(WA) Research Breakfast Great expectations: The market in 2013
Presentation Overview Established property market activity Perth land development activity Housing construction activity What to expect in 2013
Property Market Rebounding property confidence...
Property Market 2012 Overview... FIRST HOME BUYER MOMENTUM DROVE RECOVERY FHOGs paid in 2012 increased 28 per cent FHBs absorbed significant levels of existing stock FHBs spending more on their first property Residential listings Average selling days Rental vacancy rate Dec 12 Dec 11 Change 9,240 13,510 Down 31% 62 77 Down 19.5% 1.9% 2.3% Down 0.4 pts Median rent $450 $400 Up 12.5% Median house price $495,000 $470,000 Up 5.3% Source: REIWA
Property Market Property prices... THE PRICE EFFECT Prices and housing turnover are positively correlated Perth the standout house price performer in 2012 12000 10000 8000 6000 4000 2000 Perth House Sales Perth House Prices 0.7 0.5 0.3 0.1-0.1-0.3-0.5 0-0.7 Source: ABS
Property Market What s selling... THE RETURNING MIDDLE MARKET $400,000 to $600,000 and $600,001 to $800,000 house sales increase in second half of 2012. Detached House Sales Perth (inc. Peel) 4000 3500 3000 2500 2000 1500 1000 500 0 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Source: Landgate, WA Up to $400,000 $400,001 to $600,000 $600,001 to $800,000 More than $800,000
Property Market Where are people buying... HOUSE SALES INCREASE THROUGHOUT PERTH Even though just under half of Perth s population resides in the Central Metro Region, it only accounts for 18 per cent of detached house sales. 3000 Detached House Sales Perth (inc. Peel) 2500 2000 1500 1000 500 0 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Central Metro North-West Metro South-West Metro South-East Metro North-East Metro Peel Source: Landgate, WA
Residential Property Market Where are people buying... 1000 900 800 700 600 500 400 300 200 100 0... BUT REGIONAL WA MIXED Sep-07 Feb-08 Jul-08 Dec-08 May-09 Oct-09 Mar-10 Aug-10 Jan-11 Jun-11 Nov-11 Apr-12 Sep-12 Source: Landgate, WA South West Goldfields Esperance Wheatbelt Mid West Great Southern Pilbara Kimberley
Property Market Relationship with new dwelling demand... Detached House Sales - Perth What does this mean for new dwelling demand? Strong relationship between established and new property market activity 12000 10000 8000 6000 4000 2000 0 Established House Sales Lot Sales Index 180 160 140 120 100 80 60 40 20 0 Source: ABS, WA
Land Market Overview... LOT SALES AT SIX YEAR HIGH Sales up 23.4 per cent in December quarter Sales increase in two thirds of developments 3,500 Number of Lots Sold Perth (inc. Peel) 3,000 2,500 2,000 1,500 1,000 500 0 Number of Lots Sold Average Source: WA
Land Market Who s buying... FIRST HOME BUYERS BUY NEW FHBs approx. 38 per cent of new dwelling demand One in three FHBs buy new; up from pre-gfc average of 20 per cent Top FHB locations: Baldivis; Ellenbrook; and Butler FHOG Applications - New Dwellings 3500 3000 2500 2000 1500 1000 500 0 FHOG Boost Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Source: Office of State Revenue WA Up 125%
Land Market LAND PRICES FLAT FOR FIVE YEARS Average lot price ($222,000) 43 per cent below peak Lot prices... 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 0 Source: WA
Land Market...BECAUSE OF DEMAND FOR SUB-$200,000 LOTS Lot prices... 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2006 2007 2008 2009 2010 2011 2012 2013 Up to $200,000 $200,000 - $280,000 $280,000 plus Source: WA
Land Market What is selling......and STRONGER DEMAND FOR SMALLER LOTS Median lot size (419m 2 ) declined 25 per cent since 05/06 37 per cent of new vacant lots sold in 2011 were less than 400m 2 Source: WAPC
Land Market What is selling... HOW SMALL CAN LOTS GO? LGA Proportion of Lots less than 400m 2 Median Lot Size City of Wanneroo 48.8% 412m 2 City of Cockburn 46.4% 441m 2 Town of Kwinana 41.5% 441m 2 City of Armadale 37.9% 432m 2 City of Joondalup 37.6% 455m 2 City of Swan 32.6% 476m 2 City of Gosnells 32.4% 500m 2 City of Rockingham 22.5% 497m 2 Shire of Serpentine- Jarrahdale 10.6% 495m 2 Source: WA, Landgate
Land Market Where are people buying... SALES UP ACROSS THE BOARD Sales south of the river increased strongest in the December quarter Lot Sales per quarter 800 700 600 500 400 300 200 FHOG Boost North-West Metro North-East Metro South-East Metro South-West Metro 100 Peel 0 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Source: WA
Land Market North of the river... NORTH METRO Sales Activity Local Authority Change in Lot Sales* Average Monthly Sales per Development Average Price Share of Metro Sales City of Wanneroo Up 99% 16.0 $218,000 29.5% City of Joondalup Up 45% 6.1 $450,000 2.5% City of Swan Up 79% 13.2 $229,000 21.7% Lot Availability Local Authority Lots on the Market (Months) Change in Stock Levels (YoY) City of Wanneroo 1.7 Down 15% City of Joondalup 3.7 Down 52% City of Swan 1.4 Down 29% *Sales and prices relate to new vacant land sales over the last six months of 2012 compared to the last six months of 2011. Lots on the market as at 31 December, 2012. (Source: WA)
Land Market HOT SPOTS North of the river... Suburb/ Area House Approvals (Jul to Dec 12) Trend Median Land Price Settled Vacant Land Sales (2012) Ellenbrook 740 Up 47.4% $216,000 397 Yanchep/ Alkimos 678 Up 46.8% $208,000 625 Butler 592 Up 17.9% $180,000 358 Landsdale 402 Up 15.5% $294,000 377 Banksia Grove 352 Up 46.7% $198,000 220 Source: WA, ABS, Landgate
Land Market South of the river... SOUTH METRO Sales Activity Local Authority Change in Lot Sales* Average Monthly Sales per Development Average Price Share of Metro Sales City of Armadale Up 145% 12.6 $239,000 13.8% Shire of Serpentine- Jarrahdale Down 2% 6.1 $188,000 4.6% City of Cockburn Up 43% 4.4 $311,000 4.9% Town of Kwinana Up 90% 21.9 $181,000 6.0% City of Rockingham Up 135% 8.7 $183,000 16.6% Lot Availability Local Authority Lots on the Market (Months) Change in Stock Levels City of Armadale 1.0 Up 12% Shire of Serpentine-Jarrahdale 2.3 Down 40% City of Cockburn 1.3 Down 22% Town of Kwinana 2.5 Up 179% City of Rockingham 2.4 Down 21%
Land Market South of the river... HOT SPOTS Suburb/ Area House Approvals (Jul to Dec 12) Trend Median Land Price Settled Vacant Land Sales (2012) Baldivis 996 Up 25.1% $182,000 900 Harrisdale/ Piara Waters Southern River Forrestfield/ Wattle Grove Coogee/ Beeliar Success/ Hammond Park 876 400 Down 3.9% Down 16.3% $239,000 756 $261,000 354 326 Up 31.5% $239,000 224 288 Up 162% $525,000/ $250,000 264 268 Up 97.1% $262,000 190 Source: WA, ABS, Landgate
Land Market Peel and South West... MANDURAH ON THE MOVE Sales Activity Local Authority Change in Lot Sales* Average Monthly Sales per Development Average Price Mandurah and Peel Up 70% 4.9 $189,000 South West Up 22% 3.0 $183,000 Great Southern Up 108% 0.6 $179,000 Lot Availability Local Authority Lots on the Market (Months) Change in Stock Levels Mandurah and Peel 3.6 Down 36% South West 9.1 Down 22% Great Southern 53.6 Down 23%
Residential Land Market Outlook What to expect in 2013... CONSTRUCTION TIMEFRAMES TO WIDEN Potential shortages of capital equipment and skilled labour Land sales take 6 to 18 months to flow through to housing construction Dwelling approvals on track to reach 23,000 in 2012/13; 22 per cent more than 2011/12 Detached House Approvals 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Outer Metro Regions Regional WA Central Metro Source: WA, ABS
Perth Land Market Outlook What to expect in 2013... Potential land shortages Potential shortage of 600 lots in Perth over the next six months; equivalent to three weeks of sales Swan (C) Armadale (C) Kwinana (T) Cockburn (C) Wanneroo (C) Joondalup (C) Forecast Land Availability 6-mth Lot Construction Activity Stock on the Market Rockingham (C) Serpentine Jarrahdale (S) Mandurah (C) -500-300 -100 100 300 500 700 900 # of Lots Source: WA
Perth Land Market Outlook What to expect in 2013... Food for thought What is the chance of strong land price growth returning to 2003 to 2006 levels? What effect will declining mining investment and labour demand have on population growth and household formation rates in Perth?