MONTHLY RESEARCH BULLETIN DECEMBER 2016
ABOUT REIV The Real Estate Institute of Victoria has been the peak professional association for the Victorian real estate industry since 1936. Over 2,000 real estate agencies in Victoria are members of the REIV. These Members are located in city, rural and regional areas. Members specialise in all facets of real estate, including: residential sales, commercial and industrial sales, auctions, business broking, buyers agency, property management, owners corporations management and valuations. 2 REIV Monthly Research Bulletin December 2016 Edition 11
CONTENTS CONTENTS DECEMBER MONTHLY RESEARCH BULLETIN MARKET OVERVIEW 4 ECONOMY 5 PRICES 6 AUCTION MARKET 7 RENTAL MARKET 8 TRANSACTIONS 9 COMMERCIAL MARKET 10 GLOSSARY/ABOUT REIV DATA 11 CREDITS/DISCLAIMER 12 REIV Monthly Research Bulletin December 2016 Edition 11 3
MONTHLY RESEARCH BULLETIN Market Overview Interested in purchasing any of the statistics on this page? Simply email research@reiv.com.au Overview Following the Reserve Bank meeting in December, the cash rate was left unchanged at 1.5 per cent. The rise in commodity prices this year has resulted in an increase in Australia s terms of trade. This represents a marked turnaround from the pattern of recent years, whereby the terms of trade had fallen significantly. There have been about 35,200 auctions held in Victoria in the first eleven months of 2016 with 75 per cent selling. The middle Melbourne region recorded the highest number of properties sold by auction so far this year, with around 10,700 sales, and a clearance rate of 77 per cent. Victoria s vacancy rate stands at 2.4 per cent in November 2016. The weekly median rent for houses in metropolitan Melbourne rose to $420 in November on the back of rises in inner and middle Melbourne. In regional Victoria, the weekly median rent for houses remained at $300 per week in November. The weekly median rent for units remained at $400 per week in metropolitan Melbourne while the median rent for units in regional Victoria rose by 4.0 per cent to $260 per week. The REIV House Price Index (HPI) for Melbourne rose 0.7 per cent over November to 188.3, and the index is currently 3.6 per cent higher than its value a year ago. The HPI for regional Victoria is 1.4 per cent higher than its value a year ago, now at 139.4. The number of listings appears to be recovering somewhat in December, with a record number of auctions scheduled and anecdotally more listings coming through in comparison to earlier months. There were an estimated 14,300 house and unit sales transacted in Victoria in November 2016, and about 121,800 sales in 2016 thus far. REIV estimates that 130,500 total house and unit sales in Victoria have been transacted in the 12 months leading to November 2016. Based on these estimates, the share of auctions sold as a percentage of overall sales was 21.7per cent from January to November 2016. 0.7% 76% 4.7K 32 2.4% -3.5% HPI Growth The REIV House Price Index for Melbourne rose 0.7 per cent to 188.3 in October and has increased by 3.6 per cent from November 2015. The HPI for regional Victoria is 1.4 per cent higher than its value a year ago, now at 139.4. Clearance Rate The clearance rate remained high this month, at 76 per cent. The rolling 12 month clearance rate is 74per cent. Auctions Held Auctions picked up again in November with 4,740 auctions held. There have been about 35,200 auctions held in Victoria in 2016 so far with 75 per cent selling Days on Market Properties in Melbourne spent on average 32 days on market in November, a decrease of one day from October and four days less than in November 2015. For regional Victoria, the median days on market fell two days to 64 days on market in November 2016. Vacancy Rate The proportion of vacant properties in metro Melbourne dropped slightly to 2.4 per cent, while also dropping slightly to 2.5 per cent in regional Victoria. Sentiment Consumer Sentiment in Victoria fell 3.5 per cent to 98.2 in December and is 8.1 per cent lower than in December 2015. Nationally, consumer sentiment has also fallen, down by 3.9 per cent in December to 97.3. 4 REIV Monthly Research Bulletin December 2016 Edition 11
MONTHLY RESEARCH BULLETIN Economy Interested in purchasing any of the statistics on this page? Simply email research@reiv.com.au Following the Reserve Bank meeting in December, the cash rate was left unchanged at 1.5 per cent. The chance of a rate cut to 1.25 per cent in January according to the ASX RBA Rate indicator, was at 13.0 per cent as of 13 December. The rise in commodity prices this year has resulted in an increase in Australia s terms of trade. This represents a marked change from the pattern of recent years, whereby the terms of trade had fallen significantly and by more than expected. GDP growth is expected to be solid in 2016/17 and gradually pick up thereafter, to be between 3 and 4 per cent by the end of the RBA s forecast period. Exports of liquefied natural gas continue strong, making significant contributions to GDP growth. Low interest rates and the depreciation of the exchange rate should help support household consumption, dwelling investment and exports. The unemployment rate has declined over the course of this year. The growth in employment has been accounted for by part-time employment however. The unemployment rate is expected to edge just a little lower over the next couple of years. Inflation is expected to remain around current rates in the near term, before gradually picking up to around 2 per cent by the end of the RBA s forecast period. The Reserve Bank Board reduced the cash rate by 25 basis points in May, following weaker-than expected inflationary pressures, and by the same amount again in August, when the data confirmed that inflationary pressures remained low. Those reductions in the cash rate will provide support to demand and enhance the prospects of inflation returning to target. Consumer sentiment dropped both nationally and in Victoria, with Victoria sentiment dropping 3.5 per cent in December to 98.2. Nationally, consumer sentiment dropped by 3.9 per cent to 97.3 in December. News that banks have been raising some interest rates, partly in response to a sharp increase in wholesale rates following the US election result will need to be closely watched due to its potential to impact on buyer activity. Consumer Sentiment v Time to Buy a Dwelling, Victoria GDP Growth v VIC State Final Demand Interest Rates Wage Price Index REIV Monthly Research Bulletin December 2016 Edition 11 5
MONTHLY RESEARCH BULLETIN Prices Interested in purchasing any of the statistics on this page? Simply email research@reiv.com.au The REIV House Price Index (HPI) for Melbourne rose 0.7 per cent over November to 188.3, and the index is currently 3.6 per cent higher than its value a year ago. The HPI for regional Victoria is 1.4 per cent higher than its value a year ago, now at 139.4. The number of listings appears to be recovering somewhat in December, with a record number of auctions scheduled and anecdotally more listings coming through versus previous months. Annual HPI growth is highest in inner Melbourne, with an increase of 8.6 per cent since November 2015 compared to 7.5 per cent for outer Melbourne and 4.3 per cent for middle Melbourne. Inner Melbourne also experienced the largest monthly growth at 1.5 per cent. The REIV Unit Price Index (UPI) rose by 1.7 per cent in November for middle Melbourne while rising by 1.4 per cent and 1.2 per cent respectively for inner and outer Melbourne. Year on year, UPI has increased by 4.3 per cent in Melbourne and is now at 165.3. Annually, UPI growth in outer Melbourne is the strongest with an increase of 7.4 per cent since November 2015, followed by inner Melbourne at 3.3 per cent and middle Melbourne at 2.6 per cent. The HPI for regional Victoria remained at 139.4 over the month while UPI for regional Victoria rose by 0.7 per cent to 130.1. Over the year, HPI growth in regional Victoria has been strongest in Geelong, where it has increased by 4.1 per cent since November 2015. Annual UPI growth is also strongest in Geelong, where it has increased 1.8 per cent since November 2015. It should be noted that the HPI and UPI are a different measure from the quarterly median prices. It provides an additional measure of market activity that can be monitored on a monthly basis using sales. In the coming months the REIV will be introducing a new housing price index, the RMX, in order to better reflect real price change in dwellings in Victoria. REIV House and Unit Price Index, Melbourne REIV House and Unit Price Index, Regional Victoria REIV House Price Index, Melbourne REIV House Price Index, Regional Centres 6 REIV Monthly Research Bulletin December 2016 Edition 11
MONTHLY RESEARCH BULLETIN Auction Market Interested in purchasing any of the statistics on this page? Simply email research@reiv.com.au There have been about 35,200 auctions held in Victoria in the first eleven months of 2016 with 75 per cent selling. The middle Melbourne region recorded the highest number of properties sold by auction so far this year, with around 10,700 sales, and a clearance rate of 77 per cent. In November 2016, there were around 4,740 auctions held, with 76 per cent selling, compared to about 5,750 auctions in November 2015. The local government areas of Boroondara (261 auctions), Glen Eira (257auctions), Kingston (251 auctions) and Monash (248 auctions) had the highest number of auctions in November 2016, with Kingston reporting a clearance rate of 83 per cent. At the suburb level, Reservoir had the most auctions for the month, with 78 auctions held in November 2016 followed by Glen Waverley (53), St Kilda (53) and Richmond (52). Reservoir (61 sales), Elwood (40 sales), Cheltenham (39 sales) and Brighton (38 sales) had the highest number of properties sold by auction in November. Hadfield and Kensington had the highest clearance rates in November, with clearance rates of 100 per cent. It should be noted that the REIV continues to receive results several weeks after the date of auction which may lead to revisions in auction data. House Price Growth v Clearance Rate, Rolling Annual, Melbourne Highest Clearance Rates, November 2016 SUBURB SOLD CLEARANCE RATE HADFIELD 18 100% KENSINGTON 15 100% KEILOR EAST 20 95% THOMASTOWN 19 95% FERNTREE GULLY 14 93% YARRAVILLE 21 91% BRIGHTON EAST 30 91% CAULFIELD SOUTH 20 91% CAMBERWELL 29 91% HAMPTON 19 90% NOTE: Includes sales between 01-30 November 2016 for suburbs with 15 or more auction sales Auctions v Clearance Rate, Victoria Highest Number of Auction Sales, November 2016 SUBURB SOLD CLEARANCE RATE RESERVOIR 61 78% ELWOOD 40 82% CHELTENHAM 39 81% BRIGHTON 38 78% GLEN WAVERLEY 37 70% RICHMOND 36 69% CRAIGIEBURN 35 76% KEW 35 76% GLEN IRIS 35 70% ST KILDA 35 66% NOTE: Includes sales between 01-30 November 2016 for suburbs with 15 or more auction sales REIV Monthly Research Bulletin December 2016 Edition 11 7
MONTHLY RESEARCH BULLETIN Rental Market All members who participate in REIV s vacancy rate survey receive the data before it is published. If you are interested in being added to this survey, email research@reiv.com.au Victoria s vacancy rate stands at 2.4 per cent in November 2016. The weekly median rent for houses in metropolitan Melbourne rose to $420 in November on the back of rises in inner and middle Melbourne. In regional Victoria, the weekly median rent for houses remained at $300 per week in November. The weekly median rent for units remained at $400 per week in metropolitan Melbourne while the median rent for units in regional Victoria rose by 4.0 per cent to $260 per week. Vacant space across metropolitan Melbourne dropped slightly to 2.4 per cent in November. Within Melbourne s sub-regions, vacancy rates in the inner suburbs remained at 2.3 per cent in November while the middle suburbs rose ten basis points to 2.7 per cent and the outer suburbs fell 10 basis points to 2.0 per cent. The continuing lower vacancy rates in outer Melbourne suggest pressure on family housing in these areas, which are relatively affordable compared to areas closer to the CBD. The vacancy rate in regional Victoria dropped to 2.5 per cent in November. The vacancy rates in the Geelong region dropped slightly to 3.1 per cent while vacancy rates in the Bendigo and Ballarat regions dropped 30 basis points each and are now at1.9 per cent. Rents for houses in Geelong fell $10 per week to $340 per week in November while rents for Ballarat rose $10 to $295 per week and rents for Bendigo also rose $10 to $300 per week.. Vacancy Rates, Melbourne & Regional Victoria Vacancy Rates, Metropolitan Melbourne Vacancy Rates, 6-month average trend VACANCY RATES NOVEMBER 2016 OCTOBER 2016 Inner Total 2.3 2.3 Inner (0-4Km) 2.7 2.9 Inner (4-10Km) 2.1 2.1 Middle (10-20Km) 3.0 2.9 Outer Total 2.0 2.1 Outer (20+Km Exc. Mornington Pen.) 2.0 2.1 Outer (Mornington Pen.) 2.3 2.3 Melbourne Total 2.4 2.5 Geelong 3.1 3.2 Bendigo 1.9 2.2 Ballarat 1.9 2.2 Regional Victoria Region 2.5 2.6 Victoria Total 2.4 2.5 MEDIAN HOUSE RENTS Inner $595 $580 Middle $421 $410 Outer $375 $380 Metro Melbourne $420 $418 Geelong $340 $350 Ballarat $295 $285 Bendigo $300 $290 Regional Victoria $300 $300 MEDIAN UNIT RENTS Inner $420 $415 Middle $390 $390 Outer $340 $340 Metro Melbourne $400 $400 Geelong $320 $300 Ballarat $260 $250 Bendigo $265 $260 Regional Victoria $260 $250 8 REIV Monthly Research Bulletin December 2016 Edition 11
MONTHLY RESEARCH BULLETIN Transactions Interested in purchasing any of the statistics on this page? Simply email research@reiv.com.au There were an estimated 14,300 house and unit sales transacted in Victoria in November 2016, and about 121,800 sales in 2016 thus far. REIV estimates that 130,500 total house and unit sales in Victoria have been transacted in the 12 months leading to November 2016. Based on these estimates, the share of auctions sold as a percentage of overall sales was 21.7per cent from January to November 2016. In the 12 months ending October 2016, there were approximately 108,660 housing finance commitments (excluding refinancing) in Victoria. This is a growth of 3.5 per cent from last year. The share of first home buyers was at 15.5 per cent for the year to October 2016. The continued rise in housing finance commitments is a leading indicator of future transactions and as more consumers are readying to buy. Properties in Melbourne spent on average 32 days on market in November, a decrease of one day from October and four days less than in November 2015. For regional Victoria, the median days on market fell two days to 64 days on market in November 2016. Inner Melbourne properties spent 38 days on market in November 2016, two days down from October, while middle Melbourne and outer Melbourne properties both fell by one day to 34 and 30 days on market respectively. The total number of building approvals fell by 2.7 per cent in October in seasonally adjusted terms, with approximately 4,920 dwelling units approved and 66,680 dwelling units approved in the past 12 months in Victoria. The past two months have seen a rise in the proportion of building approvals attained for houses, with 59.6 per cent of building approvals in October and 59.2 per cent in September attained for houses compared to 52.3 per cent from January to August 2016. Building Approvals, Victoria Estimated Sale Volume, Victoria Housing Finance Commitments, Victoria Median Days on Market, Private Sales REIV Monthly Research Bulletin December 2016 Edition 11 9
MONTHLY RESEARCH BULLETIN Commercial Market Interested in purchasing any of the statistics on this page? Simply email research@reiv.com.au Capital values in the commercial office space increased over November by 2.3 per cent to $4,474/sqm from $4,375/sqm in October. Net face rents remained stable during this period, recording $249/sqm value in November. Net rental yields decreased by 0.1 percentage points over November to 5.6 per cent. Capital values for the retail sector increased over the month by 1.9 per cent to $4,188/sqm in November from $4,111sqm in October, while net face rent rose by 0.4 per cent to $245sqm. Net rental yields decreased by 0.1 percentage points over November to 5.8 per cent. Capital values for the factory/warehouse sector decreased by 0.1 per cent in November to $1,408/sqm, while net face rents remained stable at $85/sqm. Net rental yields also remained stable at 6.0 per cent. Commercial Office LOWER MEDIAN UPPER LOWER MEDIAN UPPER MONTH QUARTILE NOV-16 QUARTILE QUARTILE OCT-16 QUARTILE CHANGE Capital values ($/sqm) $3,173 $4,474 $6,549 $3,162 $4,375 $6,197 2.3% Net face rents ($/sqm) $177 $249 $347 $177 $249 $351 0.0% Net Rental Yield (% pa) 4.4% 5.6% 7.1% 4.3% 5.7% 7.1% -0.1ppts Industrial General Retail LOWER MEDIAN UPPER LOWER MEDIAN UPPER MONTH QUARTILE NOV-16 QUARTILE QUARTILE OCT-16 QUARTILE CHANGE Capital values ($/sqm) $1,173 $1,408 $1,795 $1,173 $1,410 $1,823-0.1% Net face rents ($/sqm) $75 $85 $99 $77 $85 $103 0.0% Net Rental Yield (% pa) 5.7% 6.0% 6.8% 5.7% 6.0% 7.1% 0.0ppts LOWER MEDIAN UPPER LOWER MEDIAN UPPER MONTH QUARTILE NOV-16 QUARTILE QUARTILE OCT-16 QUARTILE CHANGE Capital values ($/sqm) $2,273 $4,188 $6,588 $2,343 $4,111 $6,525 1.9% Net face rents ($/sqm) $140 $245 $433 $152 $244 $418 0.4% Net Rental Yield (% pa) 3.6% 5.8% 6.5% 3.6% 5.9% 6.3% -0.1ppts 10 REIV Monthly Research Bulletin December 2016 Edition 11
GLOSSARY/ABOUT REIV DATA Glossary/About REIV data What is a median price Why do you use median prices? What are upper and lower quartile points? How do you gather your data? Is your data accurate? Why are only areas with 25, 30 or 50 sales included in snapshots? How does the REIV classify property The median price is the middle price in a series of sales. For example, if 15 sales are recorded in a suburb and arranged in order from the lowest to the highest value, the eighth sale price is the median price. In the case where there is an even number of sales in a series, the median price is the average of the middle two prices. Median prices provide a useful guide to market activity. The REIV does not intend for median price measures to be regarded as a valuation tool. The assessment of a property s value is a job for a qualified professional who possesses the knowledge, experience and comparable sales information required to do so. The lower quartile is the point where one quarter of the sales are of a lesser value, and the upper quartile is the point where one quarter of the sales are of a higher value. The REIV gathers most of its data online from agents submitting their sales results electronically and it also has a dedicated call centre to collect property sales results at the time of contract. The sales results submitted to the REIV include residential, commercial, industrial and rural sales results from around the state. All our data is checked for accuracy and questionable sales are either verified with the selling agent or excluded from analysis. Using a median price taken from a limited sample will tend to be more volatile from one period to the next. Therefore caution must be taken about making broad conclusions on the market from such figures. Which areas are included in metropolitan Melbourne? For the purpose of our analysis we define metropolitan Melbourne as those suburbs contained within the following 31 municipalities: Banyule Bayside Boroondara Brimbank Cardinia Casey Darebin Frankston Glen Eira Greater Dandenong Hobsons Bay Hume Kingston Knox Manningham Maribyrnong Maroondah Melbourne Melton Monash Moonee Valley Moreland Mornington Peninsula Nillumbik Port Phillip Stonnington Whitehorse Whittlesea Wyndham Yarra Yarra Ranges The REIV endeavours to use as similar classifications as possible to the ones used by real estate agents, in order to maintain the accuracy of data collected. Property that falls under the house classification includes: - detached houses - terraced houses - semi-detached houses - holiday houses - duplexes - house and granny flat Property that falls under the units & apartments classification includes: - flats - units - apartments - townhouses - penthouses - villas - residential warehouse conversions - bed-sits Which regions are inner, middle and outer Melbourne? For the purposes of our analysis we define: - inner as being within 10km from the CBD; - middle as being between 10km and 20km of the CBD; and - outer as being more than 20km from the CBD. The full suburb list of what is within the inner, middle, and outer regions is available on the REIV website at www.reiv.com.au/property-research/about-reivdata REIV Monthly Research Bulletin December 2016 Edition 11 11
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CREDITS & DISCLAIMER Chief Executive Officer Geoff White Editors REIV Research 2016 The Real Estate Institute of Victoria Ltd. (REIV). All rights reserved. No reproduction, distribution, or transmission is permitted without the prior written permission of the REIV. In compiling information, the REIV has relied upon data supplied by third parties. The REIV uses recognised statistical techniques in compiling its data, and this data is checked for accuracy and questionable sales results are either verified with the selling agent or discarded. Because the REIV has relied upon data supplied by third parties, the REIV does not warrant the information s accuracy or completeness. Subscribers specifically accept the information on an as is basis. To the full extent allowed by law the REIV excludes liability in contract, tort or otherwise, for any loss or damage sustained by subscribers, or by any other person or body corporate arising from or in connection with the supply or use of the whole or any part of the information in this publication through any cause whatsoever and limits any liability it may have to the amount paid to REIV for the supply of such information. Median prices are a guide to market activity, and the REIV does not intend for median prices measures to be regarded as a valuation tool. The assessment of an individual property s value is a job for a qualified professional, who possesses the knowledge, experience, and comparable sales information required to do so. REIV Monthly Research Bulletin December 2016 Edition 11 13
CONTACT US The Real Estate Institute of Victoria Ltd. 335 Camberwell Rd, Camberwell, Victoria 3124, Australia Phone +61 3 9205 6666 Fax +61 3 9205 6699 Email reiv@reiv.com.au www.reiv.com.au facebook.com/reivictoria @REIVictoria REIV Networking Group