reiv state of victorian property market (june 2012)

7/31/2019 REIV State of Victorian Property Market (June 2012)

1/18

State of the Victorian property marketRobert Larocca


2/18

Some key indicators

Yeartodateclearancerate:61%

Medianhousepricegrowthin

Lasttimeconsumerconfidence

improvedovera12month

period:Aug2010

lastyear:0.9%

Rentalvacancyratein

Melbourne:2.4%

Victorianunemploymentrate:

5.4%

ProjectedgrowthinVictorian

economythis

year:

1.5%

Salesvolumescomparedto

peak

in

2007:

21%

ProjectedgrowthinVictorian

economynextyear:1.75%

Medianhousepricecompared

topeakinDec10: $45,000


3/18

Melbourne Median (annual) over 10 years

Index Median($)

140

145

150

550000

600000

Melbournemedianhouse

130

135500000

price(nominal)

Melbournemedianhouse

price(real:base2001=100)

115

120

400000

100

105

110

300000

350000

Source: REIV


4/18

Melbourne Median (monthly change) over 5 years

$550,000

$600,000

$450,000

$500,000

$400,000

$300,000

$350,000

7 7 7 7 7 7 8 8 8 8 8 8 9 9 9 9 9 9 0 0 0 0 0 0 1 1 1 1 1 1 2 2 2

Units/Apartments

Jan

Mar

May

Jul

Sep

Nov

Jan

Mar

May

Jul

Sep

Nov

Jan

Mar

May

Jul

Sep

Nov

Jan

Mar

May

Jul

Sep

Nov

Jan

Mar

May

Jul

Sep

Nov

Jan

Mar

May


5/18

Volume drives prices excepting 20102011201020092008200720062005200420032002

100000 15.0%

.

80000 10.0%

40000

60000

0.0%

5.0%

20000 5.0%

Housepricegrowth(real)

0 10.0%

Totalres

sales

(VG)Source: REIV, VG, ABS


6/18


7/18

Rental market over last decade

Index Weeklyrent

$

120

125

130

340

360

110

115

300

320

3bedroomhouserent

(nominal)

95

100

105

240

260

280

3bedroomhouserent(real:

base2001

=100)

80

85

90

200

220

Source: REIV, ABS,Office of Housing


8/18

Demand and supply drive rentsRealgrowth Vacancyrate

8.0%

10.0%

3.5%

4.0%

Vacancyrate(March)

3brmhouserent(real)

4.0%

6.0%

2.5%

.

0.0%

2.0%

1.5%

.

4.0%

2.0%

0.0%

0.5%

.

2011201020092008200720062005200420032002Source: REIV, ABS,Office of Housing


9/18


10/18

Half time

2012 21,275 6,925 60.6% 28,200

2011 22,477 8,566 62.7% 31,043

2010 23,846 11,647 81.6% 35,493

2009 26,261 6,391 81.1% 32,652

2007 25,602 10,206 84.8% 35,808

Source: REIV,


11/18

Consumers lack confidenceWestpac-Melbourne Institute Index of Consumer Sentiment (Seasonally Adjusted,% changeover 12 months)

80%120.0

.12 Month % Change (RHS) Index (LHS)

40%

60%

80.0

100.0

0%

20%

40.0

60.0

-40%

-20%

0.0

20.0

Source: Westpac-Melbourne Institute


12/18

Confidence v clearance rates130

110

120

90

100

70

80

60

WestpacConsumerSentiment ClearanceRates


13/18

Interest rates drop

12%

10%

6%

8%25 year average: 7.9%

3.50%

4%

0% Ma

No

Ma

No

Ma

No

Ma

No

Ma

No

Ma

No

Ma

No

Ma

No

Ma

No

Ma

No

Ma

Bank Std Variable Rate RBA Official Cash Rate 25yr Cash Rate Average

-02-02 -03

-03 -04

-04 -05

-05 -06

-06 -07

-07 -08

-08 -09

-09 -10

-10 -11

-11 -12

Source: RBA


14/18

Buyers of all types remain scarce

12,000

14,000

12,000

14,000

8,000

10,000

8,000

10,000

4,000

6,000

4,000

6,000 Non First Home Buyers (original) First Home Buyers (original)

0

2,000

0

2,000

Apr

Jul-

Oct

Jan

Apr

Jul-

Oct

Jan

Apr

Jul-

Oct

Jan

Apr

Jul-

Oct

Jan

Apr

Jul-

Oct

Jan

Apr

0707 07 08 08

08 08 09 09

09 09 10 10

10 10 11 11

11 11 12 12

Source: ABS


15/18

Record levels of new builds16000

14000

15000

12000

13000

10000

11000

8000

9000

4per.Mov.Avg.(NumberofdwellingunitsCommenced)


16/18

Population growth a factor120000

100000

Overseasmigration

60000

80000

40000

20000

0


17/18

What will the next few years look like?

1. Ongoing low activity levels will result in no capital growth

2. The health of the international economy and then consumer confidence will

be the key indicators over the next few years

.

4. Low rates of economic growth in Victoria coupled with lower population

growth and with almost no unmet demand underpin at best moderategrow n e me um erm


18/18

Challenges

1. Ensuring the state does not have an oversupply of homes

2. Vendor and purchaser expectations

3. Improving economic growth and consumer confidence

4. Managing a rental market with higher number of vacancies and a lack of

improvement in yield

reiv state of victorian property market (june 2012)

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