EDITION 1 GEELONG REGIONAL CENTRE REVIEW GEELONG 2017 MARCH

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1 2017 EDITION 1 GEELONG REGIONAL CENTRE REVIEW 2017 MARCH GEELONG

2 GEELONG AT A GLANCE OVERVIEW MAJOR GOVERNMENT FUNDED PROJECTS National Disability Insurance Agency Headquarters / Department of Human Services Office Development / WorkSafe Victoria Office Development. GEELONG IS CURRENTLY THE 13TH MOST POPULATED AREA IN THE NATION, WITH THE LATEST FIGURES SHOWING A POPULATION BASE OF 235,041. THIS AREA HOLDS JUST UNDER 10% OF THE AUSTRALIAN POPULATION AND ON AVERAGE HAS GROWN BY APPROXIMATELY 2900 PEOPLE PER ANNUM SINCE Geelong has experienced historic compounding growth rates of 8.35% for houses & 7.71% for units since Over the past 10 years the market has experienced a growth rate of 5.06% for houses and 4.23% for units. As of 2013/14 financial year the main industry sector was Rental, Hiring & Real Estate Services at 16,57% of GPB. Followed by Manufacturing at 13,96%. For lower risk, an ideal economic breakdown would see no industry with over a 10% share in a region, however with Geelong being so close to Melbourne we see this risk minimized. Over there is $1931 per person committed to public and private infrastructure spending. This is a fall from the spending but remains higher than 2014 & MAJOR PRIVATELY FUNDED PROJECTS Kingston Village Shopping Centre / Geelong Yacht Club Precinct GEELONG AS WE SEE IT We believe this market is showing Value. Given the rate of long term growth and economic diversification we believe it is best suited to a Short to Medium Term Trading Strategy. We classify 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 SNAPSHOT OF GEELONG THERE ARE APPROXIMATELY 2,344 PROPERTIES CURRENTLY ON THE MARKET IN THE GREATER REGION OF GEELONG. OVERVIEW 2017 MARCH GEELONG 2,344 Median rent for houses in Geelong is $340 and consistently trending upwards since THE GEELONG MARKET HAS SEEN ONLY 3.11% GROWTH COMPOUNDED PER ANNUM SINCE IN COMPARISON GROWTH SINCE 1999 HAS AVERAGED 8.35% PER ANNUN FOR HOUSES. This long term growth, coupled with the fundamental indicators that are present we see value in this market YIELDS IN GEELONG HAVE REMAINED RELATIVELY FLAT SINCE 2010 AND CURRENTLY SIT AT 4.36% FOR HOUSES AND 4.88% FOR UNITS. Conversely, vacancy rates have fallen to 2.8% from a high of 3.10% in to 2015 saw a consistent over-supply of dwelling commercements compared to population increase. UNEMPLOYMENT PEAKED IN 2009 AT It s currently sitting at 5.8% just above Melbourne at 5.7%. 5.8% GEELONG POPULATION HAS INCREASED ON AVERAGE 1.38% OVER THE LAST 10 YEARS TO FORECASTS SUGGEST THAT THE POPULATION WILL RISE TO 320,791 PEOPLE BY

4 EXECUTIVE SUMMARY Key Indicator 1 THE ECONOMY Key Indicator 4 SUPPLY FACTORS Gross Regional Product V. Median House Price Council Budget Position Industry Diversity Neutral Slightly Positive Slightly Negative Vacancy Rate V. Median Rent Accommodation Approvals V. Population growth Slightly Positive Slightly Positive Key Indicator 2 AFFORDABILITY Gross Affordability V. Price Growth Median Income V. Median Price Median Rent V. Median Price Key Indicator 3 DEMAND FACTORS Slightly Positive Slightly Positive Positive Key Indicator 5 INVESTMENT VALUE Long-Term Performance Yield House V. Unit Price Geelong V. Melbourne Prices Price Comparison Slightly Positive Neutral Neutral Siightiy Positive Neutral Population Population Pyramid Unemployment Rate Job Creation Infrastructure Spending Council Capital Works Dwelling Sales Positive Slightly Negative Positive Neutral Slightly Negative Positive Neutral 4 5

5 OUR VIEW OF THE GEELONG PROPERTY MARKET OVERVIEW AVOID AVOID This market is showing no value and price LIMITED VALUE The market is showing some value opportunities. Overall, most fundamental indicators support growth. VALUE LOWEST VALUE SUBURBS LIMITED VALUE GEELONG VALUE CAUTION 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. The market is showing good value on most properties. Many fundamental indicators exist which support strong growth. HIGHEST VALUE SUBURBS For more information on the Geelong market, including the highest value suburbs to invest in, call to speak to one of our professional property advisors on

6 GROSS REGIONAL PRODUCT V. MEDIAN HOUSE PRICE NEUTRAL 6 7

7 COUNCIL NET POSITION - CITY OF GREATER GEELONG OVERVIEW SLIGHTLY POSITIVE 7

8 INDUSTRY VALUE ADDED GRP 2013 / 2014 OVERVIEW SLIGHTLY NEGATIVE 8 9

9 GROSS AFFORDABILITY INDEX VS MEDIAN HOUSE PRICE OVERVIEW SLIGHTLY POSITIVE 9

10 MEDIAN INCOME V. MEDIAN HOUSE PRICE SLIGHTLY POSITIVE 10 11

11 MEDIAN PRICE V. MEDIAN RENT POSITIVE 11

12 POPULATION % CHANGE POSITIVE 12 13

13 AGE AND SEX PYRAMID, 2011 SLIGHTLY NEGATIVE 13

14 UNEMPLOYMENT RATE POSITIVE 14 15

15 JOB CREATION INTERNET VACANCIES GEELONG & SURF COAST NEUTRAL 15

16 INFRASTRUCTURE SPENDING V. MEDIAN HOUSE PRICE SLIGHTLY NEGATIVE 16 17

17 CITY OF GREATER GEELONG COUNCIL CAPITAL WORKS OVERVIEW POSITIVE 17

18 TOTAL DWELLING SALES GEELONG NEUTRAL 18 19

19 VACANCY RATE V. MEDIAN RENT SLIGHTLY POSITIVE 19

20 ACCOMMODATION COMMENCED V. POPULATION CHANGE OVERVIEW SLIGHTLY POSITIVE 20 21

21 LONG TERM PERFORMANCE GEELONG (23 SUBURBS) OVERVIEW SLIGHTLY POSITIVE 21

22 YIELD NEUTRAL 22 23

23 HOUSE PRICE V. UNIT PRICE NEUTRAL 23

24 GEELONG MEDIAN HOUSE PRICE V. GREATER MELBOURNE SIIGHTIY POSITIVE 24 25

25 PRICE COMPARISON GEELONG NEUTRAL 25

26 WHY USE US? OUR PROCESS 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 RESEARCH Macro Micro Property 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 26 Australian Trade & Investment Commission

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