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7/31/2019 REIV State of Victorian Property Market (June 2012)
1/18
State of the Victorian property marketRobert Larocca
7/31/2019 REIV State of Victorian Property Market (June 2012)
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Some key indicators
Yeartodateclearancerate:61%
Medianhousepricegrowthin
Lasttimeconsumerconfidence
improvedovera12month
period:Aug2010
lastyear:0.9%
Rentalvacancyratein
Melbourne:2.4%
Victorianunemploymentrate:
5.4%
ProjectedgrowthinVictorian
economythis
year:
1.5%
Salesvolumescomparedto
peak
in
2007:
21%
ProjectedgrowthinVictorian
economynextyear:1.75%
Medianhousepricecompared
topeakinDec10: $45,000
7/31/2019 REIV State of Victorian Property Market (June 2012)
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Melbourne Median (annual) over 10 years
Index Median($)
140
145
150
550000
600000
Melbournemedianhouse
130
135500000
price(nominal)
Melbournemedianhouse
price(real:base2001=100)
115
120
400000
100
105
110
300000
350000
Source: REIV
7/31/2019 REIV State of Victorian Property Market (June 2012)
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Melbourne Median (monthly change) over 5 years
$550,000
$600,000
$450,000
$500,000
$400,000
$300,000
$350,000
7 7 7 7 7 7 8 8 8 8 8 8 9 9 9 9 9 9 0 0 0 0 0 0 1 1 1 1 1 1 2 2 2
Units/Apartments
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
Jul
Sep
Nov
Jan
Mar
May
7/31/2019 REIV State of Victorian Property Market (June 2012)
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Volume drives prices excepting 20102011201020092008200720062005200420032002
100000 15.0%
.
80000 10.0%
40000
60000
0.0%
5.0%
20000 5.0%
Housepricegrowth(real)
0 10.0%
Totalres
sales
(VG)Source: REIV, VG, ABS
7/31/2019 REIV State of Victorian Property Market (June 2012)
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7/31/2019 REIV State of Victorian Property Market (June 2012)
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Rental market over last decade
Index Weeklyrent
$
120
125
130
340
360
110
115
300
320
3bedroomhouserent
(nominal)
95
100
105
240
260
280
3bedroomhouserent(real:
base2001
=100)
80
85
90
200
220
Source: REIV, ABS,Office of Housing
7/31/2019 REIV State of Victorian Property Market (June 2012)
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Demand and supply drive rentsRealgrowth Vacancyrate
8.0%
10.0%
3.5%
4.0%
Vacancyrate(March)
3brmhouserent(real)
4.0%
6.0%
2.5%
.
0.0%
2.0%
1.5%
.
4.0%
2.0%
0.0%
0.5%
.
2011201020092008200720062005200420032002Source: REIV, ABS,Office of Housing
7/31/2019 REIV State of Victorian Property Market (June 2012)
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7/31/2019 REIV State of Victorian Property Market (June 2012)
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Half time
2012 21,275 6,925 60.6% 28,200
2011 22,477 8,566 62.7% 31,043
2010 23,846 11,647 81.6% 35,493
2009 26,261 6,391 81.1% 32,652
2007 25,602 10,206 84.8% 35,808
Source: REIV,
7/31/2019 REIV State of Victorian Property Market (June 2012)
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Consumers lack confidenceWestpac-Melbourne Institute Index of Consumer Sentiment (Seasonally Adjusted,% changeover 12 months)
80%120.0
.12 Month % Change (RHS) Index (LHS)
40%
60%
80.0
100.0
0%
20%
40.0
60.0
-40%
-20%
0.0
20.0
Source: Westpac-Melbourne Institute
7/31/2019 REIV State of Victorian Property Market (June 2012)
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Confidence v clearance rates130
110
120
90
100
70
80
60
WestpacConsumerSentiment ClearanceRates
7/31/2019 REIV State of Victorian Property Market (June 2012)
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Interest rates drop
12%
10%
6%
8%25 year average: 7.9%
3.50%
4%
0% Ma
No
Ma
No
Ma
No
Ma
No
Ma
No
Ma
No
Ma
No
Ma
No
Ma
No
Ma
No
Ma
Bank Std Variable Rate RBA Official Cash Rate 25yr Cash Rate Average
-02-02 -03
-03 -04
-04 -05
-05 -06
-06 -07
-07 -08
-08 -09
-09 -10
-10 -11
-11 -12
Source: RBA
7/31/2019 REIV State of Victorian Property Market (June 2012)
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Buyers of all types remain scarce
12,000
14,000
12,000
14,000
8,000
10,000
8,000
10,000
4,000
6,000
4,000
6,000 Non First Home Buyers (original) First Home Buyers (original)
0
2,000
0
2,000
Apr
Jul-
Oct
Jan
Apr
Jul-
Oct
Jan
Apr
Jul-
Oct
Jan
Apr
Jul-
Oct
Jan
Apr
Jul-
Oct
Jan
Apr
0707 07 08 08
08 08 09 09
09 09 10 10
10 10 11 11
11 11 12 12
Source: ABS
7/31/2019 REIV State of Victorian Property Market (June 2012)
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Record levels of new builds16000
14000
15000
12000
13000
10000
11000
8000
9000
4per.Mov.Avg.(NumberofdwellingunitsCommenced)
7/31/2019 REIV State of Victorian Property Market (June 2012)
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Population growth a factor120000
100000
Overseasmigration
60000
80000
40000
20000
0
7/31/2019 REIV State of Victorian Property Market (June 2012)
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What will the next few years look like?
1. Ongoing low activity levels will result in no capital growth
2. The health of the international economy and then consumer confidence will
be the key indicators over the next few years
.
4. Low rates of economic growth in Victoria coupled with lower population
growth and with almost no unmet demand underpin at best moderategrow n e me um erm
7/31/2019 REIV State of Victorian Property Market (June 2012)
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Challenges
1. Ensuring the state does not have an oversupply of homes
2. Vendor and purchaser expectations
3. Improving economic growth and consumer confidence
4. Managing a rental market with higher number of vacancies and a lack of
improvement in yield