Residential housing market

Transcription

1 Housing cycle over the long term Residential housing market Dwelling values are down 2.3% over the last twelve months with most of the decline very much evident since the start of 211. Over the last five years home values are up 7.% per annum; the previous five year period (21 to 26) saw values increase at the higher rate of 11.8% per annum. 25.% Rolling annual change in dwelling values, Combined capital cities 2 15.% 1 5.% 5.% City to City there are some significant differences in market performance is the only city in which values have risen over the last year while and values have corrected significantly BRISBANE Down 5.9% over the year to May Up 5.1% per annum since May 26 Annual change in dwelling value 4.% 2.% 2.% 4.% 6.% 8.% 1 1.% Annual change in capital city property values, year to May 211.1% 2.3% Canberra Australian Capitals 2.6% 2.9% 3.2% 5.1% 5.9% 7.5% Adelaide Darwin Hobart+ Rolling annual change in dwelling values, Combined capital cities v * Note Hobart figures are based on April 211 data Source: rpdata.com - Rismark 3 1

2 PERTH Down 7.5% over the year to May Up 2.2% per annum since May 26 Rolling annual change in dwelling values, Combined capital cities v 5 4 MELBOURNE Down 2.9% over the year to May Up 8.7% per annum since May 26 Rolling annual change in dwelling values, Combined capital cities v SYDNEY Housing cycle over the long term Up 1.% over the year to May Up 4.2% per annum since May 26 Rolling annual change in dwelling values, Combined capital cities v Rolling annual change in dwelling values, Combined capital cities v Major Caps

3 Performance across the price segments Premium markets are leading the decline with values down 3.9% over the year compared with a.9% fall at the most affordable end and 2.3% fall in broad middle market. 35.% 3 25.% 2 15.% 1 5.% 5.% 1 15.% Rolling annual change in values, most affordable 2%, middle 6%, most expensive 2% Middle 6% Lowest priced 2% Top priced 2% Oct 6 Apr 7 Oct 7 Apr 8 Oct 8 Apr 9 Oct 9 Apr 1 Oct 1 Apr 11 The price gap between the major capital cities has narrowed At the end of 23 it was clear that prices had overshot the mark and the other major capitals were well undervalued. prices were: 4% higher than 52% higher than 9% higher than $6, $5, $4, $3, $2, $1, $ May 9 May 91 May 92 May 93 May 94 May 95 May 96 May 97 May 98 May 99 May May 1 May 2 May 3 May 4 May 5 May 6 May 7 May 8 May 9 May 1 May 11 1 The price gap between the major capital cities has narrowed By the end of 27 a significant shift had occurred. prices were: 18% higher than 14% higher than 1% higher than The price gap between the major capital cities has narrowed At the end of May 211, prices were: 4% higher than (smallest gap on record) 23% higher than 13% higher than $6, $6, $5, $4, $5, $4, $3, $3, $2, $2, $1, $1, $ $ May 9 May 91 May 92 May 93 May 94 May 95 May 96 May 97 May 98 May 99 May May 1 May 2 May 3 May 4 May 5 May 6 May 7 May 8 May 9 May 1 May 11 May 9 May 91 May 92 May 93 May 94 May 95 May 96 May 97 May 98 May 99 May May 1 May 2 May 3 May 4 May 5 May 6 May 7 May 8 May 9 May 1 May

4 Sale transactions in haven t been this low since the mid 9 s Nationally, house and unit sales are tracking about 27% below the five year average. In, volumes are much lower than average in April we estimate volumes levels to be 52% below the five year average. The multiplier affect of low transaction volumes is being felt throughout the economy 8, 7, 6, 5, 4, 3, 2, 1, Month to month total dwelling sales, Apr 86 Oct 88 Apr 91 Oct 93 Apr 96 Oct 98 Apr 1 Oct 3 Apr 6 Oct 8 Apr 11 Note that the last five months of transaction volumes have been modelled based on the historical time lag in receiving the full set of data Effective supply how many homes are available for sale Effective supply levels have been climbing since the start of 21, with the number of homes available for sale in reaching a peak of 29,65 houses and units advertised for sale. Since that time the total stock level has fallen by about 4% as the number of new listings being added to the market falls away. 35, 3, 25, 2, 15, 1, 5, New and Total numbers of homes advertised for sale, Total Listings New Listings Jul 7 Jan 8 Jul 8 Jan 9 Jul 9 Jan 1 Jul 1 Jan 11 Jul 11 Buyers market Days on market (houses), v Capital Cities Capital cities May 6 Nov 6 May 7 Nov 7 May 8 Nov 8 May 9 Nov 9 May 1 Nov 1 May 11 Vendor discounting (houses), v Capital Cities 1.% 2.% 3.% 4.% 5.% 6.% Capital cities 7.% 8.% 9.% May 6 Nov 6 May 7 Nov 7 May 8 Nov 8 May 9 Nov 9 May 1 Nov 1 May 11 houses are averaging 56 days to sell compared with 53 days across the combined capital cities vendors are dropping their initial asking price by an average of 7.8% in order to make a sale (6.4% across the combined capitals) Rental markets Weekly rents have remained fairly flat during 211 after softening across most of 29/1 Despite the flat rental conditions, yields are improving due to the fall in home values. rental yields are now above the national average. Average rental rate dwellings $41 $39 $37 $35 $33 $31 $29 $27 $25 Rental rates and yields, Avg rental rate all dwellings Avg gross yield Houses Avg gross yield Units May 6 Nov 6 May 7 Nov 7 May 8 Nov 8 May 9 Nov 9 May 1 Nov 1 May % 5.3% 5.1% 4.9% 4.7% 4.5% 4.3% 4.1% 3.9% Avg gross rental yield 4

5 The current volume of sales sits at 2,439 for the three months to March 211, which is almost - 6% below average and is the lowest volumes recorded since July During the peak periods, units typically account for approximately 6 percent of all sales, further highlighting the large unit market across the. Over the March quarter the volume of unit sales equated to 5% of all transactions. Selling conditions on the coast are extremely soft, with homes taking a long time to sell and vendors having to provide large discounts in order to make a sale. Both houses and units are taking more than 1 days to sell on average Discount levels are around 9% 1, 9, 8, 7, 6, 5, 4, 3, 2, 1, Unit sales volumes Quarterly volume of sales, House sales volumes Mar 81 Mar 84 Mar 87 Mar 9 Mar 93 Mar 96 Mar 99 Mar 2 Mar 5 Mar Mar 5 Mar 5 Sep 5 Sep 5 Time on market, houses Mar 6 Sep 6 Mar 7 Sep 7 Mar 8 Sep 8 Mar 9 Sep 9 Mar 1 Time on market, units Mar 6 Sep 6 Mar 7 Sep 7 Mar 8 Sep 8 Mar 9 Sep 9 Mar 1 Sep 1 Sep 1 2.% 4.% 6.% 8.% 1 2.% 4.% 6.% 8.% 1 Mar 5 Mar 5 Vendor discounting, houses Sep 5 Mar 6 Sep 6 Mar 7 Sep 7 Mar 8 Sep 8 Mar 9 Sep 9 Mar 1 Sep 1 Vendor discounting, units Sep 5 Mar 6 Sep 6 Mar 7 Sep 7 Mar 8 Sep 8 Mar 9 Sep 9 Mar 1 Sep 1 Median house and unit prices were both down 11.4% over the 28 calendar year, with prices showing an improvement during early 29/1. Based on the March quarter data, houses prices were 5.4% below their peak and unit prices were 8.3% below their peak. The largest price falls have been recorded within the most prestigious markets The Glitter Strip, which includes Main Beach, Surfers Paradise, Broadbeach and Mermaid Beach have seen median house prices fall by 28.7% Median house and unit prices, $6, Median house price Median unit price $5, $4, $3, $2, $1, $ Mar 81 Mar 84 Mar 87 Mar 9 Mar 93 Mar 96 Mar 99 Mar 2 Mar 5 Mar 8 Glitter strip v Greater, median house prices $1,75, $1,5, $1,25, $1,, $75, $5, $25, $ Mar 3 Mar 4 Mar 5 Mar 6 Mar 7 Mar 8 Mar 9 Mar 1 Mar 11 5

6 Flooding the worst hit areas Flooding the worst hit areas 7,939 properties completely inundated valued at $5.21 billion 1,334 properties partially inundated valued at $7.32 billion Auchenflower 472 partially flooded ($261.8m) 161completely flooded ($92.1m) St Lucia 762 partially flooded ($547.9m) 689 completely flooded ($46.4m) New Farm 684 partially flooded ($592.9m) 382 completely flooded ($341m) South and West End 1,866 partially flooded ($1.1b) 41 completely flooded ($225.3m) At least 1,5 properties affected 1, to 1,5 properties affected At least 1,5 properties affected 1, to 1,5 properties affected 5 to 1, properties affected 5 to 1, properties affected Less than 5 properties Less than 5 properties Flooding the most completely inundated properties Flooding the most completely inundated properties (5) New Farm (382 / $341.1m) (1) Milton (235 / $243.8m) (2) St Lucia (689 / $46.4m) (4) Chelmer (488 / $46.4m) (8) Jindalee (253 / $134.2m) (7) Fairfield(337 / $278.2m) (9) Yeronga (239 / $188.6m) (3) Graceville (51 / $323.2m) (1) Rocklea had the most properties completely inundated 929 homes worth $498.4m (1) Rocklea had the most properties completely inundated 929 homes worth $498.4m At least 1,5 properties affected 1, to 1,5 properties affected At least 1,5 properties affected 1, to 1,5 properties affected (6) Oxley (367 / $173.6m) 5 to 1, properties affected 5 to 1, properties affected Less than 5 properties Less than 5 properties 6

7 How has the flooding affected the market Values: no dramatic change to date mostly due to the fact that not much is selling. Suburb Median value, December 21 Median value, June 211 Change Fairfield $619,3 $56,73 9.4% Rocklea $385,5 $349,7 9.4% Graceville $76,811 $663, % South $5,89 $477,3 4.7% St Lucia $65,87 $585, % Chelmer $875,991 $859,43 1.9% West End $672,677 $662,56 1.5% Auchenflower $67,337 $599,63 1.3% New Farm $61,11 $63,318.4% Kangaroo Point $51,694 $532,421.4% Non flood affected suburbs $428,13 $421,62 1.5% Volumes: a significant decline in the number of sales Region # sales, Mar 21 # sales, Mar 211 change Ten most severely flood suburbs: % Suburbs not affected by flooding 4,415 2, % Wrapping up Evidence points towards a soft landing at the macro level To date, the exit from the strong growth conditions looks reasonably controlled. At the combined capital city level, values are down 2.5% from the Dec 21 peak. The same doesn't ring as true for and where values are down 6.3% and 7.5% from their respective peaks. Buyers market Conditions certainly favour the buyer more listings, longer selling times and vendors are having to discount their asking prices more than normal. With listings at high levels and buyer activity remaining well below average, there is not likely to be any upwards pressure on prices for some time yet. Recently it seems that the leading indicators are levelling and some are improving suggesting the market may be at or approaching the bottom of the cycle Rental rates and yields heading north Rental markets continue to tighten resulting in improved yields for investors. This trend is likely to continue into the foreseeable future with vacancy rates remaining very low. An improvement in consumer confidence is critical before we see any improvement in housing market conditions Interest rate certainty Reduced levels of debt Global jitters 26 It s not just data its rpdata 27 7