Market Update: November 2011
Market Update: November 2011
Market Update: November 2011
November 2011
Market snapshot
Australian capital cities, September 11
Darwin Houses: down -0.3% over quarter Units: down -0.7% over quarter Median house price: $450,000 Median unit price: $410,000 Gross rental yields: 5.3% (houses) / 5.8% (units)
Brisbane Houses: down -1.8% over quarter Units: up 3.2% over quarter Median house price: $435,000 Median unit price: $365,000 Gross rental yields: 4.8% (houses) / 5.4% (units) Perth Houses: down -1.2% over quarter Units: down -1.1% over quarter Median house price: $455,000 Median unit price: $386,000 Gross rental yields: 4.5% (houses) / 4.9% (units) Sydney Houses: down -1% over quarter Units: down -0.4% over quarter Median house price: $552,000 Median unit price: $458,000 Gross rental yields: 4.4% (houses) / 5.2% (units) Canberra Houses: up 0.9% over quarter Units: down -5.6% over quarter Median house price: $535,000 Median unit price: $420,000 Gross rental yields: 4.8% (houses) / 5.6% (units) Hobart Houses: down -6.4% over quarter Units: down -4.8% over quarter Median house price: $334,000 Median unit price: $262,000 Gross rental yields: 5.2% (houses) / 5.4% (units)
Adelaide Houses: down -1.1% over quarter Units: up 0.7% over quarter Median house price: $385,000 Median unit price: $319,000 Gross rental yields: 4.2% (houses) / 4.8% (units)
Melbourne Houses: down -2% over quarter Units: down -2.9% over quarter Median house price: $485,000 Median unit price: $423,000 Gross rental yields: 3.8% (houses) / 4.3% (units)
Home values are down across all capital cities over the year
Across the capitals, property values have fallen by -3.4% over the past year. Hobart (-9.1%) and Brisbane (-6.1%) have been the weakest markets over the past year. Sydney and Canberra have been relatively stronger performers with values down -1.2% and -1.6% respectively.
2.0%
Annual change in dwelling value
0.0%
-2.0% -1.2% -1.6%
-4.0% -6.0%
-8.0%
-3.4%
-3.4%
-3.7%
-4.4%
-5.1% -6.1%
-10.0%
Sydney Canberra Australian Adelaide Capitals Darwin Melbourne Perth Brisbane
-9.1%
Hobart+
-0.7%
-0.8%
-0.9%
-1.2%
-1.3%
-1.3% -2.0%
-6.6% Darwin Adelaide Sydney Canberra Brisbane Perth Australian Melbourne Capitals Hobart+
Adelaide Brisbane
Darwin
$334,000 $319,000
$385,000 $365,000
Canberra Sydney
$0 $100,000 $200,000
$435,000 $410,000 $450,000 $386,000 $455,000 $415,000 $465,000 $423,000 $485,000 $420,000
$535,000 $552,000
$458,000
$400,000
$500,000
$600,000
Darwin has been the standout performer over the past five years
Capital city property values have increased at an average annual rate of 5.0% during the five years to September 2011. Over the past 10 years capital city property values have increased at an average annual rate of 6.5%, indicating more subdued growth conditions over the second half of the decade.
10.0%
Avg annual value growth last five years
Average annual change in property values past five years to September 2011
9.3% 8.2%
8.0% 6.7%
6.0% 4.1%
4.0% 2.0%
5.5%
5.0%
4.3%
3.0% 0.8%
0.0%
Perth Hobart+ Sydney Brisbane Canberra Adelaide Melbourne Darwin Australian capitals
Values are down -3.4% across the combined capital cities benchmark over the past year
Annual growth in capital city dwelling values most recently peaked at 14.2% in March 2010. Since that time the annual rate of change in dwelling values has fallen to -3.4% in September 2011. Home values across the combined capital cities are currently -3.6% below their peak.
25.0%
20.0%
15.0%
10.0%
5.0%
0.0%
-5.0%
Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11
National volume of house and unit sales monthly vs. 5 year average
70,000
National
5 yr average
60,000
Monthly sales volumes
50,000
40,000
30,000
20,000
10,000
0 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11
Note: the last five months of sales volumes are modelled based on historic levels of revision Source: rpdata.com
On a quarterly basis the decline in home values has improved slightly in September
Over the last quarter property values across the combined capital cities fell by -1.3% compared with a quarterly fall of -1.4% over the three month period ending August. On a quarterly basis, capital city home values have been falling right throughout 2011.
Sep-04
Sep-05
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Quarterly change in capital city house values vs. Rest of state house values
Capital city Rest of State
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
10
25.0%
20.0%
15.0%
10.0%
5.0% 0.0%
-5.0%
-10.0%
Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11
11
Sydneys estimated volumes have recorded a slight improvement over recent months
Estimated transaction volumes are running -2% below five year average levels. Compared to other cities, sales activity in Sydney is relatively strong.
Sydney
5 yr average
12,000
Monthly sales volumes
10,000
8,000
6,000
4,000
2,000
0 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11
Note: the last five months of sales volumes are modelled based on historic levels of revision Source: rpdata.com
12
13
Melbourne
5 yr average
Note: the last five months of sales volumes are modelled based on historic levels of revision Source: rpdata.com
14
40.0%
35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0%
15
After a surge of buyer activity in July, Brisbane transaction volumes have once again weakened
Estimated sales volumes in Brisbane are -35% below the five year average in Brisbane following a surge in July due to the change in stamp duties payable on owner occupied properties which came into affect on August 1. Volumes have been below five year average levels since mid 2009.
Brisbane
5 yr average
7,000 6,000
Note: the last five months of sales volumes are modelled based on historic levels of revision
Source: rpdata.com
16
17
Adelaide sales volumes continue to remain well below five year average levels
Adelaides estimated sales volumes are currently -22% below the five year average. As capital gains have transitioned out of the market, sales volumes have also fallen.
Adelaide
5 yr average
3,000
Monthly sales volumes
2,500
2,000
1,500
1,000
500
0 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11
Note: the last five months of sales volumes are modelled based on historic levels of revision
Source: rpdata.com
18
30.0%
20.0%
10.0% 0.0%
-10.0%
-20.0%
Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11
19
Perth sales volumes improve over recent months however, transactions remain at low levels
The Perth property market has been consistently weak for most of the last five years, resulting in a strong downward trend in the five year average volume of sales. Estimated Perth sales volumes are -4% below the five year average after 2 consecutive months of improving buyer numbers.
Perth
5 yr average
6,000
Monthly sales volumes
5,000
4,000
3,000
2,000
1,000
0 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11
Note: the last five months of sales volumes are modelled based on historic levels of revision
Source: rpdata.com
20
21
450
Monthly sales volumes
Darwin
5 yr average
400
350
300 250
200 150
100
50 0 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11
Note; the last five months of sales volumes are modelled based on historic levels of revision
Source: rpdata.com
22
Values fall in Canberra however, the city continues to outperform the benchmark
Apart from a period of exceptional growth between 2002 and 2004, the Canberra market performance has closely mirrored the capital gains recorded across the combined capital cities. During the 12 months to September 2011, Canberra property values have fallen by -1.6%.
35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0%
Sep-01 Sep-02
Sep-03
Sep-04
Sep-05
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
23
Canberra
5 yr average
Note: the last five months of sales volumes are modelled based on historic levels of revision
Source: rpdata.com
24
25
Hobart sales volumes sit well below the five year average level
The estimated volume of sales across the city is -15% below the five year average, highlighting the low level of buyer demand across the Hobart housing market.
Hobart
5 yr average
Note: the last five months of sales volumes are modelled based on historic levels of revision
Source: rpdata.com
26
25.0% 20.0%
15.0% 10.0%
Performance of top 20% of suburbs vs. middle 60% vs. bottom 20%
Most affordable 20% Middle 60% Most expensive 20%
5.0% 0.0%
-5.0%
-10.0%
Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11
27
5.5%
5.3% 4.9% 4.7% 4.5% 4.3%
Avg gross rental yield
28
$420
$400
5.1%
$380
$360 $340
4.1%
3.9%
$320
$300
3.7%
3.5%
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Sydney, Brisbane and Perth the only markets to record a rental rise of any magnitude
Sydney Houses Units Houses Units Houses Units Houses Units Houses Units Houses Units Houses Units Houses Units Houses Units Annual Change % $ 5.9% $31 5.4% $26 1.9% 0.9% 4.8% 8.4% 0.9% 4.4% 10.1% 6.8% 0.8% -2.0% -0.3% -0.6% -3.5% -6.3% 4.5% 4.4% $7 $3 $18 $28 $3 $14 $39 $27 $4 -$10 -$1 -$3 -$12 -$18 $19 $18 Five year change % $ 5.5% $128 6.8% $144 6.2% 6.9% 4.9% 6.8% 4.2% 5.0% 8.7% 7.8% 8.8% 9.8% 5.1% 4.6% n.a. n.a. 5.8% 6.8% $103 $102 $86 $103 $65 $70 $147 $135 $189 $173 $110 $82 n.a. n.a. $110 $121
Across the combined capital cities weekly rents sit at $446/week for houses and $432/week for units. Capital city rents have increased by 4.5% for houses and 4.4% for units over the past 12 months. Rental yields have been showing some improvement due to falls in home values and modest rental increases. Over the last five years capital city house rents have increased at an average annual rate of 5.8% and units by 6.8%. Over the past five years, house and unit rents have increased at a faster rate than property values, a trend we expect will continue. Rental vacancies remain low across most capitals which is likely to see further upwards pressure on rental rates.
Melbourne
Brisbane
Adelaide
Perth
Darwin
Canberra
Hobart
Combined caps
29
Average time on market increases over the month but still below recent peaks
Average days on market, houses
70 60
50
30
Discount levels fall suggesting vendors are setting more realistic asking prices
Average vendor discount, houses
0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0% -7.0% -8.0%
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0% -7.0% -8.0% -9.0%
Average vendor discount, units This yr: -6.1% Last yr: -6.0%
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
31
Clearance rates below 50% for most of the last six months
Auction clearance rates are well below levels recorded at the same time last year when around 60% of auctions were clearing. The weak clearance rate highlights that market conditions favour the buyer with little competition amongst active buyers and no urgency around making a purchase decision.
90%
80% 70% 60% 50% 40% 30%
3,000 2,500
2,000
Auction volumes
1,500
1,000 500
20% 10% 0%
Feb 09 May 09 Aug 09 Nov 09 Feb 10 Jun 10 Sep 10 Dec 10 Mar 11 Jul 11 Oct 11
Source: rpdata.com
32
The number of properties advertised for sale has increased to record levels
More than 306,000 properties are currently advertised for sale across the country compared with about 230,000 homes being advertised for sale at the same time last year (+33%). The climb in total listings is being driven by slower market conditions not an influx of new listings given newly advertised properties being added to the market are around -9% lower than at the same time last year.
350,000
Jan 07
Sep 07
May 08
Jan 09
Sep 09
May 10
Jan 11
Sep 11
Source: rpdata.com
33
Inflation is starting to ease however, headline inflation remains outside of target range
All groups inflation increased over the June 2011 quarter to an annual rate of 3.5%, while the RBAs preferred measure, the average of the weighted median and trimmed mean is recorded at 2.5% over the year, right in the middle of its medium term target range. The easing in inflation has largely removed the threat of any interest rate rises over the medium term.
7.0 6.0
Annual change in CPI (%)
5.0
4.0
3.0
Reserve Bank's Target Range
2.0
1.0 0.0 -1.0
Sep-97
Sep-99
Sep-01
Sep-03
Sep-05
Sep-07
Sep-09
Sep-11
34
Inflation is starting to ease however, headline inflation remains outside of target range
Inflation was strongest across the food and non-alcoholic beverages category which has a significant impact on household budgets as it is an item which is regularly being purchased. The recreation and culture and furnishings and household equipment and services components of CPI were the only two groups that recorded a fall over the year.
-0.1% -0.5%
0.0% 2.0% 4.0% 6.0% 8.0%
35
Higher electricity, utilities, water and sewerage costs driving the cost of CPI housing higher
Housing CPI rose by 4.2% over the year. CPI for electricity (12.5%), utilities (10.1%), water and sewerage (8.6%) and gas and other household fuel (6.0%) all rose at a rate well above inflation.
4.6% 4.2%
6.0%
8.0%
10.0%
12.0%
14.0%
36
Standard variable mortgage rates remain at 7.8% but for how much longer?
Mortgage rates have remained on hold for 11 months now and have moved once in the last 17 months. Despite the fact that headline inflation is outside of the RBAs target range underlying inflation was very low over the September quarter suggesting that the RBA may cut rates to help stimulate the economy. 3 year fixed rates loans are currently 6.6%.
10.0% 9.0% 8.0% 7.0% 6.0% 5.0%
10.0%
8.0% 6.0% 4.0%
Oct-61
Oct-66
Oct-71
Oct-76
Oct-81
Oct-86
Oct-91
Oct-96
Oct-01
Oct-06
Oct-11
Long term
4.0%
Oct-03 Oct-04 Oct-05 Oct-06 Oct-07 Oct-08 Oct-09 Oct-10 Oct-11
37
12%
10% 8% 6% 4% 2%
Unemployment Rate
38
Sep-81
Sep-84
Sep-87
Sep-90
Sep-93
Sep-96
Sep-99
Sep-02
Sep-05
Sep-08
Sep-11
100.0
0.0
-100.0
-200.0 Sep-01 Sep-03 Sep-05 Sep-07 Sep-09 Sep-11
39
Consumer confidence improves in September and again in October however, pessimism still prevails
The index of Consumer Sentiment was recorded at 97.2 points in October 2011, up a total of 8.5% over September and October. Despite the fact that sentiment improved over the month respondents remained more pessimistic than optimistic with the Index remaining below 100 points.
130
Consumer Sentiment Index
80
70 60 Oct-91 Oct-93 Oct-95 Oct-97 Oct-99 Oct-01 Oct-03 Oct-05 Oct-07 Oct-09 Oct-11
40
Housing transaction volumes unlikely to improve significantly until the consumer mindset improves
There is a fairly strong correlation between consumer sentiment and sales volumes. With sentiment weak we would expect sales volumes to remain at low levels.
140
Consumer sentiment index vs. sales volumes (Syd, Mel and Bris)
Consumer Sentiment (LHS) Sales vols (Syd, Mel and Bris) (RHS)
30,000 25,000
120
100 80
20,000
15,000
60
40
20 0 Oct-91 Oct-93 Oct-95 Oct-97 Oct-99 Oct-01 Oct-03 Oct-05 Oct-07 Oct-09
41
First home buyers and non-first home buyers remain relatively inactive
During August 2011, first home buyers accounted for just 15.3% of all owner occupier finance commitments up from a low of 14.9% in July 2011. Non first home buyer activity also remains quite subdued despite the modest rises recently.
70,000
Monthly finance commitments
60,000 50,000
40,000
30,000
20,000
10,000 0 Aug-93 Aug-96 Aug-99 Aug-02 Aug-05 Aug-08 Aug-11
42
18 16 14
Value of Commitments ($billion)
43
12
10 8
6
4 2 Aug-01 Aug-02 Aug-03 Aug-04 Aug-05 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 Aug-11
60,000
50,000
Finance commitments
10,000
0
Aug-93
Aug-95
Aug-97
Aug-99
Aug-01
Aug-03
Aug-05
Aug-07
Aug-09
Aug-11
44
18,000
16,000
14,000 12,000
10,000
8,000 Aug-91 Aug-93 Aug-95 Aug-97 Aug-99 Aug-01 Aug-03 Aug-05 Aug-07 Aug-09 Aug-11
45
0 Aug-91 Aug-93 Aug-95 Aug-97 Aug-99 Aug-01 Aug-03 Aug-05 Aug-07 Aug-09 Aug-11
46
80,000 70,000
Although population growth is slowing, the supply of new dwellings has been insufficient
As population growth took-off during 2005, there was not a sufficient increase in the supply of new building approvals. The latest projections from the National Housing Supply Council suggest that the housing undersupply is likely to be around 228,300 dwellings in 2011.
Aug-95
Aug-99
Aug-03
Aug-07
Aug-11
48