE REDUCTIONS AND APRA’S EASING OF THE SERVICEABILITY TEST, THE MARKET
HAS GONE SOME WAY IN RECOUPING LOSSES INCURRED THROUGHOUT 2017/18.
Over the September quarter 2019, house prices
increased 4.5% while units rose 3.9% from June
quarter 2019. When compared to the September quarter a year ago, house prices remain steady
(+0.1%) while unit prices rose by 2.3%. This strong
recovery in the residential property market has been supported by the robust level of people moving
to Melbourne from interstate and overseas, which has resulted in continued solid demand for rental
accommodation. Subsequently, the vacancy rate for Metropolitan Melbourne remained static from the
previous quarter at 2.2%, and significantly below the balanced rate of 3%.
58
R P M R E A L E S TAT E G R O U P
DAVID YANG
MANAGER, PROPERTY MANAGEMENT d.yang@rpmrealestate.com.au +61 402 446 058
Three-bedroom units and apartments in the inner
across most of the defined areas for established
increase of 10.4%, followed closely by 4-bedroom
annual gains (albeit modest) have persisted in rents houses, units and apartments. Interestingly, rental
increases are not taking place between regions as
previously seen, but in dwellings sizes. For instance, 4-bedroom houses and 3-bedroom apartments
ring recorded the largest annual rental gain with an houses in the middle ring with gains of 9.4%. This
increase is on the back of weekly rental growth over the past 12 months of $65 and $53 respectively.
largely experienced the highest rental growth across
From a regional perspective, Geelong continues to
the inner and middle rings and 3-bedroom units in
types. This has been the case since 2017 as some
each region. In particular, 3 to 4-bedroom houses in inner Melbourne showed strong growth.
This suggests more families are choosing location (rent in desirable area) over affordability (buying
further out). Also impacting on rents is that these dwelling sizes are scarcer than for instance,
1-2-bedroom apartments which make up most
rental stock. As such, the modest available supply is
being absorbed by growing demand which is placing upward pressure on rents.
see strong growth across all bedroom and dwellings government agencies have been progressively
moving to Geelong as part of a plan to expand the employment base of the region. This results in an
increasing number of households moving into rental
accommodation while they decide whether Geelong
is a long-term prospect for the family. Likewise, these households remain in rental accommodation while
they wait for their house to be built or try to buy into the established market.
WHILE THIS GOVERNMENT INITIATIVE HAS BEEN IMPORTANT IN DRIVING REGIONAL JOBS GROWTH, IT HAS NOT ONLY RESULTED IN INCREASED RENTS BUT ALSO PLACED UPWARD PRESSURE ON BOTH LAND PRICES AND THE ESTABLISHED MARKET. IN ADDITION, THE INCREASING GROWTH IN PURCHASE PRICES HAS SUBSEQUENTLY LEFT MORE PEOPLE IN RENTAL ACCOMMODATION – THUS IMPACTING FURTHER ON DEMAND AND RENTS. Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
R E QS 3I DME AN RT KI AE LT IONVVEERSVTI M EE WN T
As a result, with vacancy rates remaining tight,
59
OVERVIEW
In general, the larger houses (3 and 4-bedroom) and
These families are largely priced out of buying in the
over the past 2 years. The largest gains over this
requirements ahead of home ownership. In addition,
R E QS 3I DME AN RT KI AE LT IONVVEERSVTI M EE WN T
3-bedroom apartments have seen steady growth
period have been in family-sized houses in the inner and middle rings. This suggests families are looking for amenity-rich suburbs and possibly in highly regarded school zones.
suburb they want but are putting lifestyle/schooling
access to retail amenity and public transport for more convenient living.
strong growth has also been seen in 3-bedroom
Worth noting is rents for houses in the inner ring
in recent times expressed a desire for larger and
demand. In fact, supply is extremely tight (vacancy
units in the outer ring which suggests renters have
continue to fluctuate. This is not due to a lack of
more centrally located dwellings which allows easier
rates sitting at 1.9%) and as such any fluctuation
MEDIAN RENTS HOUSE:
INNER
Bedrooms 2
3
$550 $700
4
$838
MIDDLE
2
3
$430
OUTER
2
$350
GEELONG
4
3
4
2
3
4
60
Sep-18
R P M R E A L E S TAT E G R O U P
$390 $560
Jun-19 $570
$700
Sep-19 $550
-4%
-$45
-6%
$390
-$10
-3%
$0
0%
$360
$340
-$20
-6%
$430
$10
$370
$0
$613
$380
$310
$320
$323
$420
$430
$420
$370
0%
-6%
$440
$570
$0
-$45
$450
$400
Change from Previous Year
$655
$890
$380
$350
-$20
$900
$380 $420
Change from Previous Quarter
$433
-$10
-$10 $43 $0
$3
$3
-1%
-2%
$53
2.4%
0.8% 5.5% 1.9%
2%
2.0%
-$10
-3%
0.0%
2%
$10
2%
1.2%
0%
$20
7%
0% 1%
1%
$10
6%
2 Year Average Annual Gain
$53 $0
$13
$13
9%
0% 4%
6% 3%
5.5% 1.3%
5.5%
2.8% 2.7%
DAVID YANG
MANAGER, PROPERTY MANAGEMENT d.yang@rpmrealestate.com.au +61 402 446 058
composition of the type of property for rent. For instance, a well appointed 3-bedroom detached house will command more than an older terrace needing renovation.
4.5%
THREE-BEDROOM UNITS AND APARTMENTS IN THE
OVER THE SEPTEMBER QUARTER 2019,
RENTAL GAIN WITH AN INCREASE OF 10.4%.
QUARTER 2019.
INNER RING RECORDED THE LARGEST ANNUAL
R E QS 3I DME AN RT KI AE LT IONVVEERSVTI M EE WN T
10.4%
in the average rental price is dictated by the
HOUSE PRICES INCREASED 4.5% FROM JUNE
UNITS & APARTMENTS:
INNER
MIDDLE
OUTER
GEELONG
Bedrooms
Sep-18
Jun-19
2
$490
$495
1
3
1
$380 $625
$320
$390
-3%
$0
$700
$690
-$10
-1%
$65
10%
$410
$5
1%
$10
2%
$330
$405
1
$260
$280
$395
2 3
1
2
3
$350 $220
$300 $393
Change from Previous Year
-$10
$400 $520
Change from Previous Quarter
$380
2 3
Sep-19 $495 $325
$530
$520
$345
$350
$0
-$5
-$10
0%
-2% -2%
$5
$5
$0
0%
2.0%
$0
0%
2.2%
-4%
$10
$393
$430
$38
10%
$35
$320
$320
$0
0%
$20
$220
$400
$230
$400
$10 $0
5%
0%
1.6%
5.7%
0.8%
-$10
1%
1%
1.3%
2%
$270
$5
0%
2 Year Average Annual Gain
$10 $8
4%
9% 5%
7%
2%
1.2% 1.4%
5.7% 4.7%
5.0% 2.6%
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
61
R E QS 3I DME AN RT KI AE LT IONVVEERSVTI M EE WN T
OVERVIEW
VACANCY RATES & YIELDS
Consistently low vacancy rates reinforce the
far more appealing than other types of investment
Vacancy rates in September quarter 2019 reflect
the market.
uncertainty in the sharemarket due to a weakening
consensus there is no oversupply of stock in
minimal change across the board, with those that did record a change from the previous quarter showing
Due to significant capital gains seen in both detached
the middle ring (3.1%) and the outer ring including
rental yields in general have been below long-term
a slight improvement. Nevertheless, except for
Mornington Peninsula (3.3%), all areas remained below the acceptable level of 3%.
Inner Total
Inner (0-4km)
Inner (4-10km)
Middle (10-20km)
Outer Total
Outer (20+km exc. Mornington Peninsula) Outer (Mornington Peninsula) Melbourne Total Geelong Source: REIV
global economy.
houses and other dwellings over the past 5 years,
For those investing in detached housing in the outer
levels. Nevertheless, in the current market a rental
be the driving force in the earlier stages. However,
yield of 2.5-3.0% in some areas of the market is
and regional areas, land value appreciation tends to with vacancy rates at acute levels, and what seems YIELDS:
VACANCY RATE: Melbourne
currently on offer due to low interest rates and
Sep-18
Jun-19
Sep-19
2 Year Average
1.4
1.6
1.7
1.7
2.0
2.2
1.9
2.0
2.6
3.4
1.5
1.7
1.6
2.8 2.0 2.1
1.9 2.1
3.0
1.7
1.6
1.8
2.5
3.3
1.7
2.0
3.1
1.8
2.2
1.9
2.2
2.0
1.7
2.5 2.1
1.7
Houses
Sep-18
Jun-19
Sep-19
Middle
2.32%
2.58%
2.33%
Metro
2.67%
2.82%
Units
Sep-18
Jun-19
Sep-19
Middle
3.17%
3.22%
3.13%
Inner
Outer
Regional Inner
R P M R E A L E S TAT E G R O U P
2.94% 4.15%
4.28%
Outer
3.49%
Regional
4.56%
Metro
Source: REIV, RPM 62
2.52%
3.73%
2.71%
2.47%
3.13%
3.00%
4.37%
4.26%
4.38%
2.69%
4.28%
3.62%
3.50%
4.97%
4.64%
3.96%
3.73%
DAVID YANG
MANAGER, PROPERTY MANAGEMENT d.yang@rpmrealestate.com.au +61 402 446 058
OUTLOOK to be a movement from the middle to the outer ring
Tighter lending criteria over the past 12 months
Also assisting first home buyers and by extension the
Melbourne’s property rings.
necessary finance. While this impacted all buyers, first
being introduced at the start of 2020. First home
Over the September quarter 2019, houses and units
in regional areas recorded an average yield of 4.26% and 4.64% respectively. These robust returns are
due to a lower purchase price, coupled with robust rental pricing given regional areas are traditionally tightly held.
made it increasingly difficult for buyers to obtain the
home buyers were most affected given their borrowing capacity was reduced coupled with a mandatory
10% deposit requirement. This forced many ‘would
be’ homeowners to remain in rental accommodation. Coupled with continuing high population growth,
vacancy rates have remained at low levels – particularly in suburbs with strong infrastructure and amenities.
Similarly, units in the inner ring recorded an attractive
While household expenses are being heavily
suggests there is a high prevalence of demand for 1
the market – in both the established market and the
average yield of 4.28% in the September quarter. This and 2-bedroom units in or on the fringe of the CBD. Over the September quarter the vacancy rate for dwellings within 4km of the CBD was recorded at
1.7%. This tightly held area suggests there is not an
oversupply of stock currently in the market as these
dwelling sizes are favoured by singles/couples with no children households (including students who share) who wish to remain in and near the city centre.
scrutinised by lenders, buyers are slowly re-entering land market. This uptick in activity has been largely driven by first home buyers which, if having bought in the established market, should help improve
the rental market. However, if they have bought
in the greenfield market, they will remain in rental accommodation for at least the next 12 months
while their house is being built. This ultimately means vacancy rates will remain tight.
rental market is the new first home buyers’ scheme
R E QS 3I DME AN RT KI AE LT IONVVEERSVTI M EE WN T
for renters, yields are at the higher end among all of
buyers will be able to enter the market sooner with a 5% deposit for properties up to $600,000. The
downside is that the grants are capped at 10,000 each year nationally which accounts for only 9% of current annual first home buyer demand.
WHILE VACANCY RATES REMAIN ACUTE IN MOST AREAS ACROSS METROPOLITAN MELBOURNE, THERE IS A STRONG LEVEL OF SUPPLY LIKELY TO ENTER THE MARKET IN THE COMING 6 TO 12 MONTHS. THIS STOCK WILL PROVIDE WELCOME RELIEF TO RENTERS. Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
63
RESIDENTIAL INVESTMENT BUYER SURVEY DATA
IT APPEARS INVESTORS ARE GETTING THEIR HEADS
RPM surveys feature a question to investors about
Prudent lending criteria has affected the limit investors
INTEREST RATE CUTS AND PRICE REDUCTIONS HAVE
indicate household wealth). While current household
46% of purchasers indicated a budget of between
R E QS 3I DME AN RT KI AE LT IONVVEERSVTI M EE WN T
AROUND STILL TIGHT LENDING CRITERIA. RECENT ALSO ASSISTED IN REDUCING THEIR POTENTIAL REPAYMENTS AND GEARING LEVELS.
As a result, the share of investors rose to 35% in
September quarter 2019, up from 33% in the same
period a year earlier and, importantly, an increase from a low of 28% in the June Quarter 2019.
There is an oft-held view that only more affluent
the value of their current home (a proxy often used to values sitting above $600,000 comprise the largest overall price bracket, this share fell from 60% in the
September quarter last year to 40% in the September quarter this year.
Interestingly, investors with a current house value of
between $450,000 to $600,000 increased from 34% to 44% for the 2 September periods.
households can afford land or house and land
The age of investors in the greenfield market is also
household incomes limited to 1 or 2 bedroom
accounted for 40% of all purchases in the current
purchases, with other investors on more modest apartments where prices are lower.
getting younger. Investors aged between 18 and 34
quarter, up from 34% in the same quarter a year earlier.
However, with the growth of townhouses or smaller
With buyers getting younger, household type is also
the uncertainty around apartment prices and build
buyers were couples compared to 29% at the same
house and land packages that sit under $450,000 and quality, this trend appears to be changing.
changing. In the current September quarter, 46% of
time a year ago. While family households make up the largest mix of buyers, this share fell from 63% in the September quarter 2018 to 49% this quarter.
64
R P M R E A L E S TAT E G R O U P
are willing or able to spend. Over the current quarter,
$350,000 and $450,000, up from 30% in the September quarter last year. Interestingly, a sharp increase was
recorded in the $350,000 to $400,000 price bracket,
with the share increasing from 6% in September quarter 2018 to 23% in the most recent quarter.
The increasing presence of buyers in the sub-$450,000 range, and in particular the sub-$400,000 price level is due to the growing prominence of townhouses within
this bracket. Townhouse purchases rose to 24% in the September quarter 2019 - up significantly from 4% in the September quarter last year.
NOT SURPRISINGLY, PRICE, VALUE AND AFFORDABILITY WERE THE KEY DRIVERS BEHIND TOWNHOUSE PURCHASES, UP FROM A SHARE OF 22% IN THE SEPTEMBER PERIOD LAST YEAR COMPARED 36% IN THE CURRENT QUARTER.
RPM surveys every buyer on its clients’ estates in the greenfield market. 35% of all buyers indicated they were investors. The following illustrates demographic and purchase intent changes amongst this cohort based on surveys from the September quarter 2019 compared to the same quarter in 2018.
September Quarter 2018
OWNER OCCUPIER VS INVESTOR
33%
67%
Owner Occupier
0%
Group/Friends
8%
Single
HOUSEHOLD TYPE
29%
Couple
63%
Family
3%
60>
Owner Occupier
0%
Group/Friends
Single
5%
Family
49%
46%
Couple
4%
60>
35-49
50-59 35-49
9% 47%
18-24
2%
18-24
3%
32%
25-34
Townhouse
PURCHASE TYPE
65%
10% 53%
50-59
COMBINED AGE
35%
Investor
4%
House and Land
23%
Land Only
72%
R E QS 3I DME AN RT KI AE LT IONVVEERSVTI M EE WN T
Investor
September Quarter 2019
37%
25-34
Townhouse
24%
House and Land
11%
Land Only
65%
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
65
RESIDENTIAL INVESTMENT BUYER SURVEY DATA
September Quarter 2018 $600K>
$550-$600K $500-$550K
$450-$500K
R E QS 3I DME AN RT KI AE LT IONVVEERSVTI M EE WN T
VALUE OF PRESENT HOME
<$250K
Facilities
1%
Investment
4%
$350-$400K $300-$350K $250-$300K
Design
Schools Shops
Lot Size
Presentation Parks/Water Proximity
Affordability
Location/Area
$300-$350K < $300K
66
R P M R E A L E S TAT E G R O U P
$350-$400K $300-$350K $250-$300K <$250K
Facilities
4% 0% 4% 6% 2%
3%
1%
Design
1%
Investment
3%
Schools
3%
Lot Size
4%
2% 0%
Shops
1%
5%
Presentation
5%
9%
Proximity
8% 22%
34 %
18%
$350-$400K
$400-$450K
5%
$500-$550K
$450-$500K
$500-$550K
$450-$500K
40% 17% 19% 8%
Community
10%
$400-$450K
$600K>
$550-$600K
5%
$600K>
$550-$600K
HOME & LAND PACKAGE BUDGET
60% 20% 9% 5% 3% 1% 0% 2% 0%
$400-$450K
Community
TOP 3 BEST FEATURES OF ESTATE
September Quarter 2019
11%
Parks/Water
Affordability
Location/Area
$600K>
$550-$600K
1%
4%
6%
36%
36%
2%
13%
$500-$550K
13%
24%
$400-$450K
23%
3%
$300-$350K
27% 6% 1%
$450-$500K
$350-$400K < $300K
25%
23% 0% 2%
OUR TEAM
ERIC DICK
KEVIN BROWN
LUKE KELLY
eric@rpmrealestate.com.au
kevin@rpmrealestate.com.au
luke@rpmrealestate.com.au
EXECUTIVE CHAIRMAN +61 418 349 267
+61 418 397 577
DIRECTOR
+61 400 688 520
PETER GRANT
ROD ANDERSON
JINYIN ZHANG
peterg@rpmrealestate.com.au
rod@rpmrealestate.com.au
jinyin@rpmrealestate.com.au
DIRECTOR, COMMUNITIES +61 411 494 499
68
CHIEF EXECUTIVE OFFICER
R P M R E A L E S TAT E G R O U P
DIRECTOR, COMMUNITIES +61 417 595 859
DIRECTOR, RPM INTERNATIONAL +61 451 898 886
CHRISTIAN RANIERI
MICHAEL STAEDLER
DAVID YANG
christian@rpmrealestate.com.au
m.staedler@rpmrealestate.com.au
d.yang@rpmrealestate.com.au
DIRECTOR, TRANSACTIONS & ADVISORY +61 416 445 078
RESEARCH MANAGER +61 434 619 280
MANAGER, PROPERTY MANAGEMENT +61 402 446 058
Q 3 R E S I D E N T I A L M A R K E T R E V I E W | S E P T E M B E R Q U A R T E R 2 019
69
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.
T +61 3 9862 9555
Level 5, 52 York Street
South Melbourne VIC 3205 rpmrealestate.com.au