Australian housing markets report Sunshine Coast solid again and rising Dr Andrew Wilson Domain Group senior economist March 2015 Copyright 2015 Dr Andrew Wilson all rights reserved
Housing market model Wilson Curve
Housing market analysis house price cycle model (Wilson 98) Change points... Define phases peak peak expansion Prices above last peak trough correction Prices below last peak trough recovery Prices above last trough contraction Prices below last trough
Recent capital city performance
Capital city house price cycle - recent history Correction 2011 Prices fall Affordability falls from higher rates, higher prices PLUS economy down Recovery 2012 Prices rise Affordability improves as rates fall, lower prices AND economy revives Expansion 2013 Price records emerge and consolidate as affordability peaks Historically low rates, still solid economy, CONFIDENCE RESTORED Expansion 2014 Price growth moderates as general economy and low rate impact wane Sydney breaks clear of the pack - other capitals flat or flattening CONFIDENCE TESTED
Current state of the national market
Current state of the national housing market Expansion consolidated but now moderating All capital city house prices at or near record levels Brisbane, Adelaide and Hobart still on the move with moderate growth Perth prices growth remains modest, but better signs for Canberra - Darwin down Solid finish to 2014 - all markets on the up except Darwin Peak price growth rates however moderated though 2014 Sydney still booming CONTEXT Mixed-speed economies AND housing markets Markets and market segments patchy Forward indicators and market drivers increasingly mixed and local Lower rates to impact markets affordability, confidence offset by local economy drag
Key price drivers
The future for house price growth?...as usual depends on the economy Key Drivers Low unemployment and more jobs Rising wages, incomes and profits Lower interest rates Rising stockmarket Confidence
Recent prices growth
Correction phase 2011 - prices fall -1.4% -1.7% -4.2% -3.5% -4.0% -4.4% -5.0% -8.0% Sydney Melbourne Brisbane Adelaide Perth Canberra Hobart Darwin
Recovery phase 2012 - prices stabilise and rise 12.6% 4.6% 5.5% 0.8% 0.7% 1.8% -0.4% Sydney Melbourne Brisbane Adelaide Perth Canberra Hobart Darwin -4.5%
Expansion phase 2013 - all markets rising 15.4% 10.0% 9.6% 5.1% 5.0% 5.6% 3.4% 2.2% Sydney Melbourne Brisbane Adelaide Perth Canberra Hobart Darwin
Expansion phase 2014 - growth moderates 14.0% 4.1% 5.9% 4.6% 0.6% 0.9% 2.1% -6.8% Sydney Melbourne Brisbane Adelaide Perth Canberra Hobart Darwin
Prices rise over December quarter except Darwin 3.5% 0.6% 1.5% 0.9% 1.0% 1.9% 2.1% -5.9% Sydney Melbourne Brisbane Adelaide Perth Canberra Hobart Darwin
Most markets now above or close to previous peaks 34.8% 8.4% 7.9% 3.6% 3.0% 3.2% -2.1% -0.7% Sydney Melbourne Brisbane Adelaide Perth Canberra Hobart Darwin
Markets now well above previous price troughs 37.5% 16.6% 16.4% 13.1% 9.5% 8.8% 10.9% 4.9% Sydney Melbourne Brisbane Adelaide Perth Canberra Hobart Darwin
Current capital city price cycle
Capital city house price cycle (Wilson Curve) Sydney Melbourne Perth Darwin Brisbane Hobart expansion correction recovery Adelaide Canberra contraction
Real price growth (deduct inflation) remains subdued since last price peak 27.5% -0.6% -7.9% -8.6% -3.2% -4.7% -9.8% -7.2% Sydney June 11 Melbourne June 10 Brisbane June 10 Adelaide June 10 Perth June 10 Canberra Dec 10 Hobart Dec 10 Darwin Mar 11
Current capital city growth
R I S I N G F A L L I N G Boom Strong Solid Moderate Modest Flat Modest Moderate Solid Strong Bust Housing Market Barometer 4% 4% 3% 2% 1% 0.5% 0% 0.5% 1% 2% 3% 4% 2% 5% Sydney 3.5% Hobart 2.1% Canberra 1.9% Brisbane 1.5% Perth 1.0% Melbourne 0.6% Darwin -5.9% December quarter 2014
Sydney the most expensive - Brisbane affordable $872,811 $614,479 $615,280 $588,023 $634,316 $489,128 $469,097 $332,998 Sydney Melbourne Brisbane Adelaide Perth Canberra Hobart Darwin
Brisbane price cycle
Brisbane annual house prices recent solid performance continues 5.1% 5.9% 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Brisbane quarterly price growth consistent trend after flat September 2.3% 1.5% 2007 2008 2009 2010 2011 2012 2013 2014
Brisbane house price cycle (Wilson Curve) current $489,128 December 2014 peak $472,259 June 2010 expansion correction recovery trough $432,440 June 2012 contraction
Brisbane unit market
Brisbane houses versus units units flatter but down recently $600,000 $500,000 $489,128 $400,000 $357,315 $300,000 $200,000 $100,000 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Houses Units
Brisbane houses versus units December qtr Houses Units Median $489,128 $357,315 Quarter 1.5% -4.2% Year 5.9% -3.3% 5 year 4.5% -3.4% Peak 3.6% -6.3% Trough 13.1% -1.9%
Brisbane house price cycle (Wilson Curve) Units Houses expansion correction recovery contraction
Interest rates and housing markets
$850,0 00 $750,0 00 $650,0 00 $550,0 00 $450,0 00 $350,0 00 $250,0 00 8% 7% 6% 5% 4% 3% 2% 1% 0% Interest rates drive the cycle for ALL capitals in sync Rates rise 06-07 (mining boom 1) Rates fall 08 (GFC) Rates rise 09-10 (FHOGB mining boom 2) Rates fall 11-12-13 (economy fades) 2006 2007 2008 2009 2010 2011 2012 2013 2014 Sydney Melbourne Brisbane Adelaide Perth Interest rate
Brisbane house prices and interest rates underlying relationship 8% $520,000 7% 7.25% $489,128 $480,000 6% $440,000 5% 4.75% $400,000 4% 3% 2% 3.00% 2.50% 2006 2007 2008 2009 2010 2011 2012 2013 2014 $360,000 $320,000 Interest rate Brisbane median
South east Queensland
South east Queensland in sync $550,000 $500,000 $450,000 $400,000 $350,000 $300,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Sunshine Coast Gold Coast Brisbane
South east Queensland median house prices (Dec qtr.) $520,000 $500,000 $489,128 Sunshine Coast Gold Coast Brisbane
South east Queensland December qtr growth 4.0% 1.9% 1.5% Sunshine Coast Gold Coast Brisbane
South east Queensland 2014 growth 7.4% 6.4% 5.9% Sunshine Coast Gold Coast Brisbane
South east Queensland 5 year growth 4.5% 2.9% 2.2% Sunshine Coast Gold Coast Brisbane
South east Queensland previous price peak 3.6% 2.0% 0.6% Sunshine Coast March 2010 Gold Coast March 2010 Brisbane June 2010
South east Queensland regions cycle (Wilson Curve) Brisbane Sunshine Coast Gold Coast expansion correction recovery contraction
South east Queensland sales per listing - supply demand 3.7 3.4 3.1 2.8 3.0 2.6 Sunshine Coast Gold Coast Brisbane Houses Units
Sunshine Coast house price cycle
Sunshine Coast annual house prices rising trend 6.4% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Sunshine Coast quarterly price growth rising again after flat mid year 1.9% 2007 2008 2009 2010 2011 2012 2013 2014
Sunshine Coast house price cycle (Wilson Curve) current $500,000 December 2014 peak $490,000 March 2010 expansion correction recovery trough $440,000 March 2012 contraction
Sunshine Coast units
Sunshine Coast houses versus units $550,000 $500,000 $500,000 $450,000 $400,000 $370,000 $350,000 $300,000 $250,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Houses Units
Sunshine Coast houses versus units December qtr Houses Units Median $500,000 $370,000 Qtr 1.9% -2.4% Year 6.4% 2.8% 5 Year 2.9% -5.9% Peak 2.0% -5.9% Trough 14% 8.2%
Sunshine Coast houses and units price cycle (Wilson Curve) Houses Units expansion correction recovery contraction
Sunshine Coast annual unit prices recovering 2.8% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Sunshine Coast quarterly unit price growth dip in December as trend wanes -2.4% 2007 2008 2009 2010 2011 2012 2013 2014
Sunshine Coast unit price cycle (Wilson Curve) peak $393,00 0 December 2009 current $370,000 December 2014 expansion correction recovery trough $342,000 September 2012 contraction
Sunshine Coast suburbs
Sunshine Coast top selling suburbs (6 months December 2014) Houses Sold Median Listings per sale 6 month 1 year 5 year Buderim 330 $550,000 1.9 2.9% 4.8% 0.5% Tewantin 166 $446,350 1.8 4.9% 7.6% 2.4% Noosaville 137 $640,000 2.8 6.7% 6.7% -11.4% Mountain Creek 117 $535,000 2.8 9.2% 7.2% 15.1% Little Mountain 114 $495,500 2.9 5.4% 8.4% 5.4% Nambour 107 $344,500 2.4 3.8% 6.2% -3.1% Maroochydore 104 $485,700 1.7 6.7% 17.0% 11.0% Caloundra West 103 $427,000 3.0 4.1% 5.4% 0.5% Coolum Beach 98 $487,500 1.7-7.1% 8.3% -0.5% Peregian Springs 98 $545,000 3.8 0.9% 6.9% 7.4%
Sunshine Coast top selling suburbs (6 months December 2014) Units Sold Median Listings per sale 6 month 1 year 5 year Maroochydore 221 $355,000 2.1-1.9% 0.0% -4.9% Mooloolaba 141 $365,000 3.0 0.3% 7.4% -0.8% Noosa Heads 99 $560,000 2.6 12.4% 25.8% 2.8% Kings Beach 97 $390,000 2.7 3.7% 14.7% -16.1% Buderim 95 $372,000 1.6-3.4% -3.4% -4.6% Caloundra 90 $413,500 2.6 17.3% 20.7% -2.1% Noosaville 86 $372,500 2.4 0.7% -5.7% -6.9% Alexandra Headland 70 $318,500 3.1-6.7% -2.0% -3.2% Coolum Beach 61 $367,000 2.7 3.4% 6.4% 2.7% Golden Beach 57 $385,000 2.0-2.5% 10.0% 14.9%
Capital city rental markets
Capital city rental markets (December qtr 2014) Houses Rent Qtr change Annual change Yield Vacancy rate (January) Sydney $520 2.0% 4.0% 4.00% 1.8% Melbourne $380 0.0% 0.0% 4.08% 2.0% Brisbane $400 0.0% 0.0% 5.02% 2.1% Adelaide $350 1.4% 0.0% 4.81% 1.3% Perth $450 0.0% -6.3% 4.57% 2.4% Canberra $450 0.0% -2.2% 4.55% 1.3% Darwin $660 0.0% -5.7% 5.21% 1.3% Hobart $320 3.2% 3.2% 5.44% 1.0%
Capital city rental markets (December qtr 2014) Units Rent Qtr change Annual change Yield Vacancy rate (January) Sydney $500 1.0% 2.0% 4.48% 2.2% Melbourne $360-1.4% 2.9% 4.60% 3.4% Brisbane $370 0.0% -1.3% 5.14% 3.0% Adelaide $290 1.8% 1.8% 5.27% 2.0% Perth $390-1.3% -2.5% 4.92% 2.9% Canberra $390 2.6% -4.9% 5.28% 1.7% Darwin $550 0.0% -3.5% 5.68% 3.6% Hobart $270 3.8% 3.8% 5.65% 4.5%
South east Queensland rental markets
South east Queensland rental markets (December qtr 2014) Rent Qtr change Annual change Yield Houses Sunshine Coast $458 1.8% 4.1% 4.76% Gold Coast $458 1.7% 4.0% 4.58% Brisbane $400 0.0% 0.0% 5.02% Units Sunshine Coast $360 2.9% 5.9% 5.06% Gold Coast $360 0.0% 2.9% 5.20% Brisbane $370 0.0% -1.3% 5.14%
Sunshine Coast rental market
Sunshine Coast house rents versus house prices $500 $510,000 $450 $490,000 $400 $470,000 $450,000 $350 $430,000 $300 $410,000 $250 $390,000 $200 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 $370,000 Price Rent
Sunshine Coast unit rents versus unit prices $400 $450,000 $350 $400,000 $300 $350,000 $250 $300,000 $200 $150 $250,000 $100 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 $200,000 Price Rent
Sunshine Coast house rents versus unit rents $500 $458 $450 $400 $360 $350 $300 $250 $200 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Unit House
Sunshine Coast house yields versus unit yields 5.5% 5.0% 5.1% 4.8% 4.5% 4.0% 3.5% 3.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 House Unit
Sunshine Coast suburbs rental markets
Sunshine Coast top rental suburbs ( 6 months December 2014) Houses Vacancies Rent 6 month change Annual change Yield Buderim 243 $480 0.0% 6.7% 4.5% Mountain Creek 158 $480 0.0% 4.3% 4.7% Tewantin 148 $440 2.3% 2.3% 5.1% Sippy Downs 106 $450 4.7% 7.1% 5.2% Noosaville 99 $495-1.0% 1.0% 4.0% Maroochydore 99 $440 11.4% 10.0% 4.7% Peregian Springs 95 $485-3.0% 2.1% 4.6% Noosa Heads 69 $565 7.6% 10.4% 4.5% Mooloolaba 62 $450 4.7% 7.1% 4.1% Little Mountain 60 $450 0.0% 2.3% 4.7%
Sunshine Coast top rental suburbs ( 6 months December 2014) Units Vacancies Rent 6 month change Annual change Yield Maroochydore 255 $350 2.9% 6.1% 5.1% Mooloolaba 215 $350 2.9% 9.4% 5.0% Alexandra Headland 126 $373 6.4% 12.0% 6.1% Kings Beach 105 $325 1.6% 3.2% 4.3% Parrearra 94 $438 4.2% 8.7% 6.2% Buderim 75 $350-2.8% 5.4% 4.9% Mountain Creek 66 $410 5.1% 31.4% 5.8% Noosaville 61 $385-1.9% 6.9% 5.4% Noosa Heads 48 $400-9.1% 3.9% 3.7% Marcoola 48 $340 0.7% 13.3% 5.5%
Sunshine Coast key market drivers
Sunshine Coast ABS dwelling approvals houses surge 2,585 1,993 2,225 1,239 1,397 1,500 158 493 360 2012 2013 2014 Houses Units Total
Sunshine Coast ABS January dwelling approvals - more houses 160 160 114 114 0 0 2014 2015 Houses Units Total
Sunshine Coast population growth drives prices (ABS financial year) 4.0% 3.5% 3.0% 3.7% $600,000 $500,000 2.5% $400,000 2.0% 2.0% $300,000 1.5% 1.0% $200,000 0.5% $100,000 0.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Population growth House price $0
Prestige markets versus All Ords - Sunshine Coast driver $2,250,000 7000 6000 $1,750,000 5000 $1,250,000 4000 $750,000 3000 2000 $250,000 1000 -$250,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Sydney Melbourne Brisbane All Ords 0
Brisbane prestige market versus All Ords key driver $1,000,000 7000 $900,000 6000 $800,000 5000 $700,000 4000 $600,000 $500,000 3000 $400,000 2000 $300,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 1000 Brisbane prestige All Ords
Sunshine Coast economic performance
Sunshine Coast jobs falling down 4,069 new jobs over year (ABS February) 180,000 170,000 160,000 164,861 160,792 150,000 141,009 152,423 149,224 145,232 140,000 130,000 120,000 110,000 100,000 2010 2011 2012 2013 2014 2015
Sunshine Coast jobless high but falling (ABS February) 10% 9% 8.5% 8.1% 8% 7% 6.9% 7.2% 7.4% 7.3% 6% 5% 4% 3% 2% 1% 0% 2010 2011 2012 2013 2014 2015
Those in work still falling - discouraged jobseekers yet to return (ABS February) 90% 80% 78.7% 70% 70.9% 68.1% 70.5% 70.3% 64.2% 60% 50% 40% 30% 20% 2010 2011 2012 2013 2014 2015
National economic performance
National turnaround? February ABS jobless rate 2014 2015 Trend Sydney 5.8% 5.8% Melbourne 7.3% 6.6% Brisbane 6.7% 6.5% Adelaide 7.5% 7.1% Perth 6.3% 6.4% Hobart 8.0% 6.8% Canberra 3.6% 5.4% Darwin 3.3% 3.1%
NSW retail spending top performer (ABS growth year to January 2015) 5.7% 4.2% 4.0% 2.9% 3.1% 2.4% 2.4% 2.5% -2.0% NSW VIC QLD SA WA TAS NT ACT AUS
QLD economy and mining boom fades (state final demand ABS rolling annual quarters Dec 2014) 12% 10% 8% 6% 4% 2% 0% -2% -4% -3.5% -6% 2009 2010 2011 2012 2013 2014
QLD economy worst (SFD ABS Dec qtr 2014 vs Dec qtr 2013) 6.2% 4.0% 2.7% 1.9% 1.6% 1.5% -1.7% -3.5% NSW VIC QLD SA WA TAS NT ACT
Economic outlook
Economic outlook 2015 Mixed national economic outlook Pessimism outweighing optimism - future cloudy Reserve Bank increasingly bearish on near-term direction of economy International economy wavering? Growth in China remains relatively strong but signs of fading international economy US economy continues to slowly revive but real growth (wages) still too low AUD to fall as USD rises Mixed results for local economies QLD up as dollar falls - strong exporter, tourism, population rising confidence up slowly NSW solid growth trend top performer as mixed economy spreads the load VIC set for decline as manufacturing base wanes but building and services holding up SA showing early signs of revival but will be a gradual and lengthy process WA still OK with population surge but mining building boom over and lower iron ore prices TAS showing early signs of revival but remains national underperformer NT boom resources economy creaking under population surge but set to resume growth
Economic drivers - rates, dollar, wages, profits all low and falling - but shares up Interest rates remaining at 60 year low Downward bias until jobless falls below 6% - less stimulus capacity from record low rates deflation risk Mortgage costs falling as banks compete for market share but still above 2009 rates Rate cuts to continue through 2015 - economy needs more stimulus watch the currency Stockmarket rising with lower dollar but hostage to global forces Investors shift to shares and increased international investment with lower dollar Solid growth upside as still 10% below 2007 peak, unlike other exchanges at or near highs Lower dollar and looming deflation Imports more expensive, living standards fall, spending and investment decline Wages & profits subdued in low inflation economy places lid on house price growth despite rate cuts Government spending constrained by high deficit - horror budget(s) Retail sales, building, profits, sentiment and exports mixed, but not good enough
Sunshine Coast housing market outlook
Sunshine Coast housing market outlook 2015 - continued solid growth Local market to keep rising as restored confidence consolidates - now clearly in catch-up mode Most price ranges and regions to record continued moderate to strong growth as demand intensifies Lower interest rates and restored confidence to provide ongoing market momentum Value perceptions also driving activity as prices still only 2 percent above previous peak 5 years ago Rising markets in Brisbane, Sydney and Melbourne to activate seachangers, retirees and holiday home buyers Wealth effect, higher stockmarket and lower dollar to activate prestige buyers Remains national iconic lifestyle market holiday, retirement and seachangers Unit market bottoming out and set to become an increasing target for investors - rising rents, high yields Local economy continues to struggle although early signs of improvement emerging Unemployment still high but lower recently Jobs still falling from recent strong growth and workers remain discouraged Surge in house construction to continue and create jobs Lower dollar positive for local and international tourism Brisbane economy looking better and Gold Coast flying local flow-on effects likely New government honeymoon? Sunshine Coast recent solid prices growth to consolidate and rise by up to 8 percent
National housing market outlook
R I S I N G F A L L I N G Boom Strong Robust Solid Moderate Flat Moderate Solid Robust Strong Bust Housing Market Barometer 12% 4% 8% 6% 4% 2% 0% 1% 2% 3% 4% 5% 0% 2% Sydney 8% Sunshine Coast 7% Brisbane 6% 2015 forecasts Melbourne, Adelaide, Hobart 4% Perth, Darwin, Canberra 2% 5%
Sunshine Coast auctions reliable and timely market indicator
Sunshine Coast auctions reflect prices growth, reliable indicator (March qtr auctions vs median) $600,000 600 $500,000 437 500 $400,000 400 $300,000 300 $200,000 200 $100,000 100 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Auctions House price 0
The rising tide
House price history lesson Australian housing markets are historically trend-linked 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Sydney Melbourne Brisbane Adelaide Perth
South east Queensland in sync 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Sunshine Coast Gold Coast Brisbane
A rising tide lifts all boats - in time Economies Employment Incomes Population growth Prosperity Confidence House prices Monolithic Australian economy and housing market
Australian residential property s best friend (the Wilson curve) Secure reliable long-term tax-enhanced capital growth
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