Upper Kedron Market Analysis. Prepared For: Cedar Woods Properties Limited

Transcription

1 Upper Kedron Market Analysis Prepared For: Cedar Woods Properties Limited March 215

2 Table of Contents Key Findings... 3 Historical Sales Analysis... 6 Vacant Urban Land... 6 Upper Kedron... 6 Brisbane LGA... 7 Moreton Bay LGA... 8 Ipswich LGA... 9 Logan LGA... 1 Redland LGA Single Unit Dwellings Upper Kedron Brisbane LGA Moreton Bay LGA Ipswich LGA Logan LGA Redland LGA Population Projections Upper Kedron Ferny Grove SA Broad South East Queensland Population Projection Summary Dwelling Projections Upper Kedron Ferny Grove SA Brisbane and Moreton Bay LGA... 2 Project Impact Analysis Current Land Estates Summary The Palisades Jarrah Estate Parks Edge Estate Completed Land Estates Summary Kilbowie Rise Timberline The Gap Cedar Vue Future Land Supply Summary Moreton Bay Regional Council Corridor Demand Economic Drivers and Infrastructure... 3 Ferny Train Station... 3 Mitchelton Employment Growth Area... 3 Schools and Education Affordability Matrix The National Property Research Co. Be In The Know 2

3 Key Findings Historical Sales: Despite the onset of the GFC and the associated negative market conditions, land sales volumes in Upper Kedron rallied in 21 as the new estate The Palisades gained significant traction in its first full year of sales. Across 21 The Palisades contributed to approximately 9.3% of all sales within Upper Kedron. The positive sentiment did not last into 211 with the effects from the Brisbane floods and the continuing depressed residential market conditions hampering supply within the area through to the end of 212. The limited supply and subsequent sales volumes showed significant signs of recovery across 213 and 214 with the release of a range of new stages across the Cedar Vue, Palisades, Jarrah and Parks Edge Estates all of which helped contribute to a large majority of sales in both years. Interestingly 214 saw a marked increase in house sales with lots between 4m 2 and 499m 2 as a direct result of the DHA house sales from the Cedar Vue estate. The 4m 2 to 499m 2 range contributed to 3% of all sales in 214, a dramatic increase considering the estate had only ever achieved one previous sale in 212. The undeniable influx in smaller style housing within Upper Kedron (which has been accepted by consumers) is clearly a result of developers trying to improve yields on what is a quickly declining supply residential market for both new houses and vacant land. The Upper Kedron, Keperra, and The Gap suburbs remain demand led with supply constraints typically resulting in outperforming price growth and thereby narrow market segmentation. Population Projections: Population projections from the QGSO for the Upper Kedron Ferny Grove SA2 show that the area is expected to see an increase in total residents of approximately 35.6% from 9,36 in 211 to 12,69 as at 236. This equates to an average annual growth rate of approximately 1.4%. This could be significantly understated if the area adopts incremental increases to residential densities meeting the demonstrable demand from SEQ s population growth forecasts. Overall, the 65 plus age group is expected to experience the most notable level of growth between 211 and 236 increasing by approximately 152.2% from 765 to 1,929 residents in total, by far the greatest shift out of any age cohort. This also suggests that the downsizing demographic will be looking for property types that only exist in very small supply in the current market. This increase in residents is expected to see the 65 plus age range contribute to 15.2% of all residents by 236; a distinct increase from the 8.2% of residents it represented in 211. Smaller compact homes on low maintenance lots will be important in housing this demographic cohort as Government policy continues to place greater emphasis on the Ageing in Place service delivery model. Dwelling Projections: As at the 211 Census, there were a total of 2,89 standard dwellings (2,714 houses, 168 townhouses and 8 apartments) within the Upper Kedron Ferny Grove SA2. According to the QGSO projections, total dwellings are required to increase by 39.3% (or 1,128 new dwellings) to meet the expected population change forecast for the area. NPR Co believes this is understated as a result of land being constrained under existing planning schemes. Overall, by 236 there is expected to be a total of 4,18 dwellings (new and existing dwellings) in the Upper Kedron Ferny Grove SA2. It is anticipated that the product mix will change to reflect a more accurate depiction of the demographic character of the region. If the Upper Kedron Ferny Grove SA2 saw an increased level of population growth in line with the Queensland average rate of 1.9% per annum then the area would need approximately 1,94 new dwellings by 236 just to meet demand. This figure equates to 776 more dwellings than the current middle range QGSO projections. The National Property Research Co. Be In The Know 3

4 Project Impact Analysis: According to the most recent sales data from land estates within Upper Kedron, there are approximately 185 lots remaining within the three current estates in the area. Please note it is expected that this number may actually be significantly lower, due to the three month lag in the sales database, however this figure is more reliable than potentially inaccurate anecdotal reports. Most of these projects are expected to be completed or nearing completion by mid Upon completion of the three current land estates, future land supply within Upper Kedron is expected to be all but non-existent besides the land parcel owned by Cedar Woods Properties. Development stock within Brisbane s northern corridor has approximately four years of land stock remaining within the major projects. This is again a cause for concern with pricing expected to be noticeably affected as a result of limited supply. Future infill projects within Upper Kedron, stemming from the combination of rural/park residential lots are also expected to diminish due to the cost of developing such a holding. The topographical limitations imposed by surrounding environmental corridors and the potential for exorbitant acquisition costs as a direct result of lack of supply (educated owners keen to capitalise on their asset s sale) continue to inhibit supply. Affordability: The Upper Kedron Ferny Grove SA2 sits more in the at risk range of affordability with 26% of income dedicated to mortgage repayments based on a weekly household income of $2,52. Housing costs above 3% of income are deemed unaffordable. Despite Upper Kedron s comparatively affordable status at present, an increase in the median house price to approximately $629, (a 16.5% increase from 214 median) would mean that the area is deemed as unaffordable. Upward pressure on pricing as a result of a lack of supply in the area, along with changes to the current interest rate back to the long term average (7.2% as identified by the RBA) could mean this scenario occurs faster than expected and is far from unimaginable. It should be noted that the current Brisbane median House Price now exceeds $6, so at $629,, this is not such a stretch. Conclusion: The suburb of Upper Kedron, as well as the Greater Brisbane Area as a whole, is clearly suffering from a declining supply of quality residential land and new housing. At present there are only three land estates remaining within the suburb which all have the potential to be sold out before mid-216. This diminishing supply is exacerbated by the fact the Upper Kedron Ferny Grove SA2 is projected to see a total population increase of approximately 35.6% to 12,69 people as at 236. As a result of the projected increase in population alone, the area will need a total of 1,128 new dwellings simply to meet the somewhat understated forecast demand. It should be noted that this does not include demand from purchasers from surrounding areas/interstate who may be attracted to Upper Kedron s close proximity to the CBD, environmental attributes and existing infrastructure. The NPR Co. believes that the current population and subsequent dwelling forecasts are understated as a result of land being constrained under existing planning schemes. In short, if population growth only increases in line with the state average of 1.9% per annum (a very feasible scenario given Upper Kedron s close proximity to the Brisbane CBD), a total of 1,94 new dwellings will be required by 236. This figure equates to 776 more dwellings than the current middle range QGSO projections. At present, there is also a general shortage of large residential estates remaining in the inner northern corridor. This is a problem as masterplanned communities typically provide the glue to hold together many of the smaller residential developments that can be seen around North Lakes. At best, North Lakes has approximately 12 months left to run which will push many purchasers further north upon its completion. A site such as Cedar Wood s offers the capacity to provide a quality, well designed infill solution of scale to the south that makes significantly better use of existing infrastructure within the Upper Kedron region. This also has the added benefit of reducing unnecessary sprawl and is highly complementary to the sentiment of the SEQRP which embraces more compact urban form, better utilisation of existing land and the opportunity to provide accommodation across projects that meet a broad demographic base. The National Property Research Co. Be In The Know 4

5 When considering the modest scale of the Cedar Woods project, it has the capacity to be developed as a quality residential community whilst adopting the design attributes and quality of a larger masterplanned residential development. Given that the northern Brisbane corridor (inclusive of the Moreton Bay Regional Council area) has approximately four years of land stock remaining in current projects, there is a real expectation that pricing will increase on the back of limited stock if supply issues are not addressed. Furthermore, opportunities for alternative infill projects within Upper Kedron, stemming from the combination of rural/park residential lots is also expected to diminish due to the cost of development, the topographical limitations of the area and the potential for exorbitant acquisition costs as a direct result of lack of supply. Unfortunately the supply issue surrounding Upper Kedron is actually much greater than the suburb itself; it is a South East Queensland problem. With population growth at 1.9% in Queensland, and the majority of it occurring in the south east corner of the State, the challenge is to provide accommodation that is suitable for all demographics and prices that allow for a broad spectrum of potential purchasers. It also suggests that with the State economy in a generally acknowledged cash strapped position, existing infrastructure needs to be utilised to its fullest. This has been taken into account within the proposed project as no additional government infrastructure will be required thereby capitalising on existing infrastructure/public transport and preventing potentially inefficient fringe development. The Cedar Woods site is potentially one of the last significant development opportunities, of this scale, within 15 kilometres of the Brisbane CBD. The development of the site to its full potential would not only help to maximise the use of the existing land, but will also provide a multitude of benefits to the existing community. Furthermore, the project itself could potentially help introduce a new range of product diversity into the Upper Kedron region, should the developer see fit. This could help to service both the first home buyer and downsizer demographic, both of which are expected to see noticeable increases in their individual populations within the area. The range of purchaser types within the proposed project is also expected to see rental options expand within the area which is expected to have a positive effect on affordability. In conclusion, the Cedar Woods Properties Site in Upper Kedron is well located to take advantage of current market circumstances whilst also adding greater vibrancy to the local community, more successful retail outcomes in the broader catchment as well as creating greater longevity within the residential market as a whole. It is also clear that without this project, supply pressures within the area will undoubtedly continue, along with negative impacts on both pricing and cost of living. The National Property Research Co. Be In The Know 5

6 Historical Sales Analysis Vacant Urban Land The vacant land sales below have been compiled for the subject suburb of Upper Kedron as well as the secondary catchments of Brisbane, Moreton Bay, Ipswich, Logan and Redland LGA s. All sales have been restricted to lot sizes between 5m 2 and 1,5m 2 and prices between $1, and $7, to ensure accuracy and the removal of obvious outliers within the data sets. Upper Kedron sqm sqm sqm sqm sqm sqm sqm sqm sqm 1-15 sqm Median Land Price $35, $3, $25, $2, $15, $1, $5, $ Vacant Urban Land sales within Upper Kedron have fluctuated sporadically since 23 due to inconsistent supply from land estates, economic influences such as the Global Financial Crisis and the generally built up/constrained nature of the suburb as a whole. Overall, volumes reached their peak in 27 at 121 on the back of the residential housing boom in Queensland as well as an influx of developer stock within the area which accounted for approximately 95.9% of the sales that year. Despite the onset of the GFC and the associated negative market conditions, sales volumes rallied in 21 amidst high government stimulus with the new estate The Palisades gaining significant traction in its first full year of sales. Across 21 The Palisades contributed to approximately 9.3% of all sales within Upper Kedron. After the stimulus hangover, the positive sentiment did not last into 211 with the negative effects from the Brisbane floods and the continuing depressed residential market conditions hampering supply within the area through to the end of 212. Despite this, the limited supply and subsequent sales volumes showed significant signs of recovery across 213 and 214 with the release of a range of new stages across Cedar Vue, Palisades, Jarrah and Parks Edge Estates all of which helped contribute to a large majority of sales in both years. Despite large variances in annual sales volumes, median vacant land prices have historically trended upwards since 23 despite a decline in 21 off the back of discounted developer stock. Overall the median price has increased from $148, in 23 to $325, in 214 an increase of approximately 119.6% or $177,. The suburb achieved its peak median price in 214 which is largely expected to be a result of the limited amount of vacant land stock available within the suburb and the subsequent level of demand for the existing lots. Upper Kedron is expected to have continued price growth through 215. Historical lot size preferences typically fell between 5m 2 and 799m 2 with approximately 72.2% of sales per annum between 23 and 21 falling within that range. From 211 to 214 the onset of significant supply issues has meant the development of smaller lot sizes in order to improve project The National Property Research Co. Be In The Know 6

7 yields. Most notably is the 4m 2 to 499m 2 cohort which contributed to an average of 37.7% of sales from 211 to 214 after being almost non-existent in the market previously. The opportunity to provide smaller lot sizes and increase affordability should not be discounted. The first home buyer market which has remained quite small since the GFC would benefit from more compact sizes suiting this price sensitive purchaser. Given that most master planned communities now refer to a 48m 2 lot as a traditional size, Upper Kedron is not really challenging any new urban design outcomes. With Economic Development Queensland demonstrating that the public will accept freehold title to less than 1m 2, Upper Kedron should be following this lead and broadening the market appeal of the project to a significantly wider demographic. With the low interest rate environment expected to remain for some time, the creation of smaller lot sizes may allow those long term renters to enter the market in what is a desirable urban location that is surrounded by good quality amenity. Brisbane LGA 3,5 $35, 3, $3, 2,5 $25, 2, $2, 1,5 $15, 1, $1, 5 $5, sqm sqm sqm sqm sqm sqm sqm sqm $ sqm 1-15 sqm Median Land Price The Brisbane LGA has seen a clear downturn in sales volumes since achieving a peak of 3, sales in 27. The GFC hit hard in 28 with total sales declining by 62.1% or 1,863 sales. 29 saw a 61.5% recovery in volumes off the back of significant government stimulus. Despite this, 21 revealed the true market sentiment and volumes declined again for two consecutive years amidst reduced consumer confidence and the considerable pull forward effect of government and developer offers. Sales volumes appeared to be improving during 213 as economic and market conditions improved however supply side constraints have hampered volumes in 214 with only 1,178 sales achieved. Median prices have improved significantly between 23 and 214 increasing by 75.7% or $14, from $185, to $325,. Lot size preferences have remained relatively consistent despite overall changes in volumes. However 213 and 214 showed the first significant signs of small lot product gaining traction within the market with the 5m 2 to 2m 2 cohort contributing to 6.5% of 5.7% of total sales respectively. The small lot size trend in the Brisbane City Council region is expected to increase as more lots are split and any smaller developments increase density. The National Property Research Co. Be In The Know 7

8 Moreton Bay LGA 4,5 4, 3,5 3, 2,5 2, 1,5 1, $252, $224, $196, $168, $14, $112, $84, $56, $28, $ 5-2 sqm sqm sqm sqm sqm sqm sqm sqm sqm 1-15 sqm Median Land Price Sale volumes in the Moreton Bay LGA peaked in 27 at 4,13 sales off the back of the residential housing boom. The subsequent sales volumes in 28 declined by approximately 53.4% as a result of the GFC. The bottom of the market was effectively reached in 211 after having declined by 4.7% from the previous year. 21 represented the hangover from government stimulus spending in 29 where arguably 211 was a much more accurate representation of how low consumer confidence was. The three consecutive increases from 212 to 214 of 7.9%, 33.3% and 1.8% are thought to be a mix of pent up demand, record low interest rates and improved consumer confidence. Overall, median prices increased from $144, in 23 to $219, in 214 a change of 52.1% or an average annual increase of 4.7%. Similarly to the Brisbane LGA, the Moreton Bay LGA has seen fairly consistent lot size trends between 23 and 214. The one exception to this is the 3m 2 to 399m 2 cohort which has continued to gain momentum in the market since 24. Overall this cohort has increased from 2.3% of the market in 24 to approximately 31.7% of the market as at 214. This is another clear indicator of the decrease in lot sizes as a result of declining supply. It should also be noted that the increase in smaller lot sizes has only been made possible by the home building industry becoming more flexible with their house designs. As a result, the buying public now have a much broader range of housing options than ever before. The National Property Research Co. Be In The Know 8

9 Ipswich LGA 2,8 2,45 2,1 1,75 1,4 1, $2, $175, $15, $125, $1, $75, $5, $25, $ 5-2 sqm sqm sqm sqm sqm sqm sqm sqm sqm 1-15 sqm Median Land Price Similar to the other LGA s the Ipswich LGA saw its peak sales volumes achieved in 27 with a total of 2,39 sales. This rate has been unparalleled since this time with the second highest total sales (1,521 in 29) being approximately 36.4% lower. Sales volumes were significantly affected by the GFC with total sales declining more than 42.6% between 27 and 28 alone. Interestingly, as a result of continual government stimulus through 29 and 21 the bottom of the market was not reached until 211 where only 81 sales were achieved, the lowest rate on record since 23. Despite negative market sentiment and poor economic conditions in the post GFC period, median prices performed remarkably well up until 212 where they began to stagnate in comparison to the historical growth seen prior. Overall the median land price within the Ipswich LGA has increased from $115, in 23 to $175, in 214 a change of approximately 52.2% or $6,. Despite this, the period from 211 to 214 has seen pricing drop from a peak of $182,, approximately 4% higher than the current median. This period of stagnant growth is expected to be the hangover from the stimulus affected market, where pricing has had time to correct amidst a high supply environment. Historical lot size preferences have typically remained consistent however the smaller lot size cohorts have continued to make inroads with the LGA since 27. Overall the 2m 2 to 299m 2 range has increased its market share from.6% in 27 to approximately 4.1% as at 214. Interestingly the 5m 2 to 2m 2 range contributed to 1.5% of total sales in 213 the highest rate for this cohort on record. The Ipswich LGA is a reliable and case leading example of where sound supply can keep the price inflation of raw land at reasonable levels. When supply matches or slightly exceeds demand, affordability is generally not an element in the purchaser equation. The proposed Upper Kedron project has the potential to take away some of the immediate inflationary pressure around vacant land prices as the supply of new lots will absorb much of the pent up demand. The National Property Research Co. Be In The Know 9

10 Logan LGA 1,4 $224, 1,2 $192, 1, $16, 8 $128, 6 $96, 4 $64, 2 $32, $ 5-2 sqm sqm sqm sqm sqm sqm sqm sqm sqm 1-15 sqm Median Land Price The Logan LGA saw their peak sales reached in 27 at 1,299 which is approximately 33.6% higher than the 214 rate of 972, the second highest volume on record. Despite suffering significant declines in sales volumes of 45.5% between 27 and 28 and a further decline of 41.9% between 21 and 211, the area has seen three consecutive years of recovery between 212 and 214. Overall volumes have increased by 147.3% from 211 to 214. This recovery has largely been stimulated by the major developments discounting their pricing within the region to help restimulate sales volumes and consumer confidence. Lend Lease s Yarrabilba project has proven to be a specific catalyst for change in the region with its small lot size options and extremely competitive pricing forcing other estates to adapt in order to retain market share. The median land price within the Logan LGA peaked in 21 at $24,95 after 7 years of consecutive growth since 24. Despite this, pricing corrected by approximately 16.7% from 21 to 213 where it reached $175,. Improved market confidence and a jump in sales volumes saw the median price increase for the first time in three years. Lot sizes between 3m 2 and 399m 2 have gained significant traction within the market since 211 increasing from 6.9% of the market in 211 to 19.2% as at the end of 214 The National Property Research Co. Be In The Know 1

11 Redland LGA 1,4 1,2 1, sqm sqm sqm sqm sqm sqm sqm sqm sqm 1-15 sqm Median Land Price $315, $27, $225, $18, $135, $9, $45, $ The median land price within the Redland LGA has increased by approximately 56.8% from $185, in 23 to $29, as at the end of 214 which is an average annual growth rate of 5.16%. Total sales volumes have been trending downwards since 22 where the peak of 1,291 sales was achieved. Aside from 27, sales volumes of this nature have not been seen again with each other year between 23 and 214 recording between 261 and 62 sales in total. This significant drop in annual volumes is again expected to be a result of the declining availability of land within the Redland LGA. This is also expected to apply even greater upward pressure on land and house values into the future. Despite historically inconsistent sales rates, lot size preferences have continued to remain relatively constant with the traditional sized lots between 6m 2 and 799m 2 making up an average of 52.3% of sales every year. Smaller lots of between 4m 2 and 499m 2 have begun to appear more frequently within the Redland LGA, specifically between 212 and 214 making up a further 25.9% of sales on average per annum. The Redland LGA shares many characteristics with the subject site, particularly with regard to green areas. A significant attraction of the Redlands area is the amount of green environmental corridors. I is the understanding of the author that even in its most dense form, the Upper Kedron project retained over 3% of the area in natural bushland corridors. The National Property Research Co. Be In The Know 11

12 Single Unit Dwellings The single unit dwelling sales below have been compiled for the subject suburb of Upper Kedron as well as the secondary catchments of Brisbane, Moreton Bay, Ipswich, Logan and Redland LGA s. All sales have been restricted to lot sizes between 5m 2 and 1,5m 2 and prices between $15, and $1,5, to ensure accuracy and the removal of obvious outliers within the data sets. Upper Kedron $63, $56, $49, $42, $35, $28, $21, $14, $7, $ 5-2 sqm sqm sqm sqm sqm sqm sqm sqm sqm 1-15 sqm Median House Price Single Unit Dwelling sales within Upper Kedron have fluctuated across the analysis period albeit to a lesser extent than vacant urban land within the same area. Overall sales volumes peaked in 27 at 81 total sales on the back of the residential housing boom. Despite this, the GFC had a significant impact on sales volumes with Upper Kedron recoding two consecutive years of declines in 28 and 29 where sales decreased by approximately 17.3% and 13.4% respectively. Sales rates rallied in 21 off the back of a significant number of Defence Housing Australia sales (28 in total) which contributed to 38.9% of sales in 21 alone. However, sales declined significantly between 211 and 213 in the wake of limited new developer stock and a reluctance from existing owners to exit the market post GFC. Interestingly, sales rebounded strongly in 214 with Upper Kedron recording the second highest number of sales on record with 8 sales in total. According to the available data there were another 23 homes sold by Defence Housing Australia in 214 all of which were originally vacant land sales from within the Cedar Vue estate. Each home sold between $525, and $635, (average price of $537,5) and all lots were between 4m 2 and 457m 2. Across the analysis period median prices have increased significantly from $336, in 23 to $56, as at the end of 214. This represents growth of approximately 66.7% or $244, and is equivalent to an average annual increase of 6.1%. As was the case with vacant land in Upper Kedron, pricing has reached its peak in 214 off the back of limited supply and increased demand from surrounding markets. Lot size preferences within the subject suburb have remained relatively consistent through the sales data despite changes in total volumes. Between 23 and 214 the traditional sized cohort between 6m 2 and 799m 2 contributed to an average of 7.9% of total sales per annum. Interestingly 214 saw a marked increase in lots between 4m 2 and 499m 2 as a direct result of the DHA house sales from the Cedar Vue estate. The 4m 2 to 499m 2 range contributed to 3% of all sales in 214, a dramatic increase considering the cohort had only ever achieved one previous sale in 212. The undeniable influx in smaller style housing within Upper Kedron is clearly a result of developers trying to improve project longevity on what is a quickly declining residential market for both new houses and vacant land. The National Property Research Co. Be In The Know 12

13 Brisbane LGA 27, 24, 21, 18, 15, 12, 9, 6, 3, $63, $56, $49, $42, $35, $28, $21, $14, $7, $ 5-2 sqm sqm sqm sqm sqm sqm sqm sqm sqm 1-15 sqm Median House Price Contrasting the majority of the other LGA s analysed, Brisbane LGA house sales peaked at 22,385 in 23 as result of high consumer confidence and lower pricing within the area. Volumes of this level were emulated again in 27 during the residential housing boom with the Brisbane LGA achieving a further 21,568 sales, just 3.65% lower than the record results in 23. The GFC had significant impact on the area, causing volumes to decline by approximately 38.5%. After reaching the bottom of the market in 211 with only 11,45 sales, the Brisbane LGA has recovered somewhat as at 214 with approximately 15,38 sales achieved in the year. Despite fluctuating sales volumes, median prices have remained resilient and have historically trended upwards since 23 despite some stagnation through 211 and 212 as a result of depressed market conditions and limited consumer confidence. Overall median house prices have increased from $32, in 23 to $575, as at 214, a change of approximately 79.7% which is equivalent to an average annual growth rate of 7.2%. Historical lot size trends are dominated by the traditional sizes, most common within the existing market. Lots between 5m 2 and 799m 2 have, on average, contributed to approximately 56.7% of annual sales. Smaller style lots of between 4m 2 and 499m 2 have also featured continually within the market as infill development and subdivisions continue to become increasingly necessary within the built up Brisbane LGA. Overall the 4m 2 to 499m 2 cohort has consistently achieved between 19.6% and 22.1% of total sales per annum. The National Property Research Co. Be In The Know 13

14 Moreton Bay LGA 16, 14, 12, 1, 8, 6, 4, 2, $44, $385, $33, $275, $22, $165, $11, $55, 5-2 sqm sqm sqm sqm sqm sqm sqm sqm sqm 1-15 sqm Median House Price House sales in the Moreton Bay LGA peaked at 13,612 in 29 amidst significant government stimulus in the post GFC environment. Sales volumes declined dramatically in 21 as the market corrected and poor economic conditions remained prevalent. Overall sales declined by 62.9% to reach only 5,41 in 21, Volumes started their recovery after reaching the bottom of the market in 211 with the 6,119 sales achieved by the end of 214, this is equivalent to the sales rates recorded in 25. Despite noticeable fluctuations in total volumes, median house prices trended upwards across the analysis period shifting from $235, in 23 to $39, in 214, a change of approximately 65.9%. Similarly to the Brisbane LGA, lots size preferences within the Moreton Bay LGA have been heavily influenced by traditional sized lots between 6m 2 and 799m 2 which are very common within the existing market. Overall this cohort contributed to an average of 58.1% of all sales per annum. Ipswich LGA 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, sqm sqm sqm sqm sqm sqm sqm sqm sqm 1-15 sqm Median House Price The Ipswich LGA saw a peak in total sales during 27 with 4,337 sales in total. Similarly to the other LGA s Ipswich was affected by the GFC which caused a 36.7% decline in sales during 28. The National Property Research Co. Be In The Know 14 $ $35, $315, $28, $245, $21, $175, $14, $15, $7, $35, $

15 Volumes began to recover from 212 to reach a toal of 2,59 as at the end of 214, approximately 4.3% less than the peak in 27. Median house prices have increased significantly across the analysis period from $185, in 23 to $31, as at 214, a change of approximately 67.6% or $125,. This equates to an average annual increase of 6.14%. Lots size preferences have again seen traditional sized lots dominant the market place for the most part. Small lots between 2m 2 and 299m 2 have also achieved more noticeable market penetration since 25. Logan LGA 6,4 5,6 4,8 4, 3,2 2,4 1,6 8 $4, $35, $3, $25, $2, $15, $1, $5, sqm sqm sqm sqm sqm sqm sqm sqm sqm 1-15 sqm Median House Price The Logan LGA saw a peak in total sales during 27 with 5,591 sales in total. Similarly to the other LGA s Logan was affected by the GFC which caused a 34.9% decline in sales during 28. Volumes began to recover from 212 to reach a toal of 3,541 as at the end of 214, approximately 36.7% less than the peak in 27. Median house prices have increased significantly across the analysis period from $22, in 23 to $345, as at 214, a change of approximately 7.8% or $143,. This dramatic increase comes despite stagnant and even negative growth throughout 211 to 213. Lots size preferences have again seen traditional sized lots dominate the market place for the most part. Small lots between 2m 2 and 299m 2 have also achieved more noticeable market penetration since 211. $ The National Property Research Co. Be In The Know 15

16 Redland LGA 4,55 3,9 3,25 2,6 1,95 1,3 65 $56, $48, $4, $32, $24, $16, $8, sqm sqm sqm sqm sqm sqm sqm sqm sqm 1-15 sqm Median House Price Overall, median house prices within the Redland LGA have increased by 59.9% from $294, in 23 to approximately $47, as at 214. This equates to an average annual growth rate of approximately 5.45% with the bulk of the growth seen between 23 and 27. Despite the positive trajectory of prices within the region, volumes have proven less stable with annual sales fluctuating between as high as 3,528 (22) and as low as 1,691 (212). The NPR Co. expects that the sales volumes have increased in 214 and will continue to accelerate in 215 due to the low interest rate environment and increasing demand for bayside suburbs. Again lot size preferences have historically seen sales of lots between 6m 2 to 799m 2 contribute to an average of 59.6% of all sales per annum. Similarly to most of the other LGA s analysed, lots below 299m 2 have not experienced a dramatic increase in volume due mainly to the large volume of existing product within the market (with traditional or larger lot sizes) at present and the hesitation of developers to introduce smaller lots into the market at present. $ The National Property Research Co. Be In The Know 16

17 Population Projections Population growth is one of the key drivers of demand for residential housing. The four components that typically determine population change are natural increase, net overseas migration, net interstate migration and in the case of smaller catchments like Upper Kedron, net intrastate migration. The graphs below show the projected population growth for the Upper Kedron Ferny Grove SA2 between 211 and 236. The 211 figure is based on 211 Census data while the other years are projections based on Queensland Government Statistician s Office (QGSO) data. The following page also provides a breakdown of the major secondary LGA areas and their projected population change out to 236. Upper Kedron Ferny Grove SA2 Upper Kedron Ferny Grove SA2 Population Projections by Age Group Cohort , 13, 12, 11, 1, 9, 8, 7, 6, 5, 4, 3, 2, 1, Source: QGSO and The NPR Co Population projections from the QGSO for the Upper Kedron Ferny Grove SA2 demonstrate that the area is expected to see an increase in total residents of approximately 35.6% from 9,36 in 211 to 12,69 as at 236. This equates to an average annual growth rate of approximately 1.4%. It is suggested this growth rate which is below the State average is a result of limited supply opportunities. As at 211, the 25 to 44 year old cohort was the dominant age bracket within the subject area making up approximately 28.8% of the total population. This trend is expected to continue out to 236 where the 25 to 44 year old age group will continue to make up approximately 24.9% of all residents despite only experiencing estimated growth of approximately 16.9% (the lowest rate of growth out of all 5 age brackets) across the 25 year period. It is important to note that the 25 to 44 year old age range is typically identified as the cohort with the greatest earning (and therefore spending) capacity and generally contributes to the higher end of the earnings bell curve within any given area. The ageing population within south east Queensland has been well documented and it is no different within the Upper Kedron Ferny Grove SA2 catchment. Overall, the 65 plus age group is expected to experience the most notable level of growth between 211 and 236 increasing by approximately 152.2% from 765 to 1,929 residents in total, by far the greatest shift out of any age cohort. This increase in residents is expected to see the 65 plus age range contribute to 15.2% of all residents by 236 a distinct increase from the 8.2% of residents it represented in 211. Interestingly, despite the continually heralded ageing population the to 14 year old age category is expected to experience the second highest rate of growth across the analysis period. Overall the to 14 year olds are projected to increase from 2,254 to 2,984 residents, a change of approximately 32.4%. It is assumed that this increase is largely the result of natural increase and could result in a number of existing, previously childless residents of Upper Kedron looking to upgrade their dwellings within the same area The National Property Research Co. Be In The Know 17

18 Broad South East Queensland Population Projection Summary 3,5, 3,25, 3,, 2,75, 2,5, 2,25, 2,, 1,75, 1,5, 1,25, 1,, 75, 5, 25, Major LGA Population Projections by Market Share Source: QGSO and The NPR Co. The overall population growth within the secondary catchment LGA s from 211 to 236 is displayed in both charts above and below. Overall the Ipswich LGA is projected to experience the largest increase in both volume (increase of 36,446 people) and percentage change (increase of 29.3%) by 236 out of the five LGA s analysed. This change in total residents exceeds the Brisbane LGA s expected growth by approximately 1,12 people and is expected to be the result of large scale residential development (Springfield Lakes, Ecco Ripley and other Western Corridor estates), strong economic drivers and the migration of residents from more expensive locations. Overall, the Brisbane LGA is expected to see the total number of residents increase from 1,89,879 in 211 to approximately 1,44,223 as at 236, equivalent to growth of approximately 32.1% or 1.3% per annum. Interestingly, Redland LGA is expected to see a similar level of growth as Brisbane out to 236 with an increase in residents of approximately 38% or 54,579 people. The comparatively limited growth within these two LGA s is expected to have been affected by the limited availability of new developable land and the increased cost of living/buying within these areas as supply continues to decline. Similarly to the obvious growth corridor that is the Ipswich LGA, the Logan LGA is expected to see significant population expansion by 236. This is again expected to be aided by large scale residential development like Lend Lease s Yarrabilba project and the greater Flagstone PDA. Overall the Logan LGA is expected to see total population increase from 287,474 in 211 to 521,749 in 236, a change of 81.5%. 1,6, 1,5, 1,4, 1,3, 1,2, 1,1, 1,, 9, 8, 7, 6, 5, 4, 3, 2, 1, Source: QGSO and The NPR Co. Brisbane LGA Moreton Bay LGA Ipswich LGA Logan LGA Redland LGA Major LGA Population Projections by Volume of Change Brisbane LGA Moreton Bay LGA Ipswich LGA Logan LGA Redland LGA The National Property Research Co. Be In The Know 18

19 Dwelling Projections The dwelling projections below are based on the projected population rates from the previous section, along with the historical number of residents per dwelling, dwelling type and the number of existing homes within the subject area. Upper Kedron Ferny Grove SA2 6, 5,5 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1, Upper Kedron Ferny Grove SA2 Total Dwelling Projections Source: QGSO, ABS and The NPR Co QGSO's Middle Range Total Dwelling Forecast Scenario 1: Total Dwelling Forecast Based on QLD Average Annual Pop. Growth of 1.9% Scenario 2: Total Dwelling Forecast Based on Annual Pop. Growth of 2.5% As at the 211 Census, there were a total of 2,89 standard dwellings (2,714 houses, 168 townhouses and 8 apartments) within the Upper Kedron Ferny Grove SA2. According to the QGSO projections, total dwellings are required to increase by 39.3% (or 1,128 new dwellings) to meet the expected population change forecast for the area. Overall, by 236 there is expected to be a total of 4,18 dwellings (both new and existing) in the Upper Kedron Ferny Grove SA2. If the Upper Kedron Ferny Grove SA2 saw an increased level of population growth in line with the Queensland average rate of 1.9% per annum then the area would need approximately 1,94 new dwellings by 236 just to meet demand. If population growth did reflect the state average, the subject SA2 would see an 18.1% increase in total residents compared to the original QGSO projections which is equivalent to 2,294 extra people. Scenario 3 has been included to help portray the increased level of demand for dwellings should population growth rise at a rate of 2.5% per annum. Overall a total of 2,76 new dwellings would be required to house the additional 4,663 people should this outcome occur. It is The NPR Co. s opinion that the Scenario 3 projection shows significant upside and has been included as a comparative tool that demonstrates what high population growth looks like. 3, 2,7 2,4 2,1 1,8 1,5 1, Upper Kedron Ferny Grove SA2 New Dwelling Volume Projections Total New Dwellings Based on QGSO Projections Total New Dwellings Based on Scenario 1 Total New Dwellings Based on Scenario 2 Source: QGSO, ABS and The NPR Co. The National Property Research Co. Be In The Know 19

20 The graph above shows the volumes of new dwellings required to meet the three scenarios at any given year. It should be noted that these figures do not include the 2,89 existing dwellings recorded in 211. This graph shows a clear and demonstrable demand for new dwellings in order to meet the population forecasts. Without new supply there is an expectation that price growth will outpace wage growth pushing Upper Kedron into the realms of unaffordability. Brisbane and Moreton Bay LGA Brisbane and Moreton Bay LGA Total Dwelling Projections , 55, 525, 5, 475, 45, 425, 4, 375, 35, 325, 3, 275, 25, 225, 2, 175, 15, 125, 1, 75, 5, 25, Brisbane LGA Middle Range Dwelling Forecast Brisbane LGA High Range Dwelling Forecast Moreton Bay LGA Low Range Dwelling Forecast Brisbane LGA Low Range Dwelling Forecast Moreton Bay LGA Middle Range Dwelling Forecast Moreton Bay LGA High Range Dwelling Forecast Source: QGSO, ABS and The NPR Co. The projections above are based on the low, middle and high range QGSO population forecasts for both the Brisbane and Moreton Bay LGA s. According to the 211 Census data, the Brisbane LGA had a total of 378,45 dwellings, 71.3% were houses, 9.8% were townhouses and 18.9% were apartments. According to the Middle Range QGSO population projections, Brisbane will need a total of 142,478 new dwellings to meet demand by 236. This is expected to comprise of 88,468 new houses (62.1%), 16,24 (11.4%) townhouses and 37,771 (26.5%) apartments. By 236 the Brisbane LGA is expected to comprise of 52,928 dwellings, approximately 37.6% more than in 211. The variances in the Low and High Range reflect the potential effects of reduced/increased population growth. Overall the low range is expected to require approximately 2.5% (29,143) less dwellings in 236 and the high range is expected to require 2.6% (29,438) more. Comparatively the Moreton Bay LGA had only 131,252 dwellings as at the end of 211. According to the Middle Range QGSO population projections, the Moreton Bay LGA will require an additional 94,442 dwellings to meet the expected demand. This equates to approximately 58,641 new houses, 1,765 new townhouses and 25,36 new apartments. The Moreton Bay LGA is expected to have a total of 225,694 dwellings which is an increase of 71.9%. The High Range projections show the need for a total of 114,228 new dwelling by 236 compared to the low range which only requires 74,855 dwellings required to meet demand. The National Property Research Co. Be In The Know 2

21 Project Impact Analysis This section of the report will provide an insight into current and completed development projects within Upper Kedron and the nearby suburb of The Gap. The charts below identify the market share of the most dominant projects in both suburbs in comparison to sales of existing/non-developer stock within the same areas. 3 The Gap Market Share Analysis Timberline The Gap Kilbowie Rise Non-Developer Sales As can be seen from the table above, non-developer sales have historically contributed to 1% of The Gap s market during 29 and 21. The onset of 211 saw the start of both Timberline The Gap and Kilbowie Rise, which saw sales within The Gap increase significantly as a result of what appears to be pent up demand. Overall, the Timberline The Gap project dominated sales in both 211 and 212 comprising 7% and 5% of sales each year respectively. Once Timberline The Gap was completed, Kilbowie Rise saw the remainder of its stock sold in Upper Kedron Market Share Analysis Parks Edge Estate 1 16 Jarrah Estate The Palisades Cedar Vue Non-Developer Sales Upper Kedron has seen a number of significant residential developments of varying levels of quality between 29 and 214. Overall, The Palisades has been the most dominant estate between 29 and 212 due to its quality offering and its established position within the market (being the only project with Upper Kedron for two years). Since 213, Jarrah Estate has made a significant dent in the market contributing to 28.1% of sales in 213 (first year of development) and 22.5% of sales in 214. It should also be noted that the Cedar Vue project finalised their development within the declining Upper Kedron land market during 213 after two years of limited sales by contributed 46.1% The National Property Research Co. Be In The Know 21

22 of all sales in 213 (their third and final year of development). Interestingly, the Parks Edge Estate, which has released a number of small lots below 4m 2 in both 213 and 214, has gained significant traction within the Upper Kedron market despite the number of competing projects. Overall, Parks Edge has contributed to 11.2% of sales in 213 and a further 2% of sales in 214. Current Land Estates Summary The Palisades Source: The NPR Co. The Palisades located in Upper Kedron, is one of the larger land estates within the area. Historically, the estate has predominantly attracted owner occupiers due to the higher price points and building costs within the area. Whilst the majority of homes are located on sloped lots at present, the later stages are expected to yield a high number of flat allotments which are expected to sell quickly according to staff. At present the estate has recorded 142 sales out of an expected total of 223 residential lots proposed across a total of 4 stages. The Palisades Historical Vacant Land Sales Summary Year Total Sales Median Price Median Lot Size Median SQM Rate 29 5 $33, 1,3 $ $295, 618 $ $395, 1,74 $ $355, 1,859 $ $324,995 1,126 $ $33, 673 $49 Jarrah Estate Source: The NPR Co. The Jarrah Estate, located in Upper Kedron, is currently selling lots from its final release. According to the data available, the project has already sold a total of 43 lots of the 69 blocks expected upon The National Property Research Co. Be In The Know 22

23 overall completion. Lots within the project range in size from approximately 4m 2 to 1,777m 2 with most blocks featuring park frontages. Jarrah Estate Historical Vacant Land Sales Summary Year Total Sales Median Price Median Lot Size Median SQM Rate $292, 46 $ $33, 564 $575 Parks Edge Estate Source: The NPR Co. The Parks Edge Estate, located adjacent to both the Jarrah and Cedar Vue projects, is currently selling from its second and third releases. All lots within the latest stages range in size from 35m 2 to 9,42m 2 (heavily impacted by environmental restrictions) with an average size of approximately 732m 2. At present, the currently advertised lots within Parks Edge Estate range from $289,5 to $375,. Parks Edge Estate Historical Vacant Land Sales Summary Year Total Sales Median Price Median Lot Size Median SQM Rate $36, $ $297, $718 The National Property Research Co. Be In The Know 23

24 Completed Land Estates Summary Kilbowie Rise Source: The NPR Co. The Kilbowie Rise estate was a small scale development which was undertaken by the Urbex group on Kilbowie Street in The Gap. The development itself only released a single stage which contained 11 lots, ranging in size from between 53m 2 to 32,91m 2. It must be noted that due to the location of the 32,91m 2 lot, it was subject to the restrictions of a vegetation covenant, which encompasses approximately 98% of the site and dramatically reduced the ability to develop the land further. Many established trees were left within the estate in order to compliment the surrounding Keperra Bushland. Across the life of the project the median price for land sales was found to be $36,. The estate has been fully sold out since 213, with one lot expected to have been retained by the developer. Kilbowie Rise Historical Vacant Land Sales Summary Year Total Sales Median Price Median Lot Size Median SQM Rate $44, 1,75 $ $31, 56 $ $417,5 1,97 $383 Timberline The Gap Source: The NPR Co. Timberline The Gap was a small residential subdivision which was developed by Turissi Properties, located on Tilquin Street within The Gap. The estate is fully developed with each of the 28 lots sold. According to historical data, house blocks ranged in size from 475m 2 to approximately 2,5m 2. Staff reportedly never negotiated on price with the cheapest lot being sold for $295, and the most expensive reaching $46,. Settlement was conducted on a 3 day basis with no subject to sale contracts entered into. The majority of purchasers within the project were second and third home buyers with the alleged average age of the buyer being approximately 38 years old. These were predominantly professionals The National Property Research Co. Be In The Know 24

25 who already resided in The Gap and were upgrading to a more modern or larger home. Inspection of the site revealed that, like neighbouring projects such as Kilbowie and the much older Stonehawke development, the majority of the lots were quite slopey due to the estate s hillside location. Timberline The Gap Historical Vacant Land Sales Summary Year Total Sales Median Price Median Lot Size Median SQM Rate $399,5 82 $ $39, 861 $453 Cedar Vue Source: The NPR Co. The Cedar Vue project located on Lyrebird Crescent within Upper Kedron, was originally developed by Ausbuild. The estate has sold out of all available land with the majority of the estate s sales recorded in 213 (total of 41). It is interesting to note that of the 41 sales in 213, 23 were in the form of two multi-sales to Defence Housing Australia. Across the life of the project, the median sale price for land (without taking into account the multi-sales) was found to be approximately $295, for lots between 4m 2 and 635m 2. Cedar Vue Historical Vacant Land Sales Summary Year Total Sales Median Price Median Lot Size Median SQM Rate $33, 45 $ $296, 445 $ * 41 $295, 429 $697 *The sales recorded in 213 featured 18 Normal Sales and 23 Multi-Sales. Due to the fact that Multi-Sales are recorded under the same sale price and a combined land area, the medians included refer to the 18 normal sales. The National Property Research Co. Be In The Know 25

26 Future Land Supply Summary Future land supply within the Upper Kedron area, as well as the Brisbane LGA as a whole, is significantly constrained as a result of limited supply. This is expected to compound as the estates listed above continue to sell their remaining stock and land parcels. A detailed breakdown of Upper Kedron s current land estate s historical sales and remaining future supply can be seen below. Upper Kedron Land Estate Sales and Remaining Stock Estate Suburb Total Lots Upon Stock Completion Remaining Cedar Vue Upper Kedron Sold Out 52 The Palisades Upper Kedron Jarrah Estate Upper Kedron Parks Edge Estate Upper Kedron Total Total Stock Remaining According to the most recent sales data from land estates within Upper Kedron, there are approximately 185 lots remaining within the three estates in the area. Please note it is expected that this number may actually be significantly lower, due to the three month lag in the sales database and extended settlement times which delay the recording of sales. Despite that, this figure is more reliable than potentially inaccurate anecdotal reports. Historically, the three currently active estates have achieved the following average annual sales rates: The Palisades: 24 Sales P.A. Jarrah Estate: 22 Sales P.A. Parks Edge Estate: 13 Sales P.A. If the three estates listed above continue to achieve sales rates equal to their historical annual volumes then the combined land supply within Upper Kedron is expected to be consumed in approximately 6 years as can be seen below. This however does not take into account the expected upside in sales volumes as the historical data relates to the period immediately following the GFC. In the present cycle, each project should be achieving a minimum of one sale per week. In real terms, all projects should be complete by mid to late 216 unless developers ratchet up prices to maximise their profit due to limited competition. Estate The Palisades Stock Remaining as at 214 Upper Kedron Land Estate Future Sales Scenario 1 Average Annual Sales Rate Jarrah Estate Parks Edge Estate 185 Output Estate Sales Stock Rem Sold Out Estate Sales 22 4 Stock Rem. 4 Sold Out Estate Sales Stock Rem Sold Out It is expected that the estates will start to gain more momentum as they enter the final stages and releases of their individual projects. Furthermore, the ongoing lack of supply in the area is expected to see sales rates increase within all remaining estates, provided that development approvals and other statutory requirements are finalised in advance and land releases keep up with demand. The table below shows that if sales rates in all estates increase by only 5 sales a year, the land supply within Upper Kedron will be absorbed within 4 years. Estate The Palisades Upper Kedron Land Estate Future Sales Scenario 2 (5 Additional Estate Sales Per Annum) Stock Remaining Average Annual as at 214 Sales Rate Output Estate Sales Stock Rem Sold Out Estate Sales 26 Stock Rem. Sold Out Estate Sales Stock Rem Sold Out Jarrah Estate Parks Edge Estate The National Property Research Co. Be In The Know 26

27 Comparatively, the final table below shows that if sales rates in all estates increase by only 1 sales a year, the land supply within Upper Kedron will be absorbed within 3 years. Again it should be noted that the remaining stock in the estates included below could be significantly lower due to the lag in sales data and the extended settlement times in some estates. Estate The Palisades Upper Kedron Land Estate Future Sales Scenario 3 (1 Additional Estate Sales Per Annum) Stock Remaining Average Annual as at 214 Sales Rate Output Estate Sales Stock Rem Sold Out Estate Sales 26 Stock Rem. Sold Out Estate Sales Stock Rem Sold Out Jarrah Estate Parks Edge Estate Upon completion of the three current land estates, future land supply within Upper Kedron is expected to be all but non-existent besides the land parcel owned by Cedar Woods Properties. Infill projects stemming from the combination of rural/park residential lots are also expected to diminish due to the cost of developing such a holding, the topographical limitations imposed by surrounding environmental corridors and the potential for exorbitant acquisition costs as a direct result of lack of supply (educated owners keen to capitalise on their asset s sale). The National Property Research Co. Be In The Know 27

28 Moreton Bay Regional Council Corridor Demand The northern Brisbane Corridor is about to undergo a serious change to the urban fabric over the next twelve months in short, there will be no masterplanned community. Both of these corridors have dominated the accommodation and population demands for South East Queensland, yet strangely both now find that their regions will be devoid of these significant economic and community enablers. Total Sales 4,25 4, 3,75 3,5 3,25 3, 2,75 2,5 2,25 2, 1,75 1,5 1,25 1, Land Sales Summary: Moreton Bay LGA No. Sales Long Term Average Long Term Median The long term demand in the northern corridor equates to between 2,3 and 2,335 sales per annum. The data clearly identifies the two peaks in the market leading up to the GFC in 28, being 23 and 27. The 23 spike was largely fuelled by the owner occupier market whilst the 27 peak saw a considerably higher level of investment activity on the back of cheap funds, high capital growth and record high stock market valuations. The bottom of the market was effectively reached in 211 after having declined by 42% from the previous year. 21 represented the hangover from government stimulus spending in 29 where arguably 211 was a much more accurate representation of where the Queensland economy sat and how low consumer confidence was. This did change for the positive with volumes increasing from their low point by 8% in 212 and 22% in 213. These increases in volumes were both a mix of pent up demand combined with record low interest rates. Consumer confidence had returned as had the level of investor activity, partially as a result of the considerable momentum building in the mining construction boom, which employed thousands of Queenslanders. Depending on which project you focus on in the Moreton Bay region, the buyer profile is radically different. Stockland have claimed that North Lakes small lot accommodation (Mode) is being well received by the first home buyer. The Mode stage was designed as a result of EDQ s success in shrinking dwelling size yet maintaining good market penetration through more affordable price points. As a result, Fitzgibbon Chase, an EDQ flagship development, has won multiple awards and created new design outcomes that have pushed higher density residential accommodation to new levels. In doing this, they have also demonstrated that demand for smarter, smaller homes has been readily accepted by those who thought they were excluded from the housing market and would become long term renters. This was both a successful social and economic outcome whilst providing a significantly more sustainable result for the use of raw land. The National Property Research Co. Be In The Know 28

29 Northern Brisbane Corridor: Lots Remaining 2,1 2, 1,9 1,8 1,7 1,6 1,5 1,4 1,3 1,2 1,1 1, Warner/Griffin Middle North Caboolture Warner Reserve Warner Lakes Freshwater North Lakes Newport Griffin Retreat Griffin Pocket Griffin Crest Park Vista Capestone Abode Alma Heights North Harbour Sanctuary on Alma Stone Ridge Woodvale Riverbank Palm Springs Central Lakes Pumicestone Park The Reserve Acacia Grove The above graph clearly demonstrates that there is a general shortage of large residential estates remaining in the inner northern corridor. This is a problem as masterplanned communities typically provide the glue to hold together many of the smaller residential developments that can be seen around North Lakes. At best, this project has 12 months to run which will push many purchasers further north. The issue is that much of the land north is highly fragmented making it expensive and often unviable to consolidate. Sites such as Upper Kedron offer the capacity to provide an infill solution of scale that makes significantly better use of existing infrastructure rather than pushing it further out. This is highly complementary to the sentiment of the SEQRP which embraces more compact urban form, better utilisation of existing land and the opportunity to provide accommodation across projects that meet a broad demographic base. When one considers the typically modest scale of the Cedar Woods project, it has the capacity to be developed as a large residential community whilst adopting the design attributes of a masterplanned residential development. Given that the northern Brisbane corridor inclusive of the Moreton Bay Regional Council area has approximately four years of land stock remaining in current projects, there is an expectation that price escalation will increase on the back of limited supply. Unfortunately the issue surrounding Upper Kedron is actually much greater than the suburb itself; it is a South East Queensland problem. With population growth at 1.9% in Queensland, and the majority of it occurring in the south east corner of the State, the challenge is to provide accommodation that is suitable for all demographics and prices that allow for a broad spectrum of potential purchasers. It also suggests that with the State economy in a generally acknowledged cash strapped position and as a result, existing infrastructure needs to be utilised to its fullest. Upper Kedron is well located to take advantage of these circumstances whilst also adding greater vibrancy to the local community, more successful retail outcomes in the broader catchment as well as creating greater longevity to the schools in the region. The National Property Research Co. Be In The Know 29

30 Economic Drivers and Infrastructure The following economic drivers and infrastructure projects have been deemed as significant catalysts for continued population growth and economic development within the Upper Kedron region. It should be noted that the Cedar Woods Properties project at Upper Kedron will require no additional government infrastructure and as a result will capitalise on the existing infrastructure network, thus reducing the need for future Government spending on additional facilities. Ferny Train Station The Ferny Grove Train Station is located approximately 3 kilometres from the subject site and services the 16.1 kilometre Ferny Grove Line which is a direct link to the Brisbane CBD, Roma Street and Fortitude Valley. Most services stop at all stations to Roma Street station with the typical travel time between Ferny Grove and Brisbane City (Central) recorded as approximately 27 minutes. During weekday peak times, some services skip stations between Mitchelton and Bowen Hills for faster travel times for commuters working in the CBD. This is a significant drawcard for residents and future purchasers within Upper Kedron in contrast to the travel times from estates within the Moreton Bay Corridor. Source: TransLink The station was upgraded in December of 212 as part of the Keperra - Ferny Grove duplication project. The upgrade included relocating the platform, a new station building and car park. Translink also operates three bus routes from the station, one of which services the Upper Kedron area making access to transport for residents in the area very easy. Mitchelton Employment Growth Area Mitchelton is identified within the Brisbane Long Term Infrastructure Plan , as one of the top 2 employment growth areas in Brisbane between 211 and 231. Brisbane s top 2 employment growth areas are presumed to accommodate approximately 8% of total employment growth in the area by 231. Accordingly, these locations will play an influential role in shaping Brisbane s economic longevity and are rightfully expected to attract significant population growth as well as demanding greater attention for foreseeable infrastructure needs to ensure employment growth projections are facilitated. The table below depicts Brisbane s top employment growth areas outside of the CBD and surrounding suburbs between 211 and 231. According to the Brisbane City Council, each of these areas offer location advantages, such as access to skilled labour, proximity to suppliers, competitors and customers, access to transport routes, and access to research and knowledge institutions. The National Property Research Co. Be In The Know 3

31 Top Employment Growth Areas, Excluding CBD and Surrounding Suburbs Local Area Employment Growth 211 to 231 Top Three Growth Industries ATC 23,23 Transport Government, Manufacturing Bowen Hills 12,64 Transport, Business Services, Health and Community Mt Gravatt 8,894 Education, Retail, Health and Community St Lucia 8,372 Education, Business Services, Hospitality Chermside 6,75 Health and Community, Retail, Government Wacol 5,397 Manufacturing, Health and Community, Transport Acacia Ridge 4,857 Manufacturing, Transport, Wholesale Rochedale 4,794 Education, Business Services, Personal Services Nathan 4,352 Education, Business Services, Health and Community Toowong 3,713 Health and Community, Business Services, Retail West End 3,691 Cultural and Recreational, Health and Community, Personal Services Mitchelton 3,275 Retail, Education, Health and Community Indooroopilly 2,979 Retail, Education, Business Services Source: Brisbane Lot Term Infrastructure Plan Mitchelton is identified as one of the many sizeable employment growth areas outside of the CBD. According to the Brisbane City Council, the top three growth industries projected for Mitchelton are Retail, Education, Health and Community. Mitchelton is expected to see 3,275 new employees between 211 and 231. Whilst housing within Mitchelton will facilitate the majority of these new employees, given its proximity to Upper Kedron (8km) and the lack of new housing supply in surrounding regions, Cedar Woods would be expected to receive some on flow of residents who will work in Mitchelton and reside in Upper Kedron. Schools and Education The neighbouring suburbs of Upper Kedron host a number of public and private schools as included in the table below. These facilities provide potential future residents with a variety of high quality education options. Upper Kedron and Surrounding Suburbs School Breakdown School Name Ferny Hills State School Ferny Grove State School Ferny Grove State High School Mitchelton State School Mitchelton State High School St Andrew's Catholic Primary School (Ferny Grove) St William's Primary School (Keperra) Our Lady of Dolours Primary School (Mitchelton) Mater De Catholic Primary School (Ashgrove) St Finbarr's School (Ashgrove) Our Lady of the Assumption Primary School (Enoggera) Marist College Ashgrove (Ashgrove) Mt Maria College (Mitchelton) Mount St Michael's College (Ashgrove) Classification State Schools Private Schools Do to Upper Kedron s relatively close proximity to the CBD; residents have access to multiple other tertiary education facilities such as Queensland University of Technology s Gardens Point Campus and Queensland TAFE at South Bank. Both of these institutions are accessible from Upper Kedron via the Ferny Grove Line and a short walk. The National Property Research Co. Be In The Know 31

32 Affordability Matrix The tables below take into account the weighted weekly median incomes and estimated housing costs (both mortgage and rental price) to provide a guideline as to the affordability of dwellings throughout Upper Kedron, Ferny Grove, The Gap, Ashgrove, the Hills District (Ferny, Arana and Everton Hills) Keperra, Mitchelton and Enoggera. It should be noted that the threshold of affordability lies at 3% and once the housing share of income exceeds 3%, it is considered unaffordable. Region/LGA Weighted Av. Median Household Income (Weekly) 211 Census* Owned with a Mortgage 214 Median House Price (5-1,5m2) Weekly Mortgage Repayments (1% deposit, 4.95% Interest) Housing Share of Income Upper Kedron - Ferny Grove SA2 $2,52 $54, $649 26% The Gap SA2 $2,672 $57, $685 26% Ashgrove SA2 $2,891 $79, $949 33% Hills District (Ferny, Arana and Everton Hills) SA2 $2,42 $477,5 $574 24% Keperra SA2 $2,273 $462, $555 24% Mitchelton SA2 $2,541 $561, $674 27% Enoggera SA2 $2,495 $583, $71 28% *Adjusted based on monthly changes to the Wage Price Index out to Dec 214. Note: SA2 Areas with multiple suburbs have a median price based on aggregated data from the suburbs listed. Source: ABS, PriceFinder, CBA, RBA and The NPR Co. As shown above, all properties owned with a mortgage are all regarded as affordable, with the exception of the Ashgrove SA2 where the housing share of income sits at approximately 33% at present. The Hills District and Keperra SA2 s are at the more affordable end the scale, recording a housing share of income of only 24% each. Comparatively, the Upper Kedron Ferny Grove SA2, whilst affordable, still sits in the at risk range with 26% of income dedicated to mortgage repayments based on a weekly household income of $2,52. Upper Kedron - Ferny Grove SA2 $2,52 $629, $756 3% Source: ABS, PriceFinder, CBA, RBA and The NPR Co. Interestingly, despite Upper Kedron s comparatively affordable status at present, an increase in the median house price to approximately $629, (a 16.5% increase from 214 median) as seen above would mean that the area is deemed as unaffordable. Upward pressure on pricing as a result of a lack of supply in the area, along with changes to the current interest rate back to the long term average (7.2% as identified by the RBA) could mean this scenario occurs faster than expected and is far from unimaginable. Region/LGA Weighted Av. Median Household Income (Weekly) 211 Census* Rented Rent Range for 2-4 Bed Houses 3 Bed Weekly Rent (QTR 4: 214) Rental Share of Income Upper Kedron - Ferny Grove SA2 $1,868 N/A - $485 $4 21% The Gap SA2 $1,863 N/A - $595 $45 24% Ashgrove SA2 $1,79 $46 - $58 $465 26% Hills District (Ferny, Arana and Everton Hills) SA2 $1,75 $36 - $51 $4 23% Keperra SA2 $1,25 N/A - $47 $395 32% Mitchelton SA2 $1,662 $36 - $51 $415 25% Enoggera SA2 $1,474 $4 - $69 $48 33% *Adjusted based on monthly changes to the Wage Price Index out to Dec 214 Note: SA2 Areas with multiple suburbs have rental rates based on the aggregated ranges from the suburbs listed. Source: ABS, RTA and The NPR Co. In terms of the affordability of rental properties, the table above presents only two particular causes of concern. Both Enoggera and Keperra currently exceed the desired affordability threshold in terms of the portion of income delegated to weekly rent. Ultimately, this means, without an increase in median The National Property Research Co. Be In The Know 32

33 weekly household income for these regions, or a decline in the median weekly rental price, people will become increasingly unable to afford rent. It would be expected that if this trend continues, renters will look elsewhere towards more affordable locations, or face having their quality of life reduced. Despite this, the Upper Kedron Ferny Grove SA2 has lowest rental share of income with only 21%. This is a clear combination of relatively low rental rates (compared to that of The Gap, Ashgrove, and Enoggera) as well as the highest recorded median household income (for those who rent) out of any of the areas analysed. The National Property Research Co. Be In The Know 33

34 Matthew Gross Director The National Property Research Company Level 1, 37 Queen Street Brisbane, QLD, 4 (Ph) This Research Report of National Property Research Pty Ltd is issued on the basis that it is only for the information of the Cedar Woods Properties Limited and that it is not a valuation. This report may not be reproduced, distributed or published without the written permission of National Property Research Pty Ltd. Any recommendations contained herein are subject to the property market at the time of writing the report and as such are conditional. They must not be relied upon without specific advice from an Analyst of National Property Research Pty Ltd as to the appropriateness of the intended action. Past performance of property is no guarantee of future performance. Given that some of the material conveyed in this report is from speaking with Agents, Operators and other persons in positions of trust, National Property Research has endeavoured to ensure that all information is true and accurate. National Property Research reserves the right to amend the report should new information become available. The National Property Research Co. Be In The Know 34