RESIDENTIAL MARKET REPORT MARCH QUARTER 2017

RESIDENTIAL MARKET REPORT MARCH QUARTER 2017 EXECUTIVE SUMMARY RESIDENTIAL LAND MARKET - VICTORIA The established house and vacant land markets across Greater Melbourne continued to remain buoyant in the March quarter 2017. Metropolitan Melbourne s median house price of $826,000 in the March quarter 2017 represented sizeable growth of 18.0% from the corresponding quarter a year earlier. Growth corridors within Melbourne, Geelong and Surf Coast recorded a combined 5,793 gross lot sales in the March quarter 2017 (+22.0% from the March quarter 2016, and -0.6% from the peak in the December quarter 2016). The median land price across Greater Melbourne s growth corridors was $250,000 in the March quarter 2017, equating to growth of 6.3% from the December quarter 2016 and 15.2% from the March quarter 2016. Further highlighting the strength of new house demand that underpinned this solid price growth was that it coincided with the median lot size across Greater Melbourne s growth corridors shrinking by 1.0% from the previous corresponding quarter to 416m2 in the March quarter 2017. ECONOMIC UPDATE Annual Gross Domestic Product (GDP) to December 2016 increased by 2.47% on annual GDP to December 2015, with private dwelling investment and exports being key drivers of economic activity. Growth in the Victorian economy outperformed the national average, with annual State Final Demand (SFD) at December 2016 being 3.15% higher than the same period at December 2015. The RBA has maintained the cash rate at a historical low of 1.50% through to March 2017. FINANCE AND BUILDING ACTIVITY - VICTORIA Improving economic conditions and strong population growth in Victoria, combined with historical low borrowing costs, has underpinned robust owner occupier demand through 2016 and into the first quarter of 2017. The number of loans for the construction of new dwellings or newly erected dwellings that have not previously been occupied during the twelve months to February 2017 (29,278) dwellings, was 6.6% higher than the previous corresponding twelve month period. In Victoria, there were 36,201 new detached houses approved during the twelve months to March 2017, reflecting an annual increase of 3.7%. $ sqm $ m Lot Sales Lot Prices Lot Sizes Victorian Economy Performance Finance Activity Detached Building Approvals

VACANT LAND MARKET - VICTORIA GROSS SALES The number of land sales recorded by the RPM Research Division since the middle of 2014 reflects an exceptionally strong market. In particular, gross sales have surpassed 5,000 lots in each of the past four quarterly periods, with the growth corridor regions in Melbourne and Geelong recording 5,793 gross lot sales in the March quarter 2017. This was a marginal 0.6% below the peak in December quarter 2016, although a considerable 22.0% above gross lot sales in the March quarter LAND PRICES AND LOT SIZES The median price of all vacant lots sold across the growth corridors within Greater Melbourne (excluding Geelong and Surf Coast) was $250,000 in the March quarter 2017, representing growth of 6.3% from the previous quarter and a higher 15.2% from the March quarter 2016. With the exception of Melton and Moorabool, all other Greater Melbourne growth regions experienced double digit annual price growth in the March quarter 2017. Changes in land price become more relevant when compared to lot sizes. The median lot size across the growth corridors of Greater Melbourne was 416sqm in the March quarter 2017, which was 1.0% smaller than the same quarter in the previous year. Melton experienced the largest decrease in median lot size of 10.5%, which is likely to have led to the contraction in land prices. Amongst the Greater Melbourne growth corridors, Casey recorded the highest median at $292,000, while Moorabool recorded the lowest at $151,000 in the March quarter 2017. In addition, the largest median lot size was recorded in Moorabool at 496sqm, with the lowest being 400sqm in Whittlesea and Wyndham. Interestingly, the Surf Coast median lot price of $283,500 in the March quarter 2017 was more expensive than all growth corridors in Greater Melbourne (except Casey), which is likely attributed to the region s attraction to changeover buyers. Gross Sales Median Land Price Median Land Price 6,000 5,500 5,000 4,500 4,000 3,500 3,000 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 WESTERN CORRIDOR $300,000 600 $250,000 $200,000 $150,000 $100,000 $50,000 $0 0 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Wyndham (LHS) Melton (LHS) Moorabool (LHS) Wyndham (RHS) Melton (RHS) Moorabool (RHS) NORTHERN CORRIDOR $300,000 600 $250,000 $200,000 $150,000 $100,000 $50,000 $0 0 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Hume (LHS) Mitchell (LHS) Whittlesea (LHS) Hume (RHS) Mitchell (RHS) Whittlesea (RHS) SOUTH EASTERN CORRIDOR South East Corridor Median Land Price $350,000 460 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 340 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Casey (LHS) Cardinia (LHS) Casey (RHS) Cardinia (RHS) GREATER GEELONG & SURF COAST CORRIDOR Median Land Price $300,000 520 $250,000 $200,000 $150,000 $100,000 $50,000 $0 400 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 500 400 300 200 100 500 400 300 200 100 440 420 400 380 360 500 480 460 440 420 Median Lot Size (sqm) Median Lot Size (sqm) Median Lot Size (sqm) Median Lot Size (sqm) Geelong (LHS) Surf Coast (LHS) Geelong (RHS) Surf Coast (RHS) Source: RPM Research Division

TOPIC OF INTEREST LAND AFFORDABILITY The chart below examines the ratio of median land prices to median house prices from March quarter 2007 to March quarter 2017 for the local government areas of Casey, Cardinia, Hume, Whittlesea, Melton, Wyndham and Geelong. Traditionally, Melbourne as a whole records a ratio of land at approximately 40% of the median house price. This level in recent years has significantly increased. Within the chart: The green bar shows the variance between the highest and lowest ratio of median land price to median house price in any quarter over the last ten years to March 2017. The blue dash refers to a preliminary median land price to median house price ratio as at March quarter 2017. The grey dash refers to the average long term (ten year) ratio of median land prices to median house prices. The ratio of median land price to median house price in Hume (61%) and Cardinia (55%) in March quarter 2017 was closest to its respective worst quarterly ratio during the last ten years amongst the growth corridor regions. Hume and Cardinia have experienced the steepest reduction in total lots on the market in the March quarter 2017, compared to each municipality s respective total in the March quarter 2016, resulting in land price affordability being most constrained in these two municipalities. Any further deterioration may lead to demand increasingly shifting to established dwellings in both regions. In the March quarter 2017, the ratio of median land price to median house price in Whittlesea (50%), Melton (47%), Wyndham (56%) and Geelong (46%) were all below their respective long term average ratio and nearer to their respective best ratio over the last ten years. While this ratio in Casey (56%) was around its long term ten year average. All these municipalities have experienced greater levels of new lots being brought onto the market, which has kept their land price relatively affordable compared to their respective house price and maintained the attraction of a new house/land package over an established house. LAND AFFORDABILITY Median Land Price as a % of Median House Price 70% 65% 60% 55% 50% 45% 40% 35% Highest 61% 56% 55% 56% Lowest 50% 47% 46% Casey Cardinia Hume Whittlesea Melton Wyndham Geelong 10 Year Average Ratio Ratio @ Mar Qtr. 17 Source: RPM Research Division

NEWS AND UPDATES VICTORIAN PLANNING AUTHORITY In February 2017, the Wollert Precinct Structure Plan was completed. Once complete, the area will provide around 8,000 jobs and house an estimated 42,000 people in 15,000 dwellings. In an effort to boost housing supply, the VPA has been set a target to complete 17 Precinct Structure Plans over 2017 and 2018, which will include the rezoning of more than 100,000 lots. Peter Seamer stepped down from role as the VPA s Chief Executive Officer in April. The table below outlines the number of dwellings, people and jobs each of the 17 Precinct Structure Plans, to be completed during 2017 and 2018, are anticipated to support. Precinct Structure Plan LGA Status Estimated Dwellings Estimated Population Estimated Jobs Pakenham East Cardinia Council Led - - - McPherson Casey Review of Submissions 10,100 28,300 1,619 Minta Farm Casey Council & State Agency Consultation 3,000-10,000 Lancefield Road Hume Review of Submissions 8,000 22,000 - Sunbury South Hume Review of Submissions 11,800 33,000 - Kororoit Melton Structure Plan Finalisation 9,200 25,875 2,100 Mt Atkinson & Tarneit Plains Melton Structure Plan Finalisation 6,700 19,000 18,000 Plumpton Melton Structure Plan Finalisation 10,680 29,900 12,000 Lindum Vale Hume Council & State Agency Consultation 1,500 - - Beveridge Central Mitchell Review of Submissions 3,640 10,193 - Beveridge North West Mitchell Council & State Agency Consultation 11,290 31,611 6,165 Donnybrook & Woodstock Whittlesea Submitted for Approval 16,400 46,000 3,316 Shenstone Park Whittlesea Council Led - - - Wollert Whittlesea Completed - February 2017 15,060 42,168 8,040 Quandong Wyndham Council Led - - - Source: Victorian Planning Authority

NEWS AND UPDATES VICTORIAN GOVERNMENT In early 2017, the Victorian Government announced changes to its first home owner grant and also stamp duty charges to first home buyers and investors, which will come into effect from July 2017. These changes are outlined in the tables below. Dutiable Value ($) First Home Buyer Grant Foreign Purchaser Additional Duty* FIRB Fees Total Fees Difference Stamp Duty FIRST HOME BUYER (OWNER OCCUPIER) Now to 30th June 2017 $250,000 $10,000 $4,435 $0 $0 $4,435 From 1st July 2017 $250,000 $10,000 $0 $0 $0 $0 $4,435 Stamp Duty for First Home Buyers will be Abolished from 1st July 2017 NON-FIRST HOME BUYER (OWNER OCCUPIER) Now to 30th June 2017 $250,000 $0 $8,870 $0 $0 $8,870 From 1st July 2017 $250,000 $0 $8,870 $0 $0 $8,870 $0 No Change in Stamp Duty for Non-First Home Buyers LOCAL INVESTOR Now to 30th June 2017 $250,000 $0 $10,070 $0 $0 $10,070 From 1st July 2017 $250,000 $0 $10,070 $0 $0 $10,070 $0 No Change in Stamp Duty for local investors LONG TERM (NOT PERMANENT) RESIDENT (OWNER OCCUPIER) Now to 30th June 2017 $250,000 $0 $8,870 $17,500 $5,000 $31,370 From 1st July 2017 $250,000 $0 $8,870 $17,500 $5,000 $31,370 $0 No Change in Stamp Duty for long term (non permanent resident) OVERSEAS PURCHASER (INVESTOR) Now to 30th June 2017 $250,000 $0 $10,070 $17,500 $5,000 $32,570 From 1st July 2017 $250,000 $0 $10,070 $17,500 $5,000 $32,570 $0 No Change in Stamp Duty for oversea purchasers * Foreign Purchaser Additional Duty Rate is 7% on Dutiable Value GREATER MELBOURNE - House and Land (2 contracts) Purchase of House/Land Package. Land Component Worth $250,000 (Mar Qtr. 2017 Median Land Price) Source: State Revenue Office Victoria GREATER MELBOURNE - Apartments & Townhouses (if have 1 contract) Purchase of Apartment or Townhouse Package Worth $500,000. Land Component Worth $250,000 and build of $250,000 Foreign Purchaser Dutiable Value ($) First Home Buyer Grant Stamp Duty Additional Duty* FIRB Fees Total Fees Difference FIRST HOME BUYER (OWNER OCCUPIER) Now to 30th June 2017 $250,000 $10,000 $4,435 $0 $0 $4,435 From 1st July 2017 $250,000 $10,000 $0 $0 $0 $0 $4,435 Stamp Duty for First Home Buyers will be Abolished from 1st July 2017 NON-FIRST HOME BUYER (OWNER OCCUPIER) Now to 30th June 2017 $250,000 $0 $8,870 $0 $0 $8,870 From 1st July 2017 $250,000 $0 $8,870 $0 $0 $8,870 $0 No Change in Stamp Duty for Non-First Home Buyers LOCAL INVESTOR Now to 30th June 2017 $250,000 $0 $10,070 $0 $0 $10,070 From 1st July 2017 $500,000 $0 $25,070 $0 $0 $25,070 -$15,000 Off-The-Plan Stamp Duty Concession Removed for Local Investors from 1st July 2017. Dutiable Value lifts to Total Purchase Price LONG TERM (NOT PERMANENT) RESIDENT (OWNER OCCUPIER) Now to 30th June 2017 $250,000 $0 $8,870 $17,500 $5,000 $31,370 From 1st July 2017 $250,000 $0 $8,870 $17,500 $5,000 $31,370 $0 No Change in Stamp Duty for Long Term Residents who Receive Off-The-Plan Stamp Duty Concession if Owner Occupiers OVERSEAS PURCHASER (INVESTOR) Now to 30th June 2017 $250,000 $0 $10,070 $17,500 $5,000 $32,570 From 1st July 2017 $500,000 $0 $25,070 $35,000 $5,000 $65,070 -$32,500 Off-The-Plan Stamp Duty Concession Removed for Overseas Investors from 1st July 2017. Dutiable Value lifts to Total Purchase Price * Foreign Purchaser Additional Duty Rate is 7% on Dutiable Value Source: State Revenue Office Victoria

NEWS AND UPDATES OUTSIDE METROPOLITAN MELBOURNE 1 Purchase of House/Land Package. Land Component Worth $196,000 (Mar Qtr. 2017 Median Land Price) Dutiable Value ($) First Home Buyer Grant Foreign Purchaser Additional Duty* FIRB Fees Total Fees Difference Stamp Duty FIRST HOME BUYER (OWNER OCCUPIER) Now to 30th June 2017 $196,000 $10,000 $3,085 $0 $0 $3,085 From 1st July 2017 $196,000 $20,000 $0 $0 $0 $0 $13,085 Stamp Duty for First Home Buyers will be Abolished from 1st July 2017 NON-FIRST HOME BUYER (OWNER OCCUPIER) Now to 30th June 2017 $196,000 $0 $6,170 $0 $0 $6,170 From 1st July 2017 $196,000 $0 $6,170 $0 $0 $6,170 $0 No Change in Stamp Duty for Non-First Home Buyers LOCAL INVESTOR Now to 30th June 2017 $196,000 $0 $6,830 $0 $0 $6,830 From 1st July 2017 $196,000 $0 $6,830 $0 $0 $6,830 $0 No Change in Stamp Duty for local investors LONG TERM (NOT PERMANENT) RESIDENT (OWNER OCCUPIER) Now to 30th June 2017 $196,000 $0 $6,170 $13,720 $5,000 $24,890 From 1st July 2017 $196,000 $0 $6,170 $13,720 $5,000 $24,890 $0 No Change in Stamp Duty for long term (non permanent resident) OVERSEAS PURCHASER (INVESTOR) Now to 30th June 2017 $196,000 $0 $6,830 $13,720 $5,000 $25,550 From 1st July 2017 $196,000 $0 $6,830 $13,720 $5,000 $25,550 $0 No Change in Stamp Duty for oversea purchasers 1 Includes Mitchell Shire, Moorabool Shire, Greater Geelong, and Surf Coast Shire * Foreign Purchaser Additional Duty Rate is 7% on Dutiable Value Source: State Revenue Office Victoria

MELBOURNE RESIDENTIAL MARKET PRICES Property prices in Melbourne have trended upwards since the middle of 2013, with detached houses achieving stronger growth than units. The established housing market to date remains robust when compared to other states with approximately 40,220 auctions held in Victoria during the twelve months to March 2017, with a clearance rate of 76.3% (REIV). Nevertheless, the number of auction sales during the twelve months to March 2017 is almost 6.0% lower than the corresponding period a year earlier, where the clearance rate was 73.7% (REIV). At March quarter 2017 preliminary data recorded; House prices rose to a median of $826,000 (+7.6% from the previous quarter, and +18.0% from the corresponding quarter a year earlier) Unit prices rose to a median of $583,000 (+3.8% from the previous quarter, +10.7% from the corresponding quarter a year earlier) Land prices rose to a median of $250,000 (+6.3% from the previous quarter, +15.2% from the corresponding quarter a year earlier) The 15.2% growth recorded in March quarter 2017 takes into account all growth corridors of Greater Melbourne. The overall gain consists varying price movements within each corridor, which is largely dictated by the fundamentals of supply and demand. An increase in stock levels in Melton at the March quarter 2017, compared to the March quarter 2016, led to its median lot price decreasing by 10.1%. Conversely, diminishing stock levels in Casey between the two periods has driven a 25.3% increase in its median lot price. MELBOURNE PRICES Median house and apartment price $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 Mar-10 Jun-10 Sep-10 Melb House Price (LHS) Melb Unit Price (LHS) Melb Land Price (RHS) $250,000 $826,000 $583,000 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 $255,000 $245,000 $235,000 $225,000 $215,000 $205,000 $195,000 $185,000 $175,000 Median land price Source: REIV, RPM Research Division PRICE CHANGE 120.0% 114% % change 100.0% 80.0% 60.0% 40.0% 20.0% 18% 23% 11% 15% 14% 54% 30% 19% 16% 79% 79% 0.0% 12 months 2 years 5 years 10 years Melbourne House Price Melbourne Unit Price Melbourne Land Price Source: REIV, RPM Research Division

ECONOMIC MARKET UPDATE Economic activity rebounded in the December quarter 2016, with Gross Domestic Product (GDP) increasing by 1.08% from the previous quarter. This was attributed to growth in private consumption, private dwelling investment, public investment, and exports. Annual GDP at December 2016 increased by 2.47% from the corresponding figure at December 2015, which is below the long term trend of around 3.50%. Private dwelling investment and exports were key drivers of economic growth through calendar 2016, which was adversely impacted by subdued wage growth limiting the rise in private consumption and significant declines in private non dwelling investment. Growth in the Victorian economy has outperformed the national average, with annual State Final Demand (SFD) at December 2016 being 3.15% higher than the INTEREST RATE After reducing the cash rate by 25 basis points in both May and August of 2016, the RBA has made no further changes in following monthly meetings, leaving the cash rate at a historical low of 1.50%. Below trend economic growth, and low wage growth have both resulted in weak inflationary pressures, which has led to the current low interest rate environment. Inflation rose to be within the RBA target band of 2% to 3% in March quarter 2017, and combined with strong dwelling price growth in Sydney and Melbourne and an avoidance to encourage further residential investment demand, further cuts to the cash rate are unlikely. same figure at December 2015. This places Victoria third, behind Australian Capital Territory (5.95%) and New South Wales (4.74%). Victoria experienced annual growth of 3.16% in the number of employed persons at March 2017. However, the unemployment rate at March 2017 of 6.1% was slightly above the national rate (5.9%). However, with banks raising housing interest rates during March 2017 in response to further directives by APRA to slow residential investment lending and to protect against weakening price growth, it is likely to diminish the need for the cash rate to rise in the short term. $ Dwelling Investment The official standard variable interest rate for owner occupiers sits at 5.30% (while investor loans sits at 5.70%). However, with some bargaining owner occupiers can obtain a discounted interest rate of 4.55% (investors can obtain 4.95%) from the major lenders. Victorian State Economy Employment 1.50% 5.30% 4.55% 4.25% % 3 yr - Cash Rate (Mar-17) Standard Variable Rate (Owner Occupiers) (Mar-17) Discounted Variable Rate (Mar-17) 3 Year Fixed Rate (Mar-17) Source: Reserve Bank Australia

CONSUMER SENTIMENT The Westpac-Melbourne Institute Consumer Sentiment Index is the most widely quoted barometer of consumer sentiment in Australia. A score of greater than 100 means that optimists outnumber pessimists, with readings of below 100 indicating that pessimistic consumers are in the majority. The Westpac-Melbourne Institute Consumer Sentiment Index has increased from January to February, before stabilising at 99.7 in March 2017. This suggests that the decline in consumer sentiment during late 2016 has been arrested, although some volatility in both the domestic and international economy is still impeding more buoyant sentiment. Index = 100 115.0 110.0 105.0 100.0 99.7 95.0 90.0 85.0 80.0 Sep-2013 Dec-2013 Mar-2014 Jun-2014 Sep-2014 Dec-2014 Mar-2015 Jun-2015 Sep-2015 Dec-2015 Mar-2016 Jun-2016 Sep-2016 Dec-2016 Mar-2017 Source: Westpac Melbourne Institute Consumer Sentiment Index BUSINESS CONDITIONS NAB s Business Survey has been tracking Australian business confidence levels for more than two decades. Businesses are approached quarterly, with two smaller monthly surveys conducted in the intervening months to capture changes on a more regular basis. The panel now exceeds 2,700 businesses. Growth in business conditions has largely remained solid from the middle of 2015, with the March 2017 result of a 13.1 percentage point increase being the highest since the start of 2008. The return of growth in Gross Domestic Product (GDP) in December quarter 2016 is likely to have buoyed business conditions and led to the stronger rises in the survey in 2017, after growth had eased in late 2016 in response to declining GDP in September quarter 2016. However, the authors of the index highlight their cautiousness given that confidence has not picked up to reflect the overall strength in business conditions seen over the past year or more. Moreover, the longerterm outlook remains less compelling, with current key drivers of economic activity expected to start to weaken going forward. Business Conditions 15.0 +13.1 10.0 NAB Index 5.0 0.0-5.0-10.0 Sep-2013 Oct-2013 Nov-2013 Dec-2013 Jan-2014 Feb-2014 Mar-2014 Apr-2014 May-2014 Jun-2014 Jul-2014 Aug-2014 Sep-2014 Oct-2014 Nov-2014 Dec-2014 Jan-2015 Feb-2015 Mar-2015 Apr-2015 May-2015 Jun-2015 Jul-2015 Aug-2015 Sep-2015 Oct-2015 Nov-2015 Dec-2015 Jan-2016 Feb-2016 Mar-2016 Apr-2016 May-2016 Jun-2016 Jul-2016 Aug-2016 Sep-2016 Oct-2016 Nov-2016 Dec-2016 Jan-2017 Feb-2017 Mar-2017 Source: National Australia Bank Business Survey VICTORIAN POPULATION Victoria gained 31,241 people during September quarter 2016 (latest available data), lifting its estimated resident population to 6,100,877 people. This equated to a population increase of 127,498 people or 2.13% growth in Victoria over the twelve months to September 2016, which were both the strongest in absolute terms and percentage terms amongst all states and territories. People 25,000 20,000 15,000 10,000 5,000 - -5,000 Sep-2011 Dec-2011 Mar-2012 Jun-2012 Sep-2012 Dec-2012 Mar-2013 Jun-2013 Sep-2013 Dec-2013 Mar-2014 Jun-2014 Sep-2014 Dec-2014 Mar-2015 Jun-2015 Sep-2015 Dec-2015 Mar-2016 Jun-2016 Sep-2016 Natural Increase Net overseas migration Net interstate migration

POPULATION COMPONENTS A breakdown of the three components of population growth shows that in June quarter 2016 Victoria recorded; Natural Increase + Net Interstate Migration Net Overseas Migration +4.0% * +20.7% * +19.3% * +41,700 persons over the 12 months to September 2016 (+16.6%). Reflects 27% of the national increase +17,185 persons over the 12 months to September 2016 (+53.6%). +68,613 persons over the 12 months to September 2016 (+12.8%). Reflects 35% of the national intake * Increase on same quarter of the previous year FINANCE ACTIVITY - VICTORIA LOANS BY DWELLING TYPE Victoria recorded 42,328 new loans for owner occupation during the three months to February 2017, which was a marginal increase of 0.2% on the number of new owner occupier loans over the previous corresponding period. Significantly, this figure is only 0.3% below the peak in new owner occupier loans over the same three month period, which occurred between December 2007 and February 2008. Robust owner occupation demand has been largely underpinned by strong population growth and historical low borrowing costs. In the three months to February 2017, compared to the previous corresponding period, new owner occupation loans for newly constructed dwellings and recently constructed dwellings (but have not been lived in) increased by 3.2%, although declined by 0.4% for established dwellings. However, established dwellings still accounted for a relatively high 84% of total new owner occupation loans in the three month period. Overall, the number of new owner occupation loans during the twelve months to February 2017 in Victoria totalled 181,278 loans, which represented a 5.1% escalation on similarly financed dwellings in the twelve months to February 2016. No. of new dwellings 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Feb-17 45,000 40,000 35,000 30,000 25,000 20,000 No. of established dwellings new dwelling purchase of established dwellings

VALUE OF LOANS BY PURCHASER TYPE The total value of new owner occupier loans in the three months to February 2017 declined by a marginal 0.2% compared to the previous corresponding period, despite sizeable established house price growth continuing through 2016 and into 2017. This suggests that owner occupier demand is increasingly shifting to relatively more affordable outer metropolitan areas, and also to new housing in broadhectare subdivisions, which supports the higher growth in loans for new dwellings compared to established dwellings. The total value of loans to investors in February quarter 2017 increased by a sizeable 14.7% compared to February quarter 2016. This significant improvement can be aligned to investors being able to obtain finance through second tier banks, and also the major banks feeling more comfortable to lend to investors whilst ensuring residential investor lending growth remains below the 10% cap set by the Australian Prudent Regulation Authority. $7,000 total value of loan by type ($m) $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Owner Occupier Sep-15 Dec-15 Mar-16 Jun-16 Investor Sep-16 Dec-16 Feb-17 NUMBER OF LOANS TO FIRST HOME BUYERS AND NON-FIRST HOME BUYERS The number of loans attributed to first home buyers reached 7,079 loans over December quarter 2016, which was 1.2% higher than first home buyer loans in December quarter 2015. Dwellings financed to non-first home buyers recorded 39,489 loans during December quarter 2016, reflecting a 2.6% decrease on the same quarter in the previous year. With first home buyer demand remaining stagnate, their overall share remains at a historical low (15% of total loans), highlighting affordability constraints. No. of loans 60,000 50,000 40,000 30,000 20,000 10,000 0 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 23% 20% 18% 15% 13% 10% 8% 5% 3% 0% % share of FHBs First Home Buyers Non-First Home Buyers Share of FHBs

AVERAGE LOAN SIZE FIRST HOME BUYERS AND NON-FIRST HOME BUYERS The average loan size to first home buyers in December quarter 2016 remained steady, compared to the previous corresponding quarter, while the average loan size to non-first home buyers fell by 2.4%. After narrowing during the first half of calendar 2016, the divergence between the average loan amount to first home buyers and non-first home buyers has widened again through the second half of 2016, with this difference being relatively large. At December 2016, the average loan size attributed to a non-first home buyer was $64,367 above the average loan size to a first home buyer ($325,200). $400,000 $375,000 Average loan size ($) $350,000 $325,000 $300,000 $275,000 FHBs - Average loan size Non-FHBs - Average loan size $250,000 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16

BUILDING ACTIVITY - VICTORIA APPROVALS Victoria recorded 8,300 new detached house building approvals in the March quarter 2017, which equated to a 2.6% decline on new detached house approvals in the previous corresponding quarter. Nevertheless, this volume of approval activity remains relatively strong for the specified three month period. Total approvals in the March quarter 2017 of 15,496 dwellings represented growth of 1.3% on total dwelling approvals during the same period in the previous year. This increase was primarily attributed to the sizeable 15.9% increase in approvals of flats/units/apartments in buildings of 4 storeys and higher. During the twelve months to March 2017, there were 36,201 new detached houses approved, which reflects an increase of 3.7% on house approvals during the twelve months to March 2016. Over the same period, approvals of semi-detached/row/terrace houses and townhouses rose by 6.5%, although flat/unit/apartment approvals declined by 5.9%. Overall, a total of 67,604 dwellings were approved in Victoria during the twelve months to March 2017, resulting in an No. of approvals annual growth of 1.0%. 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - Jun-11 Sep-11 COMMENCEMENTS Detached Houses Townhouses Apartments Dec-11 Mar-12 Over the 2015/16 financial year in Victoria, detached house commencements escalated by 9.7% to 35,480 starts, while multi unit dwelling commencements rose by 1.3% to 33,140 starts. As a result, total commencements increased by 5.5% over 2015/16 to 68,620 dwellings, with this figure expected to be the cyclical peak. Total dwelling starts in Victoria are expected to remain relatively strong through 2016/17 at 62,300 commencements, despite the subsequent 9.2% annual decline. House commencements are anticipated to hold up better, contracting by a projected 2.9% to 34,460 starts, compared to the more sizeable 16.0% forecast decline in multi unit starts to 27,840 commencements. Jun-12 A more substantial fall in dwelling commencements is expected for 2017/18, with 2018/19 projected to be the cyclical low point year for dwelling starts. From 2019/20, dwelling starts are forecast to rebound and return to levels similar in the 2011/12 to 2013/14 period. Notably, forecast dwelling commencements in the four years to 2020/21 in Victoria will still be relatively high and support ongoing solid residential construction activity. Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 80,000 70,000 60,000 Houses Multi-units Forecast No. of dwellings 50,000 40,000 30,000 20,000 10,000 0 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 Source: Housing Industry Association Although all reasonable care has been taken in the preparation of this report, the RPM Real Estate Group Pty Ltd take no responsibility for the accuracy of the information contained herein. It is recommended that all the information be verified if it is to be used for commercial purposes.