Property Outlook Australian Property Market Report - March 2018 The realestate.com.au Property Outlook report brings you the latest data and insights relating to demand and median price for residential dwellings across Australia. is dropping, prices to follow? Nerida Conisbee Chief Economist at realestate.com.au Nerida is one of Australia s leading property experts. She provides regular market commentary to a wide range of Australian media outlets across digital, print, television and radio. She also contributes content for REA Group s websites including realestate.com.au and realcommercial.com.au.
Table of contents National 3 NSW 5 VIC 7 QLD 9 SA 11 TAS 13 NT 15 ACT 17 WA 19 Methodology 21 2
for all property National 1% 8% 5% by capital city WA 0 % NT 0.3 % QLD 0.0% SA -6 % NSW -24% ACT 26 % TAS 41 % VIC 9% House prices are falling and demand for property continues to moderate nationally. Despite the Reserve Bank of Australia yet to move on rates, the banks continue to cut mortgage rates to maintain volumes and we should expect to see the continuation of a market slowdown. The days of low interest rates will soon be over and the Financial Services Royal Commission will likely result in further restrictions on lending. The flow of money into residential property is slowing which is going to have a big impact on prices in 201 As ever, conditions remain highly variable across each capital city. The capital city most challenged right now is Sydney, where we are seeing drops in demand like we saw in Perth at the end of the mining boom. High prices are having a big impact on buyer activity and the decline in prices is likely to continue during the first half of this year. Further south, Hobart is experiencing the strongest increases in buyer demand on the back of a changing Tasmanian economy. This will continue to flow through to price growth in the city in 201 With Hobart performing strongly, it s not surprising that half of the top 10 most in-demand suburbs are located there. While it isn t as red hot as Hobart, Canberra is also experiencing very high demand, with apartments becoming increasingly popular compared with houses over the past 12 months. Melbourne suburbs are also in high demand, with Warrandyte in the north-east currently the most in-demand suburb in Australia. This is being driven by its offer of big homes and blocks, commuting distance to Melbourne and relative affordability. 3
Top 10 most in demand suburbs in Australia All dwellings Warrandyte, Vic Bellerive, Tas South Hobart, Tas Eltham, Vic Battery Point, Tas Hobart, Tas Middle Park, Vic Albert Park, Vic West Hobart, Tas Eltham North, Vic Sydney Melbourne Brisbane Adelaide Hobart Darwin Canberra Perth $800,000 $650,000 $475,000 $440,000 $425,000 $479,000 $596,000 $460,000 YoY growth -4% +3% 0.0% +5% +17% -2% +15% -7% Across Australia, prices have increased by 3% over the year. Over the past quarter, however, we have seen a significant slowdown. Sydney and Perth are experiencing the biggest declines, yet there is a very different outlook for each. Sydney is expected to see continued declines, while Perth is likely to see a sustained pickup throughout 2018 driven by demand levels which continue to increase in the city. With official employment data for Q1 2018 still to be released, we can predict that it is likely to show a stronger pickup for Perth and a slowing in Sydney. Perth is in the midst of a slow but steady recovery, having been in downfall for four long years. The cities seeing the strongest price growth are Canberra and Hobart, supported by sustained demand for property. Melbourne has experienced a 3% downturn in prices over the past quarter. Despite this, levels of interest from buyers suggest that a downturn will be relatively short-lived and prices will rise over the course of 2018 - albeit at a slower rate to what we saw in 201 4
Good news for Sydney's first home buyers NSW Sydney There is no city more challenged than Sydney right now. Across all measures we are seeing declines in activity, including demand from buyers, renters and those offshore, as well as in house and apartment prices. High prices are the main driver for the s in the market. At a suburb level, buyer activity tends to pull back once a suburb hits a very high median. For Sydney, it is now happening at a city level. All dwellings $800,000-4% -24% -9% While prices have already declined, recent drops in demand suggest that conditions will not turn around any time soon. That s not great news for people looking to sell, but it could mean good news for first home buyers and upgraders - who could find it easier to buy in a rapidly slowing market, one they ve previously been locked out of. While the decline in demand may be similar to what we saw in Perth at the end of the mining boom, we shouldn t expect to see a similar crash in our biggest city. The Sydney economy is performing well, and people aren t losing their jobs, so any drops in price won t be as significant as what the West experienced. Additionally, not all areas of Sydney are experiencing a dip in house prices. -21% $890,000-21% $709,750-6% -13% -4% -4% The Northern Beaches and Eastern Suburbs are the standout performers for housing demand and it is likely that prices will continue to grow in these areas. For apartments, the Lower North Shore and the Inner West are also expected to do well, with Artarmon currently seeing the highest demand on realestate.com.au for apartments in the state. Similar to the variation across Sydney metro suburbs, some parts of regional NSW are expected to do well this year. In particular, Northern NSW is seeing very high levels of demand in the Local Government Areas of Richmond Valley and Clarence Valley. In Orange, buyer demand is up almost 40% from last year, clearly benefiting from Sydney s high prices as well as buyers seeking a lifestyle. 5
Top 10 most in demand suburbs in Sydney Freshwater North Narrabeen Bronte Paddington Allambie Heights Oatley Manly Willoughby Stanmore Dee Why Artarmon Annandale Elizabeth Bay Wollstonecraft Greenwich Paddington Fairlight Queenscliff Balgowlah Freshwater NSW regions Regions Median Price MAR 2018 median price % % % Albury $290,000-0% -6% 7% Armidale Dumaresq $350,000 7% 4% 24% Ballina $637,500 10% 4% 15% Bathurst Regional $410,000 0.2% 2% 4% Byron $880,000-4% 7% 12% Clarence Valley $387,500 2% 6% 38% Coffs Harbour $478,500 5% 0.3% 3% Dubbo $360,000 4% 8% 6% Eurobodalla $457,000 12% 7% 36% Gosford $725,000 1% 6% -11% Great Lakes $447,000 0.4% 6% 32% Hawkesbury $680,000 0.1% -3% -20.8% Lismore $382,000 1% 0.7% 1% Newcastle $617,500 13% 8% -16% Orange $380,000 13% -6% 39% Port Macquarie-Hastings $492,500 0.3% -3% 0.3% Queanbeyan $482,500-0.5% 0.5% 37% Richmond Valley $310,000-5% -3% 40.1% Shellharbour $619,975 2% -6% -40% Shoalhaven $560,000 7% 8% -19% Tamworth Regional $360,000 4% 0% 13% Tweed $525,000 2% -5% 15% Wagga Wagga $375,500 0% 11% 18% Wingecarribee $790,000 0.0% -4% -17% Wollongong $717,500 7% 5% -34% Wyong $570,000 1% -0.9% -4% 6
Why Melbourne's price drops will be short-lived VIC Melbourne Prices have declined in Melbourne over the past quarter, however buyer demand is still up on last year suggesting that a pullback is likely to be relatively short lived and a stabilisation will occur in the first half of this year. Another sign that Melbourne is going to continue to see price growth is that half of the top 10 most in-demand suburbs in Australia are located in the city. Right now, Warrandyte is the most in-demand suburb in Australia - big homes and blocks, commuting distance to Melbourne and relative affordability are the biggest drivers. The most in-demand suburbs for house buyers are a mix of outer North-East (e.g., Warrandyte and Eltham) and inner suburbs (e.g., Essendon and St Kilda). All dwellings $650,000 3% 9% -0% High levels of inner city apartment development over the past five years mean that demand for apartments has been largely satisfied. As a result, the suburbs experiencing increased competition among apartment buyers are in middle and outer suburbs where there is less supply. While it is unlikely we are going to see high rise apartment development in places like Parkdale and Mt Eliza, levels of demand support higher densities such as townhouses. While demand in Melbourne remains elevated, regional areas of Victoria are also doing well. Ballarat has seen a jump of more than 60% in the past 12 months and places like Soldiers Hill continue to see high demand, likely driven by buyers leaving Melbourne. Warrnambool and Greater Geelong are also seeing big jumps in competition for housing and we can expect prices to continue to rise throughout this year. 0.5% $715,000 9% $535,000 9% -7% 0% 0.0% Geelong is experiencing an influx of Melbourne buyers, chasing affordability, lifestyle and ease of commuting to the CBD. The First Home Buyer grants introduced in the past year have seemingly moved market prices up rather than making it more accessible for this group, however many are seeing Geelong as their opportunity to enter the market. 7
Top 10 most in demand suburbs in Melbourne Warrandyte Hawthorn Eltham Essendon St Kilda Fitzroy North Richmond Abbotsford South Melbourne Hawthorn East Parkdale Mount Eliza Bayswater North Sydenham Albert Park Balaclava Carrum Black Rock Mitcham Mill Park VIC regions Regions Median Price MAR 2018 median price % % % Ballarat $329,000 1% -8% 61% Greater Bendigo $335,000 4% -0.1% 40.5% Greater Geelong $500,000 10% 3% 54% Greater Shepparton $288,000 1% 3% 39% Mildura $250,000 2% 0.4% 35% Surf Coast $780,500 4% 5% 31% Warrnambool $328,500 0.8% 3% 58% Wodonga $337,500 9% 3% 28% 8
The end of the Games can't come soon enough... QLD Brisbane and prices have been flat in Brisbane over the past 12 months. Although prices have fallen a bit over the past quarter, it is likely that the relative affordability of the city, as well as an easing in the levels of new development, will be a driver of continued demand in 201 Prices are unlikely to surge; however they are also unlikely to fall. The most popular suburbs among house buyers in Brisbane are inner suburbs, with Paddington currently the most in demand. Similarly to Melbourne, high levels of development in inner Brisbane has meant that demand for apartments has pushed to middle ring suburbs, so we re likely to see an increase in townhouse development in these areas in 201 All dwellings $475,000 0.0% 0.0% -1% On the Gold Coast, the seemingly never-ending build up to the Commonwealth Games has seen demand levels from buyers and renters at extreme levels. However, relief is in sight. We can expect cooler market conditions once the Games finish and the region returns to a more normal cycle. For renters and buyers, it will mean less competition and a slowing of price growth. On the flip side, some investors could begin to see lower rental yields in the market, although increased vacancy levels are not likely to be an issue. For regional Queensland, our site has seen a surprising jump in activity in the Local Government Areas of Mackay and -0.1% $510,750 0% $380,000 1% -7% -4% -4% Gympie. Although these areas have not yet recorded jobs growth via official statistics, both areas have seen demand levels increase by 30% over the past 12 months. Usually this is driven either by jobs growth or increasing speculation from investors. While Mackay has seen reasonable price growth over the past 12 months, Gympie has been slightly lower, suggesting that it may see greater increases over the next 12 months. It is possible that prices in Gympie could be affected by the recent cyclones in the region. 9
Top 10 most in demand suburbs in Brisbane Paddington Windsor Holland Park Red Hill Coorparoo Ashgrove Indooroopilly Toowong Newmarket Holland Park West Wilston Red Hill Holland Park Wishart Herston Carina Heights New Farm Paddington Newmarket Arana Hills QLD regions Regions Median Price MAR 2018 median price % % % Bundaberg $288,000 0.3% -5% 26% Cairns $364,375 6% 2% 5% Douglas $270,000-20.5% -29% 12% Fraser Coast $313,250 1% 0.1% 25% Gladstone $255,000-3% 0% 29% Gold Coast $525,000 4% 0.0% -6% Gympie $303,750 8% -6% 36% Mackay $330,000 0% 2% 35% Noosa $635,000 8% 1% 23% Rockhampton $260,000-9% -9% 3% Sunshine Coast $540,000 9% 3% 12% Toowoomba $369,000 8% -6% 0.4% Townsville $320,000 0.0% 0.0% 0.7% 10
Are interstate investors driving the market? SA Adelaide in Adelaide has dropped marginally over the past 12 months with prices remaining relatively stable. There is, however, a significant variance between apartments and houses. for houses and pricing appear to be holding up well, whereas apartments in the city are experiencing declining interest from buyers. In the next six months, it is likely we will continue to see price growth for houses, but not for apartments. All dwellings $440,000 5% -6 9% Unley has been knocked off its perch as Adelaide s favourite suburb for two years running, surpassed by Parkside and Stirling. While Parkside s location close to Unley is consistent with a preference for inner suburban Adelaide, Stirling is more surprising and shows the growing popularity of the Adelaide Hills amongst buyers. Although apartment demand in Adelaide is down, there are some suburbs that continue to see lots of interest. The beachside suburbs of Brighton and Glenelg are currently seeing the highest demand for apartments in South Australia and can be expected to perform well this year. Given strong interest from interstate in beachside Adelaide, it is likely investor activity is a big driver of this interest. 0.5% $470,000-3% $364,450 4% 8% 6% 2% 11
Top 10 most in demand suburbs in Adelaide Parkside Stirling Unley Norwood Hyde Park Mile End Fullarton Unley Park Glenelg East Crafers West Brighton Glenelg South North Adelaide West Beach Brompton Grange Glenside Seacliff Glenelg East Richmond 12
Is our hottest market is headed for a crisis? TAS Hobart Hobart has been a standout performer since 2015 and this is set to continue. A combination of a changing economy, as well as low levels of development, has meant buyer and renter demand remain incredibly high. It s great news for home owners, but it is starting to become very challenging for those wanting to enter the market, and particularly difficult for renters. Although it is still our cheapest capital city, it is starting to become expensive and prices will keep rising in 201 The biggest issue in Hobart right now is rental supply and needs to occur soon to avoid a crisis. More properties need to become available and the city needs new development. In the past, the Tasmanian economy couldn t support substantial levels of new development, however the changing landscape in Hobart means the city is now ready. All dwellings $425,000 17% 41% 5% Hobart suburbs continue to perform well on the most in-demand suburbs in Australia list. Inner suburbs dominate with places like South Hobart and West Hobart being the most in demand from buyers of houses, while apartment buyers prefer Hobart and Sandy Bay. These areas are likely to outperform the rest of Hobart in 201 Outside of Hobart, Launceston and Devonport are also experiencing growing levels of demand, likely from those searching for an affordable alternative to Hobart. These areas will see price growth in 201 41% $461,500 60.4% $344,500 14% 6% 11% 3% 13
Top 10 most in demand suburbs in Hobart South Hobart West Hobart Lindisfarne Sandy Bay Moonah New Town North Hobart Howrah Lenah Valley Glenorchy Hobart Sandy Bay Kingston Glenorchy Old Beach Claremont Brighton Dynnyrne Seven Mile Beach New Norfolk TAS regions Regions Median Price MAR 2018 median price % % % Devonport $262,500 0% 6% 41% Launceston $315,000 19% 5% 31% 14
What do Darwin and Brisbane have in common? NT Darwin It has been a slow four years for property in Darwin, but we are now seeing similar levels of demand in Darwin as we are in Brisbane and it looks like the declines in house prices are now over. Still unlikely to see strong increases in 2018, it is the premium suburbs that will do well first, as we ve seen in Perth. Over the past two years, the suburbs that have seen the highest demand have been those to the north of Darwin, near to Charles Darwin University. Although many of these suburbs continue to be popular among buyers, people are also concentrating on areas closer to the Darwin CBD. Right now, Fannie Bay is seeing the strongest demand from house buyers while The Gardens is seeing the highest demand from those seeking an apartment. All dwellings $479,000-2% 0.3% 6% 4% -0.4% $505,000 $376,000-7% -0% -15% 0.3% 15
Top 10 most in demand suburbs in Darwin Fannie Bay Nightcliff Girraween Leanyer Alawa Wagaman Parap Ludmilla Wulagi Stuart Park The Gardens Fannie Bay Marrara Stuart Park Bakewell Ludmilla Leanyer Rapid Creek Bayview Gray 16
Politicians are not the only ones feeling the heat ACT Canberra Canberra has not been as red hot as Hobart, but it comes close. Buyer demand is up more than 27% over the past 12 months with apartments surprisingly seeing stronger increases than houses. Both factors will support sustained price growth in 201 Like Melbourne, the mix of suburbs most in-demand in Canberra includes inner and outer suburbs, with both Yarralumla and Macgregor on the list for houses. For apartments, the most in-demand suburb is Kambah showing that even on the urban fringe of Canberra, higher densities are sought after. All dwellings $596,000 15% 26% 8% 21% 35% $679,000 $427,000 8% 9% -3% -7% 17
Top 10 most in demand suburbs in Canberra O'Connor Macgregor Curtin Yarralumla Watson Griffith Amaroo Harrison Franklin Ngunnawal Kambah Holt Watson Garran Casey Harrison O'Connor Barton Hawker Mawson 18
Why premium suburbs are the key for the market WA Perth Perth has been the most challenged housing market in Australia for the past four years. While on average, prices are still declining, we are now seeing sustained growth in demand from buyers - a situation we have not witnessed since 201 increases will drive price growth in 2018, something we are already seeing in premium suburbs. Now is the time for the rest of Perth to catch up. Shenton Park continues to be the most in-demand suburb for house buyers, a position it has held for the past couple of years. All dwellings $460,000-7% 0% -1% Overall, the beachside suburbs of Perth and the Inner West are seeing the most interest for houses. For apartment buyers, the same regions dominate with Nedlands seeing the highest demand levels. As ever, it s the lifestyle factors of premium locations driving popularity amongst buyers. Jobs growth is also leading to a resurgence for new apartments and this is beginning to flow through to sales; another sign the market has turned. 1% $475,000 4% $396,000-9% -6% -6% -7% 19
Top 10 most in demand suburbs in Perth Shenton Park Floreat Subiaco Leederville Nedlands Cottesloe East Fremantle Mount Hawthorn City Beach Wembley Nedlands Shenton Park Doubleview Sorrento Joondanna Kensington Melville Mount Lawley Mount Hawthorn Como WA regions Regions Median Price MAR 2018 median price % % % Broome $475,000 0% 11% 0.2% Bunbury $290,000-11% -15% -8% 20
REALESTATE.COM.AU PROPERTY MARKET REPORT MARCH 2018 This report uses realestate.com.au internal data that is current as at the time of publication. This report provides general information only and is not intended to constitute any advice or appraisal and should not be relied upon as doing so. If you wish to cite or refer to this report (or any findings or data contained in it) in any publication, please refer to the report as the realestate.com.au Property Outlook March 2018. Methodology Property for property provides data and insights relating to demand for residential dwellings across Australia, at a national level, capital city, local government area level, and by suburb according to property views data on realestate.com.au. It calculates the number of property views in the past 3 months against the average number of property listings. Median Price is calculated using CoreLogic sold price data for residential dwellings across Australia, at a national level, capital and local government areas. is for the past quarter for suburbs that have had at least 10 property sales. Data obtained by RP Data Pty Ltd trading as CoreLogic Asia Pacific is subject to the following copyright: 2018 Copyright RP Data Pty Ltd trading as CoreLogic (CoreLogic), Local, State, and Commonwealth Governments. All rights reserved. No reproduction, publication, adaption, modification, public communication, distribution or transmission of the copyrighted materials in this publication is permitted whether in whole or in part. The copyrighted materials in this publication are provided for personal or internal business purposes only unless otherwise agreed in writing. The information provided in this publication is current as at the publication date only. CoreLogic does not warrant accuracy or completeness in the information it supplies and to the full extent allowed by law excludes any liability for any loss or damage 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 CoreLogic for the supply of such information. 21