2014 july property market overview and outlook

residential Property MARKET OVERVIEW AND OUTLOOK

publication 6 / 2014

JULY 2014

Residential Market Update

The top performing cities for 2013-2014

The year 2014 to date has been an interesting year in a number of states where price movement have been dramatic – in both directions.

According to RP Data

May 2014.

suppressed for most of 2014 and Darwin

reinforces the notion that the housing

gain over the month recording a rise in

for a unit. Darwin continues to show the

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FUTURE ESTATE RESIDENTIAL PROPERTY MARKET UPDATE – JULY 2014

Key statistics JUNe 2014

ECONOMIC GROWTH WORLDWIDE 2013 US, EUROPE & JAPAN 2013 AUS annual to MARCH 2014 AUSTRALIAN 1ST quarter 2014

Consumer Sentiment Index

AUD BUYS

3.0% 2.2% 3.2% 0.8%

0.9356 USD

Westpac - Melbourne institute

UPDATED on 7th July 2014

94.9

1.9% in JUNE

GDP growth

2014

Australian Employment UNEMPLOYMENT 6.0%

RBA STATS 0% 0.6%

PARTICIPATION in Q1 2014

$ 27,725

132 pts

7%

1.4%

10.1% adjusted value of total dwelling commitments

monthly

Property Council/ ANZ Property Industry Confidence Index

housing finance

quarterly -0.2%

Australia wide snapshot

HIA-COMMBANK HOUSING AFFORDABILITY INDEX

77.2

64.7%

in 1 MONTH

annual

CASH RATE 2.50% INFLATION 2.90%

Difference from Peak Dwelling Value

0.4%

Dwelling Values

Median House Price

$ 580,000

Median Unit Price

$ 482,000

New Home Sales

4.3 %

Weekly House Rent $ 435 Rental Yield 3.9% Weekly Unit Rent $ 426 Rental Yield 4.6%

New Dwelling Approvals

-1.7%

Source: ABS, RP DATA, HIA, RBA, Westpac - Melbourne Institute, REIA

FUTURE ESTATE RESIDENTIAL PROPERTY MARKET UPDATE – JULY 2014

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Residential Market Update

FUtUre estate capital city ratiNg sUmmary STATE

CAPITAL CITY

NSW

SYDNEY

FUTURE ESTATE SCORE

OVERVIEW

VIC

QLD

WA

SA

ADELAIDE

ACT

NT vacancy rate score.

TAS

Source: Future Estate Research

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FUTURE ESTATE RESIDENTIAL PROPERTY MARKET UPDATE – JULY 2014

DwelliNg treND year oN year 18% 16%

Dwelling Trend YoY (%)

15.4%

14% 12% 10%

9.4%

8%

6.7% 5.7%

6%

5.2%

4%

2.9%

2.9%

Adelaide ( SA )

Canberra ( ACT )

2.5%

2% 0

Sydney ( NSW )

Melbourne ( VIC )

Brisbane ( QLD )

Darwin ( NT )

Perth ( WA )

Hobart ( TAS )

Source: RP DATA

aUctioN clearaNce rates

capital cities numbers remain tight suggesting demand

outside of Sydney where price points are

recording $800,000 for June 2014 and

APM, were at June 2014.

FUTURE ESTATE RESIDENTIAL PROPERTY MARKET UPDATE – JULY 2014

5

Residential Market Update

property aUctioN clearaNce rates: weeK eNDiNg 29tH JUNe Auction Clearance Rates 80%

73%

75%

72%

70.1%

74%

69.2%

70% 60% 50% 40% 30% 20% 10% 0

Australian Property Monitors

RP Data

REIV/REINSW* Sydney

Melbourne

cHaNge From preVioUs peaK aND troUgH (%) Change from Previous Peak and Trough (%) 23.1

24% 20%

17.1

17.0 15.2

24%

Change (%)

16%

14.2

12% 8.8 8%

8.7

6.4 Trough (%) Change from Previous Peak and 5.6 3.6

4% 23.1

Change Previo Peak (%

2.2

Change from Previous Peak and Trough (%) 0.7 17.0

Change (%)

17.0

Change (%)

16% 12%

12% 15.2

8.8

Sydney (NSW)

3.6

4%

6.4

2.2 -4%

0

2.2

8.8

8.7

-4.5 Melbourne Canberra -6.0 Adelaide (VIC) (ACT) (SA)

Perth (WA)

Change from Previous Peak (%)

Melbourne Canberra (VIC) (ACT)

Adelaide (SA)

Brisbane (QLD)

Darwin (NT)

Brisbane (QLD) -8.3 Hobart (TAS)

-8.3 Darwin Hobart (NT) (TAS) Change from Previous Peak (%)

-1.6

-1.6 Perth (WA)

Brisbane (QLD)

0.7

FUTURE ESTATE RESIDENTIAL PROPERTY MARKET UPDATE – JULY 2014 Sydney (NSW)

Adelaide (SA)

-4.5

Sydney (NSW)

-8%

6.4 Melbourne Canberra 5.6 (VIC) (ACT)

Perth (WA)

0.7

-8%

-4%

-6.0 8.7

5.6 Source: RP DATA 30 June 2014

0

3.6

-4.5 17.1

14.2

8% 4%

14.2

-8%

8%

Change Previo Trough

17.1

-1.6

15.2

-4%

16%

20%

6

0

20%

23.1

24%

-6.0

Darwin (NT)

Change from Previous Trough* -8.3 (%) Hobart (TAS)

Change from Previous Trough* (%)

qUarterly capital city HoUse aND UNit price treND House Price Trend Over Quarter (%)

7%

Unit Price Trend Over Quarter (%)

The best performing

6% 5.9%

5% 4% 3% 2% 1%

1.6% 0.9%

0.8% 0.8%

0.7%

0 -0.2%

-0.3%

-0.5%

-0.7%

-1%

-0.3%

-2% -2.3%

-2.5%

-3%

-2.4% -2.4%

-3.2%

-4%

Sydney ( NSW )

Brisbane ( QLD )

Perth ( WA )

Adelaide ( SA )

Hobart ( TAS )

Canberra ( ACT )

Darwin ( NT )

Melbourne ( VIC )

Source: RP DATA

Gross Rental Yields capital city HoUse aND UNit gross reNtal yielDs 7%

Gross Rental Yields

6%

5.8% 5.8%7%

5%

6%

5.3%

5.2% 6.1% 5.2% 4.6%

5.2% 5.1%

5%

4%

5.0%

5.9%

4.9%

5.4%

4.3% 4.5%

4.8%

4.3%

4.2%

4.9%

4.3%

4.7% 4.2%

4.7%

4.4%

5.0%

3.8%

4.6%

4.2% 3.8%

4%

3.4%

4.3%

2014

3.4%

3% 3%

2% 2%

1%

1%

0

0

Darwin ( NT )

Hobart Darwin ( NT )) ( TAS

Source: RP DATA

Brisbane Hobart ( TAS ) ) ( QLD

Canberra Brisbane ) ( QLD( ACT )

Adelaide Perth Adelaide ( SA ) ( SA ) ( WA )

PerthCanberra ( WA ) ( ACT )

Sydney Sydney ( NSW ( NSW ) )

HouseHouse GrossGross Rental Yield (%) Rental Yield (%)

Melbourne Melbourne ( VIC) ) ( VIC Units Gross Units Gross Rental Yield (%) Rental Yield (%)

FUTURE ESTATE RESIDENTIAL PROPERTY MARKET UPDATE – JULY 2014

7

Residential Market Update

CAPITAL CITY hOUSE AND UNIT mEDIAN PRICES State

Capital City Sydney

median house Price ($)

median Unit Price ($)

Dwelling Trend YTD* (%)

$800,000

Victoria

$490,000 $420,000 $440,000

Perth Tasmania

Hobart

Northern Territory

Darwin

$343,000

Source: RP DATA

KEY INVESTmENT ThEmES Theme

Summary

Future Estate View

Comments

Key growth opportunities growth growth

Western and Eastern Suburbs

Key value opportunities

Discounts to when compared to Sydney new areas to demonstrate growth

trends emerge – i.e. inner city Outer South and North Western

growth yield growth income and

rents in some areas

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FUTURE ESTATE RESIDENTIAL PROPERTY MARKET UPDATE – JULY 2014

KEY CYCLICAL ThEmES Cyclical Outlook

Summary

global economy and policy

Future Estate View

to credit and changes to price growth areas No negative impacts

Comments

rate changes

RBA Domestic growth and policy

Lowered cash rate and above trend growth however the recent tough budget had a dampening

end of 2014 which is having a strong impact on property investment activity

starting to become an issue for the RBA Housing

REIA

Lower interest rates have

spent on mortgage payments,

Housing price growth, besides

The median house price/

trend, which when combined

& Europe Impact on housing demand /

population growth

are rising throughout 2014, – housing shortage too from reduced construction activity and investment driver of demand for housing and is forecast to underpin a positive housing price growth of new migrants given greater

Dwelling construction

increased throughout 2014

compared to a decade ago

increasing

growth trends consumer

RP Data emerging, with stronger HIA reports hotspots are emerging

Household savings / demand for credit

Demand for housing credit is it is anticipated that demand for housing credit

trend Investor credit demand is

Demand for housing credit mortgage repayments after recent savings

FUTURE ESTATE RESIDENTIAL PROPERTY MARKET UPDATE – JULY 2014

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Residential Market Update

FUtUre estate capital city ratiNg

PERTH State Auction Clearance Rate State Days on Market (days) State Discount Rate Asking Price Index Change City Vacancy Rate State Property Market Score*

BRISBANE

DARWIN State Auction Clearance Rate State Days on Market (days) State Discount Rate Asking Price Index Change City Vacancy Rate State Property Market Score*

36.7% 86 6.0% 0.0% 2.3% 2.40

75% 133 5.5% -1.2% 1.4% 3.45

Future Estate Capital City Rating

Future Estate Capital City Rating

3.34

2.63

State Auction Clearance Rate State Days on Market (days) State Discount Rate Asking Price Index Change City Vacancy Rate State Property Market Score*

36.8% 136 7.5% 0.7% 2.3% 2.70

Future Estate Capital City Rating

3.00

SYDNEY

DARWIN

State Auction Clearance Rate State Days on Market (days) State Discount Rate Asking Price Index Change City Vacancy Rate State Property Market Score*

NT

71.4% 94 6.0% -0.8% 1.7% 3.65

Future Estate Capital City Rating

QLD

3.58 WA

BRISBANE

SA

CANBERRA

NSW SYDNEY

PERTH

ACT ADELAIDE

CANBERRA

VIC

MELBOURNE

State Auction Clearance Rate State Days on Market (days) State Discount Rate Asking Price Index Change City Vacancy Rate State Property Market Score*

44.7% 86 4.9% -4.1% 2.3% 2.55

Future Estate Capital City Rating

2.74

TAS HOBART

ADELAIDE State Auction Clearance Rate State Days on Market (days) State Discount Rate Asking Price Index Change City Vacancy Rate State Property Market Score*

MELBOURNE 51.8% 148 7.2% -0.7% 1.6% 2.40

Future Estate Capital City Rating

3.11

State Auction Clearance Rate State Days on Market (days) State Discount Rate Asking Price Index Change City Vacancy Rate State Property Market Score*

HOBART 67.1% 105 6.8% -1.6% 2.4% 2.85

Future Estate Capital City Rating

3.41

* The State Property Market Score, which is out of 5, takes into account several factors, including demographic factors that indicate Future Growth, Quarterly House and Unit Median Price Growth Rates, Annual Dwelling Growth Rates and the Median Mortgage Payments as a proportion of the Median Household Income.

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FUTURE ESTATE RESIDENTIAL PROPERTY MARKET UPDATE – JULY 2014

State Auction Clearance Rate State Days on Market (days) State Discount Rate Asking Price Index Change City Vacancy Rate State Property Market Score*

28% 188 9.5% -1.7% 1.8% 2.70

Future Estate Capital City Rating

2.44 Sources: Australian Property Monitors, Domain.com.au and SQM Research.

Future estate’s research team has developed an extensive quantitative modelling process to critically assess the australian residential property market.

For the capital city rating, our team records, benchmarks, assigns weights to and scores various key property market lead indicators and descriptive statistics.

please contact our team at Future estate for more information on our methodology and/or our range of other property investment advisory services.

our services include: Buyers’ agency research – suburb reports and due-diligence markets personalised advice and investment strategy panel of “endorsed projects”- over $1bn portfolio of “investment grade” projects nationally contact us to arrange a complimentary consultation to discuss your needs

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FUTURE ESTATE RESIDENTIAL PROPERTY MARKET UPDATE – JULY 2014

(03) 9988 2900 info@futureestate.com.au www.futureestate.com.au @futureestate future.estate future estate