Sunshine Coast Residential Market

Sunshine Coast Residential Market Warwick Temby HIA Executive Director, QLD HOUSING INDUSTRY ASSOCIATION April 2010

Overview Look at international, national and local events that are shaping the outlook for the industry Big picture interest rates, economic growth, population pressures, investment options, finance availability Local house prices, land prices, supply constraints like land availability, skills

% change Dec-88 Dec-89 Dec-90 Dec-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Australia poised for a good year Gross Domestic Product Source: ABS 5206 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0-1.0-2.0 Qtrly The economic growth outlook for Australia in 2010 is close to trend (3.5%) The strength of China and other South East Asian trading partners provided the impetus needed to avoid a technical recession in 2009 Unemployment seems to have peaked and the interest rate hiking cycle is now well under way The eventual upcycle brings with it the flipside issues such as avoiding excessive interest rate rises, housing affordability and skill shortages Annual

Jun.1991 Jun.1992 Jun.1993 Jun.1994 Jun.1995 Jun.1996 Jun.1997 Jun.1998 Jun.1999 Jun.2000 Jun.2001 Jun.2002 Jun.2003 Jun.2004 Jun.2005 Jun.2006 Jun.2007 Jun.2008 Jun.2009 Jun.2010 Jun.2011 Jun.2012 Growth in Qld Gross State Product - Queensland Source: ABS 5220.0; Access Economics 7.0 6.0 Long term average 5.0 4.0 Forecast 3.0 2.0 1.0 0.0 Year ended June GSP grew by 0.3 per cent in the year to June 2009 Access Economics is forecasting growth of 2.7 per cent for the year to June 2010.

% Interest Rate Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 Interest Rates Interest Rates, Australia, RBA Source: RBA 10.00 9.00 8.00 7.00 6.00 5.00 4.00 3.00 2.00 Standard Variable Mortgage Rate RBA Cash Rate

QLD First Home Buyers Source: ABS Housing Finance 4500 30% 4000 3500 3000 25% 20% 2500 2000 1500 15% 10% 1000 3 n -0 Ja 3 p r-0 A 3 J u l-0 3 ct-0 O 4 n -0 Ja 4 p r-0 A 4 J u l-0 4 ct-0 O 5 n -0 Ja 5 p r-0 A 5 J u l-0 5 ct-0 O 6 n -0 Ja 6 p r-0 A 6 J u l-0 6 ct-0 O 7 n -0 Ja 7 p r-0 A 7 J u l-0 7 ct-0 O 8 n -0 Ja 8 p r-0 A 8 J u l-0 8 ct-0 O 9 n -0 Ja 9 p r-0 A 9 J u l-0 9 ct-0 O 5% 0 n -1 Ja First home buyers - Dwellings financed (LHS) Proportion (RHS)

Feb-04 May-04 Aug-04 Nov-04 Feb-05 May-05 Aug-05 Nov-05 Feb-06 May-06 Aug-06 Nov-06 Feb-07 May-07 Aug-07 Nov-07 Feb-08 May-08 Aug-08 Nov-08 Feb-09 May-09 Aug-09 Nov-09 Feb-10 Housing Finance QLD New Home Lending - Number of Loans Source: ABS Housing Finance 2,500 2,000 1,500 1,000 500 0 Total New Loans Construction of dwellings Purchase of new dwellings

Value $m (moving annual total) Jan-01 Jun-01 Apr-02 Jul-03 Oct-04 Jan-06 Jun-06 Apr-07 Jul-08 Nov- Sep- Feb- Dec- May- Mar- Aug- Nov- Sep- Feb- Dec- May- Oct-09 Lending for Rental Properties - Queensland Source: ABS Lending Finance 20,000 3,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,500 2,000 1,500 1,000 500 2,000 0 Existing (lhs) Construction (rhs)

% change in index Dec-89 Dec-90 Dec-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 CPI - Rental CPI Rental Growth Brisbane Source: ABS 6401 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0-0.5 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Qtrly (LHS) Annual (RHS)

% change Housing Industry Outlook Dec-88 Dec-90 Dec-92 Dec-94 Dec-96 Dec-98 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Brisbane CPI 5.0 4.0 3.0 2.0 1.0 0.0-1.0 Private rents All groups

Sunshine Coast land market still expensive 10 MOST EXPENSIVE REGIONAL MARKETS Rank Region Median Lot Price ($) 1 Richmond-Tweed (NSW) 255,500 2 Sunshine Coast (QLD) 241,500 3 Gold Coast (QLD) 240,275 4 Illawarra (NSW) 192,500 5 (e) Hunter (NSW) 170,000 5 (e) Mackay (QLD) 170,000 7 Barwon (VIC) 162,000 8 Northern (QLD) 159,000 9 South West (WA) 158,250 10 Mid-North Coast (NSW) 157,500 Source: RP Data, HIA Economics Group In the Sept 09 qtr, the Gold Coast had the third most expensive median residential land price

$ Sep-01 Jan-02 May-02 Sep-02 Jan-03 May-03 Sep-03 Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Number Sunshine Coast residential land market Sunshine Coast Source: RP Data 300,000 1,200 250,000 1,000 200,000 800 150,000 600 100,000 400 50,000 200 0 0 No. of sales Price In the Sept 09 qtr, both the volume of sales and the median price trended upwards

Skills shortages will soon re-emerge Trade Prices and Availability - Brisbane Source: HIA-Austral Bricks Trade Report Index 0.40 0.20 0.00-0.20-0.40-0.60-0.80 Index 142.0 140.0 138.0 136.0 134.0 132.0 130.0 128.0 126.0 124.0-1.00 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Trade Availability (LHS) Trade Prices (RHS 122.0 A marginal surplus of trades people was operating in Brisbane in the Dec 09 qtr However, the new home building recovery is expected to see a shortage reemerge in 2010

Skills shortages will soon re-emerge Trade Prices and Availability - Regional QLD Source: HIA-Austral Bricks Trade Report -0.20-0.40-0.60-0.80 Index 0.40 0.20 0.00 Index 138.0 136.0 134.0 132.0 130.0 128.0-1.00 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 126.0 Trade Availability (LHS) Trade Prices (RHS A very marginal surplus of trades people was operating in regional Queensland in the Dec 09 qtr Surplus likely to re-emerge in regional Qld in 2010 also

Population growth long term driver Rest of Australia = 1.9% Queensland = 2.7% Sunshine Coast = 3.1% Population growth in 12 months to September 2009

Population ERP at 30 June Change Statistical Subdivision and 2001 2002 2003 2004 2005 2006 2007r 2008r 2009p 2004-2009p(a) 2008r-2009p Area Population density 2009 Statistical Local Area no. no. no. no. no. no. no. no. no. % no. % km2 persons/km2 Sunshine Coast Buderim 33,178 35,076 37,626 39,674 41,415 42,734 44,447 45,655 46,813 3.4 1158 2.5 62 754.9 Caloundra North 18,398 19,280 20,172 21,153 21,865 22,493 23,299 24,249 25,259 3.6 1010 4.2 27.5 919.2 Caloundra South 15,778 16,594 18,199 19,511 20,374 21,342 22,231 23,307 24,493 4.7 1186 5.1 106.1 230.9 Coolum-Mudjimba 18,429 19,571 20,730 21,877 23,190 24,678 26,101 27,335 28,356 5.3 1021 3.7 47.3 599.8 Kawana 17,952 18,486 19,327 20,035 20,976 21,753 22,444 23,142 23,951 3.6 809 3.5 35.3 677.9 Maroochydore 15,640 15,865 16,139 16,653 17,100 17,466 17,828 18,203 18,274 1.9 71 0.4 14.1 1293.6 Mooloolaba 10,387 10,535 10,614 10,864 10,894 11,076 11,085 11,172 11,283 0.8 111 1.0 5.4 2084.1 Nambour 12,995 13,231 13,506 13,755 13,903 14,144 14,465 14,789 15,218 2.0 429 2.9 22.4 679.6 Noosa-Noosaville 9,128 9,496 9,662 9,838 9,816 9,840 9,870 10,152 10,318 1.0 166 1.6 22.8 452.5 Paynter-Petrie Creek 13,999 14,458 15,031 15,277 15,692 16,161 16,777 17,506 18,210 3.6 704 4.0 86.2 211.3 Sunshine-Peregian 9,411 9,660 9,859 9,961 9,948 10,055 10,230 10,293 10,460 1.0 167 1.6 19.1 548.7 Tewantin 11,096 11,524 11,915 12,105 12,318 12,317 12,390 12,554 12,674 0.9 120 1.0 14.3 887.4 Total Sunshine Coast 186,391 193,776 202,780 210,703 217,491 224,059 231,167 238,357 245,309 3.1 6952 2.9 462.4 530.5 Sunshine Coast SD Bal Caloundra Hinterland 7,490 7,621 7,889 7,971 8,065 8,140 8,360 8,562 8,866 2.2 304 3.6 505.2 17.6 Glass House Country 16,589 17,005 17,627 18,267 18,898 19,487 20,106 21,171 22,307 4.1 1136 5.4 419.2 53.2 Maroochy Hinterland 22,574 23,355 24,099 24,900 25,672 26,402 27,086 27,944 28,789 2.9 845 3.0 926.5 31.1 Noosa Hinterland 14,123 14,646 15,218 15,989 16,465 16,996 17,351 17,817 18,152 2.6 335 1.9 813.1 22.3 Total Sunshine Coast SD Bal 60,776 62,627 64,833 67,127 69,100 71,025 72,903 75,494 78,114 3.1 2620 3.5 2663.9 29.3 Total Sunshine Coast 247,167 256,403 267,613 277,830 286,591 295,084 304,070 313,851 323,423 3.1 9572 3.0 3126.3 103.5

Dec-87 Dec-89 Dec-91 Dec-93 Dec-95 Dec-97 Dec-99 Dec-01 Dec-03 Dec-05 Dec-07 Dec-09 Number Housing Industry Outlook Population Total Dwelling Starts vs Population Queensland Source: ABS 8752.0 15,000 14,000 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Commencements s.a. Population: Change Over Previous Quarter

Index Consumer Confidence Consumer Confidence Source: Westpac-Melbourne Institute 125 120 115 110 105 100 95 90 85 80 75 Mar-92 Mar-95 Mar-98 Mar-01 Mar-04 Mar-07 Mar-10

Qld Building Approvals QLD Monthly Dwelling Approvals Source: ABS Building Approvals 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Feb-03 Aug-03 Feb-04 Aug-04 Feb-05 Aug-05 Feb-06 Aug-06 Feb-07 Aug-07 Feb-08 Aug-08 Feb-09 Aug-09 Feb-10 Total Detached houses Multi Units Detached house approvals grew 41% in the 3 mths to Feb 2010 compared with the same period a year ago Multi-unit approvals grew 61% in the 3 mths to Feb 2010 compared with the same period a year ago

Building approvals Total Dwelling Building Approvals - Sunshine Coast Source: ABS Building Approvals 350 300 250 200 150 100 50 0 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Approvals grew by 43% in the 3 mths to Feb 10 compared with the same period a year ago

Building approvals Total Dwelling Building Approvals - Sunshine Coast Source: ABS Building Approvals 350 300-18% change 3500 3000 250 2500 200 2000 150 1500 100 1000 50 500 0 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Sunshine Coast Moving Total 12 months to Feb 09 Moving Total 12 months to Feb 10 0 Approvals fell by 18% compared with the previous year

Number Dec-87 Dec-89 Dec-91 Dec-93 Dec-95 Dec-97 Dec-99 Dec-01 Dec-03 Dec-05 Dec-07 Dec-09 Qld Dwelling Commencements Total Dwelling Starts Queensland Source: ABS 8752.0 15000 14000 13000 12000 11000 10000 9000 8000 7000 6000 5000 s.a. Trend Housing starts fell by 36% in 2008/09 Housing starts in Queensland are forecast to grow by 15% in 2009/10 to a level of 32,840. This growth is occurring off an extremely low base (of only 28,650 starts)

Forecasts HOUSING STARTS: by state and territory thousand dwellings commenced Starts NSW Vic Qld SA WA Tas NT ACT Aust 2003/04 (a) 45.72 45.33 44.22 10.39 22.55 2.85 1.04 2.89 174.99 2004/05 (a) 39.40 40.97 39.31 11.01 22.90 2.83 1.33 2.46 160.20 2005/06 (a) 32.92 39.35 37.72 10.78 25.90 2.56 1.35 1.87 152.45 2006/07 (a) 29.78 38.64 41.14 11.17 24.73 2.86 1.40 2.33 152.05 2007/08 (a) 31.50 41.71 44.83 11.89 22.48 2.90 1.05 2.26 158.61 2008/09 (a) 23.28 41.81 28.65 11.97 18.26 2.89 1.15 2.64 130.65 2009/10 31.20 50.14 32.84 11.63 22.71 3.11 1.40 3.75 156.77 2010/11 34.57 48.72 34.98 12.26 23.48 2.80 1.48 2.81 161.10 2011/12 36.04 46.89 40.03 12.30 23.47 2.75 1.51 2.66 165.64 % change: 2004/05 (a) -14-10 -11 6 2-1 28-15 -8 2005/06 (a) -16-4 -4-2 13-9 2-24 -5 2006/07 (a) -10-2 9 4-5 12 3 24 0 2007/08 (a) 6 8 9 6-9 1-25 -3 4 2008/09 (a) -26 0-36 1-19 0 10 17-18 2009/10 34 20 15-3 24 8 22 42 20 2010/11 11-3 7 5 3-10 6-25 3 2001/12 4-4 14 0 0-2 2-5 3 Updated March 2010

Queensland Dwelling Starts 14000 12000 10000 8000 6000 4000 2000 0 2003 2004 2005 2006 2007 2008 2009 2010 2011

Renovations

Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 $'000 Housing Industry Outlook Renovation Activity The QLD Renovations and Additions Market Monthly Lending and Monthly Council Approvals 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0 Lending for Alts and Adds Value of Council Approved Alts and Adds Approvals for major alts and adds decreased by 8.9% over the 3 mths to Jan 2010 compared with the same period a year ago. Lending for major alts and adds was up by 0.9% over the 3 mths to Jan 2010 when compared to the same 3 month period to Jan 2009.

Alterations and additions Value of Alterations and Additions Total Dwellings ('000) - Sunshine Coast Source: ABS Building Approvals 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Value of major alts and adds grew by 12% in the 3 mths to Feb 10 compared with a year ago

Alterations and additions Value of Alterations and Additions Total Dwellings ('000) - Sunshine Coast Source: ABS Building Approvals 16,000-3% change 120,000 14,000 12,000 10,000 8,000 100,000 80,000 60,000 6,000 4,000 2,000 40,000 20,000 0 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Sunshine Coast Moving Total 12 months to Feb 09 Moving Total 12 months to Feb 10 0 Value of major alts and adds fell by 3% compared with the previous year

Warwick Temby HOUSING INDUSTRY ASSOCIATION http://economics.hia.com.au