australian economic property report 2018...prdnationwide 2018 we are proud to present our australian...

Australian Economic Property Report 2018The Property Winds of Change

© PRDnationwide 2018

We are proud to present our Australian Economic and Property Report which is now in its eleventh year. You will see in this report that although the economy is in a relatively good state, the property market in Australia is changing and market dynamics are rapidly shifting and evolving.

This report release signals a significant change in the property market generally and particularly within the housing affordability landscape. Following sustained growth in residential values in major city markets over the past 3 years, we have seen a number of factors contributing to a slowdown in many markets. A tightening of lending policies, increased costs for offshore buyers and a general perception of peaked prices have contributed to these changes.

For the first time in the past 24 months we are seeing capital cities decline in the average annual median price growth and metropolitan markets experiencing a slower decrease, whilst their regional counterparts are standing out with local markets recording a positive growth - key indicators that market dynamics are on the move. The winds of change are upon us.

Although the Federal Budget 2018 was noticeably silent on housing and affordability measures, the Federal and State Government Budgets of 2017 were extremely focused on first home buyers. This focus resulted in a positive flow on effect, with first home buyer loans reporting strong growth overall in the 2018 March quarter including impressive growth results in New South Wales (NSW) and Victoria (VIC) for the same quarter. However, the current market dynamics have created opportunities for affordability in general and for first home buyers specifically.

This report gives a good overview of the key economic drivers and their impact on the property market thereby assisting you in making fact based property decisions.

FOREWORD

Tony Brasier Chairman and Managing Director, PRDnationwide

WELCOME

I can feel a change in the air.

Last year I reflected on the roller coaster journey in which the Australian consumer sentiment has travelled, with an index reading of 98.6 – just below the positive line. In this edition I am excited to report that consumer sentiment has improved over the past 12 months by 3.4% and now sits over the positive line at 102.4 index points. A positive index reading has been evident since late 2017 and has continued past the first quarter in 2018. What’s more, the timing of this report has stayed the same – just after the release of the Federal and State Budgets.

This is without a doubt an overall testament to a change in sentiment within the Australian society, and how much more confident we are in the economy. This also underpins why you will see many ‘green’ traffic lights, as opposed to the ‘orange’ from last year’s report.

Over the past 3 Australian Economic and Property Reports I have reported and discussed the exploding property market in Sydney and Melbourne, increasing affordability issues and first home buyer’s cries of help in both capital cities as well as NSW and VIC.

Dr Diaswati Mardiasmo National Research Manager, PRDnationwide

The differential between the median prices and growth rates of Sydney and Melbourne compared to Brisbane and Hobart, together with the growth rate of metropolitan versus regional markets left me wondering how much longer can we really have such significant disparity between markets.

Finally we are seeing a shift in the property trends. It’s about time too, as we need our explosive capital city markets to return to a more sustainable level of growth. Australian dwelling values held relatively firm in May 2018, and over the first half of the year capital city values were down by an annual growth average of -3.4%, compared with a 2.6% lift in regional values. These figures alone should give a good indication of the winds changing.

There has also been significant changes in who has the highest housing affordability. In 2018 NSW has consecutively had the most improved number of first home buyer loans, increasing by 74.9% (12 months to December 2017) and 80.8% (12 months to March 2018). Shockingly, Tasmania (TAS) historically known as the more affordable option when compared to NSW, recorded a lower first home

buyer loans growth at 4.0% and 6.9% respectively.

There’s no doubt about it that housing affordability is still an issue. The utopia of equal home ownership opportunity continues to be a challenge that we all slowly chip at, however there is definitely a dynamic shift in both economic and property key indicators. It will be interesting to see where the wind blows over the next 12 months.



Overview 6

Property Growth 8

Confidence 12

Macroeconomic Climate 13

Foreign Exchange and Commodity Price 14

Labour Market 15

Construction Market 16

House Finance 17

Home Affordability 18

Dwelling Market 20

Rental Market 21

Demographics 22

CONTENTS

The key guidance point throughout this document is the traffic light. The traffic light colour indicates the health of market conditions and highlights what each economic and/or property graph could mean for you.

Health of the Market Indicator:

Green: Go!

Healthy market conditions.

Yellow: Somewhat stable

Needs to be carefully monitored.

Red: Cautious

Need to pay increased attention.

National Research ManagerDr Diaswati (Asti) Mardiasmo

Research AnalystsDr Ava SimmsHarrison FrenchJosh ManglesonChristine Junidar

PRDnationwide Research Team Key Contributors:

2


ABOUT PRDnationwidePRDnationwide is an acknowledged industry real estate leader. We’ve been in the business of selling and managing properties since 1976 and have a network of over 80 franchise offices spanning nationally and internationally (and still counting).

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© PRDnationwide 2018 PRDnationwide Australian Economic and Property Report 20183


PRDnationwide’s research division provides reliable, unbiased and authoritative property research and consultancy to clients in metro and regional locations across Australia.

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4PRDnationwide Australian Economic and Property Report 2018


OVERVIEWKEY FACTS

Consumer Price Index: 1.9 %

Standard Variable Home Loan Rate:

5.3%

Unemployment Rate: 5.5%

Average Australia Fuel Price:

$1.5/L

The Federal Budget 2018 was eerily silent on the housing front, particularly when concerning first home buyers. There seems to be a more indirect approach to assisting home owners and those wanting to enter the market, through the three-stage personal income tax proposal for 2018-2024 and the $24.5B of new major transport projects, as part of a $75.0B ten year infrastructure commitment. Personal income tax is related to household budget and dispensable income, with any tax cuts benefitting families and their ability to save for a home deposit. Meanwhile, investments in infrastructure, particularly better transport, will provide higher connectivity between outer ring suburbs and business district hubs.

Although the Federal Budget 2018 was noticeably silent on housing and affordability measures, interestingly it fared better than the Federal Budget 2017 in terms of consumer confidence. After the release of the Federal Budget 2017, the Australian consumer sentiment remained under the positive line at 98.0 index points. However, after the release of the Federal Budget 2018 consumers are now reporting higher confidence (over the positive line at 102.4 index points). This is potentially due to: the targeted focus on personal income tax cuts, the promise of better infrastructure and transport links, the impressive amount dedicated to supplying remote housing ($550M over 5 years in the Northern Territory (NT)), the established City Deals to create world-class cities, or policies targeted towards the baby boomer generation and its aging population.

It is extremely refreshing to see that policies implemented by a variety of institutions are having their desired impact, although at various levels of success. The Federal Budget 2017 was extremely focused on first home buyers and rightly so. The schemes introduced such as: the First Home Buyer Super Savers Scheme in the Budget 2017, the First Home Buyer super savings accounts in banks, the continuation of first home buyer grants in most states, and the increased price range for stamp duty exemptions; all have had their desired effect. As of the March quarter of 2018 the number of first home buyer loans gre by 28.0% over the past 12 months. This is something that we should be proud of.

In the State Budget 2017, the state governments took the focus on first home buyers even further, through state-level first home buyer grants, stamp duty exemptions, and releasing more land for housing development. Impressive results can be seen in NSW and VIC, recording 80.8% and 35.3% growth in first home buyer loans over the past 12 months to the March quarter of 2018.



Lenders have overachieved the Australasian Performing Right Association’s (APRA)macroprudential guidelines, with annual credit growth for investment purposes tracking at just 2.8% per annum, which is well below the limit of 10%. Additionally, lending on interest only terms comprised only 15.2% of mortgage originations in December 2017, which is tracking at roughly half the APRA limit of 30.0%. Data from the Reserve Bank of Australia (RBA) to the end of March 2018 shows the average mortgage rate on a 3 year fixed rate investment loan fell by 5 basis points over the month to 4.4%.

There has been a real shift in affordability across states; as well as within a state. This shift is not unexpected, and it is part of a natural progression in a country’s property cycle. Capital city markets recorded a decline in the average annual median price growth (-3.4% over the past 12 months to the 1st half of 2018). Metro markets experienced the same pattern, although at a gentler slope of -0.9%. Regional markets recorded a positive growth of 2.6% over this period, which confirms the shift in market dynamics.

It seems that buyer demand has rippled away from the capital city areas where housing is more affordable, as well as where jobs, amenities, and transport options are reasonably plentiful. Regional markets are moving up in the property cycle, whereas capital cities and metro markets are heading towards a more sustainable rate of price growth.

This pattern can also be seen between states. NSW, once considered to be the more unaffordable market, experienced negative median price growth in both its capital city and metro markets (-11.1% and -8.7% respectively) over the past 12 months to 1st half 2018. In contrast, TAS is experiencing double digit price growth in both its capital city and metro markets of 13.2% and 12.6% respectively. These rates of price growth were previously enjoyed by NSW during the past 24 months.

It is not surprising to see this, as whilst NSW enjoyed double digit price growth its affordability lessened making many look for alternative investment strategies, relocating their choices to more affordable states such as TAS or Queensland (QLD). Demand in these two states then increases dramatically, outstripping the states’ ability to produce housing supply, and causing price hikes. As a result, the cries of first home buyers in NSW have quietened and have relocated to QLD and TAS.

The word ‘change’ can be daunting to some. It can present the unknown and demand out of the box thinking. Thankfully with change sometimes there is a precedent, one that can be learned and perhaps applied. The property landscape in Australia is changing. Market dynamics are shifting rapidly. The once affordable is no longer, the states once experiencing double digit annual median price growth are no longer, the once investor haven is no longer, and the once that was unthinkable to first home buyers is no longer. Thankfully the key words here are ‘no longer’, meaning that for those who are currently experiencing change can learn from their predecessors. Now is the time for TAS and QLD to learn from NSW and VIC.

Australian home loan affordability has decreased by -3.3% over the past 12 months to the March quarter of 2018. The winds of unaffordability are blowing south, with NSW recording a growth of 80.8% in first home buyers loans, whilst TAS recorded 6.9%. An evident change in Australia’s property landscape will create an overall balance in the medium term.



PROPERTY GROWTHRegionals Roar

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AVERAGE GROWTH IN MEDIAN HOUSE PRICE

Capital markets are returning towards a more sustainable level of price growth in the 1st half of 2018, recording an average negative growth figure for the first time in the past 24 months. This marks a significant change in the Australian property market, particularly as affordability issues in the capital cities have been front and centre of national debate for quite some time. There are capital cities that recorded positive growth, with QLD at 0.1% and TAS at 13.2%. That said, Brisbane and Hobart have been traditionally known as the more affordable capital cities, which attracted heightened interest during Sydney and Melbourne’s peak cycles. This does pose a concern for Brisbane and Hobart locals of course, thus relocating the outcry of first home buyers to these capital cities.

Metropolitan markets are experiencing similar trends, however at a gentler rate. Average annual price growth decreased by -0.9% over the past 12 months to the 1st half of 2018, which has provided more hope to first home buyers waiting to enter the highly competitive market. This is particularly true for those in NSW, with a -8.7% decline. Similar to capital city markets QLD and TAS are the only two states with positive growth in their metro markets, recording 1.7% and 12.6% respectively. This further confirms the shift in property market dynamics, from NSW-centric to TAS-centric.

The regional property market has fared the best in the 1st half of 2018, recording an average annual price growth of 2.6% over the past 12 months. The winds are definitely blowing towards regional markets, with many in the metro and capital cities looking at investment alternatives in the regional areas. This is no surprise considering affordability discrepancies (one can almost find a property at half the price), but it is also due to the increase in infrastructure and commercial commitments of local, state, and national government in regional areas. In contrast to its capital city and metro markets, the regional markets in NSW and VIC are recording positive growths of 4.0% and 6.5% respectively. The only states to record negative growth were QLD and South Australia (SA) at -2.5% and -3.8% potentially due to a downturn in their mining industries and slow employment growth in regional areas.

The winds of price growth changing course. The average annual price growth for capital cities and metro areas are declining (-3.4% and -0.9% respectively). Regionals roar with 2.6% in the 1st half of 2018, a trend that will likely continue for the rest of the year.

NSW 12.1% 14.1% 15.6% 0.4% -11.1% 5.9% 6.0% 14.7% 6.1% -8.7% 4.1% 6.8% 9.9% 5.2% 4.0%

QLD 7.0% 3.1% 3.7% 4.6% 0.1% 3.7% 2.3% 4.4% 4.9% 1.7% 6.8% -2.7% 1.5% 1.1% -2.5%

VIC 10.0% 20.0% 33.3% 23.7% -1.6% 11.8% 10.2% 15.7% 11.2% -0.5% 8.6% 10.4% 8.1% 8.5% 6.5%

WA -11.1% -13.3% 12.0% -8.2% -17.2% -6.8% -2.3% 7.6% 2.2% -7.2% -30.2% -6.4% -11.8% -0.6% 3.9%

TAS 6.1% 11.0% 13.5% 14.4% 13.2% 5.6% 11.3% 10.2% 12.1% 12.6% 3.8% 4.6% 6.8% 4.6% 7.2%

NT -8.8% -7.9% 8.7% 0.0% -8.8% -3.8% -7.0% 1.1% 1.9% 2.4% 41.5% 14.5% -23.6% -11.0% -44.0%

SA 3.8% 13.2% -0.6% -2.0% -4.1% 5.1% 8.2% 3.2% 2.5% -2.9% -5.6% 0.2% 8.0% 0.1% -3.8%

ACT 5.6% 11.9% 13.0% 5.8% -1.3%

1st half 2016

2nd half 2016

1st half 2017

2nd half 2017

1st half 2018

1st half 2016

2nd half 2016

1st half 2017

2nd half 2017

1st half 2018

1st half 2016

2nd half 2016

1st half 2017

2nd half 2017

1st half 2018

PRDnationwide Australian Economic and Property Report 20187


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AUSTRALIA PROPERTY GROWTH MAP



PROPERTY GROWTH (CONT’D)

Stop Press: The median price for the 1st half of 2018 reflects sales up to and inclusive of 30 June 2018. Average annual growth percentage quoted does not include NT due to low number of sales transactions in the regional area.

MEDIAN HOUSE PRICE CAPITAL CITY

MEDIAN HOUSE PRICE METRO

MEDIAN HOUSE PRICE REGIONAL

1st half 2nd half 1st half 2nd half 1st half 2016 2016 2017 2017 2018

NSW $294,342 $311,951 $323,516 $328,043 $336,591

QLD $264,711 $262,538 $268,590 $265,375 $261,912

VIC $291,351 $302,810 $314,807 $328,583 $335,227

WA $245,196 $226,449 $216,202 $225,163 $224,692

TAS $238,522 $249,087 $254,826 $260,565 $273,076

NT $336,500 $300,000 $257,000 $267,000 $143,833

SA $222,521 $220,375 $240,306 $220,667 $231,257


NSW $1,459,417 $1,559,097 $1,673,407 $1,654,296 $1,528,513

QLD $459,500 $468,600 $479,800 $491,400 $488,090

VIC $855,216 $912,516 $989,067 $1,014,911 $983,984

WA $812,048 $886,207 $873,643 $906,000 $811,098

TAS $371,000 $394,167 $408,667 $441,833 $459,990

NT $495,450 $490,600 $500,667 $500,000 $512,667

SA $578,789 $586,737 $597,368 $601,368 $580,134

ACT $1,026,738 $1,121,900 $1,159,810 $1,187,429 $1,144,886


NSW $1,557,500 $1,643,500 $1,800,000 $1,650,000 $1,600,000

QLD $645,000 $655,000 $669,000 $685,000 $670,000

VIC $968,000 $1,140,000 $1,290,000 $1,410,000 $1,270,000

WA $948,750 $1,015,250 $1,062,500 $932,500 $880,000

TAS $401,667 $430,000 $456,000 $492,000 $516,313

NT $520,000 $550,000 $565,000 $550,000 $515,000

SA $716,500 $727,000 $712,500 $712,500 $683,500

9 PRDnationwide Australian Economic and Property Report 2018


AVERAGE TIME ON MARKET AND VENDOR DISCOUNT

STATE AND TERRITORY PROPERTIES LISTED FOR SALE MAY 2018

CAPITAL CITY PROPERTIES LISTED FOR SALE MAY 2018

WHAT DOES THIS MEAN FOR YOU?

✓ Capital city markets, particularly Sydney and Melbourne, are returning to a more sustainable rate of price growth. Regional market price growth is slowly outpacing both capital and metro markets, suggesting now is the time to look into regional property investment.

✓ Regional listings are seeing a boost in activity, increasing by 12.8% over the past 12 months. This surpasses the capital city new listings growth of 10.0%, confirming a change in listing activity dynamics. Furthermore, Sydney new listings only grew by 3.8%, well below Brisbane (14.2%) and Adelaide (19.5%) – a change in the air is highly evident.

✓ Average days on the market for Australia’s combined capital cities was 37 days in May 2018, which is a -9.8% decline over the past 6 months. Perth’s average days on market has declined the most (-20.3%), followed by Hobart (-16.3%). Properties are selling the quickest in Hobart at 26 days, which is half the amount of time than Brisbane (53), Perth (55), and Adelaide (56).

✓ The average vendor discount is the lowest in Canberra (-3.8%), suggesting sellers in the area are achieving the closest to their first list asking price. Interestingly, the average vendor discount has widened in both Sydney and Melbourne over the past 6 months, suggesting increased affordability for buyers – now is the time to buy. The average vendor discount has tightened in Brisbane and Adelaide, making now the time for sellers to act.

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State No. of new listings

12 month change (%)

No. of total listings

12 month change (%)

NSW 12,620 9.4% 51,559 12.9%VIC 12,171 14.5% 50,388 -2.8%QLD 10,984 18.0% 64,899 -0.6%SA 3,371 23.8% 18,466 -1.7%WA 5,045 3.6% 34,840 -3.9%TAS 989 -1.1% 5,318 -26.8%NT 276 25.5% 2,140 0.8%

ACT 781 11.1% 2,204 6.4%National 46,237 12.8% 229,814 0.2%

Capital City No. of new listings

12 month change (%)

No. of total listings

12 month change (%)

Sydney 7,106 3.8% 26,879 28.2%Melbourne 8,740 14.2% 31,195 11.4%Brisbane 4,527 14.9% 20,403 1.4%Adelaide 2,283 19.5% 4,707 1.7%

Perth 3,599 2.5% 21,069 -3.7%Hobart 375 -3.1% 1,100 -30.7%Darwin 203 31.8% 1,523 -0.6%

Canberra 760 11.1% 2,117 6.1%Combined capitals 27,593 10.0% 112,994 8.0%

Nov 2017 May 2018 Nov 2017 May 2018Sydney 36 36 -4.9% -5.6%

Melbourne 31 29 -4.1% -4.7%

Brisbane 61 53 -5.8% -5.6%

Adelaide 50 56 -6.2% -5.9%

Perth 69 55 -8.1% -8.1%

Hobart 31 26 -4.4% -4.8%

Darwin 76 89 -10.1% -10.8%

Canberra 43 46 -3.6% -3.8%

Combined Capital 41 37 -5.8% -5.8%

Average Days on Market Average Vendor Discount



CONFIDENCEConfidence has lifted

Australian consumer sentiment was recorded at 102.4 index points in April 2018, which is above the positive line. This represents a 3.4% increase in confidence over the past 12 months and for the first time in 24 months consumer confidence has been above 100 index points (positive line) for 4 consecutive months. Furthermore, in last years’ report (also released after the announcement of the Federal Budget 2017), the consumer sentiment index was 98.0 points (below the positive line). Families are more confident about how the Federal Budget 2018 will impact their family income, potentially due to the planned reform surrounding personal income tax. From 1 July 2018 a new tax offset of up to $530 will be provided to middle and lower income earners, and the top threshold for the 32.5% tax bracket will be increased to $90,000. Although the immediate effect of this may be modest, it seems that families are welcoming of any forms of tax relief.

Australian business confidence has slightly fluctuated on a quarterly basis over the past 12 months, however overall there has been an improvement of 33.3% between March 2017-2018. This is good news as in last year’s report we also saw stable growth. The latest ANZ/Property Council of Australia survey published in April 2018 found confidence in the property and construction industry was at its highest level in 5 years. The Federal Budget 2018 will continue to extend the $20,000 instant asset tax write-off, with plans to increase the small business tax discount rate from 5.0% to 8.0%. This is consistent with their commitment to drive growth by prioritising small to medium businesses, which is welcome news by many Australian entrepreneurs.

CONSUMER SENTIMENT

BUSINESS CONFIDENCE


✓ Consumers are feeling more confident with the current economic climate, however with the Australian Consumer Index only 2 points above positive levels, there is still a degree of cautiousness in spending.

✓ Business confidence is at the highest level since the Global Financial Crisis (GFC), which will continue to grow with the government’s plans to further reduce tax burdens for small and medium businesses.

✓ The Federal Budget’s 2018 initiatives for both personal income and business taxes may see an increase in commercial (including property-related) and retail spending over the next 12 months.

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Prepared by PRDnationwide ResearchSource: National Australia Bank (NAB), last updated May-2018

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Prepared by PRDnationwide ResearchSource: Westpac/Melbourne Institute, last updated May-2018

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130.0

Apr-

2008

Oct

-200

8

Apr-

2009

Oct

-200

9

Apr-

2010

Oct

-201

0

Apr-

2011

Oct

-201

1

Apr-

2012

Oct

-201

2

Apr-

2013

Oct

-201

3

Apr-

2014

Oct

-201

4

Apr-

2015

Oct

-201

5

Apr-

2016

Oct

-201

6

Apr-

2017

Oct

-201

7

Apr-

2018

Con

sum

er S

entim

ent I

ndex

Month

Australian Consumer Sentiment Six Month Moving Average

Prepared by PRDnationwide ResearchSource: Westpac/Melbourne Institute, last updated May-2018

Increasing Confidence



HOUSING LOAN INTEREST RATE

MACROECONOMIC CLIMATE Low level interest rates are continuing to support the Australian economy

In June 2018 the RBA decided to leave the cash rate at 1.5 points, which was a historical low for the past 20 consecutive months. The Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.

The Australian government plans to return the Federal Budget to a balanced point, whereby the budget deficit is forecasted to improve from 3.0% of Gross Domestic Product (GDP) in 2013-2014 to 0.8% of GDP in 2018-2019. Nett debt is currently 18.6% of GDP and is projected to fall to 14.7% by 2021–2022. Many celebrated the news that the government is no longer borrowing money to meet everyday expenses, as this is the first time since the GFC.

Inflation (consumer price index) for all groups was recorded at 1.9% in March 2018, which is just below the RBA’s inflation target rate of 2.0%. That said, this is the closest the inflation rate has travelled towards the RBA target range over the past 36 months, in which the 1.9% inflation rate has remained steady for the past 4 quarters. Stability in the inflation index suggests relatively unchanged prices for goods and services. This is good news for families preparing their budgets at a time when wage growth has been subdued. This may have contributed to stable positive consumer confidence over the past consecutive 4 months in early 2018, which was a refreshing change to fluctuating levels experienced over the past 24 months.

INFLATION

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✓ The standard variable bank loan has remained at 5.2% over the past 11 months, providing home mortgage owners prolonged opportunity to service their loans at a stable rate.

✓ The March 2018 inflation rate is one of the closest inflation rate to enter the RBA’s target range, indicating healthier economic conditions.

✓ Progress in reducing unemployment and having inflation return to target is expected.

-35

-30

-25

-20

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-5

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ar-9

9Se

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p-09

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ar-1

5Se

p-15

Mar

-16

Sep-

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ar-1

7Se

p-17

Mar

-18

ImprovingConfidence


0%

1%

2%

3%

4%

5%

6%

7%

8%

Mar

-08

Sep-

08

Mar

-09

Sep-

09

Mar

-10

Sep-

10

Mar

-11

Sep-

11

Mar

-12

Sep-

12

Mar

-13

Sep-

13

Mar

-14

Sep-

14

Mar

-15

Sep-

15

Mar

-16

Sep-

16

Mar

-17

Sep-

17

Mar

-18

Ann

ual C

hang

e in

CP

I

Month

Excluding volatile items All groups

Reserve Bank's Target Range

Prepared by PRDnationwide ResearchSource: RBA Table G1 Consumer Price Index, last updated May-2018

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2%

4%

6%

8%

10%

12%

May

-08

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May

-09

Nov

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May

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-12

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May

-14

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-15

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-18

Sta

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Hou

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Loa

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Month

Standard Variable Bank Loan

Prepared by PRDnationwide ResearchSource: RBA Table F5 Indicator Lending Rates, last updated May-2018

Average 3yr Fixed Rate



FOREIGN EXCHANGE & COMMODITY PRICE The Australian Dollar is where it needs to be

The RBA Commodity Price Index has declined over the past 12 months to May 2018, by -14.9% to a 109.3 index in Australian Dollar terms. That said, this represents an increase of 0.3% on a monthly average basis. The rural and base metals subindices increased in the month, while the non-rural index was unchanged. Over the past year the index has been led by higher Liquified Natural Gas (LNG), thermal coal, and oil prices.

The Trade Weighted Exchange Rate Index has trended relatively stable over the past 12 months to May 2018. The index was at 63.4 index points in June 2018, reflecting a -3.2% decrease over the past 12 months. That said, this is an improvement when compared to the March-May 2018 index reading, which suggests a return towards higher purchasing parity power. As the index is weighted against 24 other currencies (at present), it is important to treat any improvement with caution as many of Australia’s trading partner currencies have experienced a devaluation.


✓ The Australian economy continues to strengthen, and is shaking off the downturn in mining investment. That said higher oil and LNG prices continue to create a dent in household budgets.

✓ The Federal Budget 2018 plans to support overseas investment by reinstating stamp duty concessions for off-the-plan apartment purchases in CBD’s and a review of the impact of the absentee owner’s land tax surcharge. This is to further stimulate inner-city housing supply.

✓ The Australian Dollar remains within the range that it has been in over the past 2 years, which creates a stable platform for import/export into Australia. An appreciating exchange rate is expected to result in a lower pick-up in economic activity.

RBA COMMODITY PRICE INDEX

Exchange Rates

The Australian Dollar is performing at a rate that is needed to further stimulate economic growth, ensuring the outflow of Australian products into the world economy. Over the past 12 months to June 2018 the Australian Dollar has strengthened against the United States Dollar (by 2.6%), New Zealand Dollar (by 2.9%), and Hong Kong Dollar (by 1.7%). However, the Australian Dollar has depreciated the most against the Malaysian Ringgit over this time frame (by -5.7%).

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TRADE WEIGHTED EXCHANGE RATE INDEX

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9

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8

RBA

Com

mod

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Inde

x Va

lue

MonthPrepared by PRDnationwide ResearchSource: RBA Table I2 Commodity Prices, last updated May-2018

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RB

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JPY USD EUR NZD GBPJun-2016 78.4200 0.7331 0.6463 1.0600 0.5098Jun-2017 82.5700 0.7464 0.6626 1.0477 0.5798Jun-2018 82.2600 0.7659 0.6459 1.0784 0.5681% Annual Change -0.4% 2.6% -2.5% 2.9% -2.0%

HKD MYR CNY SGDJun-2016 5.6946 3.0061 4.8125 0.9985Jun-2017 5.8155 3.1849 5.0784 1.0312Jun-2018 5.9161 3.0036 4.8391 1.0097% Annual Change 1.7% -5.7% -4.7% -2.1%



LABOUR MARKET Unemployment rate is on the mend

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The unemployment rate was recorded at 5.5% in April 2018, which was a 2.9% improvement compared to 12 months prior. The trend participation rate increased to 65.7% in April 2018, which is the highest it has been since 1978. Employment increased by around 14,000 persons (8,000 part-time and 6,000 full-time capacity). The unemployment rate has hovered within the 5.7-5.5% band over the past 12 months, which is the lowest unemployment rate band Australia has seen since the 2011 GFC. SA and VIC have improved the most over the past 12 months, declining by -21.1% and -16.1% respectively. The NT experienced an increase in unemployment rate by 2.6%. However, there is increasing business

confidence in the NT after the state government’s announcement of no Land Tax, exemption of payroll tax for locals, and infrastructure spending in the State Budget 2018.

Local job creation and growth in areas outside of the CBD and its immediate ring need to continue being a focus to improve liveability conditions. Choosing affordable suburbs (i.e state average loan + 20% premium) within 20km from the CBD with an unemployment rate below the state’s average is no easy task. First home buyers must be prepared to pay a hefty premium of up to 88% in Sydney and 30% in Melbourne, or settle for a long commute in a more affordable suburb.


✓ Unemployment levels have improved over the past 12 months, yet the inflation rate has remained stable. This should improve the society’s purchasing power in general. This will have a positive spill-over effect on the property market and we should see an increase in sale transactions in the 2nd half of 2018.

✓ The premium cost of living in a suburb with a low local unemployment rate is extremely high, suggesting the need to establish job creation policies within 20km from the CBD.

UNEMPLOYMENT RATE

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

Apr

-199

8O

ct-1

998

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-199

9O

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Apr

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ct-2

016

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7O

ct-2

017

Apr

-201

8

Une

mpl

oym

ent R

ate

Australian Unemployment Rate

Prepared by PRDnationwide ResearchSource: ABS Cat 6202 Table 1 Col BM. Last updated June-2018



CONSTRUCTION MARKET Residential construction strategically assists a return to more sustainable price growth

Residential construction in Australia amounted to $15.7B in March 2018, a -10.2% decline over the past 6 months. Some may be concerned that this will result in an undersupply and more price hikes, particularly in capital cities, however annually this is a 4.7% increase. Furthermore, $15.7B is above the 10 year average of $12.2B, suggesting the residential construction market continues to thrive, and with the potential of an oversupply in some areas, will assist in the return to a more sustainable price growth. Over the past 12 months residential construction has increased in NSW and VIC by 8.8% and 7.0% respectively, resulting in increased affordability and more first home buyer loans in both states. SA and TAS also experienced an increase by 12.1% and 29.8% respectively, which although is having a reverse effect in NSW and VIC, it is much needed to satisfy interstate investor demand and allow local first home buyers the chance to enter the market in the near future.

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Foreign investor interest in residential construction has slightly subdued over the past 12 months. This was partly due to stricter regulations regarding ownership in newly built residential development from the Federal Budget 2017 initiatives, but also due to stricter lending policies from banks. The Federal Budget 2018 plans to tighten tax concessions including through stapled structures, which will ensure that foreign investors pay their fair share of tax. This will allow Australian investors to compete on fairer terms with foreign investors; particularly when investing in land-rich investments. The Property Council of Australia acknowledges that overseas investment is often essential to getting bank approval for office developments and inner-city housing supply. They have advocated towards the VIC state government for reinstating stamp duty concessions for off-the-plan apartment purchases in the Melbourne CBD and a review of the impact of the absentee owner’s land tax surcharge in the VIC State Budget 2018.


✓ The increasing amount of residential construction will create a housing oversupply in some parts of Australia, however this is needed to bring back price growth into more sustainable levels.

✓ Tighter tax laws for foreign investors will allow Australian investors to compete on fairer terms, however this may have a negative effect in regional areas.

RESIDENTIAL CONSTRUCTION MARKET

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010

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ar-2

014

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ec-2

014

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017

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7M

ar-2

018

Tota

l val

ue ($

billi

ons)

Residential building work done

Prepared by PRDnationwide ResearchSource: ABS Cat 8755. Last updated June 2018

10-year avg: 12.1



HOUSE FINANCEThe balance between owner-occupiers and investors has shifted to normal levels

HOUSING FINANCE COMMITMENTS

The gross value of housing finance commitments has totalled $428.2B over the past 12 months to March 2018, an increase of 1.8%. This is an increase in housing finance commitment overall, as the previous year’s growth (March 2016-2017) was recorded at 1.3%. The Budget’s 2017 property investment tax policies were designed to dampen investor activity, so as to give owner-occupiers (particularly first home buyers) a fairer chance. This has been successful considering that investment finance decreased by -2.0% over the past 12 months to March 2018, and in contrast, owner-occupiers increased by 4.1%.


✓ Owner-occupier spending has ramped up over the past 12 months, taking over investor spending. This brings more confidence into the market, particularly for the first home buyers.

✓ Moving into the income growth cycle of real estate, key measures announced in the Federal Budget 2018 point to a strong upside for investors over the medium term. There is a need to continuously monitor the current balance between owner-occupiers and investor finance.

The balance between owner-occupier and investment finance have stood comfortably around the 65%-35% split over the past 8 to 10 years. The balance shifted towards a 60%-40% split in 2013 and tipped to 55%-45% in 2014/2015. These were the key years in which Sydney and Melbourne prices skyrocketed and cries for inequity in the balance between investors and owner-occupiers were voiced by many.

Owner-occupiers committed $271.1B over the past 12 months to March 2018, which brings the proportion of owner occupiers finance to 65.9%. This is the highest figure since August 2012 and just above figures in November/December 2015. Investment finance was $157.1B over the past 12 months to March

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2018, meaning that the proportion of investor finance was a low 34.1% - one of the lowest figures since 2014/2015. This confirms a shift in market dynamic, with the wind blowing towards owner occupiers and returning to its previous comfortable balance.

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5

10

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25

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-11

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Prepared by PRDnationwide ResearchSource: ABS Cat. No. 5609, last updated June-2018



HOME AFFORDABILITY A change in which is the most affordable state


✓ Australia’s home loan affordability decreased by -3.3% over the past 12 months to March 2018, suggesting that the increase in dwelling supply is severely needed to meet demand and balance the market in the near future.

✓ The once most unaffordable state, NSW, only decreased by -0.7% in the home loan affordability index. TAS, the once more affordable state, decreased by more than fivefold at -3.8%. This is a real shift in home loan affordability, with the wind blowing south.

✓ ACT continues to be the most affordable state to live in, with its home loan affordability index of 50.8 in March 2018. This is closely followed by the NT at 50.4 index points.

✓ QLD and SA are now neck and neck in home loan affordability, at 36.4 and 36.8 index points respectively. Once again the wind is blowing south, as historically SA has been the more affordable option compared to QLD.

✓ Families in the NT will see the most improvements in household income budget as it is the only state whose proportion of income required to meet home loan and rent payments decreased (by -6.2% and -5.1% respectively).

✓ VIC leads in the number of first home buyers approved, recording 8,169 loans. That said, NSW leads in first home buyer loans growth at 80.8%, which eclipses historically more affordable states such as QLD (5.0%), SA (7.5%), and TAS (6.9%).

HOME LOAN AFFORDABILITY INDEX

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80.0

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Home Loan Affordability

New South Wales Victoria Queensland

South Australia Western Australia Tasmania

Northern Territory Australian Capital Territory Australia

Prepared by PRDnationwide ResearchSource: Real Estate Institute of Australia

Last updated: June 2018

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Home Loan Affordability

New South Wales Victoria Queensland

South Australia Western Australia Tasmania

Northern Territory Australian Capital Territory Australia

Prepared by PRDnationwide ResearchSource: Real Estate Institute of Australia

Last updated: June 2018



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The number of first home buyer loans approved in Australia has increased by 28.0% over the past 12 months to the March quarter of 2018. This brings us to 26,458 first home buyer loans approved in the March quarter of 2018. Although this is not the highest number of loans (it was at 30,932 in the December quarter of 2017), it is one of the highest annual percentage increases over the past 36 months. Higher first home buyer activity brings good news, particularly as the Federal Budget’s 2017 initiatives honed in on policies that were designed to encourage first home buyer activity growth. Interestingly, the Federal Budget 2018 was silent on the matter, with the government believing that first home buyers can capitalise on policies put in place by the Federal Budget 2017.

The proportion of family income required to meet home loan repayments increased by 3.0% over the past 12 months to the March quarter of 2018, coinciding with a -3.3% decrease in the home loan affordability index. The wind continues to blow south as families in NSW only need to spend an extra 0.8% of their income to meet home loan repayments, whilst those in TAS need to spend 3.8%. Families renting need to spend an extra 0.4% in March 2018 to meet rental payments, however those renting in QLD, WA and the NT can expect an increase in their disposable household budget, as the proportion needed to meet rental payments decrease by -2.5%, -7.4% and -5.1% respectively.

NUMBER OF FIRST HOME BUYER LOANS

NSW 80.8%VIC 35.3%QLD 5.0%SA 7.5%WA 0.5%TAS 6.9%NT 29.7%

ACT 80.6%National 28.0%

Source: Real Estate Institute of Australia, Housing Affordability Report, March Quarter 2018

Growth

65018169563912973578

420166688

26458

March Q2018

March Q

35966036537112063559

393128381

20670

2017State

PROPORTION OF FAMILY INCOME REQUIRED TO MEET HOME LOAN REPAYMENTS

NSW 0.8%VIC 4.9%QLD 3.0%SA 3.8%WA 0.9%TAS 3.8%NT -6.2%

ACT -2.0%National 3.0%


Growth

36.50%34.10%27.50%27.20%23.60%24.50%19.80%19.70%31.30%

March Q2018

March Q

36.20%32.50%26.70%26.20%23.40%23.60%21.10%20.10%30.40%

2017State

PROPORTION OF FAMILY INCOME REQUIRED TO MEET RENT PAYMENTS

NSW 3.8%VIC 0.0%QLD -2.5%SA -0.9%WA -7.4%TAS 5.6%NT -5.1%

ACT 3.4%National 0.4%


Growth

30.10%23.80%23.10%22.40%16.30%28.10%22.50%18.50%24.80%

March Q2018

March Q

29.00%23.80%23.70%22.60%17.60%26.60%23.70%17.90%24.70%

2017State



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DWELLING MARKET First home buyers rejoice as dwelling supply increases

Dwelling approvals have increased by 8.5% over the past 12 months to April 2018, clocking 17,320 approvals. This is just under the 10 years moving average of 18,992 in April 2018, suggesting that overall there is a good chance for a balanced market between demand and supply in the near future. This further allows for more first home buyers to take advantage of associated grants and stamp duty exemptions provided by the state government.

Although there are increasing vacancy rates in some capital cities, this is mostly contained within the inner-CBD areas and units/apartments of a particular type (usually 2 bedrooms 2 bathrooms). Vacancy rates in the outer-CBD ring suburbs, particularly for townhouses and houses, are still quite low. The vacancy rate in metro and regional areas are typically below that of the inner-CBD and trending downwards, suggesting that the increase in dwelling approvals is warranted to answer rental demand. Dwelling approvals increased the most in ACT and VIC by 22.7% and 58.2% respectively, and rightly so to ensure demand is met and affordability is not compromised.

The time to buy a dwelling index has increased by an average of 6.5% across the 6 states over the 12 months to Q2 2018. Interestingly, NSW leads in the time to buy a dwelling index by 26.7%, due to a combination of many factors such as: increasing level of housing supply, slower price growth in the capital city, stronger wage growth, and more accommodating policies for first home buyers. This is followed by VIC (17.8%), SA (12.7%) and QLD (5.9%). Perhaps shockingly the time to buy a dwelling index has decreased the most in TAS, by -15.6%, potentially due to first home buyers feeling priced out by interstate investors. This further confirms that there is dynamic shift in the Australian property market, as TAS was favoured over NSW 15-24 months ago.

TIME TO BUY A DWELLING INDEX

DWELLING APPROVALS


✓ An increase in dwelling approvals may lead to a balance in supply and demand, or an oversupply in some markets. This paves the way for increased affordability, which is good news for first home buyers.

✓ On average the time to buy a dwelling index has increased by 6.5% over the past 12 months to Q2 2018, bolstered by increased confidence in the economy. The property market should see increasing transaction activity for the rest of 2018.

✓ TAS for the first time in 24 months is the least preferred state to purchase a dwelling, with the time to buy a dwelling index decreasing by -15.6%. In contrast, the time to buy a dwelling index in NSW increased by 26.7%, confirming the wind is indeed blowing south.

5,000

7,000

9,000

11,000

13,000

15,000

17,000

19,000

21,000

23,000

Jun-

1984

Jun-

1985

Jun-

1986

Jun-

1987

Jun-

1988

Jun-

1989

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1990

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1991

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Total Dwelling Approvals Annual Average


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Total Dwelling Approvals Annual Average


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Sep

-08

Dec

-08

Mar

-09

Jun-

09

Sep

-09

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-09

Mar

-10

Jun-

10

Sep

-10

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-10

Mar

-11

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11

Sep

-11

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-11

Mar

-12

Jun-

12

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-12

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-12

Mar

-13

Jun-

13

Sep

-13

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-13

Mar

-14

Jun-

14

Sep

-14

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-14

Mar

-15

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15

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-15

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-15

Mar

-16

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NSW VIC QLD WA SA TAS

Prepared by PRDnationwide ResearchSource: Westpac/ Melbourne Institute, last updated Jun- 2018

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180Ju

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-11

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11

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-11

Dec

-11

Mar

-12

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Sep

-12

Dec

-12

Mar

-13

Jun-

13

Sep

-13

Dec

-13

Mar

-14

Jun-

14

Sep

-14

Dec

-14

Mar

-15

Jun-

15

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-15

Dec

-15

Mar

-16

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NSW VIC QLD WA SA TAS

Prepared by PRDnationwide ResearchSource: Westpac/ Melbourne Institute, last updated Jun- 2018

19 PRDnationwide Australian Economic and Property Report 2018


RENTAL MARKETDeclining rental vacancy rate is good news for investors

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✓ Vacancy rates have improved the most most in Perth by -1.4%, presenting exciting opportunities for the rest of 2018. Canberra holds the tightest vacancy rate at 0.5%.

✓ The implied rental yield for May 2018 is the highest in Hobart at 4.4% and 6.0%. Combined with affordable sale prices this continues to create an investor haven.

✓ Investment potential dynamics in Sydney, Melbourne, and Brisbane are changing, with 2 bedroom unit median rent prices eclipsing that of 3 bedroom houses.

✓ Hobart, Canberra and Darwin replace Sydney, Melbourne and Brisbane as capital cities with the highest implied rental yield for houses and units. It is time for investors to change their property investment direction.

Over the past year to the March quarter of 2018, the Australian national residential vacancy rate has decreased by 0.6% and is currently at 2.4%. The Real Estate Institute of Australia (REIA) has put a 3.0% healthy rental market demand benchmark, which confirms that not only is the Australian rental market healthy, its declining trend suggests it’s travelling at a healthier rate. Canberra held the tightest vacancy rate in the March quarter of 2018 at 0.5%, whereas Brisbane holds the highest at 2.7%, which is not surprising due to the oversupply of inner-CBD apartments. Interestingly, in contrast to the rest of the capital cities Sydney’s vacancy rate has increased by 0.4 points of the past 12 months. This suggests more people are buying in Sydney, complimenting NSW’s record breaking 80.8% increase in first home buyer loans.

That said, Sydney continues to be the most expensive capital city to rent, at $520 for a 3 bedroom house and $560 for a 2 bedroom unit. There was an extremely interesting trend in the rental market in the March quarter of 2018, with many 2 bedroom unit rental prices outpacing 3 bedroom houses. This is true for Sydney (as above), Melbourne ($400 and $440 respectively), and Brisbane ($390 and $400 respectively). Investors will benefit the most in Hobart, as over the past 12 months median rental price change was the highest at 8.1% for 3 bedroom houses and 11.7% for 2 bedroom units.

The implied rental yield for the combined Australian capital cities in May 2018 was 2.9% for houses and 4.0% for units, which shows a relatively stable trend over the past 12 months. Those looking to invest in houses will benefit the most in Hobart (4.4%), Darwin (4.3%) and Canberra (4.1%). Whereas those looking to invest in units should consider Hobart (6.0%), Canberra (5.7%) and Darwin (5.6%). These figures further confirm that there is a change in the Australian property market, as the historical rental yield bread-winners

(Sydney Melbourne and Brisbane) are no longer the top three for either houses or units. In fact, both Sydney and Melbourne hold the lowest implied house rental yield of 2.7% and also the lowest implied unit rental yield at 3.7% and 3.9% respectively. The winds have indeed changed directions.

MEDIAN RENTAL PRICESydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra

3 b/r House2 b/r Unit

$520 $400 $390 $355 $330 $400 $477 $495$560 $440 $400 $300 $320 $335 $366 $450

ANNUAL % CHANGESydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra

3 b/r House2 b/r Unit

4.0% 2.6% 0.0% 1.4% -5.7% 8.1% -3.4% 5.9%5.7% 10.0% 3.9% 3.4% -3.0% 11.7% -2.4% 7.1%

ANNUAL MEDIAN RENT PRICES

QUARTERLY VACANCY RATE

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Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra National

Vacancy Rate - March qtr 2018

Annual Change (points)

Prepared by PRDnationwide Research. National rate is the weighted average vacancy rate for the eight capital citiesSource: REIA and SQM Research, last updated June-2018

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Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra National

Vacancy Rate - March qtr 2018

Annual Change (points)

Prepared by PRDnationwide Research. National rate is the weighted average vacancy rate for the eight capital citiesSource: REIA and SQM Research, last updated June-2018

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DEMOGRAPHICS Nett overseas migration drives future housing supply and design

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Australia’s national population was recorded at 24,702,851 people in September 2017, representing an increase of 1.6% over the past 12 months. This signifies a return to higher population growth, as over the past 24 months the annual population growth has trended between 1.4%-1.5%. An increase in population growth suggests more housing is needed, and with dwelling approvals increasing by 8.5% over the past 12 months to April 2018 this potentially means an oversupply in the long-term (currently needed to combat decreasing affordability).

The largest annual increase in estimated resident population can be found in VIC by 2.4% over the past 12 months to September 2017. Dwelling approvals for VIC increased by 58.2% over the past 12 months to April 2018, issuing a caution to developers thinking of capitalising on increasing demand. The ACT recorded the second highest population increase of 1.8%, and it is no coincidence that it also holds the second highest dwelling approval increase of 22.7%.

In 2016-2017 Australia experienced a 28.4% increase in nett overseas migration, which was double the 11.6% increase in 2015-2016. Although dwelling approvals have increased to aid the quest of housing overseas migrants, it begs the question as to what extent is Australian housing answering the needs and wants of an increasing multicultural society. NSW leads in nett overseas migration with 123,111 foreigners choosing to call the state home. Out of the three main states (QLD, VIC and NSW), QLD leads in nett overseas migration growth, recording an annual increase of 43.5% in 2016-2017.

People across Australia are choosing to move to QLD and TAS, resulting in the highest nett interstate migration increases of 51.7% and 742.6% between 2015-2017. Although these numbers may look extremely high this is not a surprising result, considering that these two states are well known to be the more affordable alternatives to NSW and VIC.


✓ Australian population experienced an annual growth rate of 1.6% in 2016-2017, slower than the dwelling approval growth rate of 8.5% over the past 12 months to April 2018. The winds are blowing towards a more balanced supply and demand property market in the medium to long term.

✓ Australian nett overseas migration increased by a significant 28.4% in 2016-2017, suggesting faster population growth. This presents an opportunity to developers conceptualising new communities, to ensure it manifests on the increasing multicultural demographic.

✓ TAS needs to rapidly plan for its influx of interstate migrators, to ensure that local first home buyers are not further compromised.

POPULATION GROWTH & NET INTERSTATE MIGRATION

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Net Overseas Migration - Australia

Natural Increase - Australia

Prepared by PRDnationwide ResearchSource: ABS Statistics, Catalogue 3101.0 Table 2, last updated June-2018

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Net Overseas Migration - Australia

Natural Increase - Australia


COMPONENTS OF POPULATION GROWTH

-4.0%

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NSW VIC QLD SA WA TAS NT ACT

Net

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Population - Annual Change (%)

National Population Change1.6%


-4.0%

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Net

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Population - Annual Change (%)

National Population Change1.6%




GLOSSARY

Business Confidence Graph

The Business Confidence Index indicates expectations of business conditions for the upcoming quarter. The Index is based on a survey of approximately 900 small to large business in the non-farm sectors and is conducted by the National Australia Bank (NAB).

Australian Consumer Sentiment Graph

The Consumer Sentiment Index indicates short-run changes to consumer willingness to purchase goods in the forthcoming quarter. Based on a monthly survey of 1,200 Australian households conducted by the Melbourne Institute and Westpac, it represents current and future perspectives of the broad economic climate and household financial state.

Inflation Graph

Inflation is measured as a change in the Consumer Price Index (CPI), calculated by the Australian Bureau of Statistics as the price of a weighted ‘basket’ of goods and services which account for a high proportion of expenditure by metropolitan households. The Reserve Bank of Australia (RBA) aims to constrain inflation in a long-run target range of 2-3 %. The underlying inflation figure (as measured by the RBA) removes volatile items such as fruit and fuel.

Housing Loan Interest Rate Graph

The housing loan interest rate is the average rate of interest being offered by housing lenders. It is higher than the RBA’s target cash rate due to lending costs and profit margins.

National Residential Construction Graph

This data provides an early indication of trends in building and engineering construction activity. The data are estimates based on a response rate of approximately 85 % of the value of both building and engineering work done during the quarter.

Housing Finance Commitments Graph

Housing finance commitments track the volume of finance commitments made by significant lenders to individuals for the purchase of housing.

This graph tracks the value of loans approved for both owner occupiers and investors.

Unemployment Rate Graph

Unemployment is calculated as the proportion of people in the labour force that were unemployed and actively seeking work during the survey period.

The labour force is defined as the number of people aged between 16 and 55 who were either employed or actively looking for work during the survey period.

This graph tracks the unemployment rate on a monthly and moving annual average basis over the last 30 years.

RBA Commodity Price Index Graph

The Reserve Bank’s Commodity Price Index provides an indicator of primary commodity price movements. High commodity prices are one of the primary drivers behind Australia’s robust economy, influencing real estate prices, demand for housing and rental accommodation; particularly in Western Australia, Northern Territory, Northern Queensland and as of late South Australia.

Dwelling Approvals Graph

Dwelling approvals indicate the number of new dwellings that have been approved for: construction of new buildings; alterations and additions to existing buildings; approved non-structural renovation and refurbishment work; and approved installation of integral building fixtures.

A moving yearly average is used to filter out seasonal fluctuations in the number of dwellings commenced.

Time to Buy a Dwelling Index Graph

The Time to Buy a Dwelling Index indicates short-run changes in consumer sentiment regarding whether it is a good time to buy a dwelling. It is a component of the Melbourne Institute’s Consumer Sentiment Index, which is undertaken monthly.

Home Loan Affordability Index Graph

The Home Loan Affordability Index measures average loan repayments against median wages and tracks these values over time.

Quarterly Vacancy Rates Graph

An industry benchmark for vacancy rates is considered to be 3 %. Vacancy rates lower than 3 % indicate strong demand for rental accommodation, whilst rates higher than 3 % reflect an oversupply of rental accommodation.

Population Growth Graph

Population change tracks the change in population across the states and territories of Australia. Population growth is seen as the key driver of demand for housing.

Net Interstate Migration Graph

Net interstate migration tracks the net population change in each state attributable to interstate migration.

Net interstate migration figures fluctuate with the seasons, so a moving yearly average is shown to filter out these changes.

PRDnationwide does not give any warranty in relation to the accuracy of the information contained in this report. If you intend to rely upon the information contained herein, you must

take notes that the information, figures and projections have been provided by various sources and have not been verified by us. We have no belief one way or the other in relation to the

accuracy of such information, figures and projections. PRDnationwide will not be liable for any loss or damage resulting from any statement, figure, calculation or any other information

that you rely upon that is contained in the material. ©PRDnationwide 2018.

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