Australian Housing Chartbook July 2012

7/28/2019 Australian Housing Chartbook July 2012

1/13

AUSTRALIAN HOUSING CHARTBOOK

AUSTRALIAN PROPERTY

ANZ RESEARCH

JULY 2012

CONTRIBUTORS

David CanningtonSenior Economist+61 3 9273 4274

[email protected]

Paul BraddickHead of PropertyResearch+61 3 9273 [email protected]

Ivan ColhounHead of AustralianEconomics & Property

Research+61 2 9227 [email protected]

The Australian housing market has shown tentative signs of stabilisation in 2012,following a period of considerable softness through 2011. Sales activity has improved,

albeit from extreme lows, buoyed by the positive impact of underlying strength in housing

market fundamentals, further consolidation of household financial stability and improving

housing affordability.

Financial uncertainty stemming from the European sovereign debt crisis has drivenAustralian households to further strengthen their financial positions. Household

savings have continued to increase and household income growth remains solid while

household credit growth has been sluggish for almost four years.

Nonetheless, divergent economic performance across states will maintain softerlabour market conditions outside of the resources states. This presents a higher risk of

household financial pressure and an increased likelihood of some distressed sales in housing

markets outside of the resources states, particularly in Tasmania and Victoria.

Despite 2011 Census data showing the Australian population l e v e l to be lower thanpreviously estimated (294,000 lower at 22.324 million), weak housing construction

continues to drive further tightening of housing market balances. Forward indicators

suggest net overseas migration, while slow to pick up to the end of 2011, will increase through

2012 and weak building approvals are adding further upward pressure to the outlook for the

existing undersupply of housing. This tightness in the housing market is maintaining low rental

vacancy rates and driving upward pressure on rents, particularly in the Sydney, Perth and

Brisbane markets.

Softening house prices and low mortgage rates have combined to improve housingaffordability. Increased global economic uncertainty and job security concerns in some

sectors of the economy are weighing on sentiment and house prices, however improving

housing affordability and strengthening housing market fundamentals should support further

stabilisation in housing market activity and house prices through the second half of 2012.

Improved housing affordability, tightening housing market balance pressures andupward pressure on rents are likely to support both first home buyer and investor

housing market activity in the years ahead. Looking through the distortions created by

first home buyer policy incentives, first home buyer and investor housing finance growth

improved moderately in the first quarter of 2012.

AUSTRALIAN HOUSING MARKET BALANCE AND RENTS

-3

-2

-1

0

1

2

3

4

5

6

7

85 87 89 91 93 95 97 99 01 03 05 07 09 11 13

Annual%c

hange

-30

-20

-10

0

10

20

30

40

50

60

70

Dwellings('000s)

Real rents (lhs)Real rents - forecast (lhs)Annual change in housing market balance - 12 month lag (rhs)Annual change in housing market balance - forecast, 12 month lag (rhs)

Shortage

Excess

Sources: ABS, ANZ


2/13

Australian Housing Chartbook / 9 July 2012 / 2 of 13

KEY INDICATORS

MARKET ACTIVITY CONTINUES TO BE DRIVEN BY WEAK SENTIMENT

Indicators show that household caution continues to drive a wedge between housing market activity andunderlying fundamentals. While recently showing some gradual improvement, market activity (sales, days onmarket, prices) remains soft, fuelled by global economic and financial market uncertainty and a protracted

behavioural shift towards increased debt aversion.

Recent growth in first home buyer housing finance signals the positive impact of both improving housingaffordability and tight market fundamentals. The removal of the NSW first home buyer stamp duty exemptions for

existing homes from 1 January 2012 has temporarily dampened this impact.

Despite 2011 Census data showing the Australian population level to be lower than previously estimated(-294,000), population growth and underlying housing demand remains little changed and net migration remains

a significant pressure on the housing stock. Consequently, the fundamentals of the Australian housing market

remain generally solid. Skills shortages, particularly in the mining and related professional services sectors, have

driven recent increases in net arrivals, indicating population growth is about to re-accelerate. Combined with a

weak outlook for residential construction, we expect the underlying shortage of housing to increase in the years

ahead, pushing rental vacancies lower, rents higher and eventually supporting house prices.

House prices

0

50

100

150

200

250

300

350

400

450

500

550

600

86 88 90 92 94 96 98 00 02 04 06 08 10 12

$000(sa)

Australian capital cities average

Market balance

-100

-50

0

50

100

150

200

250

300

350

400

450

86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

Dwellings('000s)

Cumulative market balanceCumulative market balance (ex-migration surge)CompletionsUnderlying demandUnderlying demand (ex-migration surge)

Shortage

Exc

ess

Forecasts

Population growth

0

50

100

150

200

250

300

350

400

01 02 03 04 05 06 07 08 09 10 11 12

Net Movements Net Overseas Migration

Annualised-000's

Building approvals

0

2,000

4,000

6,000

8,000

10,000

12,000

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

Number

Priv ate sector h ouses (Tr end) Priva te se ctor houses (Seas Adj)

Private sector other residential* (Trend) Private sector other residential* (Seas Adj)

* Flats, units, apartments, semi-detached/row/terrace houses

Housing finance

0

20

40

60

80

100

120

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

$bil,annualisedtrend

Upgrader Investor First home buyer

Rents vs vacancies

0

2

4

6

8

10

12

Q4-1991 Q4-1993 Q4-1995 Q4-1997 Q4-1999 Q4-2001 Q4-2003 Q4-2005 Q4-2007 Q4-2009 Q4-2011

Annual%c

hange

0

1

2

3

4

5

6

%o

ftotalrentalstock

Rental vacancy rate (4-qtr moving ave, rhs)

Rent growth (nominal, lhs)

CPI (core, lhs)

Sources: ABS, Residex, REIA, ANZ


3/13


VALUATION MEASURES

AUSTRALIAN HOUSE PRICE SOFTNESS REFLECTS BETTER VALUE WITHOUT ECONOMIC STRESS

A combination of lower interest rates, falling house prices and rising household incomes has driven Australianhouse purchase affordability to better than long-run average levels. In contrast to many other developedeconomies, this has happened in the absence of a significant economic downturn and the associated stress on

household finances.

ANZ analysis of long-run trends in house prices, household income and interest rates (ignoring other drivers ofhouse price growth, including housing market balance and mortgage lending criteria) shows the recent softness in

Australian house prices has been mainly driven by weak household sentiment rather than economic fundamentals,

with prices continuing to fall below expected house prices at current household income levels and mortgage rates.

Cross-country comparisons using partial valuation measures - often used to contend the case ofovervaluation ofAustralian house prices - continue to reflect broader economic and housing market differences, while revealing

little about the future direction of house prices. These measures, including house price to income ratios and rental

yields, do not address other drivers of house prices, including economic growth and unemployment, population

growth, housing stock, net household wealth, household financial stability, government policy, housing credit risk

and mortgage lending standards.

House prices and house purchasing power*

$542,404

-$100,000

$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

87 89 91 93 95 97 99 01 03 05 07 09 11

Interest rate contribution to simulated house price**Income growth contribution to simulated house price***Actual house prices

* Represents the average households purchasing power over the median priced home

** Calculated using trend discounted variable bank mortgage rate

*** Calculated using average household disposable income

House price to purchasing power*

-80

-60

-40

-20

0

20

40

60

Mar 84 Mar 87 Mar 90 Mar 93 Mar 96 Mar 99 Mar 02 Mar 05 Mar 08 Mar 11

Housepricedeviationfrom

housepurchasingpower

(%o

factualhouseprice)

Australia US UK NZ Canada

* Represents the average households purchasing power over the median priced home

International house prices

50

70

90

110

130

150

170

190

210

230

Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11

Housepriceindex(March2002=100)

Australia US UK NZ Canada China Singapore Hong Kong

House price to income ratios

2

3

4

5

6

7

Jan 92 Jan 94 Jan 96 Jan 98 Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Jan 10 Jan 12

Housepric

etoaveragehouseholddisposableincomeratio


Housing affordability

10

15

20

25

30

35

40

45

50

Jan 92 Jan 94 Jan 96 Jan 98 Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Jan 10 Jan 12

Mortgagecostsas

%o

fmeanhouseholddisposableincome


International rental yield

2

4

6

8

10

12

14

16

Mar 96 Mar 98 Mar 00 Mar 02 Mar 04 Mar 06 Mar 08 Mar 10 Mar 12

Rentalyield(%)

Aust US UK

Sources: ABS, RBA, RP Data-Rismark, S&P/Case-Shiller, Nationwide, RBNZ, Teranet National Bank, Global Property Guide, ANZ


4/13


UNDERLYING DEMAND

LEADING INDICATORS SUGGEST POPULATION GROWTH WILL SUPPORT UNDERLYING DEMAND

Since 2006, net overseas migration has largely driven Australian population growth and supported strongunderlying demand for housing. While recent data show moderation in net permanent and long-term arrivals,annualised net movements of 300,000 at May 2012 are expected to drive population growth and continue to

support underlying demand for housing in the years ahead.

While interstate migration activity is higher than post-GFC levels, it remains low as a share of population. Thismeasure is expected to pick-up moderately through 2012-13 due to divergence in labour market conditions and

housing affordability across states and territories.

While divergent economic conditions across states and territories are already driving strong population growth anddemand for housing in WA (with 15 of the top 20 fastest growing local government areas), moderate population

growth in NSW and Victoria will continue to support the significant existing shortage of housing in these states

(see Appendix). Combined with weak dwelling construction, population growth is already squeezing rental

markets, driving increases in rental growth and yields, and building fundamental demand for first home buyers

and lower priced housing.

Market balance: Australia

-100

-50

0

50

100

150

200

250

300

350

400

450

86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

Dwellings('000s)

Cumulative market balanceCumulative market balance (ex-migration surge)CompletionsUnderlying demandUnderlying demand (ex-migration surge)

Shortage

Excess

Permanent and long-term arrivals and departures

0

100

200

300

400

500

600

700

800

01 02 03 04 05 06 07 08 09 10 11 12

Total Permanent and Long Term Arrivals

Total Permanent and Long Term Departures

Annualised-000's

Net overseas migration

-20

0

20

40

60

80

100

120

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

AnnualRollingSum

-000's

NSW VIC QLD SA WA TAS

Net interstate migration

-60

-40

-20

0

20

40

60

91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

AnnualRollingSum

-000's


Gross interstate migration

1.4

1.5

1.6

1.7

1.8

1.9

2.0

2.1

2.2

83 85 87 89 91 93 95 97 99 01 03 05 07 09 11

%o

fAustralia'spopulationperannum

200

230

260

290

320

350

380

410

440

'000sperannum

% of Australia's population By number

Top 20 fastest growing populations

0 2 4 6 8 10 12

Harvey (WA)

Dardanup (WA)

Port Hedland (WA)

Ipswich (QLD)

Busselton (WA)

Rockingham (WA)

Murray (WA)

Chittering (WA)

Leonora (WA)

Armadale (WA)

Mandurah (WA)

Kwinana (WA)

Capel (WA)

Whittlesea (VIC)

Wanneroo (WA)

Cardinia (VIC)

Serpentine-Jarrahdale (WA)

Melton (VIC)

Wyndham (VIC)

Perth (WA)

CAGR % (2007-11) Sources: ABS, ANZ


5/13


SUPPLY

HOUSING CONSTRUCTION DOWNTURN APPROACHING 1990S RECESSION LEVEL

The outlook for residential building remains weak with the current dwelling construction downturn indicatingcompletions are approximately 15% lower from the peak of the cycle (March 2011). The severity of the slowdownhas been sharper than previous building contractions and the loss in residential building activity in the current

downturn is expected to be only slightly less than during the early 1990s recession.

While soft house prices, weak house sales and tight credit conditions continue to dampen developer sentiment,financial market volatility and global economic uncertainty have also likely weighed on residential construction

plans. Annualised trend completions (134,000 dwellings), while improving in recent months, remain well below

long-run average levels and significantly below our estimate of underlying housing demand of 196,000 for

2011-12. Despite the recent interest rate cuts, weak housing market sentiment will continue to weigh on housing

construction until early 2013, before building activity is expected to recover in the second half of 2013.

Looking through monthly volatility in building approvals, trend housing construction levels continue to bestrongest in Victoria, though approvals are well below late-2010 peak levels. NSW has shown the most resilience

in the current construction downturn, with building approvals 55% higher than the lowest point in the GFC.

Approvals of flat, unit and townhouse buildings continue to show that housing affordability and land availabilityconstraints are driving an increasing share of total dwelling approvals, especially in Sydney and Melbourne.

Dwelling cycle comparison

60

70

80

90

100

110

0 1 2 3 4 5 6 7 8 9

Quarters from peak

Dwellingcompletionsindex

(cyclepeak=100)

March 2011 - December 2011

March 2007 - June

Sep 1989 - December 1991

December 1994 - December 1996

Forecast (March 2012 - March 2014)

Building approvals

0

1

2

3

4

5

6

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

Number(000's,trend)

NSW VIC QLD SA WA TAS NT ACT

Building approvals & construction finance

10

15

20

25

30

98 99 00 01 02 03 04 05 06 07 08 09 10 11

$bil,realannualisedtrend

8

10

12

14

16

Number(000's,trend)

Housing construction finance (lhs) Total dwelling approvals (rhs)

Residential vs non-residential building

0

1

2

3

4

5

6

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

Value($bil/month)

Residential (trend) Non-residential (trend)

Residential (sa) Non-residential (sa)

Private sector building activity

0

2,000

4,000

6,000

8,000

10,000

12,000

98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

Number

Privat e se ctor houses (Trend) Pr ivate sector h ou ses (Se as Adj)

Private sector other residential* (Trend) Private sector other residential* (Seas Adj)


Non-house* share of total dwelling approvals

0

10

20

30

40

50

60

70

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

%o

ftotaldwellingapprovals(trend)

Sydney Melbourne Brisbane Australia


Sources: ABS, ANZ


6/13


PRICES

HOUSE PRICES WEAKEN FURTHER ON GLOBAL ECONOMIC UNCERTAINTY

With the exception of Darwin and Canberra, house prices have weakened across all other capital cities in the yearto June 2012. However, through 2012 monthly changes in house prices have been extremely volatile, particularlyat the high-price end of the market. House price falls from peak to May 2012 for the most expensive 20% of

suburbs have been more than double price falls for remaining 80% of suburbs. This has most likely reflected the

negative impact on house prices of increased volatility in equity markets and weak consumer sentiment.

Despite weakening in recent months, Sydney dwelling (house and unit) prices have continued to outperform mostother Australian capital cities since the peak of the current price cycle, due to the increasing pressure of stronger

population growth on weak housing construction and a degree of resilience after an extended period of prior price

underperformance in houses and especially units.

In the absence of a sharp global economic downturn and escalating domestic unemployment, improving housingaffordability, solid household financial positions and strong housing market fundamentals should support modest

house price growth into 2013. While previous structural and policy drivers have now been capitalised into house

price growth, we expect prices to increase at a moderate 4-5% in annual terms by the end of 2014.

House prices

200

250

300

350

400

450

500

550

600

650

Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11

$000(sa)

Austral ian capital ci ties average Rest o f s tate

House prices, selected measures

150

250

350

450

550

650

Dec 96 Jun 98 Dec 99 Jun 01 Dec 02 Jun 04 Dec 05 Jun 07 Dec 08 Jun 10 Dec 11

ABS (-6 .1%)* Res idex (-3 .2%)* RP Data Rismark (-5 .6%)*

Mediancapitalcityhouseprice($000's)

* Price declines reflect peak prices to prices as of March 2012

House prices, capital cities

0

50

100

150

200

250

300

350

400

450

500

550

600

650

700

750

Dec 95 Dec 97 Dec 99 Dec 01 Dec 03 Dec 05 Dec 07 Dec 09 Dec 11

$000(sa)

Melbourne Sydney Brisbane Perth Adelaide Hobart Darwin Canberra

Non-house dwelling prices, capital cities

0

50

100

150

200

250

300

350

400

450

500

550

600

650

700

750

Dec 95 Dec 97 Dec 99 Dec 01 Dec 03 Dec 05 Dec 07 Dec 09 Dec 11

$000(sa)

Melbourne Sydney Brisbane Perth Adelaide Hobart Darwin Canberra

House prices, price range

95

100

105

110

115

120

125

Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11

Index(Dec2008=100)

Highest 20% (-7 .8%)* Middle 60% (-4.4%)* Lowest 20% (-4.5%)*

* Peak to current prices

Dwelling prices & housing market shortage

-14

-12

-10

-8

-6

-4

-2

0

2

4

6

NSW/Sydney VIC/Melbourne QLD/Brisbane SA/Adelaide WA/Perth

Cumulative state dwelling shortage mutiple of annual completions at June 2011

Capital city % price decline from peak to June 2012

Sources: ABS, RP Data-Rismark, Residex, ANZ


7/13


AFFORDABILITY

LOWER HOUSE PRICES AND MORTGAGE RATES CONTINUE TO IMPROVE HOUSING AFFORDABILITY

Softening house prices, rising household incomes and lower mortgage rates have continued to improve Australianhousing affordability. This has been reflected in improved consumer expectations of the best time to buy a houseand lower mortgage delinquency rates through 2012.

Previous episodes of improving housing affordability (in the early and mid-90s) were largely driven by significantreductions in interest rates (and steady growth in household incomes). With interest rates at relatively low levels

and expectations of moderate growth in household income, improvements in housing affordability through

2012-13 are expected to be driven more by household income gains and weaker house prices than in the past.

Despite Melbourne house prices experiencing the largest falls over the past year, Melbourne housing remains theleast affordable to purchase across Australian capital cities. Strong growth in WA household income and weak

house price growth has maintained Perth house deposit affordability compared to other major capital cities

(ranked 6th across Australian capital cities compared to equal 1st before the GFC).

Housing affordability

20

25

30

35

40

45

86878889909192939495969798990001020304050607080910111213

Mortgagerepayments

(%o

fmeanhouseholddisposableincome)

70

90

110

130

150

170

Index

Housing affordability (lhs)

Melbourne Institute-Westpac consumer sentiment index: house purchase indicator (trend, inverted rhs)

Worsetimetobuyahom

e

Bettertimetobuyahome

Forecast

Housing affordability, factor contribution

-8

-6

-4

-2

0

2

4

6

1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015

Contributiontohousingaffordability(ppts)

Mortgage rates Household disposable income House prices

Imrpovesaffordability

Worsensa

ordability

Forecasts

House deposit* affordability, capital cities

0

20

40

60

80

100

120

140

160

180

86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

%o

faverageannualstatehouseholddisposableincome

Sydney Melbourne Brisbane Adelaide Perth Hobart

* Calculated for 20% of capital city house price

Mortgage delinquencies

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

Oct 05 Oct 06 Oct 07 Oct 08 Oct 09 Oct 10 Oct 11

NSW & ACT VIC QLD SA WA TAS Australia

Mortgagedelinquencies90+days(%o

ftotalmortgages,sa)

Household disposable income

0

2

4

6

8

10

12

14

00 01 02 03 04 05 06 07 08 09 10 11

Annual%c

hange(trend)


Housing loan interest rates

4

6

8

10

12

14

16

18

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

%p

erannum

Standard variable rate Discounted variable rate 3-year fixed rate

Sources: ABS, RBA, Residex, Melbourne Institute-WBC, ANZ


8/13


MARKET ACTIVITY

HOME SALES ACTIVITY REMAINS WEAK

Housing market activity continues to be weighed down by weak household confidence, most likely driven byongoing financial market volatility and an uncertain global economic outlook. Despite continued softening in houseprices and improving housing affordability, residential home sales are running at 17-year lows and housing finance

activity remains soft.

Home sales levels are running at around 100,000/month, well below the pre-GFC peak of 140,000/month andtracking below the 120,000/month sales levels seen in 2009. While auction clearance rates and days on market

have shown some improvement more recently, they also remain well below recent peak levels, suggesting

continued divergence between the expectations of home buyers and vendors.

With ongoing softness in house prices and escalating uncertainty around the prospects for the global economy,the outlook for housing market sales continues to look weak over the second half of the year. However, recent

interest rate cuts and the potential for further rate cuts should drive improvements in housing affordability,

eventually rousing market sales activity from the current lows, especially for first home buyers.

Housing finance

0

20

40

60

80

100

120

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

$bil,annualisedtrend

Fir st home buye r Upgrader (excl. re fin.) Investor ( excl. refin. )

ANZ/PCA property industry confidence index

House price growth expectations*

-40

-30

-20

-10

0

10

20

30

40

50

60

70

NSW VIC QLD WA SA TAS NT ACT AUS

Annualhousepricegrowthexpectations

(netbalance)

Dec qtr 2011 Mar qtr 2012 Jun qtr 2012

* Data for December quarter 2011 and March quarter 2012 shows expectations for "the next quarter" . June quarter 2012 shows expectations for "the next 12 months".

Monthly sales

80

90

100

110

120

130

140

150

160

170

Mar 95 Mar 97 Mar 99 Mar 01 Mar 03 Mar 05 Mar 07 Mar 09 Mar 11

'000s(sa)

70

90

110

130

150

170

index

Monthly residential home sales (lhs) Westpac house purchase indicator (trend, rhs)

Worsetimetobuyahome

Bettertimetobuyahome

Days on market

40

50

60

70

80

90

100

110

120

Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12

Inner Sydney Inner Melbourne Inner Brisbane Central Perth

Daysonmarket(sa)

Auctions, major capital cities

0

100

200

300

400

500

600

700

800

900

May 08 Nov 08 May 09 Nov 09 May 10 Nov 10 May 11 Nov 11 May 12

number/week(trend)

Sydney Melbourne Brisbane Perth

Auction clearance rates, major capital cities

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

May-08 Nov-08 May-09 Nov-09 May-10 Nov-10 May-11 Nov-11 May-12

%o

ftotalauctionresults(trend)

Sydney Melbourne Brisbane Perth

Sources: ABS, RP Data, PCA/ANZ, Melbourne Institute-WBC, ANZ


9/13


REGIONAL PERSPECTIVE

REGIONAL HOUSE PRICES OUTPERFORMING CAPITAL CITIES

Despite being lower in annual growth terms, regional house prices have been more stable than capital city houseprices, which have seen larger price falls across all major states and territories. Across states/territories andregions, house price growth has continued to differ, reflecting varying economic performance across Australian

industries. NSW regional house prices were the strongest across states and territories in the year to March 2012,

with the central inland regions of Orange and Dubbo showing the greatest house price growth.

Queensland has shown the greatest intra-state variation in regional house prices, reflecting the divergenteconomic performance of regions exposed to the tourism sector (ie Cairns, Gold Coast) and mining-related

services (Gladstone, Mount Isa).

House price growth in WA regional centres has counter-intuitively been the weakest, with house prices in manycentres lower in the year to March. Of note, house price growth in the Greenough River and Moore regions were

much weaker in March 2012 (-6.5% and -4.7% respectively) compared to September 2011 (+1.3% and +0.6%

respectively). Nonetheless, the economic benefits from major mining and energy projects in WA should boost

house prices in many WA major regional centres over the next 12-18 months.

House prices: capital cities & rest of state

-10

-5

0

5

10

15

20

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12

Annual%c

hange

Austra li an cap ital c it ies Aust ra li a res t o f s ta te

House prices: non-capital city regions

$150

$200

$250

$300

$350

$400

$450

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12

$000(original)

NSW Victoria Queensland WA Australia

NSW regional house price growth

-6 -4 -2 0 2 4 6 8

Orange

Dubbo

Newcastle

Southern Tablelands

Wollongong

Coffs Harbour

Wagga Wagga

Regional NSW

Port Macquarie

Lower South Coast

Sydney

Lower Murrumbidgee

Northern Tablelands

Richmond-Tweed

Hastings

Capital growth (%, year to Mar 2012)

Victoria regional house price growth

-6 -4 -2 0 2 4 6 8

Bendigo

Latrobe Valley

Warrnambool

South Wimmera

Mildura

Ballarat

East Gippsland

Geelong

West Ovens-Murray

East Mallee

Wodonga

North Goulburn

Regional Victoria

Shepparton

Melbourne


Queensland regional house price growth

-8 -6 -4 -2 0 2 4 6 8 10 12 14 16

Gladstone

North West

Mackay

Rockhampton

Darling Downs

Lower West Moreton

Regional QLD

Toowoomba

Central West

Townsville

Cairns

Brisbane

Wide Bay-BurnettBundaberg

Gold Coast


WA regional house price growth

-10 -8 -6 -4 -2 0 2 4

Johnston

Kalgoorlie

Regional WA

Bunbury

Gascoyne

Fitzroy

Perth

Geraldton

Moore

King

Avon

Blackwood

Greenough River

Vasse

Hotham

Capital growth (%, year to Mar 2012) Sources: Residex, RP Data-Rismark, ANZ


10/13


REGIONAL PERSPECTIVE

REGIONAL HOUSE PRICES ( C O N T I N U E D )

Regional house price growth in South Australia, Tasmania and the territories have also reflected differing regionaleconomic performance. While regional house price growth in most states have been dispersed between increasesand decreases, Tasmanias regional house prices were all lower in the year to March 2012, reflecting the relatively

soft economy and weak labour market conditions.

While we continue to expect continued divergence within South Australia and ACT regional housingmarkets, a broadly soft economic outlook for the South Australia and ACT economies combined with

relatively balanced housing markets should contain house price growth in the coming year across most

regions.

The outlook for house price growth across the Northern Territory regions is buoyant, with significant mining andenergy investment (ie Icthys gas project) expected to drive solid state economic growth and broad regional house

price increases through the second half of 2012 and through 2013.

10%+ annual house price declines (March 2012), regions Employment growth by state (year to May 2012)

-10 0 10 20 30 40 50 60 70

WA

Qld

NSW

ACT

Vic

NT

SA

Tas

Change in employment over latest 12 months (trend, 000s)

SA regional house price growth

-6 -4 -2 0 2 4 6 8 10

West Coast

Barossa

Lower North

Lincoln

Whyalla

Riverland

Lower South East

Yorke

Mt Lofty Ranges

Murray Mallee

Regional SA

Upper South East

Flinders Ranges

McLaren Vale

Adelaide


Tasmania regional house price growth

-12 -10 -8 -6 -4 -2 0 2

Central North

North Eastern

North Western

Burnie-Devonport

Launceston

Southern

Hobart

Lyell

Capital growth (%, year to Mar 2012) NT regional house price growth

-8 -6 -4 -2 0 2 4 6 8 10 12 14

Barkly

Finniss

Darwin

Lower Top End

Central

Palmerston


ACT regional house price growth

-4 -2 0 2 4

North Canberra

Gungahlin-Hall

Tuggeranong

Woden Valley

Canberra

Belconnen

Weston Creek-Stromlo

South Canberra

Capital growth (%, year to Mar 2012) Sources: ABS, Residex, ANZ


11/13


IMPORTANT NOTICE

STATE/TERRITORY UNDERLYING HOUSING MARKET BALANCE

NSW housing market balance

-20

0

20

40

60

80

100

120

140

160

180

91 93 95 97 99 01 03 05 07 09 11 13

Com letions

Underlying demand

'000

Shortage

Surplus

Victoria housing market balance

-20

-10

0

10

20

30

40

50

60

70

91 93 95 97 99 01 03 05 07 09 11 13

Completions

Underlying demand

'000

Shortage

Surplus

Queensland housing market balance

-20

-10

0

10

20

30

40

50

60

70

80

90

91 93 95 97 99 01 03 05 07 09 11 13

Completions

Underlying demand

'000

Shortage

Surplus

SA housing market balance

-10

-5

0

5

10

15

20

91 93 95 97 99 01 03 05 07 09 11 13

Completions

Underlying demand

'000

Shortage

Surplus

WA housing market balance

-20

-10

0

10

20

30

40

50

60

70

80

91 93 95 97 99 01 03 05 07 09 11 13

Completions

Underlying demand

'000

Shortage

Surplus

TAS housing market balance

-3

-2

-1

0

1

2

3

4

5

91 93 95 97 99 01 03 05 07 09 11 13

Completions

Underlying demand

'000

Shortage

Surplus

NT housing market balance

-2

0

2

4

6

8

91 93 95 97 99 01 03 05 07 09 11 13

Completions

Underlying demand

'000

Shortage

Surplus

ACT housing market balance

-3

0

3

6

91 93 95 97 99 01 03 05 07 09 11 13

Completions

Underlying demand

'000

Shortage

Surplus

Sources: ABS, ANZ


12/13


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13/13


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Documents

Australian Housing Chartbook July 2012