GEELONG REGIONAL CENTRE OVERVIEW

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1 2018 EDITION 1 GEELONG GEELONG REGIONAL CENTRE

2 GEELONG Geelong is currently the 12th most populated area in the nation, with the latest ABS figures showing a population base of 238,603 for the Greater Geelong area. This region holds approximately 1% of the Australian population and on average has grown on average by approximately 3510 people per annum since The Geelong property market has experienced historic compounding growth rates of 7.47% for houses since The last 10 years have seen the house median grow at a rate of 5.06% compounded PA and 2.63% PA the last 3 years. In 2016, the dominant sector was Rental Hiring & Real Estate contributing 16.57% to GRP. This was followed by Manufacturing at 13.96%. Ideally, to minimize risk, we would like no one industry at more than 10% contribution. Infrastructure spending peaked in 2016 with approximately $3321 per person committed to public infrastructure spending for projects over $10 million. In 2017 this dropped to $1734 per person. $1734 per person of spending in the pipeline is considered below average based on the national average of $3000 per person. There are however, some major projects in the planning stages which have not been added into these calculations. MAJOR PROJECTS APPROVED GPAC Redevelopment / National Disability Insurance Agency Building / Geelong Performing Arts Centre Stage 2 / Infrastructure Works for Port of Geelong / Waurn Ponds Duplication Project Stage 1 GEELONG AS WE SEE IT We believe this market is showing Limited Value. Given the rate of long term growth, economic diversification and the population base we believe it is best suited to a Medium Term Trading Strategy. We classify the Geelong as a Medium to High Risk investment based on the size of the population, population growth, stage of the cycle and economic factors. 2

3 AT A GLANCE Type of Tenure Other, 0.8% Not Stated, 2.7% Rented, 27.7% Owned Outright, 34.7% 2018 GEELONG Owned with Mortgage, 0.0% Median rent for houses in Geelong is $350 and $290 for units. Median house rent has increased approximately 23% since 2010, while the house median has increased 37% in that same time. THE GEELONG HOUSE MARKET PREVIOUSLY PEAKED IN 2010 AND HOUSE PRICES ARE CURRENTLY 37% HIGHER THAN THIS LAST PEAK. THE UNIT MARKET LAST PEAKED IN 2011 AND THE CURRENT UNIT MEDIAN PRICE IS 11% HIGHER THAN 2011 PRICES. Both houses and units have experienced less than the historical growth rate over the last 10, 7, 5 and 3 years % YIELDS IN GEELONG HAVE BEEN ON A DOWNWARD TREND SINCE 2012 AND ARE CURRENTLY SITTING AT 3.96% FOR HOUSES AND 4.64% FOR UNITS. After experiencing a high of 4.6% in 2013, vacancy rates are currently at 1.7%. THE CURRENT UNEMPLOYMENT RATE IS down from a high of 7.5% in % GEELONG S POPULATION HAS INCREASED ON AVERAGE 1.62% PER ANNUM OVER THE LAST 10 YEARS. 0 50K 100K 150K 200K 3

4 CONTENTS Key Indicator 1 THE ECONOMY Key Indicator 4 SUPPLY FACTORS Gross Regional Product Slightly Negative Dwelling Approvals V. Vacancy Rate Slightly Positive Council Budget Slightly Positive Bedroom Approvals V. Population Positive Industry Diversity Slightly Negative Vacancy Rate V. Median Rent Positive Stock on Market Bellerine Pen Positive Key Indicator 2 AFFORDABILITY Gross Affordability Index (House) V. Price Growth Slightly Positive Key Indicator 5 INVESTMENT VALUE Gross Affordability Index (Unit) V. Price Growth Positive Long Term Performance Slightly Positive Median Price V. Income Slightly Negative Yield Neutral Median Price V. Rent Slightly Negative House V. Unit Price Movements Slightly Positive Geelong V. Melbourne Price Slightly Positive Key Indicator 3 DEMAND FACTORS Price Comparison Slightly Positive Population Positive Population Pyramid Slightly Negative Unemployment Rate Slightly Positive Job Creation Slightly Positive Infrastructure Spending Slightly Negative Council Capital Works Positive Dwelling Sales Positive 4

5 GEELONG SUBURB RANGE - HOUSES OUR VIEW OF THE GEELONG HOUSE MARKET We believe that currently this market is Rising. AVOID LIMITED VALUE The market is showing some value opportunities. Overall, most fundamental indicators support growth. LIMITED VALUE AVOID CAUTION The market is showing no value and price falls in the short term are possible. There are no fundamentals that support price growth in the short term. CAUTION The market is close to being overvalued and/or oversupplied. We see minimal growth over the short- to medium-term. VALUE VALUE The market is showing good value on most properties. Many fundamental indicators exist which support strong growth. For more information on the Geelong market, including individual property and suburb selections, call to speak to one of our professional property advisors on

6 OUR VIEW OF THE GEELONG UNIT MARKET We believe that currently this market is Rising. AVOID LIMITED VALUE The market is showing some value opportunities. Overall, most fundamental indicators support growth. LIMITED VALUE AVOID CAUTION The market is showing no value and price falls in the short term are possible. There are no fundamentals that support price growth in the short term. CAUTION The market is close to being overvalued and/or oversupplied. We see minimal growth over the short- to medium-term. VALUE VALUE G EELO N G SU B U R B R A N G E - U NITS The market is showing good value on most properties. Many fundamental indicators exist which support strong growth. For more information on the Geelong market, including individual property and suburb selections, call to speak to one of our professional property advisors on

7 GROSS REGIONAL PRODUCT V. MEDIAN PRICE $600,000 12,000 11,098 11,063 11,161 10,817 10,927 10,853 10,991 11,299 $500,000 10,086 10,223 10,000 9,360 $430,000 $460,000 $400,000 $336,000 $352,000 $355,000 $375,000 $300,000 $405,000 8,000 SLIGHTLY NEGATIVE $295,000 $300,000 $280,000 6,000 $269,000 $255,000 $200,000 4,000 $100,000 2,000 $ GRP ($Mil) Median House Price 7

8 GEELONG CITY COUNCIL BUDGET POSITION $2,500,000 $2,000,000 $2,000,000 $1,830,000 $1,500,000 SLIGHTLY POSITIVE $1,000,000 $1,008,000 $749,000 $500,000 $179,000 $175,000 $

9 INDUSTRY DIVERSITY Other Services, 1.92% Arts and Recreation Services, 0.75% Agriculture, Forestry and Fishing, 0.97% Mining, 0.24% Health Care and Social Assistance, 9.97% Manufacturing, 13.96% Education and Training, 8.04% Electricity, Gas, Water and Waste Services, 3.14% Public Administration and Safety, 4.49% Construction, 6.38% SLIGHTLY NEGATIVE Administrative and Support Services, 2.34% Wholesale Trade, 3.99% Professional, Scientific and Technical Services, 4.67% Retail Trade, 7.30% Rental, Hiring and Real Estate Services, 16.57% Accommodation and Food Services, 2.89% Transport, Postal and Warehousing, 3.53% Information Media and Telecommunications, 1.62% Financial and Insurance Services, 7.22% 9

10 GROSS AFFORDABILITY INDEX (HOUSE) V. PRICE GROWTH 40% 36% 35% 31% 33% 32% 30% 28% 27% 28% 29% 27% 25% 20% 20% 21% 19% 19% 23% 21% 21% 23% 24% 22% 24% 24% SLIGHTLY POSITIVE 17% 15% 13% 13% 15% 12% 14% 16% 13% 15% 14% 10% 5% 4% 5% 5% 4% 5% 5% 6% 4% 4% 6% 7% 3% 4% 0% 0% 0% 1% -1% -5% Median House Price Affordability Index (State Income) (Avg 23%) 10

11 GROSS AFFORDABILITY INDEX (UNIT) V. PRICE GROWTH 35% 31% 30% 25% 25% 24% 25% 27% 27% 27% 20% 15% 20% 22% 17% 13% 12% 13% 18% 18% 15% 15% 18% 17% 21% 22% 18% 22% 18% 18% 17% 18% 17% POSITIVE 10% 8% 9% 10% 7% 5% 0% 0% 1% 2% 1% 6% 4% 3% 4% 4% 4% 3% 4% 1% 3% -5% -4% -5% -10% Median Unit Price Affordability Index (State Income) (Avg 20%) 11

12 MEDIAN PRICE V. INCOME $1,800 $500,000 $1,600 $1,400 $1,200 $1,000 $800 $742 $766 $808 $875 $927 $962 $989 $1,020 $1,064 $1,116 $280,000 $269,000 $255,000 $235,000 $244,000 $1,176 $295,000 $1,232 $1,274 $1,314 $355,000 $352,000 $336,000 $1,508 $1,477 $460,000 $1,364 $1,388 $1,411 $430,000 $375,000 $390,000 $405,000 $1,244 $400,000 $300,000 SLIGHTLY NEGATIVE $205,000 $200,000 $600 $169,000 $400 $103,000 $117,000 $132,500 $100,000 $200 $- $ Median House Price Income VIC HH Income Geelong 12

13 MEDIAN PRICE V. RENT $400 $350 $340 $350 $500,000 $315 $317 $319 $325 $303 $300 $250 $200 $150 $151 $129 $157 $135 $166 $138 $177 $145 $182 $152 $198 $158 $200 $165 $215 $173 $232 $185 $253 $210 $268 $226 $285 $247 $262 $263 $270 $273 $277 $280 $290 $400,000 $300,000 $200,000 SLIGHTLY NEGATIVE $100 $100,000 $50 $- $ Median House Price Median Unit Price Median Rent House Median Rent Unit 13

14 POPULATION 3.0% 2.71% 3.0% 2.33% 2.53% 2.33% 2.44% 2.50% 2.52% 2.66% 2.17% 2.19% 2.24% 2.0% 2.0% 1.88% 1.82% 1.43% 1.79% 1.53% 1.51% 1.50% 1.50% 1.50% 1.84% 1.47% 1.83% 1.65% 1.93% 1.50% 1.44% 1.55% POSITIVE 1.31% 1.0% 1.14% 1.0% 0% Geelong Melbourne Australia 14

15 POPULATION PYRAMID Age in years Males Females SLIGHTLY NEGATIVE % of males % of females Source: Australian Bureau of Statistics, Census of Population and Housing, 2016 (Usual residence data) Compiled and presented in profile.id by.id, the population experts. Greater Geelong Victoria 15

16 UNEMPLOYMENT RATE 9.0% 8.2% 8.0% 7.5% 7.0% 7.1% 7.1% 6.0% 6.6% 6.6% 6.1% 5.9% 5.0% 4.7% 5.0% 5.6% 5.6% 5.8% SLIGHTLY POSITIVE 4.0% 3.0% 2.0% 1.0% 0.0% Geelong Melbourne Australia 16

17 JOB CREATION INDEX SLIGHTLY POSITIVE Oct 2010 Dec 2010 Feb 2011 Apr 2011 Jun 2011 Aug 2011 Oct 2011 Dec 2011 Feb 2012 Apr 2012 Jun 2012 Aug 2012 Oct 2012 Dec 2012 Feb 2013 Apr 2013 Jun 2013 Aug 2013 Oct 2013 Dec 2013 Feb 2014 Apr 2014 Jun 2014 Aug 2014 Oct 2014 Dec 2014 Feb 2015 Apr 2015 Jun 2015 Aug 2015 Oct 2015 Dec 2015 Feb 2016 Apr 2016 Jun 2016 Aug 2016 Oct 2016 Dec 2016 Feb 2017 Apr 2017 Jun 2017 Aug 2017 Oct

18 PUBLIC INFRASTRUCTURE SPENDING $900,000,000 $3,321 $3,250 $800,000,000 $2,750 $700,000,000 $2,250 $600,000,000 SLIGHTLY NEGATIVE $500,000,000 $1,734 $1,750 $400,000,000 $1,226 $1,374 $1,284 $780,643,514 $1,250 $300,000,000 $893 $750 $200,000,000 $407,625,000 $100,000,000 $271,246,847 $308,930,180 $294,596,847 $209,846,847 $250 $- -$ Spending Per Person 18

19 COUNCIL CAPITAL WORKS $140,000,000 $125,115,000 $120,000,000 $100,000,000 $80,000,000 POSITIVE $60,000,000 $52,256,019 $40,000,000 $30,584,000 $25,000,000 $20,000,000 $20,281,400 $

20 DWELLING SALES 8,000 7,597 7,000 6,859 6,600 6,565 6,310 6,000 5,000 4,000 3,526 4,700 4,672 4,170 4,213 5,425 4,619 3,788 3,602 3,403 3,321 3,997 3,559 3,813 4,525 4,963 5,693 6,034 5,840 5,606 5,562 5,269 5,959 5,377 5,010 5,198 5,434 5,948 5,766 3,918 POSITIVE 3,000 2,954 2,738 3,117 3,179 2,864 2,000 1, Houses Other Total 20

21 DWELLING APPROVALS V. VACANCY RATE 5.0% 3, % 4.5% 2,613 2,642 2, % 4.0% 2,459 2, % 3.0% 1,800 2,117 1,754 1, % 2, % 1,893 1, % 2, % 2,000 SLIGHTLY POSITIVE 2.5% 2.5% 2.5% 1,410 1,361 1, % 2.7% 1, % 1.5% 1.7% 1.7% 1.7% 1, % % 0% House Other Total Vacancy Rate 21

22 BEDROOM APPROVALS V. POPULATION CHANGE 7,000 6,192 6,000 5,085 5,000 4,761 5,059 5,115 5,067 4,000 4,099 3,471 4,151 3,665 3,661 4,068 4,003 4,305 POSITIVE 3,485 3,396 3,000 2,730 2,635 2,950 3,156 3,252 3,181 2,000 2,260 2,307 2,677 2,517 1,568 1,455 1,499 1, Approvals Based on 2.46 Persons per HH Population Change 22

23 VACANCY RATE V. MEDIAN RENT $ % 4.6% $ % $340 $ % $300 $250 $200 $150 $151 $129 $157 $135 $166 $138 $177 $145 $182 $152 $198 $158 $ % 2.5% $173 $165 $253 $232 $210 $ % 1.7% $ % $226 $285 $ % $315 $317 $319 $303 $270 $273 $262 $ % 3.0% $325 $ % $ % $ % 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% POSITIVE $ % $50 0.5% $- 0% House Rent (3 Bed) Unit Rent (2 Bed) Vacancy Rate 23

24 STOCK ON MARKET BELLARINE PENINSULA 4,500 4,000 4,000 3,982 4,000 3,697 3,700 3,650 3,500 3,500 3,000 2,800 POSITIVE 2,500 2,300 2,000 2,000 1,500 1,

25 LONG TERM PERFORMANCE 8% 7.47% 7% 6.59% 6% 5.06% 5% 4.69% SLIGHTLY POSITIVE 4% 3.52% 3% 3.11% 3.06% 2.63% 2.70% 2.42% 2% 1% 0% LT (39Yr) 10Yr 7Yr 5Yr 3Yr Houses Units 25

26 YIELD 9.0% $500, % 7.0% 6.0% 7.62% 7.21% 6.98% 6.38% 6.51% 5.70% $450,000 $400,000 $350, % 4.0% 5.45% 5.09% 4.89% 4.84% 4.70% 4.72% 4.73% 4.67% 4.62% 4.64% 4.62% 4.62% 4.64% 4.61% 4.48% 4.38% 4.38% 4.55% 4.70% 4.48% 4.41% 4.40% 4.25% 4.26% 4.15% 4.18% 4.25% 4.17% 4.00% 4.03% 4.11% 3.96% $300,000 $250,000 NEUTRAL $200, % $150, % $100, % $50,000 0% $ Yield House Yield Unit Median House Price Median Unit Price 26

27 HOUSE V. UNIT PRICE MOVEMENTS 120% $500, % 113% 112% 111% $460, % 103% 108% 105% $450,000 $430, % 100% 100% 101% 99% 97% 100% $405,000 98% 99% 100% 96% 95% 94% 94% $390,000 $400,000 97% 98% 91% $375,000 88% 88% 90% 86% $355,000 85% 88% 83% 86% $350,000 82% 79% 84% 80% $336,000 77% 77% 77% $352,000 73% $295,000 71% $280,000 $300,000 $269,000 $255,000 60% $244,000 $235,000 $250,000 SLIGHTLY POSITIVE $205,000 $200,000 40% 20% $29,000 $28,000 $27,750 0% $ $31,000 $32, $39,850 $34, $86,750 $86,000 $80,000 $86,000 $86,000 $86,000 $69,200 $85,000 $85,375 $54,000 $48,000 $60, $117,000 $103,000 $92,000 $89, $169,000 $132, $150,000 $100,000 $50,000 Median House Price Median Unit Price % Difference Between House & Unit Price (Avg 94%) 27

28 GEELONG V. MELBOURNE PRICE COMPARISON 80% $900,000 70% 60% 50% 67% 65% 63% 60% 62% 60% 62% 57% 58% 58% 58% 57% 55% 57% 56%56% 55%55% 50% 53% 44% 44% 64%68%69% 67% 68% 68% 65% 62% 60% 62% 58% 60% 55% 54% 51% 54% $800,000 $700,000 $600,000 $500,000 SLIGHTLY POSITIVE 44% 44% 40% $400,000 30% $300,000 20% $200,000 10% $100,000 0% $ Geelong Median Melburne Median % Difference (Avg 58%) 28

29 PRICE COMPARISON 40% 33% 30% 29% 26% 31% 20% 10% 0% Bendigo Ballarat Melbourne SLIGHTLY POSITIVE -10% -20% -30% -40% -38% -50% -46% Current Average 29

30 WHY USE US? OUR PROCESS RESEARCH Macro Micro Property INVESTMENT PHILOSOPHY PERFORMANCE PROPERTY ADVISORY IS A DYNAMIC PROPERTY FIRM PROVIDING PROPERTY ACQUISITION SERVICES ACROSS AUSTRALIA. OUR FIRM IS COMPLETELY RESEARCH DRIVEN AND WE APPLY A SOUND COUNTERCYCLICAL INVESTMENT APPROACH. All property must pass our stringent investment criteria and is subject to a thorough due diligence process. Our low risk approach excludes 99% of all properties currently on the market. We never source properties direct from developers and we don t buy properties off the plan or in new housing developments. We have a strict no commission policy preventing us from ever taking commissions from agents or referrers. We believe in providing quality ethical advice and exceptional customer service. We pride ourselves on delivering successful outcomes every time, guaranteed. Our objective is not to buy you a property. Purchasing a property is the last step in our considered and thorough process. Our mission is to understand and satisfy your needs financial or emotional, in a low risk and efficient manner. Our objective is to build you wealth through sophisticated property investment. We believe in everything we do because we treat your investment portfolio like it was our own. PERFORMANCE PROPERTY ADVISORY SERVICES Property Acquisition Property Management Portfolio Review Sales Advisory / Vendor Advocacy ACQUIRE Find Assess Negotiate MANAGE Property Management REVIEW Annual Portfolio Review ADVISE Hold Improve Dispose DATA SOURCES: Australian Bureau of Statistics BIS Shrapnel Residex SQM Research CoreLogic RP Data Foreign Investment Review Board Australian Trade & Investment Commission 30

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