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FEBRUARY We advise. You decide. - Property Valuations - Tax Depreciation Schedules - Research reports and other services The month in 2009 review

February 2009 Month In Review

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Herron Todd White Month In Review

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Page 1: February 2009 Month In Review

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We advise. you decide.

- Property Valuations

- Tax Depreciation Schedules

- research reports and other services

The month in

2009

review

Page 2: February 2009 Month In Review

The month in review

Page Topic

3 feature - 2009: The year ahead

4 - 5 QS Corner - repairs versus Improvement

6 - 22 residential

23 - 32 Commercial – Office

33 Contacts

34 - 37 rural

38 - 54 Market Indicators

Contents

Peace of mind for your property decisions.

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CONFUSED?!? – You’re not alone, but I guess that doesn’t help does it….

The tail end of the decade appears to be testing the resilience and gumption of even the most stoic investor. Let’s face it, we move as a flock in a universe where confidence is king. If the lead bird senses trouble and deviates, suddenly we instinctively follow in a wide sweeping arc without ever having actually spotted the danger ourselves (I don’t think even really, really smart scientists have worked out how we do that yet).

It all appeared to be going along swimmingly – a booming mining sector, higher international profile, and historically low interest rates helped create an australian economic environment where it was just too hard not to make a dollar. but these things, it appears, were a folly now sent to try us. fast forward to late 2008 and as the world’s most powerful nation got a twinge in its metaphorical back, we all started looking for a Zimmer frame.

STILL CONFUSED?!? – Let’s see if I can make matters worse…

as a whole, investors seem to knee jerk into inaction. for example when interest rates rose, buyers immediately stopped trafficking into agent’s offices. everyone looked around for somebody to make a move, eager to rush back in but not so keen to be the first. The trailblazers might get burnt after all so it’s better to wait for a few optimistic souls to test the water before we all leap into the pool. The technical terms appeared to be “consolidation”, “conservatism” or “gutless wonder” depending on where your vested interests (and source of income) lay.

This time around though it feels different. It’s on a grander scale and as economies around the globe start posting deflationary results, there are plenty of observers willing to bet we have yet to see the worst of it.

HOW YOU GOING NOW?!? – Some more head spinning thoughts…

Of course if you zoom in from the macro environment to the micro economy, there are plenty of positives that should point to some upward trends. The dollar is down so overseas investors are starting to get keen. Many bottom end price brackets are staying solid and tenants just can’t find enough accommodation, ergo, extremely strong rental returns. The federal government dips its hand in with a raft of incentives. Some agents continue to point to a lack of stock in many established markets which really says, by the forces of supply and demand, prices should be moving upwards.

but it’s not happening and as punters pick up daily media highlighting poor results from all corners, who can blame them for wanting to stand back and tread warily.

What we need is a little guidance so Herron Todd White has lit the lantern and are about to show you the way.

This month, we have checked in with our experts and asked them to read the signs, align the stars and give us a rundown on how their markets are likely to move in 2009. Our people can see the conflicting drivers and gauge just how eventful or otherwise the markets in their area will pan out based on a marriage of on the ground knowledge and careful analysis.

now our experts may have one up on the average punter – daily contact with the market is bound to do that – but we do not have eSP. Our sage professionals have taken it all in and given you their best, unbiased and honest opinion of what’s in store, and in an ever changing environment, that’s all anyone can ask – so please, don’t just rely on the advice contained within – call our experts. They are ready, willing and entirely able to take a look at your specific property situations and give you some balanced perspective so you can go into ’09 with a little more confidence.

Now, take a Bex and have a good lie down...

Kieran Clair

Certified Practising Valuer

1 february 2009

[email protected]

2009: The Year Ahead

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Repairs versus Improvement

The Income Tax assessment act 1997 allows for the immediate deductions for repairs and maintenance under sub-division 25-10, which states:

1. you can deduct expenditure you incur for repairs to premises (or part of premises) or a depreciating asset that you held or used solely for the purpose of producing assessable income

2. If you held or used the property only partly for that purpose, you can deduct so much of the expenditure as is reasonable in the circumstances.

3. you cannot deduct capital expenditure under this section.

Deciphering the difference between a normal outgoing expense such as ‘repairs and maintenance’ and an ‘improvement’ of capital nature can often be a ‘grey area’.

a ‘repair’, broadly speaking, restores the efficiency of function of the property without changing its character and may include restoration to its former appearance, form, state or condition. repair is restoration by renewal or replacement of subsidiary parts of a whole. renewal or reconstruction, as distinguished from repair, is restoration of the entirety.

an ‘improvement’ however, provides a greater efficiency of function in the property – usually in some existing function. It involves bringing a thing or structure into a more valuable or desirable form, state or condition than a mere repair would do. Some factors that point to work done to property being an improvement include whether the work will extend the property’s income producing ability, significantly enhance its saleability or market value or extend the property’s expected life.

If expenditure is incurred in replacing or renewing a part of property with a material of a different type from the original, the work done may either repair the property, or be an improvement to it.

Whether the use of a more modern material to replace the original material qualifies as a repair is a question determined on the facts of each case. If the work done restores a previous function to the property, or restores the efficiency of the previous function, it does not matter that a different material is used.

even if the work done using different material enables the property to perform its function marginally more efficiently, the work may still constitute a deductible repair.

However, the greater the work enhances the efficient functioning of the property the more likely it is that the work constitutes an improvement.

In many a repair process, there is some improvement made to property as a result of technological advancements or more modern materials and component parts becoming available. The extent of this improvement is crucial in making a judgement about the deductibility of repair expenditure under section 25-10. as a general proposition, the greater the degree of:

a) Technological advancement, or

b) enhancement arising due to the use of more modern materials and component parts.

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Involved in the work done to property, the more it is likely it is that the work involves an improvement or a change in the character of the property rather than a repair.

To distinguish between a ‘repair’ and an ‘improvement’ to property, one needs to consider the effect that the work done on the property has on its efficiency of function.

for example, if you purchase a residential property and paint it before making it available for rent, then this is considered to be an improvement i.e. capital expenditure. On the other hand, if you owned a residential property and repainted the premises during the course of the tenancy, then this would be deemed to be a repair and therefore be an immediate deduction.

There are many aTO related rulings/determinations, legislative references and case references pertaining to ‘repairs’ and ‘improvements’. To effectively ascertain whether works undertaken on property are deemed to be a ‘repair’ or ‘improvement’, a determinative test on a case by case basis

is often required.

Source:

australian Taxation Office – Income Tax assessment act 1997, section 25-10

australian Institute of Quantity Surveyors – Property Depreciation Handbook

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after an eventful year’s end, it’s difficult to see where residential property is heading into the new annum. Media reports daily on the poor state of the economy and the likelihood that things will get worse before they get better, yet some signals are conflicting. There are plenty of locations and sectors that still lack stock and it appears that landlords are continuing to get historically high rents despite the reported gloom.

unlike some of the more structured sectors of the property market, residential buyers tend to factor in a measure of emotion in their transactions, no matter how minor. This driver can be easily influenced by confidence – something that is difficult to maintain when everything in the economic universe appears to be in a state of flux. The result is that most operators are anxious about choosing whether to put a foot forward for fear of falling over.

We trust that in this month’s edition, you’ll find a little guidance on your market of interest that will help anchor your decisions as you head into 2009.

Sydney

The year ahead is anticipated to be an eventful one as the fallout from 2008’s global financial turmoil continues to have implications on Sydney’s property market. Throughout the end of 2008 there was much speculation as to what the exact implications would be for our market resulting from this crisis, and we believe this will become more evident in the early stages of the year.

The major drivers and deterrents this year will come from both local and global influences, but predominantly the global economic climate will determine what occurs locally. Interest rates will again be one of the focal points

driving the property market. Lower interest rates have helped many home owners in the last few months as would be expected, and this continuing trend will help to determine how home owners manage the current situation. If interest rates remain low or are reduced even further, we will see continued confidence in purchasing property with the hope of keeping the residential property market steady.

recent increased incentives and assistance for developers have been aimed at stimulating growth and reducing job losses. a drop in housing development is a sure indication of a slow down in the economy which, in turn, leads directly to a drop in employment. Developers should see continued assistance to help stimulate development, although this effectiveness is unknown. Decrease in development also has implications for Sydney’s much talked about housing shortage. Decreased development will only help add to this problem and possibly continue to decrease housing affordability in an already tight market.

unemployment rates are going to be a major factor this year, leading to a decrease in prospective purchaser confidence. economists are predicting increased unemployment, which of course will lead to more mortgagee sales and less affordability. This will affect all sectors of the market as it seems no industry is immune to the current conditions. The government’s increase in the first home buyers grant has helped lift the market below $350,000. This increased grant is set to expire in June which may create a surge from first time homebuyers trying to take advantage at the last minute over the first six months of this year. beyond June, assuming the grant is not extended, we could see a dramatic decrease in demand around this price range as people who were looking to purchase would certainly have attempted to do so before the expiration of the double grant.

On a more positive note, lower priced markets are likely to have the most up-side in 2009. as mentioned above, lower interest rates and the increased first time home buyers grant directly boost the lower end of the market. Properties in western Sydney suburbs, who have suffered over the past 24 months with increased mortgagee sales, seem to have steadied. In fact, many agents are

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now reporting a lack of stock in these areas. People in these areas have become attracted to the lower home prices and the increased rental potential. These, together with lower interest rates, have really spurred the market along.

In contrast, the higher end of the market which had struggled over the past few months will continue to struggle in 2009. There has already been evidence of decreased market activity in the higher end market which has been hit by the ailing stock market and job losses in the finance industry. Sydney has traditionally been very reliant on the banking and finance industry. However with these continuing to become weaker there may be tough times ahead, especially if owners are forced to sell in the weakening market changes in economic conditions.

There has been much speculation about what 2009 will bring and only time will tell exactly how our market will be affected. It is hoped with continued government regulation and assistance that the property market in Sydney can remain relatively steady. This of course all depends on how the economy performs throughout the year, and current indications are not very positive. Let us hope the economic recovery can begin at some stage in 2009 and that we can report more positive news in the upcoming issues regarding Sydney’s residential markets.

Wollongong

The big question on many people’s lips with the global economy and the property market in a downturn phase is what will happen to the housing market in 2009? Will this year spell the end of the tight market conditions, or will things worsen?

The latest IrIS data shows that there has been a decline in the median house price throughout the Illawarra since the June quarter by 5.3%, with the Wollongong CbD experiencing a less significant decline of only 1.3% in the median house price (with very few dwellings in the sample). In contrast, the medium unit/townhouse price throughout the Illawarra region rose by 5.9% for the September quarter after a slight decline in the previous quarter.

Our observations are that there is a significant oversupply of new residential units in the Wollongong CbD. Due to a lack of buyers, most asking prices have been reduced to absorb the oversupply. However, it is important to understand that the medium unit/townhouse price takes into account all types of medium density properties, of all ages and throughout the entire Illawarra. So the 5.9% rise in the medium density price being reported may not accurately reflect all market sectors if they were to be looked at on an individual basis.

recent government incentives offered to first home buyers coupled with interest rate cuts may have breathed a bit of life back into the market. Many local real estate agents and conveyances reported that December was one of their busiest months on record. It would seem that properties listed under the $300,000 mark have been getting snapped up quickly in the past few months.

The IrIS data also shows that building approvals for dwellings are down by 20.6% during the year to September 2008 in the Illawarra region. However, this data does not capture the dwelling approval rates for the period after the government upped its incentives on new property. So it will be interesting to see if the more generous incentives have helped strengthen the quantity of building approvals for the area.

anecdotally, many home owners are choosing to extend their current houses rather than move up into a 2nd or 3rd home. This is reflected in the value of approvals for alterations and additions being up by 7.3% for the year to September. a state wide trend, nSW has also experienced a 5.5% rise in the value of approvals for extension and alterations.

The lack of available rental accommodation throughout the Illawarra has been apparent for a number of years now and this trend is still continuing into 2009. This is going to get worse as investors pull out of the market.

a new frightening trend in the past few weeks has been the increase in unemployment. Wollongong can get hit quite hard if the major blue collar employers downsize, which has started to happen and will only get worse as China and Japan reduce their exports (Japan) and their imports (China). There are no alternate industries for many, and there may be some migration out of the region placing more pressure on the housing market with the prices only able to go one way.

So what does all this mean for the coming year and the property market?

We are unlikely to see the market move into recovery for the next 12 months. The most likely trend will be a combination of stability in some market sectors/areas and slight downturn to others. Government policy and the general economic climate (especially unemployment levels) can have a strong impact on the property market. So without knowing all the government fiscal policies for the upcoming year, it is a hard market to gauge.

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Central, north & West nSWDubbO

The increased government first home owner’s grant toward the end of 2008 stimulated the low to mid cost housing range in Dubbo which looks set to continue into 2009. Sales volumes have increased in this market segment with agents reporting high levels of enquiry from first home owners. With an increase in demand we are likely to see an increase in values in this market segment over the next few months.

unit sales have also increased in the past few months in line with an increase in demand from first home owners. another advantage of the increased government grant for first home owners is that the housing construction market has improved. builders are seeing an increase in demand from first home owners prompting some local builders to design special packages for first home owners. This trend looks set to continue into the start of 2009.

High cost houses are still struggling to hold values with the current economic crisis worsening. High cost properties are continuing to stay on the market for extended periods of time, and vendors are often forced to drop prices to induce a sale.

MuDGee

2009 is set to be an interesting one for the Mudgee residential property market. With 2008 a year which saw many different events happen throughout the world, Mudgee seemed to cope pretty well and finished the year off pretty much how it started! Sales may have declined slightly, however there has not been a notable decrease in value.

...the main participants here was first homebuyers...the government’s stimulus package has worked...

The driving force for Mudgee this year will be the performance of the coal industry. If the three large mines in the district, including ulan, Wilpinjong and Moolarben, continue to perform and expand, we cannot see the residential and rural residential markets suffering at all in 2009.

another industry in the area is the wine industry. although not to the same extent as the mines it still plays a part in the area. at present it is struggling and is not having a big influence on the market. If fortunes change this year, it may give another boost to the area and in turn the property market.

It is hard to determine which markets will be the winners this year and which will suffer. Herron Todd White think low to middle cost housing will remain steady to strong due the increased grants from the government until June 2009. rural residential markets should also stay firm due the lifestyle purchaser which is so apparent in the Mudgee area. It may be the high cost housing that will suffer, who knows?

newcastle

What a difference a year makes! Twelve months ago we were concerned about what effect a global recession may have on the australian domestic market and we are now starting to see that consumers are tightening their belts as job security becomes the new topic of conversation. The recent interest rate cuts together with the increased first home owners grant has seen the lower end of the housing market become the most heavily traded and prices, for the moment, have generally remained steady in these mortgage belt suburbs. These suburbs are generally described as being located some 15km from the Central business District and priced below $400,000. However, while job security remains a question mark and the depth of the global recession is unknown, it is unlikely that these suburbs will see any growth in the median sale price for 2009.

The more centrally located suburbs located within 10km of the CbD are the suburbs where activity has slowed significantly. These suburbs generally accommodate persons with higher disposable incomes, however it is many of these people that have felt the fall in equity markets over the last 12 months and this has reduced their ability to cater for discretionary spending. Some of this discretionary spending can mean that the once affordable holiday house/unit in the coastal areas around Port Stephens or The entrance is now on the market, competing with a higher volume of listing resulting in a weakened market in these holiday areas. Whilst suburbs such as adamstown, Hamilton, Merewether and Cooks Hill have seen demand slow, it should be remembered that they do have a good long term outlook as people will continue to chase that inner city lifestyle with proximity to beaches and restaurants most important.

To the west the mining towns of Singleton and Muswellbrook have seen sale volumes slow as the predicted global slowdown has meant that demand for australian commodities has slowed. The mining boom has come to an end for the moment and the residential market in these two towns could remain bearish for 2009.

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Whilst the short term outlook for the residential market has weakened, we do believe that the long term outlook for the greater city of newcastle is a healthy one as house prices are generally seen as affordable for property located on the east coast and within 25km of beaches. Sometime in 2009 may just be the right time to purchase a property in the prevailing buyers market, it’s just a question of when?

nSW Central Coast

The latter part of 2008 saw a swing in market confidence in the sub $400,000 market. There was a noticeable shift in valuations being carried out in this price bracket and agents are reporting that this is where most activity has been occurring. as one would expect, the main participants here first homebuyers, and this would suggest that the government’s stimulus package has worked.

If the employment situation holds steady, then it is reasonable to expect that the momentum in this market segment will continue for the first part of the year.

Investor purchases in the residential market have remained quiet and are unlikely to capture the attention of too many for at least for the first half of the year given the tightening of bank lending practices. The much talked about rental squeeze, while present on the Central Coast, was not as harsh to that experienced in other areas.

Who do we see as being the big winners on the Central Coast?

If the residential market follows previous trends and moves to the next price tier, then the $500,000 to $750,000 segment of the market should be ready to hit its straps. but, given the uncertainty of the economy both locally and internationally, we see this as being some time off and unlikely in at least the first half of the year.

Developers have been experiencing shrinking margins for some time now. While prices for development sites have come back, both the hard and soft costs to develop the land remains high.

There is renewed talk and pressure by industry lobby groups about development costs crippling the industry, particularly development contributions payable to the various levels of government. This, together with the need to increase supplies of low cost housing to meet demand, may lead to some relief for the developer.

It certainly won’t happen quickly, and moreover, developers should thoroughly and properly research the market to gauge what product is needed before committing to a project to give themselves the best opportunity for success. Those who think they can repeat what has worked for them in the past and ‘let the people come’ would be well advised to rethink their models.

Who will need to wait a little longer?

Once again, there does not seem to be any bright news on the horizon for those in the coasts’ ‘mortgage belt’ areas such as Woongarrah, Hamlyn Terrace, Wadalba, Mardi, narara, Lisarow, Ourimbah, etc. These are areas that have experienced more notable reductions in value and the effects of the slowing economy. However, values appeared to stabilise in the latter part of 2008 and hopefully the year ahead will provide the opportunity to consolidate.

Pity the poor old developer who’s been left with vacant land stocks. Little seemed to have been sold during 2008 at full retail prices and this is likely to continue during 2009. The effects of a slowing economy have hit this market hard.

beachfronts, waterfronts and rural lifestyle properties were seemingly recession proof in the early part of 2008, but as the year progressed, this sentiment changed and there is evidence emerging of values coming back. While too early to say with any great certainty, it is likely that 2009 will see these markets subdued.

Southern nSW & northern Vic

aLbury

The fireworks were few and far between over the albury skyline at the end of 2008 as home owners and potential investors become increasingly optimistic about the outlook for 2009. The 2009 ship is sailing in much the same fashion as the 2008 one finished – slow, unsteady and without a known destination.

relief is not expected until well into 2009 for flat property values and limited buyers across the residential property sector.

Since September, the reserve bank of australia (rba) has cut the cash rate by three percentage points to a seven-year-low of 4.25% and in October, the federal government doubled the first home owners grant to $14,000 and increased it to $21,000 for buying or building a new home with the first home buyers boost.

This ‘stimulus’ by the federal government could see potential investors creeping back into the market and the property market start its long ascent out of its hole, however, the global financial credit crisis could take a

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turn for the worse and put the market on the back foot again.

Locally speaking, the albury/Wodonga housing market could only be described as ‘soft’ with relatively average sales levels recorded across the twin cities. Most demand for residential properties have come from sub $300,000 properties, with local agents reporting a steady volume of sales of properties in this bracket. However, as we move up the property bracket (as the case in most country towns) the word ‘static’ comes to mind, with properties between $300,000 and $500,000 reporting very little demand. Properties in the $500,000+ bracket are generally on the market for extended periods with agents exhausting all avenues in search of potential buyers.

The new housing estate ‘White box rise’ in Wodonga has local girl and international sporting identity Lauren Jackson’s tick of approval and appears to be travelling smoothly with land being snapped up and construction is underway of what is set to be a busy little section of Wodonga. Thurgoona in the north-east section of albury remains a steady area for growth in terms of new dwellings and this trend is set to continue throughout 2009.

as with 2008, the forecast for 2009 in the albury/Wodonga region is uncertain, while some analysts predict a recovery in the market, others remain much more optimistic. With all the uncertainty in the air (i.e. the global credit crisis, job security, the drought, etc.) it’s anyone’s guess just what 2009 will bring.

WaGGa WaGGa

after the turmoil of 2008 it is hard to predict what will happen in 2009. So far this new year, Wagga Wagga has seen the first home buyers market become very strong with houses under the $300,000 mark selling very quickly when placed on the market at realistic prices. In the past week or so, this has slowed mainly through a lack of stock as there were so many houses sold during the last few months of 2008 and the first few weeks of 2009. The middle and upper end of the market have not been as strong as the first home owners market, but they have still remained steady. furthermore, there has been a steady stream of sales but once again, only when the properties are priced reasonably.

We believe that there will be an increase in investors returning to the market due to low interest rates and the strong rental market. We have heard of investors who plan to buy in the next few months and after another

predicted interest rate decrease, lock their rates in over the next five years.

as with any market at the moment, the real estate market is also hard to forecast and how the market reacts over the next few months will give us a better indication of what the rest of 2009 has instore for us.

LeeTOn

It is often said we lose more through missed opportunities than bad decisions and this year is definitely the time to put this theory to the test. There are many positives about the market at the present time that should in theory stimulate buyer demand. Low interest rates, a lot of good properties to choose from, lower prices, first home buyer assistance and a likelihood of further tax cuts. but, there are a few big negatives such employment instability, the ongoing drought and the tightening credit market which are creating big hits in consumer confidence levels and purchasing ability.

So there we have it; just as many deterrents as drivers. Who will come out on top?

I believe the answer to this question largely depends on the investor market. first home buyers are creeping back into the marketplace but not in great volumes. The key to generating activity and keeping the momentum in the market largely hinges on the return of the investor and the willingness of financial institutions to fund investment purchases.

The other big player in our agriculturally focused economy is rain, rain, rain. There is simply no influence bigger than water or the prolonged lack of it. It needs to rain and keep raining and, if we could just have some of the stuff, it would have an impact on the local economy far greater than global influences.

The markets which will perform the strongest in 2009 are the lower and middle markets. These markets will have the greatest volume of sales, however we are not expecting price increases unless financial institutions loosen the purse strings, the government introduces super sweet incentives, rents sky rocket and stock levels fall significantly.

The market which will suffer the most in 2009 are the high rollers, the upper price bracket, which have the hardest fall. This market has the largest gap between rental income and repayments therefore is the most expensive to hold on while the downturn passes. There will be some very good buys in this market as vendors choose to discount heavily and cut their losses. If you have been saving your rainy day pennies in anticipation for your dream house, this year is definitely the time to blow the dust off them.

Canberra

In Canberra, the first half of 2008 saw the residential market continue to grow from the end of 2007 with relatively strong prices and an active market. This was followed by

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a steady to weakening market later in the year as a result of several factors, including local confidence, the global financial crisis and affordability. Overall the yearly median increase was only 0.85%. across all suburbs over the past 3 months the recent trend has seen a 3% fall in median residential house prices. (Source: update.)

as a result of the weakening market, measures have been introduced to increase activity. Interest rate cuts have seen the cash rate fall from a high of 7.25% in March 2008 to 4.25% in December 2008. first home buyers looking at entry level or the lower end of the market are beginning to become more active with the lower interest rates and the government assisted increase of the first home owners grant from $7,000 to $14,000 and to $21,000 if constructing a new home. This lower end stimulation has had a flow on effect and has assisted the middle and upper sections of the market early in 2009.

While the above mentioned measures have resulted in the stimulation of the residential market early in 2009, overall there is still a general feeling of caution. Predictions of public service cut backs, the slow down of the construction industry and the general economic uncertainty will have a continuing effect.

Canberra rents remain some of the highest in the nation at an average of $420/wk for a house. This trend is likely to continue throughout 2009 with the traditional transient population of students, defence and government workers continuing to drive the rental market. although low rental vacancies (less than 2.2% vacancy) translate into good returns for investors, the high tax levels detract from Canberra’s investment appeal. In addition, there are predictions of public service cut backs that will have an effect on Canberra’s relatively strong unemployment rate and may also affect the investment market.

The local rural residential sector has not seen a comparable increase in activity to that of the Canberra residential market early in 2009. Locations more isolated and reliant on smaller towns for service provisions have become less attractive, and even the more centrally located rural residential areas in close proximity have been affected by water availability and drought, petrol prices and the general economic downturn. areas closer to the main town centres of braidwood, bungendore, yass and Goulburn are less affected than those more isolated locations.

Overall, the Canberra residential market has remained relatively stable with the level of sales beginning to rise over the past three months. Market values are predicted to remain steady throughout the year ahead with no significant increases. Interest rate cuts and the first home owners grant are beneficial measures encouraging activity in the market.

Melbourne

after an overall downturn in the Melbourne property market in 2008, it is expected the market as a whole will continue to experience soft levels of demand in 2009. We consider many suburbs to keep feeling the affects of the global economic crisis, particularly the top end of the market, whilst other suburbs may have some potential for growth after being overlooked in the last property boom of 2007.

Over the past 12 months to September 2008, the suburbs with the highest growth in median house prices were generally more affordable suburbs including; broadmeadows (up 24.7% to $268,000), narre Warren (up 22.9% to $329,250), Keysborough (up 19.6% to $400,500) and Coburg (up 19.3% to $593,750).

...we believe the suburbs with growth potential in 2009 to be in the first home buyer price range within 15km of the CbD...

The suburbs with the lowest growth rates, or in this case negative growth, included some of Melbourne’s more expensive suburbs such as Camberwell (down 14.9% to $1.041M), Kew (down 14.3% to $1.2M), balwyn (down 7.9% to $1.22M) and Surrey Hills (down 5.1% to $951,000). Source: reIV.

This pattern is likely to continue throughout 2009 with affordability being a key factor for many property purchases.

We believe interest rates and job security will be the biggest factors influencing the market this year. under normal circumstance the lowering of interest rates has seen demand increase for residential property though with unemployment rates on the rise this is having a dampening affect.

Interest rates are now at there lowest levels in several years and with further reductions would be a stimulus for those looking to enter the market. first home buyers have the added benefit of the combined state and federal grants which can add to an additional $21,000 saving on new dwellings. With the grant only lasting until July 2009, we would expect increased demand from the first homebuyer market in the first half of 2009. In Melbourne, this would represent houses and apartments in the range of $200,000 to $500,000.

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We believe the suburbs with growth potential in 2009 to be in the first home buyer price range within 15km of the CbD and having good access to public transport.

reservoir, situated 12km north of the Melbourne CbD, still has freestanding 1960’s dwellings for under $300,000 which appears to be good value given the services and amenities available.

West brunswick, situated 6km north of the Melbourne CbD, is another suburb suited to first home buyers with older style residences still under $450,000 and one bedroom units under $250,000.

With large losses on the share market and general lack of consumer confidence we envisage that we will see the top end of the market (properties above $1M) continue to struggle in 2009. Many of Melbourne’s most expensive suburbs witnessed strong price growth in 2007 and the current downturn could also be seen as a correction in the market.

Investors should see reasonable rental returns this year with the rental market continuing to be tight. The lowering of interest rates has seen the gap between mortgage repayments and rental income being the closest in many years. Historically, investors have come back into the market under this scenario which could see some increase in demand for investment properties.

The strongest residential yields in Melbourne can still be found in inner city apartments with gross yields in the order of 5% to 6%. a continued tight rental market and flattening or possible reduction in values could see yields slightly higher in 2009.

adelaide

adelaide - a very dry place at the moment.

as with most sectors of the national and local economies this year will be one that presents us all with the most uncertainty that we have faced in our working lives. This year, even the usually stable and predictable property market in South australia is in for a testing time. Whilst property is widely regarded as one of the safest long term investments, it still has its ups and downs over time and this year will either be steady and resilient or negative. We feel there is no scope for general value improvements other than possibly in very select markets, and the highest probability is one of declining values with the extent being too difficult to predict.

essentially all sectors of real estate the market in adelaide have been fluctuating in between buoyant to over hot since 2000. That is a long stretch of positive news, results, capital growth and the like. This year probably marks the commencement of a period of real correction in most markets. unfortunately sentiment is driving much of what is (or is not) occurring in adelaide at the moment and that sentiment is mostly negative. That means that doom and gloom is the underlying factor influencing attitudes of participants and thus activity is slow, participants are indecisive and transactions are not occurring in the usual free flowing manner.

We are reluctant to add to the negativity in our marketplace as early as January because, whilst we are continually barraged with negative international economic information, there are underlying factors that could ultimately make our markets somewhat resilient. national and local fiscal policies will hopefully help things along and the current low interest rate environment is preventing too much pressure in most sectors.

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Only time will tell what the future holds and predictions of what will occur in our local economy vary widely. South australia is not immune from flow on effects of world events. The primary influence on what happens in adelaide will, in our view, be employment levels. If unemployment escalates significantly then our usually resilient markets are likely to suffer. That effect will be falling residential prices, excess stock, and extended selling periods. If employment holds then we think we are simply in for an extended period of steady pricing. This, in real terms, will be slight decline in values over the next couple of years.

Our commercial property markets are not active at the moment. early in the year is not the time to dispose of property and while we are monitoring any transactions for trends, it is too early to start commenting on what may happen to prices, demand and supply. There will be activity as investors move into property from other investment forms and the low current interest rate environment will help this market significantly.

a more specific market discussion will hopefully be possible in the coming months.

brisbane

The new year will be a time to gaze into the mirror and check ourselves here in the South east corner. Sectors which felt impervious to trouble are showing a few cracks and it now seems that the inaccessible suburbs are becoming a very real buying option for more and more pundits.

The story of big time rental growth may be short lived as we journey further into 2009. Landlords have been relying on the low vacancy/high demand ratio for some time now, but there is a point where tenants will say enough is enough. Get ready to see some strategies from the occupants including more share housing and moving back to the family home. as tenancy demand weakens, so too will the potential for record growth in returns.

Other areas of caution include property related to disposable income. Localities with property reliant on

holiday/short term accommodation to help pay the mortgage could prove troublesome. Watch supplies in some of the Moreton bay islands for example to see how prices react.

Our people at the wheel are also noting with concern some oversupply issues looming in the broader brisbane/Ipswich regional townships where a few new estates are competing for less potential purchasers. Some of these developments are now employing incentives as part of their marketing campaigns – not an encouraging sign in our experience.

for the capital, the number of buyers looking to spend over $1M has softened – a sector that was a real driving force for the region’s real estate 12 months ago. The situation can only get more troublesome when it seems that middle management, white collar workers in industries such as finance are the ones whose employment prospects are most in jeopardy. It is these buyers that have propped up the mid-prestige end of the market. as supply of this type of property increases, so too will the prospects of a consolidation in prices.

first home buyers are proving the most promising – and for good reason. Government incentives teamed with the high cost of rental have seen these first timers look to getting in aSaP. Post war detached homes in mid-ring suburbs are finding favour and the “concertina effect” of these buyers on the market in general is readily evident. The bottom price bracket has firmed while the top end has softened resulting in a tighter band of property value in most suburbs. It’s worth noting that in this sort of market, it’s harder to make a quid on renovators. There needs to be some reasonable prospect of natural capital growth to make these projects work so expect to find less demand for “do-er upp-ers”.

for those wanting to bag a bargain perhaps the best prospects lie in some of those previously difficult to enter suburbs such as new farm and Tenneriffe. buyers over $700,000 have been thin on the ground and tenants are finding rentals a bit pricey, so it seems demand in these golden suburbs is becoming a little tarnished. Keep your ear to the ground and you just might bag a winner, but remember to keep things in perspective. Look for capital growth over a reasonable three to four year horizon. you’re unlikely to make your killing over the next 12 months.

Gold Coast & Tweed Coast

GOLD COaST

The Gold Coast residential real estate market is facing a period of genuine uncertainty entering 2009, following the soft market conditions which prevailed across the vast majority of residential real estate segments in this area during 2008.

The world financial crisis and the global ‘credit crunch’ had a softening effect on both the demand for and the

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volume of sales achieved for residential real estate on the Gold Coast over the past 12 months, and buyer sentiment was/has been significantly adversely affected as a result.

Continued negative media publicity further perpetuated this issue and an improvement in consumer confidence, in conjunction with improved availability of credit, is considered to be the major barrier to a recovery of our real estate markets in the short to medium term.

However, even in this period of uncertainty, there is certainly scope for optimism and the underlying fundamentals that drive the Gold Coast economy and subsequently the real estate market remain relatively sound. South-east Queensland continues to benefit from strong population growth and surveys continue to point to an overall shortage of residential property (either to purchase or lease) which is expected to exasperate in coming years on the back of a slow down in new developments and fall in building approvals.

The combined impact of these two factors alone should, to some degree, act to underpin property values in the prevailing volatile economic climate. Different market segments will be affected however to varying degrees, and not all markets will be as insulated as others.

for the well educated investor, the Gold Coast market is expected to offer up opportunities during 2009 to purchase ‘under valued’ property, which should realise capital gain once the economy stabilises and the real estate market returns to more favourable conditions. although, the timing on such market recovery is impossible to predict with any certainty at present.

The reality is that if you were not required to sell, then most people would resist selling property in the current climate. However, unfortunately there is a large proportion of people who are in distressed circumstances, or alternatively financiers who are acting as ‘mortgagee in possession’, and these people are choosing to meet the market, which is providing good buying opportunities.

The strongest activity for real estate on the Gold Coast is in the lower price brackets, typically houses below $500,000 and apartments below $300,000/$350,000. This market

appears to be trading steadily at present and has been buoyed by both the consecutive reductions in official interest rates and the increase in the federal governments first home buyer grants. Importantly, this market segment seems to be the least affected by a fall in property values when compared to high priced real estate.

furthermore, a major problem which faced the residential market on the Gold Coast during the ‘boom’ period was the lack of affordability and the decreasing returns being realised for investment properties when compared to the rise in sale prices. However, with sale prices softening and interest rates apparently in a prolonged downward cycle, affordability of real estate on the Gold Coast appears to be improving and rental yields are also increasing. These two factors are proving attractive to potential purchasers.

Conversely, the softest real estate market on the Gold Coast appears to be the new highrise apartment market and also the top end, prestige real estate market.

The highrise apartment market on the Gold Coast is mostly underpinned by investment demand and the current economic climate has seen an erosion in the number of investors who are actively looking to purchase real estate on the Gold Coast. The softest demand is for recently completed/or near completed apartment stock, with slightly improved demand being shown for ‘off the plan’ purchases where investors are speculating on an improvement in market conditions prior to the apartment building settling.

The new apartment market on the Gold Coast has been adversely affected by various unique market factors in recent months, including the placement of the final two stages of the Southport Central highrise project into the hands of receivers, and the delay or cancellation of a number of other large projects, the least of which included The Hilton Hotel and residences in central Surfers Paradise. Some experts consider that there is potential for a shortage of stock in the new highrise market in the medium term as a direct result of a number of large projects being cancelled in the locality and this could firm up prices of the balance of developments. (note: The Hilton Hotel and residences project may still proceed, subject to negotiations between the financier and a potential joint venture partner).

On a positive note, the Sunland Group recently instigated a new marketing campaign aimed at liquidating the remaining apartments in the twin tower Circle on Cavil project in central Surfers Paradise. With increased marketing and a more competitive pricing structure introduced in December 2008, Sunland reported of healthy sales for new apartments in the post Christmas period through to early January, with only three apartments now remaining for sale. a number of these purchases have been reportedly made to international investors attracted by the low australian dollar.

Of a related nature, good opportunities are also evident in the current market to purchase resale apartments in near new and recently completed buildings on the Gold Coast at prices which are at a significant discount on both the original sale price of the unit and also on the asking prices of similar new units. In some instances, the resale price of apartments appears to be below replacement cost of a similar new apartment.

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as stated, the prestige housing market also remains fragile and it is very susceptible to buyer sentiment. There has been evidence of reasonable falls in value levels in this sector over the past 6 months.

an extreme example of this was evident in the reported sale at auction of an absolute beachfront house located at 3551 Main beach Parade, Main beach, for around $9M on 26 January 2009. This property previously sold in June 2006 for approximately $13.5M, with the reported sale reflecting a reduction in value of 33% on the previous sale price. Interestingly the vendors of the property reportedly knocked back an offer of $14.5M at a previous auction last year.

The question is, though, what sort of capital gain will the recent buyer of this property appreciate as the economy and market improves to more standard conditions.

In summary, and despite the doom and gloom of the present market, there is room for optimism for the long term potential of Gold Coast residential real estate. It could be argued that the current market on the Gold Coast and indeed property prices are under valued to a degree and the discerning investor could purchase property today at price levels which ultimately realise good capital growth in the longer term.

as always with real estate, it is all about timing.

Sunshine Coast

In the current economic conditions, the Sunshine Coast’s property market is of a contradiction. Whilst it would appear that a number of people will be adversely affected, this may be balanced by significant opportunities for others. Someone always benefits from another’s misfortune.

On the back of government incentive schemes and stimulus packages, we have seen the sub-$500,000 market for housing continue to kick along at a steady pace. Whilst there has been some retraction in values in various areas, this has helped to improve the affordability of properties within this price sector.

The upper price/prestige markets have travelled along the rockiest road as these properties, by-and-large, are mainly lifestyle/discretionary choices and are more of a want rather than a need. There has been significant reductions in demand in this sector and has subsequently led to vendors having to reduce asking prices to achieve sales. We also note that a number of recent forced sales situations have also contributed to these softening market conditions. Once again, the affordability of these prestige properties has improved to create opportunities for purchasers within the marketplace. There is a belief that once confidence returns then these losses may be recouped at a good pace.

The unit investment market is similar to the aforementioned prestige market in that these types of properties are discretionary and also experiencing significant falls in demand.

employment issues we believe will be the main influence on the market in 2009. The major industries driving the Sunshine Coast continue to be the building and tourism sectors. It is expected that both of these industries will slow with jobs coming under threat. So regardless of how affordable a property may be, this doesn’t matter if you don’t have a job to pay the mortgage.

Major infrastructure projects on the coast continue to be the improvement of access to the Maroochy river north Shore and the Caloundra-Mooloolaba road. both of these projects will increase the liveability of the Sunshine Coast. unfortunately the Queensland State Government, in their wisdom, has postponed construction of a new hospital in the Kawana locality until 2010. This is a tough pill to swallow as the government has been benefitted the most from the Sunshine Coast’s population growth over the years with high property transfer duties. Investments in these projects are critical in keeping pace with the growing pains that are starting to raise their head.

Overall, there is no question that 2009 is going to be a tough year. The one positive is that there will be opportunities to either enter the market or upgrade within the residential property market. The only advice is to make sure that people do not extend themselves too thin and that a long term view is being taken.

Southern Queensland

activity in the residential market has remained stagnant with sales volumes half of levels achieved in 2007. Presently, it is a buyer’s market and prices have declined on average by 5% to 10% in most locations. at the beginning of 2008, the lower end of the market under $300,000 slowed as demand from investors diminished. but more recently, demand at the higher end of the market above $400,000 has weakened due to the tightening of the lending sector and low consumer confidence.

for the most part of 2009 we expect that the residential market will remain on a decline and we advise prospective

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buyers to research the market thoroughly. Local property agents have reported that inquiry rates for property have been promising, however they are troubled by vendors failing to reduce their expectations to meet a slowing market. Marketing periods are on average between three and six months, which is a far cry from 2007 when properties sold within weeks of going onto the market.

IPSWICH

Despite the slowdown in the residential market, Ipswich is still recognised as an integral part of the expansion of South-east Queensland. The current population of Ipswich is 155,000 and has grown on average by 5,000/year for the past couple of years. recent data released predicts that Ipswich will have a future growth rate of 4.6% and a population of 434,788 by the year 2031. These forecasts have thrust Ipswich to the top of the list of local government areas in Queensland.

TOOWOOMba

Toowoomba has been off to a good start this year with many agents reporting renewed interest over the Christmas period.

The main drivers for 2009 are predicted to be growth generated from our agricultural sector which is experiencing successive good harvests from regular rainfall. Grain prices could be better, which is due to the quantity held in storage, but it is reported that prices are holding for the higher grades.

The mining and energy sector should continue to have a further positive impact on our market but it has been observed over the past 12 months that intra and interstate investor activity, which been a main driver behind capital growth, has decreased as a result of tightening finance availability.

It is predicted that those workers recently made redundant in the mining sector may find their way back to the agricultural sector and replenish the labour force shortage. These workers should be cashed up and provide a boost to the region.

Suppressed fuel prices will also provide an additional catalyst for growth within the region, especially for the freight of agricultural products and commodities.

but again our number one prediction for the year ahead is the affordability of our housing in comparison with other cities, which should attract both owner occupiers and investors to Toowoomba. This should be exacerbated by the limited amount of rentals available which at present are very low and will only get lower as university students enter into the market in the first quarter of 2009.

Our main deterrents for Toowoomba appear to be the lack of a domestic/commercial airline, water availability and dam levels inhibiting water usage and freight infrastructure.

The suburbs which are likely to experience the best growth are those in close proximity to services such as schooling, parks and shopping. This should include the eastern suburbs and those in close proximity to the CbD.

It is predicted that the western suburbs will continue to have reduced volumes of sales resulting, with reduced value. This is mainly due to the distance from services. However, this should be softened by the positive impact of the first home buyers grant and general affordability of housing in these suburbs.

It is unlikely that any major infrastructure will influence our market due to the tightening of government spending, however there are some local smaller projects such as the widening of intersections along ruthven Street which are injections to the local economy. nevertheless, a start date for the second range crossing or extension of the airport runway would be a major win for the city.

all in all, it is predicted that the Toowoomba market including Highfields should certainly hold in comparison with other cities and regional towns. The general prosperity, work availability in our agricultural, mining, energy, construction and commerce sector will maintain household income. nevertheless, it has been observed that over anxious sellers selling property below market value prompt pessimists to say “the market is falling”.

DaLby anD CHInCHILLa

The outlook for the 2009 year is predicted to again be volatile on the reflection of local, national and global economic factors.

The region has been heavily influenced by gas and coal exploration, construction of gas turbine power stations at bramar (commissioned 2010), bio-refinery at Dalby (near completion), and a number of companies demonstrating liquid gasification by converting underground coal into petroleum. all these industries have created high employment, with migration of workforces to the areas seeing large temporary workers’ camps being established plus there has been a spin-off with returns of higher demands where rental returns in Dalby especially have increased to around $500/wk for a modern four bedroom home, an increase of up to $200/wk. Overall, we expect that rental returns will remain strong whilst these projects are under construction or development, however once completed the construction workforce will move on resulting in a significantly reduced long term permanent workforce. Therefore we expect significant market movement in the higher end of the markets driven by speculators and investors, with rental returns

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to be volatile in the short term before returning to a more stable level around 2011.

Other factors that will put pressure on rental returns and consequently values will be a large number of homes constructed in the earlier part of 2009, especially within Dalby, given the release of a number of estates where the majority were purchased by investors. It is difficult to assess the actual employment growth to the local areas given the speculation of a number of projects that have not eventuated. a good example is when LInC energy announced in november 2008 they were abandoning a multi-million dollar coal-to-liquid operation which was estimated to bring some 1,000 employees to the area. The recent reduction in commodity prices is driving many mining and energy companies to re-evaluate the viability of these developments in the current economic climate.

Other segments of the market less influenced by these activities are the sub $250,000 bracket where they are actively sought after by first home owners assisted with the government grant or first time investors. We have witnessed a steady rise in this market segment, although over this period the $300,000 to $400,000 market has remained relatively static. We expect over the next 12 months in order for the relatively to remain, some firming in the higher end values will be required to compensate for the movement in the lower end of the market place.

WarWICK

The Southern Downs and satellite villages/townships south of Toowoomba have certainly seen a decrease in sales volumes in the past six months, with this likely to continue for the early part of 2009. However, the area is still relatively affordable and has positive boosts from the first home buyers market where government subsidies have caused increased demand from first home buyers. also, there remains some positive outlook for some of the villages/townships near the proposed felton Mine, which (assuming the mine proceeds this year) could see increases in property values during 2009.

Decreased sales volumes are caused by decreased demand, with potential buyers having a larger number of properties available on the market for them to choose from. The larger number of properties available means that the reduced number of potential purchasers have an opportunity to select the best property in their market segment, therefore the better presented and better priced properties are likely to sell first, leaving the poorer presented or less favorable properties with a decreased opportunity to achieve a sale. anxious sellers of these

poorer properties are likely to be forced to reduce their asking prices and take lower prices to achieve a sale. Warwick has seen a large land subdivision on the south western part of town registered, with preregistration sales now materialising. Many homes are contracted to be constructed on various lots in this subdivision which will bring even more new homes on to the market. The large number of properties available for sale may create an oversupply situation for new homes in the area, however this is likely to create movement in various market segments of Warwick as people relocate in to the new homes leaving existing older homes available for purchase or rent.

...as the slowdown continues, anxious vendors may begin to lower prices to attract the few purchasers there are...

Central Queensland

rOCKHaMPTOn

We expect the major drivers of the rockhampton market through 2009 to continue to be the coal mining and rural markets of Central Queensland together with interest rates.

While increasing doubt about job security in the coal mining industry will dent confidence, lower interest rates and a relatively positive outlook for the cattle industry should provide some strength to the market.

We are currently seeing the vacant land market establish new bench marks at levels 20% to 30% below the historical highs of 2007 and 2008, however, based on the recent increased activity, our expectation is that we will see a stabilisation of the market at this new level.

The housing market has been most active at the lower prices, as first home buyers take advantage of lower interest rates and government incentives. Confidence and activity in the upper price brackets should improve throughout 2009, from the current low activity.

HerVey bay

Generally, the residential dwelling market is experiencing slow activity and pretty tough going. The sub $350,000 homes however are still receiving good interest and generally selling at a reasonable rate given their affordability price tag. Six months ago, a large number of vendors may have priced themselves just above this mark, however, are now more realistic to achieve a sale. any homes priced above $450,000 are considered to be in a period of consolidation and generally require an extended selling period. evidence to date to support any reduction in values is relatively erratic with a broad range of values in both the three and four bedroom market. as the slowdown continues, anxious vendors may begin to lower prices to attract the few purchasers there are, which may then place downward pressure on values.

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The new home, house and land package market is still competing with the established home market in the $275,000 to $375,000 range. a number of builders went into receivership in 2008, which had a significant impact on values in the particular locations they were most active in.

rental demand is still steady with a current shortage of supply, however the supply is increasing. as interest rates continue to fall, we may see investors re-enter the market as homes are affordable and returns become more attractive.

reading back to January 2008, only one of the six proposed esplanade developments for last year ended up being construction and it is now questionable if it will be completed. Oversupply is still a concern with a high number of developers stock still available in addition to re-sale product. applications however, are still being submitted with the four to five year development timeline, to hopefully see the market upturn. Supply levels will have to fall dramatically to see any movement in values in this market. any sign of developers lowering prices to clear stock is likely to have a detrimental impact on values.

as a consequence of the slow sales activity for units and residential land, there are few buyers active in the development/englobo site market. Value levels have fallen in this sector and buyers only appear to be active if the offer is too good to be true.

Overall for 2009, competition will be high across all sectors and the ball is in the buyers court.

MaCKay

The major drivers in the Mackay residential property market in 2009 will be job security and interest rates.

The industry which provides the most significant employment in Mackay is coal mining. The global financial crisis has caused a decline in the export demand for coal, and job losses are occurring in this industry as mining companies restructure operations. Job losses may also flow through to local mining support businesses. These factors could cause a reduction in residential property values in the Mackay region, however any market correction should be softened by generally strong employment requirements across other local industries (albeit at lower salary levels), recently expanded government incentives for first home buyers and falling interest rates.

Several major regional infrastructure projects will offer a vital employment safety net. These will prevent a significant increase in the local unemployment rate and will maintain housing demand and the very low housing rental vacancy rate. Such projects include the Jillalan rail

Project near Sarina ($410M under construction), forgan Smith bridges ($127M under construction), east to West Connector road ($28M under construction), Hospital bridge ($78M under construction) and new Mackay base Hospital ($405M, to commence this year).

The first home buyers market ($250,000 to $400,000) will continue to be well supported through 2009 and activity is likely to increase leading up to June if interest rates continue to fall through the first half of 2009, and if the federal government does not commit to continue with providing the additional $7,000 of the $14,000 first home buyers grant for established housing into the new financial year. More expensive family and luxury homes will more likely be discounted by uncertain high end purchasers in the year ahead.

Investors should become more active in the market through 2009 if interest rates fall, vacancy levels remain low and housing rents high. residential property investment in Mackay is considered a superior alternative to the exceptionally volatile stock market and minimal/decreasing returns from term deposits.

In summary, residential property values in Mackay have levelled off. With the heat now coming out of the coal mining boom, there is justification for purchasers to be very cautious and for vendors to have realistic price expectations. Conversely, there is also cause for optimism when the interest rate outlook and the amount of regional infrastructure projects are considered. It is a very difficult market to predict, however our best guess would be somewhere in between flat value growth and a reduction of no greater than 5% before years end.

WHITSunDay

It is going to be a tough year ahead for residential properties in the Whitsunday area. There is very little demand for new housing despite the decrease in interest rates and the first home buyers scheme.

Job security is considered to be one of the main concerns within this market and given the recent cutbacks in mining in other parts of australia, concerns are raised for the mines that operate in this area.

There is an over supply of developed land within our region and whilst prices have not been reduced, there has been no sales activity.

Over the past few months, residential house and unit values have decreased by up to 10% on the mainland, whilst at Hamilton Island, some units have decreased by 27%. One particular unit sold 27% below the previous sale. The previous sale only occurred in august 2008.

Our northern boundary is the township of bowen, which is currently undergoing a mini boom as new infrastructure projects continue to drive the market. There is a shortage of accommodation in this locality and recently 6 x 3 bedroom townhouses were each leased at $450/wk.

On a brighter note, our largest development project in the area known as the ‘Port of airlie’ is set to have its first stage completed and settled by the end of february 2009, with 15 residential lots with direct access to a public beach and future marina berths.

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Overall, as mentioned in the first sentence, it’s going to be a tough year in 2009 despite the decrease in interest rates. bring on 2010.

baTHurST

bathurst is predicted to remain fairly stagnant through early 2009 and dependant on the level of activity generated by the recent increase is first home buyers funding assistance. This should be reflected in an increase in sub $250,000 price bracket. additionally, it is expected that there will be a slight lift in activity in the $250,000 to $350,000 range, however the $350,000+ range is likely to have limited turn over, particularly over $500,000. Sales volumes in these higher ranges have had minimal activity in late 2008 with depressed sales prices being evident and vendors being motivated by high debt levels and/or financial commitment elsewhere.

OranGe

Orange will be looking a bit brighter as there has been a slight increase in activity already in 2009. There are three mining ventures in the area which will come online in 2009 or very early 2010 and are reported to be requiring an approximate additional 500 workers which will stimulate purchasing and help to set up a reasonably strong level of demand in the region.

Cairns

The Cairns economy has slowed from the heady growth rates it experienced over the last two years, but it remains in reasonable economic shape. The tourism sector in particular experienced a slowdown in growth during 2008 as a result of the high australian dollar and high fuel prices that prevailed for much of the year, which adversely affected both domestic and international tourist business into Cairns. Though the exchange rate and fuel prices have now come back, prospects of a slowdown in world tourism due to global economic uncertainty are also influencing forward confidence in the local industry and economy.

Similarly, the Cairns residential building and unit development industries which have been very much a

part of a buoyant economic situation in recent years are also experiencing a slowdown in activity as fewer new projects are brought to market.

The economic slowdown has led to considerable indecision in the local property market. buyers are still out there scouting the market, but they are very cautious of overextending themselves in the current market environment and are certainly in no rush to commit.

also of concern is a rising vacancy rate in the rental market, which has been affected by a large supply of newly constructed properties entering the rental pool at the same time as a slowdown in demand. Our Cairns office rent roll survey for December shows a trend vacancy rate in the rental market overall of 5%, with suburban vacancy trends higher again, having swollen to over 7% in both the Southern Corridor and the northern beaches. Given the large amount of new rental product requiring absorption, it could be some time before rental vacancy rates settle back down again.

Overall we expect business and economic conditions to show only slow to steady growth patterns during 2009, and for these conditions to result in a relatively lacklustre property market for most of the year.

Townsville

The residential market in 2009 should continue to stabilise, after the market peaked in early 2008 and entered a period of decline.

Prices will most likely remain soft and buyers will remain somewhat hesitant. This year should see a return of investors to the market with the major focus being on the core rental properties. These are your standard family homes in the sub $450,000 price bracket. This will be further driven by the addition of 1,500 army personnel to Townsville in 2010. These personnel will require accommodation and this will put pressure on rental rates, which will continue to increase slowly.

The higher end residential market is expected to suffer as a result of the global economic crisis. This market may experience difficulties in moving stock and may require extended selling periods.

The unit market will continue its game of ‘push and pull’ as developers maintain their asking prices to turn an overall profit for development, and investors remain absent as the investment affordability versus rate of return remains low. new unit approvals/new construction is easing, which should allow the current level of stock to deplete and future stock releases should become more in-line with the current level of demand.

In summary, the year ahead in the residential market is expected to see volumes of property sales increase only mildly and prices firm slightly.

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Tasmania

LaunCeSTOn

We are envisaging the market to be underpinned by the first home buyers grant through the first half. This has already influenced the sub $250,000 price bracket for established housing and the sub $320,000 price bracket for new housing. Post June 30, we await with anticipation the future of the grant.

Launceston’s vacancy rates have grown above 4% (as apposed to Hobart at about 1%). This should lower by february as tertiary students return to the university and maritime college. We are expecting them to return to around 2% and thus continue the upward pressure on rents. With lower borrowing rates forecast a heaper, low maintenance holding may prove an attractive investment; especially given the volatility in the share market.

...the economic slowdown has lead to considerable indecision in the local property market...

The recent Gunns pulp mill announcement (effectively delaying approval for another 2 years) has had an effect in the George Town and immediate surrounding market with many interstate investors seeking to withdraw. Of more concern is the announcement that rIO Tinto may be reviewing its operations at bell bay. With a local workforce of over 500 persons, any potential lay-offs could have a negative effect through the Tamar Valley.

Similarly, the recent closure announcement of some mining activity on the west coast has had an immediate effect on this market with negative volatility evident.

We are expecting ongoing softness in the mid range property market. While the higher end also has some softness, some recent sales above $1M have given this sector some confidence. a weakening economy again could have a dampening effect.

HObarT

Well, another year is upon us and it looks as if this year will be interesting indeed. So it’s time to knuckle down and pull out the crystal ball to look into the year ahead.

It is particularly difficult to assess the residential market in Tasmania for the upcoming year of 2009. Will it creep along as it is now, or will it tumble and fall by year’s end? Predictions overall are that the market will remain somewhat flat due to the current domestic and global credit crunch and the possible reality that owner occupiers and investors are over committed. Increasing unemployment rates may also keep the market flat, with less volume of sales.

The market has been quite active in the sub $250,000 category of late due to first home buyers. Throughout 2008, the market crept along slowly but values remained

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flat and even came off slightly in certain areas. This may be the same for 2009, however predicted unemployment rates coupled with declining consumer sentiment may auger for a very flat market indeed. Hobart hasn’t seen much of a bust in the property cycle and 2009 looks as if it may be the year.

One other problem is simple: affordability. This could prove to be the key for the year ahead. It is predicted that unemployment will rise in 2009, putting more pressure on household incomes. The only saving grace may be lower interest rates. Will another federal government bail out aid the situation?

The status quo is expected for the next few months but as the year progresses, will the market creep along as it is now, or will it take a dive? Time will tell…

Darwin

Despite the worldwide doom and gloom, the majority of sectors in Darwin’s residential property market look set to weather the storm over the next 12 months (at least at this stage). although growth may have slowed compared to the previous six years or so, there are several key drivers that should assist some areas of the market in moving in a positive direction.

• a very tight rental market which has resulted in strong yields for investment properties (typically in the $250,000 to $600,000 value range),

• Decreasing interest rates which have dramatically improved affordability especially within the sub $400,000 price range,

• Steady to strong population growth with net interstate migration (into the Territory) predicted to reach around 2%, and

• a relatively strong local economy.

at the time of writing, a study by australian Property Monitors was released which reported that Darwin is the most unaffordable australian capital city for renters. With interest rates declining, demand for properties below $400,000 continues to be strong as the gap between rents and mortgage repayments narrow further. for this reason, we consider that properties within this price

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bracket may have the best chance of achieving at least some upside during 2009. but given the volatility shown in major market drivers over the past six months alone, this forecast is at best, a soft one.

On early assessment, it appears that units at the upper end of the market ($800,000+) could be the most vulnerable to the impact of the global economic downturn. Our research indicates that presently there are in excess of 90 units for sale within inner Darwin for over $1M (many of which have either just been completed or nearing completion, whilst other developments are planned for completion within the year and these have not been accounted for). This increasing supply, coupled with an anticipated fall in the number of interstate investors, as well as purchasers who have bought ‘lifestyle’ properties to live in for three to six months (and leave vacant for the remainder of the year) is likely to result in reduced confidence levels at this end of the market. fortunately, several of the local developers may well have the ability to hold some of this premium stock off the market, which they might eventually release slowly back onto the market when the supply/demand balance returns.

The possibility of new and/or expanded LnG projects mooted for Darwin harbour is likely to contribute significantly to confidence levels which may ultimately prove to be the main factor underpinning current market value levels. The most recent press releases indicate that these planned LnG projects (with an estimated combined local build cost of potentially $20b and a construction workforce estimated at between 2,000 and 3,000) have a strong chance of going ahead despite the unstable global economic situation. although official confirmation of a go-ahead (or not) is not expected until late 2009 (and if a ‘yes’, then construction is to commence in 2010) investors will probably be more likely to take a punt on an investment property with reasonable returns in order to capitalise on an already tight rental market.

The effects of the global economic downturn so far appear to have had minimal impact on the value levels in the overall Darwin property market (apart from selling periods for expensive properties have lengthened). With the highest average rents in any capital city, and the real prospect of a lifeline in the multi-billion dollar gas projects, Darwin may fare this economic storm better than most australian cities.

Perth

2008 saw the beginning of a reduction in median house values across Perth. We expect that 2009 will see this trend continue with an over supply of properties on the market and a distinct lack of demand.

The major influence on the housing market through 2009 will be the West australian resource sector. Downturns in commodity prices led by a reduction in demand by China is already having an influence on the viability of many resource projects, with several new projects placed on hold and large expansions delayed. recent decisions by bHP to close their ravensthorpe and Mt Keith mines have seen 2,100 direct employees and contractors retrenched while rumours abound that rIO Tinto has, or soon will, follow suit. any increase in local unemployment rates could place significant pressure on affordability with potential for large increases in mortgage defaults.

Interest rates will also have a major influence. With value reductions across the metro area through 2008, reductions in interest rates may assist people to upgrade into more desirous locales. This is evidenced by beach front land within the Mandurah area which was selling for $850,000 to $900,000 18 months ago and recent transactions have occurred as low as $550,000. The premium property market has fallen victim to the global financial crisis as equity has evaporated and lending requirements have tightened considerably. There is a further risk of values weakening through the premium sector, however those investors in a reasonable cash position may be able to secure properties in highly desired locations for a large discount to 2006/2007 prices. The message here is to do your research and seek professional advice.

first home buyers were active through 2008 and their influence on the lower end of the value range has been substantial. first home buyers formed 32% of the total market prior to the increase in the first home buyers grant by the federal government; hence their influence is likely to be maintained if not boosted now that they have extra incentives to buy. We would expect the more affordable established localities within 10km of the Perth CbD to fare reasonably well through 2009, with developing areas such as Harrisdale, Piara Waters and butler to continue to attract interest, although oversupply remains a significant risk. first home buyers should also consider other property types such as villas, flats and townhouses closer to the city and analyse their current rental compared to potential home loan repayments.

The Perth rental vacancy rate remained at less than 3% through 2008, hence there remains the potential for investors to re-enter the market as falling interest rates narrow the margin between rent returns and repayments. neutral returns may be enough of an enticement for investors hoping for a return to positive capital growth.

from an infrastructure point-of-view, the suburbs south of baldivis will be anticipating the opening of the Perth to bunbury freeway. Whilst values rose in anticipation of

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the Perth to Mandurah rail line and then retreated once it commenced operating, the freeway extension will simplify access to the Peel region and suburbs such as South yunderup, which offers competitively priced canal lots and are set to reap the benefits.

South Western Wa

The local property market appears to be in somewhat of a state of flux with conflicting forces being bought to bear. Over the past six months there had been considerable numbers of properties listed for sale, which have far outweighed the numbers of buyers available to purchase them. This, combined with the number of sales of properties necessitated by over commitment and in some cases margin calls, has resulted in a continual downward slide in prices at all levels of the market. Selling periods have continued to increase and while it has been considered a buyers market, not many buyers have been prepared to actually commit.

Prior to Christmas however, there was a marked increase in the number of transactions predominantly in the first home buyer’s area as a direct result of the incentives provided by both state and federal governments. We have seen large numbers of relatively low-cost houses under construction as a result of the $21,000 first home buyers incentives combined with the reduction in land values seen throughout the region. There also appears to have been some return to close to an equilibrium situation with approximately 850 houses listed for sale at this current time, with the previous peak of over 1,400.

Speaking to a local builder, it appears that the first home builders market is continuing but now the second and third home buyers are starting to filter through and looking to build. Their company’s new house starts have risen from approximately 15/mth to approaching 25/mth as compared to 30/mth at the peak of the building boom. as a percentage of builds, the first home buyers have dropped from approximately 70% four to six months ago to now being about 50% of the houses being built, as more of the remainder of the market seeks to replace the first home that they has recently sold. The feedback Herron Todd White received was that this was a general trend across many other builders as well.

The rental market has seen an increase in demand over the last year with rental rates increasing and making returns on investment property at least somewhat more palatable than had been previously. This is partially being pushed by the reluctance of people to buy and preferring to rent while waiting for the market to ‘bottom out’. The Worsley expansion is predicted to be further exacerbated by the rental shortage when the main bulk of workers start in March/april.

The bad news received in the last couple of days, concerning the closure of the ravensthorpe mine, is that while not directly impacting on the South West region, it may have a negative effect in terms of confidence in job security with many of the locals being fly in and fly

out mine workers. This may prevent some people making commitments to mortgages, which they would otherwise have been prepared to take on.

Overall, it is considered that the market appears to be, if not at the bottom, then fairly close to the bottom. There are positive indicators for potential property investors due to the local factors of immigration, both short and long term, which may have the effect of limiting the length of the lower end of the cycle. There are short-term constraining influences as a result of job security but once these have all been worked out and more stability returns to the job market, it is considered likely that the property market will begin the upward trend again towards the later part of the year.

It is expected to be the market of under $300,000 which will continue to move along with steady volumes of sales, with sales of the next level ($350,000 to $500,000) up slowly increasing while the higher priced properties are still likely to be some way off being sold in any significant numbers.

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Commercial Overview

If ever a market were likely to feel the brunt of an economic downturn, it must be offices. as belts tighten, expansion plans get put on hold. Developers can foresee the tough time ahead for those trying to get tenants that will fill the empty space and make their projects viable.

but it’s not all bad. Despite a general sense of pessimism, there are still those predicting an upswing in their market for 2009. as with most markets, it’s too easy to generalise by saying that all office space is set to take a hit. each market and each of its sectors will be influenced by some effects beyond the overriding downturn and some of these may just be enough to help turn in a positive result.

We trust this month’s edition will help put your office market into perspective and assist with you portfolio strategies heading into the new year.

Sydney

The Sydney office market has an unhealthy outlook for the short to medium term. The Global financial Crisis (GfC) as it is now termed, has been responsible for the fall in demand for Sydney CbD office space along with other satellite CbD locations including Parramatta, north Sydney, St Leonard’s, Chatswood, north ryde, burwood, Mascot and the norwest business park.

The economic slowdown is being felt foremost by the financial hubs, where demand for office space has decreased significantly as businesses look to cut costs through job cuts. Throughout 2007 and early 2008, Sydney CbD vacancy rates were at record lows. as staffing levels decrease, and latent office space becomes a burden, more businesses are moving towards subletting in an effort to

reduce costs in a market that has a sense of the unknown in regards to length and depth of the predicted recession, and financial instability that ensues.

The potential winners in the upcoming economic downturn will be those businesses that are in a position to take up new space, as incentives increase, supply increases and demand declines. Owner-occupiers will find that values that were once skyrocketing have now gone into decline and have become more attractive. However, the conundrum lies in just how far values will fall. a majority of investors have become net sellers rather than buyers, however those properties that are for sale in the current market, are likely distressed as a result of their inability to provide a good return. There has not been a glut of quality stock enter the market yet as a result of distress or general sale purposes, as potential vendors are not yet ready to meet a market that is expecting deep discounts. The time will soon come though, as reduced income and difficulty in refinancing may lead to an increased market supply.

Moving forward, fringe Sydney CbD suburbs, including Surry Hills, Mascot and north Sydney may benefit as tenants exit the Sydney CbD in search of lower rents, new or newly renovated premises and reduced parking costs, but this is yet to be seen on a large scale. as we move forward and economic conditions become more challenging, it is expected that some Sydney CbD tenants will look to cheaper space.

rental rates in fringe suburbs tapered off towards the end of 2008, and if an exodus from the Sydney CbD does occur, this may stabilise the rental rates for fringe suburbs, preventing a steep decline. With some developers requiring a pre-commitment of approximately 70% before receiving finance, moving forward the fringe market will benefit as supply and demand trend with more congruency.

There are emerging signs that some small businesses in those sectors directly affected by the current economic slowdown e.g. finance and property, are already becoming victims of the economic climate, as there has been a small increase in the number of lease defaults and sale of distressed strata office space throughout Sydney.

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The numbers to date are small, but are likely to increase as a recession looms nearer.

Good bets over the next 12 months will depend on your position in relation to the office market. If you are a cashed up private investor, this could be your year, as more stock comes online as companies consolidate their portfolios and sell off their assets for either liquidity, debt or refinancing purposes. There will be good scope for bargaining, as demand will be limited. for large corporates or trusts with high property stock holdings that are highly geared, it is likely that current or upcoming valuations will see book values reduced.

Office stock that should be avoided includes tired, poor quality stock that has limited rental return. alternatively stock with full tenancies, strong lease covenants including strong review conditions and that is well maintained/refurbished will be attractive, as it will continue to provide good returns and attract good tenants.

The drivers of demand for office space include investment, employment and government spending. Investment and employment have taken a negative spiral over the past five months although government spending has increased as seen by the recent retail stimulus package pre-Christmas, December 2008. Investment has reduced significantly as lending and finance has dried up through a tightening of local lending and retraction of foreign money. unemployment is tipped to increase, moving from historic national lows of 4.4% to potentially 6%, maybe 7%. Time will tell. Currently unemployment in nSW stands at 5.2% while the national rate stands at 4.5% as of December 2008, and both of these rates will most definitely continue to rise. employers in banking, retailing, aviation and manufacturing have indicated there will be large numbers of job losses, with evidence of this seen through bHP billiton announcing in mid January 2008, and plans to cut approximately 3,400 jobs in australia alone. also hard hit are part-time and casual roles.

Overall, as 2009 progresses, it is expected that the office market will experience increasingly tougher conditions as unemployment increase and investment continues to dry up. These conditions will lead to lower demand and increased supply combined with the need for a reduction in rents and increase in incentives. for the purchaser, 2009 will be an exciting year as distressed stock comes online at bargain prices. for the office owner, 2009 will result in reduced rental growth and returns linked with tougher financing conditions and reduced values.

With 2009 newly underway and the holiday season almost behind us, the year is shaping up to be very interesting indeed for those looking to buy, sell, lease or invest.

Wollongong

The year ahead will, in our opinion, be one where the commercial office market gets a reality check. The Illawarra area comprises the LGa’s of Wollongong, Shellharbour and Kiama. It has a highly skilled work force but over 20,000 people commute to Sydney each day for work, placing pressure to retain important skills in the

region. accordingly, the Wollongong area appears to be at a unique point in history, where the future viability of the region must be driven by an overall increase in population and attraction of new industry.

Small business is important, with figures pointing to most employers having less than five employees and only 1% employing over 100.

for its population, the Illawarra has few major office complexes. The emergence and construction of the university of Wollongong’s Innovation Centre is probably the most significant in 20 years. Containing contemporary buildings with modern architecture and environmentally compliant technology, it indeed is the future of the office building in the region. However, without a population base to fill these buildings, future development is going to be restricted. These are where employment opportunities must be created and move the city away from its reliance on boom and bust industries such as the steelworks and the port, which rely heavily on international markets to maintain a fully employed workforce.

Most office buildings in the city centre are in the order of four to six stories maximum, and generally scattered around the fringe of the Crown Street mall area. Larger floor plate lettings are usually limited to federal or State government tenants, with commercial tenancies rarely larger than 300m². There is a large supply of older C and D grade space above retail shops both in the mall and the fringe CbD areas. In addition, many smaller companies have occupied older residential dwellings with appropriate zonings. These range from some poor older examples which require substantial work, to recently refurbished dwellings with ample on-site parking in the fringe minor industrial areas in auburn and Gladstone streets.

rental rates are struggling already to maintain their 2006/2007 levels, with space above shops in the central area at between $150/m2 to $200/m² and the more modern buildings at $250/m2 to over $300/m², but the pressure is on which will see landlords accepting minimal market reviews and long lease up periods if they don’t meet the market, which is weakening as we speak.

new development is demand-driven and only likely to occur with substantial pre-commitments. again, where are the jobs?

The nSW and federal governments should look to bolster these struggling major regional economies, such as the

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Illawarra, with support in the way of relocation of parts of departments to areas where the local workforce is eager, well-trained and ready to work. at present, many have to travel long hours to the larger employment bases such as Sydney and Canberra, or indeed relocate there. In nSW, the problems with road and rail infrastructure in Sydney are more than evident and it is logical to take some pressure off by re-locating some parts of the workforce.

It is not a case of build it and they will come either. Developers (and their banks) would be fools to erect an office building on spec in the Illawarra at present. unless there is a strong local employment base backed by public policy, it will take a long time to kick start these type of economies.

We can already see blue collar unemployment rising in the region, and it is likely that more will be hit in the following 12 to 18 months based on the overseas softening on resources and the recent reports of Japan’s falling exports. This has a kick-on effect and many other industries and businesses will fail.

now is the time to start restructuring our industry and public sector base of employment, but without government assistance that other sectors seem to be receiving, the Illawarra will be hit hard and come out of it worse than we entered. One of the casualties will be the office investment sector.

Central, north & West nSW

DubbO, baTHurST anD OranGe

The commercial office and retail market will experience difficult trading conditions in 2009 as companies look to minimise cost by not investing in additional expansion plans or reducing staff numbers to compensate for reducing revenue streams. It would appear vacancies rates are on the rise for most non-residential sectors and agents are reporting limited enquiry for both sales

and leasing. Property values are coming under some downward pressure whilst rental levels appear to be holding at this stage, although tenants are now in a much stronger negotiation position.

Public infrastructure investment and development will assist in stimulating growth so additional announcements for this type of capital expenditure will assist over the coming 12 months.

The townships of Cobar, Parkes and nyngan have seen significant reductions in employment numbers in the mining industry and this will have a negative impact on the commercial and industrial property markets in these townships.

as values come under downward pressure in 2009, there will be opportunities to acquire good quality commercial property at reasonable purchase prices that will generate good returns over the longer term. Short term investments in the commercial regional property market would be considered risky in the present environment.

...now is the time to start restructuring our industry and public sector base of employment....

Southern nSW & northern Vic

aLbury/WODOnGa

The year ahead for the office market is likely to hinge upon the current global financial situation and the ability of businesses to acquire credit the outlook of both appears gloomy. any secondary commercial locales will most likely be hit the hardest and unless you have a long-term tenant with a few years on the lease to go, such locales would be best avoided. If investing or selling in the office market, expect especially in the aforementioned secondary locales, either an increased selling period, a high vacancy/let up period and/or an elevated yield to reflect the associated risk.

WaGGa WaGGa

There have been few sales of office buildings in the past 12 months and due to this lack of sales activity it is hard to determine where yields currently sit in the office sector, though we believe that they have definitely softened and may soften more in the coming 12 months. Once again, with the failure of the crops in the agricultural sector and the on going drought, the cash flow of the region will not pick up, which will flow on to affect business in the region. until the economic situation improves, we believe that activity in the market will remain quiet.

LeeTOn

Investment in commercial office space in 2009 throughout the MIa region will depend on our agricultural sector

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and the availability of finance. If the drought continues to erode our economy and business confidence, vacancy levels will keep rising, rentals will fall and yields will need to get a lot higher to generate investment. yields will only get higher when vendors get real about their price expectations. There are some good properties on the market at the present time, but they are not good investments in the current environment as their asking prices are reflecting expectations of a market of better times.

Demand for modern, well located commercial office space with secure long-term tenants is still there, however investors are seeking stronger yields to compensate for low growth forecasts.

Vacant, older style office space is receiving a very cool reception in the marketplace. Owner occupiers have put the prospective purchase of their own premises in the too hard basket in view of the economic outlook, a fear of tying up capital and tight credit criteria.

Property managers will have a real challenge on their hands to sustain occupancy and rental levels. Tenants are showing a reluctance to commit to long term leases due to a lack of business confidence and knowledge that for the first time in a long time there is choice and bargaining power in their favour.

Canberra

The office market within the aCT found limited transactions within 2008 with only a hand full of transactions (seven) within the marketplace, showing the lack of confidence and strength within institutional purchasers.

In previous years, many of the large institutional and super fund purchasers found it difficult to purchase any investment grade stock as historically low interest rates and solid economic growth drove demand for large commercial office buildings and compressed yields below marginal lending rates.

The turning of the economy, the uS sub prime mortgage crisis and the global credit crisis have all added to the decrease in market activity and this is predicted to remain for 2009 as institutions and superannuation funds reassess debt and pursue funding options. Currently, the federal government are considering a ‘bail out’ of the industry

to assist in funding part of the outstanding debt with predictions that overseas finance will not be available in the same manner during the previous five years.

Overall, the Canberra office market still remains relatively attractive with a low vacancy rate of 6.1% (July 2008 PCa) which jumped from 2.2% in January 2008. This increase can be attributed to a pocket of vacancy in the airport office market being constructed on spec and remaining untenanted some 100,000m².

2009 will be a year of consolidation with any sale within the market place predicted to be under duress or influence from the financial sector rather than the property sector, where the market remains stable generally with government departments remaining in situ and showing no signs of growth in 2009 as the second round of the ‘razor gang’ attempt to reign in government costs.

a holding and disposal strategy is predicted for the year with any recovery in the marketplace being viewed as slow. yields for office properties are expected to be in the 8% to 9% range, increasing from the peak of the market in 2007 of 6% to 7%, to reflect the risk of the current market.

...the outlook for the CbD office market looks to be a slow but steady rise in vacancy rates with yields to soften....

Melbourne

In recent years, the Melbourne CbD office market has been one of the best performing in the country. Despite the ongoing global credit crisis and share price collapse during late 2008, the Victorian economy had been forecast to grow slightly in the 08/09 financial year with the help of state government and private sector spending on major infrastructure, such as the completion of the Deer Park bypass and the current Port Phillip bay channel deepening programme, which is designed to cope with recent strong population growth. In regards to the CbD office market, access economics forecasts white collar employment growth to ease over the next six months to approximately 2% p.a. and could continue to weaken until March 2011. In the recent past, vacancy rates for the CbD office markets have remained tight with positive net absorption driving the vacancy rate to a new record low in mid-2008.

Over recent years, the Docklands has emerged as a very desirable office location. a number of major tenants such as anZ, ericsson, aXa and Lend Lease have chosen to re-locate to the Docklands, where infrastructure continues to grow. It is expected that around 30% of all development within the Docklands will be that of an office nature by its completion, due to be 2020. This increased development within the Docklands, along with continued redevelopment along Spencer Street, has also led to the western end of the CbD becoming more desirable among commercial tenants.

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Many CbD office buildings were offered for sale on or off market in 2008 as entities aim to reduce debt levels, however, softer market conditions have caused a small number of transactions to take place. reports indicate only nine significant CbD office sales were completed in 2008, compared to 29 the year previous. Sales transactions are expected to stay low and yields to soften in the short term. The medium-term outlook of the market will be dependent on the global economic and financial factors.

Currently, the Melbourne CbD office market contains about 3.5Mm2 of let-table space of which approximately two-thirds is of premium and a grade quality. according to the PCa, an additional 444,689m² of office space is due for completion by December 2010, with approximately 65% of this space been pre-committed. Mooted projects are not likely to commence due to increased funding costs and risk the associated with a slowing economy, which will lead to a weakening of office vacancy rates likely in 2009. Due to an additional 170,000m² of office space expected to become available and a slowing absorption rate for the new space, vacancy levels are predicted to climb to 7.5% by mid-2010.

The outlook for the CbD office market looks to be a slow but steady rise in vacancy rates with yields to soften and sales volumes to stay low as the developing prospect of a recession in australia takes hold.

brisbane

It is predicted that 2009 may be quite a challenging year for economic performance around the globe, and this fact reflects directly upon the office market. Prospects for economic recovery later in 2009 and throughout 2010 will depend largely on the continued progress in the flow of credit and the success of the fiscal and economic stimulus packages created by central banks and governments around the world. a cornerstone of this recovery will be a restoration of business and consumer confidence.

a lack of confidence has had an obvious effect on the office market over the last few months and this is expected to continue for some time. The economic slowdown and subsequent drop in business sentiment has curbed demand for office space, hitting financial hubs the hardest. Whilst in previous years, the brisbane office market has seen record low vacancy rates, there has been a drop in net absorption, with brisbane showing only 1,200m2 of net absorption for the last quarter of 2008. Historically, the demand for office space has been underpinned by strong population growth, record high job creation, above national average private investment and a number of infrastructure projects. Whilst some of these factors are still being enjoyed by the greater locale, there has been a fall in job creation and employment growth as a whole. In years past, the office leasing market has responded to surging demand and shortage in supply with rises in rent levels and diminishing incentives. This era is coming to a close with tenants showing resistance to rising rents, particularly when an easing market is in view, together with new supply, and businesses remain apprehensive about the strength of the economy and financial markets.

brisbane commercial property’s affair with the mining, energy and resources sector is also expected to come into play over the coming months. Whilst six months ago, brisbane’s connection to these sectors would have left it less exposed to turmoil in the finance and insurance sector, It is obvious that the strength previously felt by the mining and resources sector has been significantly diminished, leaving the commercial property market further exposed.

brisbane’s office market will be vulnerable in the short term due to its large supply pipeline and it is likely to endure a few challenges over the next year. as the effects of the credit crisis filter through to Queensland’s real economy, it is expected that businesses will consolidate their positions, thereby diminishing demand. There will also be a substantial amount of backfill space that will be offered to the market as a result of tenant moves to the new supply. Vacancy will therefore rise, rents will fall and yields are expected to continue to soften until global liquidity is restored.

even so, the massive gains experienced by property owners in recent years have provided a comfortable buffer for long term property investors in brisbane’s office market. This will enable owners to accept a period of diminished returns in the interim until the market returns to its long-term growth path.

Gold Coast & Tweed Coast

GOLD COaST

There has been little activity in the Gold Coast office market in the past few months so it is difficult to accurately report on its current condition.

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In general terms, the market has been subdued across the board and the current situation is not confined to the office sector alone.

It is now clear that the recent increases in both official and unofficial interest rates have achieved the goal set by the reserve bank – namely dampening consumer demand. unfortunately, consumer demand and sentiment appears to have been hit so hard that the reserve bank cut official interest rates to 6% in early October, by 0.75% in november and by a further 1% in December. The official cash rate now stands at 4.25%. Commentators also believe that there are further cuts to come.

economists differ in their forecasts for the australian economy. Some believe that growth should remain positive whilst others think that a recession is unavoidable. Christmas for retailers was generally better than predicted but bad news, both locally and internationally, is everywhere.

an interesting result of the current situation is the number of phone calls Herron Todd White are taking concerning lease rentals.

The majority of these calls are from tenants seeking advice on current rental levels as they, typically, have exercised an option to renew their lease. Obviously, rent is an important business expense and our advice is sought as to the amount that should be paid.

Herron Todd White are also receiving appointments to act as determining valuers in rental disputes.

There would also appear to be alot of difficulty for some investors and developers in obtaining finance due to problems in the banking sector. This has caused problems in the land market as developers are unable to source finance with the problem being exacerbated by the slowdown in the leasing and investment market.

We know of two office development sites at Varsity Lakes that were put to the market in late 2008, with the selling agent advising that limited interest was received.

It could be a good time for owner-occupiers to take advantage of the current market conditions and secure their own premises.

Second hand strata title office units in locations such as bundall, present good buying opportunities even with traffic and parking problems.

The latest office survey is due to be published by the Property Council of australia at the end of this month. It is likely to provide some interesting reading. Our view is that rental growth has, and will continue, to moderate. It is reasonable to assume that vacancy rates will increase and that letting up allowances in terms of time and incentives will also increase.

all of this means that there is no reason to rush out and buy commercial property. It is apparent that some commentators believe that the market will soften further and that there will be some distressed sellers out there. everybody seems to be saying that 2009 is going to be pretty tough. They can’t all be wrong.

Sunshine Coast

Looking into 2009, the office market on the Sunshine Coast appears as though it will face some definite changes.

at this time last year the difference in yield levels between good quality office stock and secondary quality stock had become limited, with the margin in rental levels also closing. However, with an increased supply of good quality office stock into the market during 2008, this gap is again expected to increase.

We are again likely to see a difference in yield levels around the 100 basis points, whereas this closed during the market peak to less than 25 basis points. Value levels are likely to be hardest hit in secondary stock, especially with new stock coming out in Kawana and stock planned in Maroochydore.

We have noted the increase in incentives over the past three months of 2008 for tenants to accept current face rents, though in the main these are relatively limited and rental levels are typically holding steady.

Vacancy levels have increased slightly in certain locations such as Kawana, though this stock is likely to be taken up during the year with tenants likely to move from secondary locations.

all this will allow some opportunities in secondary office locations for potential owner-occupiers either looking to expand or just purchase their own accommodation. These areas are likely to include older accommodation around Sugar road and aerodrome road in Maroochydore and along brisbane road in Mooloolaba.

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Southern Queensland

TOOWOOMba

The commercial office market in Toowoomba starts 2009 in a transitional period, with many stakeholders and developers adopting a cautious position. During the period of 2006 to early 2008, the office market in Toowoomba saw good growth through rising rents and firming yields. recently, however, the market has slowed with rents stabilising and an increase in vacancy levels.

...the decrease in interest rates should also solidify the owner-occupied market...

In 2009, we expect the longer lease-up periods to continue with the possible re-introduction of lease incentives into the market. as a result, a slight reduction in real rental values is expected. The increase in vacancy will mean a greater choice for prospective tenants, which could create difficulties for properties in secondary locations in need of refurbishment or lacking in car parking.

2008 saw a slight softening of yields in the Toowoomba commercial market. However, with the recent decrease in interest rates and the likelihood of more in early 2009, we would expect yields to firm again as the cost of money decreases.

The decrease in interest rates should also solidify the owner-occupied market which has been traditionally strong in Toowoomba. This should also assist in the maintenance of commercial property values.

Developers should also be encouraged by the drop in interest rates but they are likely to be wary of the increased vacancy rates and will likely not proceed with new developments without significant pre-commitment from tenants.

Central Queensland

rOCKHaMPTOn

How quickly the wheel turns. We left 2008 with sentiment that the coal industry in the hinterland would provide a shield to negative global sentiment.

Our reality check has seen pits mothballed or closed, projects reviewed and job losses approaching 1,600 spreading from Moura in the south to Moranbah and Coppabella in the north. Companies involved are anglo,

bHP, bMa, Xstrata, rIO Tinto, Macarthur Coal, as well as contractors.

Gladstone waits anxiously on rIO Tinto announcements in the first quarter of 2009 as this company is the major employer in the city.

While the impact is yet to transfer directly to the real estate market, the climate has dented confidence and created a hesitance amongst buyers, developers and financiers, together with a reluctance by vendors to seriously consider sale unless under financial pressure.

The office market in rockhampton is, however, a compact local market not directly reliant on the coal industry and is supported by a broad range of industries such as government, education and local professional traders. The market has no major expansion proposals on the horizon and has a stable occupancy and rental platform. It won’t set any records this year but it won’t hold too many perils either.

HerVey bay

The commercial sector in Hervey bay is still experiencing demand for suitable stock. Supply is beginning to increase which has seen rental rates remain relatively stable for the past six months.

rental rates appear to have peaked along boat Harbour Drive and due to the economic downturn and lack of consumer spending, some tenants are now under pressure to meet rental payments.

There currently doesn’t appear to be much variation in rates/m2 of owner occupied or investment stock. Investors currently appear to be willing to offer good rental incentives to occupy premises, as long as the lease terms are good. yields appear to have remained relatively stable, however there is little activity to form a solid basis. Developers are also active with numerous proposals and approvals within and surrounding the CbD area and considerable activity along Torquay road, including Officeworks, which is currently under construction. If, however, all the proposed projects proceed over the next two to three years, then we may start to see an oversupply of office space relative to demand.

for the year ahead, a steady increase in supply with rental rates remaining relatively steady at current levels. Lowering interest rates are likely to see investment property as an attractive alternative to the falling stock market as long as tenants are in place and lease terms are good.

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MaCKay

2008 ushered out a sense that Mackay would be largely insulated from the global economic climate, but a raft of job losses in the coal industry in the first three weeks of 2009 has put the city on notice that we too may be in for some tough economic times. There seems to be a lot of confusing and contradicting signals coming from the coal industry. On one hand, job losses in the coal fields over the past three weeks have been significant but there is still under employment in mining support/heavy engineering businesses in Mackay, which appear to have committed capital fabrication and maintenance works to see through most of the year.

Where does this leave the commercial office market for 2009? Well thankfully, there is still an acute shortage of commercial office space in Mackay. 2008 saw rental rates increase significantly, but the nervousness infiltrating the general market recently has resulted in an easing in demand or a rethinking about requirements for office space. If rental rates plateau, which appears to be the most likely scenario, further development of additional space will not be viable (unless construction costs fall significantly) and we therefore anticipate the rental market holding at about current levels over this year.

yields, however, may ease out further in the short term in response to the expanding supply of investment property throughout australia, but further interest rate reductions should make commercial property investment attractive against falling cash rates and a vulnerable stock market in the medium term.

recent commercial office sales have indicated yields in the mid-8% range.

WHITSunDay

Office vacancy rates are expected to soar in the early part of 2009 as 16 new strata offices are due to be settled. Of the current supply, our commercial vacancy rate is tracking around the 25% and although these new premises have rental guarantees for 12 months, there is all but no demand by tenants.

a recent sale of a strata titled suite reflected $2,400/m², whereby the last sale some 12 months ago was showing $4,000/m². Whilst the $2,400 is considered to be out of line, indications are that this market will continue to soften.

Cairns

The Cairns office market underwent considerable expansion through 2007/2008 and the fruits of this expansion are being seen with the completion, or almost completion, of several new office buildings. In addition, a start has been made on the new state government office tower. The new developments have alleviated the undersupply situation that previously existed.

The strong pressures on office rents, which saw rents for quality tenancies typically rise from $275/wk in 2007 to $350/wk in 2008, has also been relieved and while these rents have been sustained, our view is that rents have stabilised in the short term. no further upward movement in rent is anticipated this year.

Once completed, the new developments will sedate the present spate of office demand and we are not aware of any major new office developments planned for the near future. With local economic growth conditions softening, we expect the office market to remain relatively subdued this year, and not evidence any dramatic movement.

...the year ahead is expected to be subdued as a result of the economic downturn and low business confidence...

Townsville

Townsville’s office market is set to slow this year after a strong 2007/2008.

There are several large-scale office developments in the pipeline, however, these are not expected to come onto the market over the coming year. There have been two new CbD office developments released to the market during the latter half of 2008. These developments have provided an additional 5,600m2 of a grade office space.

at the commencement of 2008, the vacancy rate for a grade office space in the CbD was around 5%. The vacancy rate at the end of 2008 is estimated at around 15%. This increase is reflective of the new stock coming onto the market, which is not being taken up as strongly as it would have been when business confidence was high 12 to 18 months ago. business confidence as measured by Pricewaterhouse Coopers in Townsville, is currently at its lowest point ever.

Sales of commercial offices are declining, with fewer properties being offered to the market as the property cycle starts declining.

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In summary, the year ahead is expected to be subdued as a result of the economic downturn and low business confidence. These factors have a direct correlation with the mining and government agencies, who are some of the major drivers in the Townsville CbD office market.

Darwin

Darwin’s office market has started off with a bang in 2009 with the sale of nT House. at 22 Mitchell Street, it provides prime accommodation in arguably Darwin’s prime location for office purposes – the corner of Mitchell and bennett Streets. Contracts have been exchanged, but settlement won’t be until May 2009. With many interstate institutional investors frozen, a local investor has stepped in.

not all investors from down south are frozen out though. Last December, one such investor bought Cavenagh House, a largely refurbished, older office building at 38 Cavenagh Street (on the corner of Knuckey Street). The new owners find themselves in the middle of the part of Darwin where construction is most intense. Just behind them, the 29 level Pandanas building was completed last year. beside that, the same developer has completed an approximately 4,000m2 office building and almost finished an 8,000m2 one beside it. The former is now the new Conoco Phillips regional HQ, and the latter is close to being fully leased before completion. behind that, evolution, Darwin’s tallest building at 33 levels, has now reached its full height, and smaller apartment buildings are under construction nearby. On the other side of Cavenagh Street from Cavenagh House, a 31 storey tower is near certain to rise this year.

Many other development proposals to meet potential demand are being attacked from two sides, combining to delay some, and destroy others. One is the international financial crisis, the other the recently imposed interim development controls in the form of both mandatory height and proposed volumetric restrictions.

In the former case, while economic projections for the Territory have taken a significant downturn (mining being our major industry), economists’ protocols require that they ignore uncertain projects. However, investors are not so obliged. any investors who, like economists, ignore likely LnG projects in the medium-term with the local equivalent (on a per capita impact comparison basis) of about a $600bn investment in Melbourne or $700bn investment in Sydney may be considered ... well, some may say that they are not doing their work very well.

In the latter case, there is an interim development control order which could spread development out at best, or out the window at worst. It is on the basis that Darwin’s CbD should be developed to look like a big wedding cake, and new developments within it like smaller ones. Hurrah, but as far as we are aware several impacts of this potentially charming aesthetic have not been assessed for input into the decision-making protocols. for example, what estimates are there in terms of the losses in values

to affected land, and the losses to the community in terms of development opportunities? There are market indications that up to 50% of value may be lost in some cases. Is that fair?

With our major industry’s troubles, further office demand from that sector is unlikely, and there may be less demand from government too as a result of the reductions in revenue resulting from mining’s retreat. even so, with other demand out there, Darwin’s office market can still look forward to 2009 with greater confidence than is reasonable to expect for most other places in australia, one reason being that we have very little more office accommodation coming on stream short-term. However, with the grim times now looming, much needs to be done now to meet the challenges LnG projects are likely to bring, including to the office sector. forget the wedding cakes for now; as far as prosperity is concerned, if Darwin is not strongly focussed upon making every post a winner, it could soon be sounding its last one.

Perth

Since our last commentary on the Perth office market of October last year, global economies have contracted significantly with the economies of europe, the uS and Japan all in a recession. business and investor sentiment is also at record lows. The effect of this global economic decline on Western australia has been significant. Declining commodity prices have caused a marked contraction in mining activity and approximately 5,000 workers in the industry have had their employment terminated in the last three months. both the largest mining companies, rIO Tinto and bHP, have announced either closures or contractions of various mining operations, which has meant a substantial number of workers have lost their jobs. In Western australia, the mining industry is a major economic driver, whose activities support many other industries, such as the service and retail sectors. This, of course, also impacted on other businesses supporting the mining industry, such

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as plant and equipment providers and other technical service providers, such as geophysicists, surveyors, etc. Many of these accounted for demand of commercial office space in the Perth office market, especially in the west Perth area. Many businesses are locked into leases signed within the last year or so, and faced with falling revenues and high rental costs, have caused a surge in sub-letting activity.

Current data on Perth’s office vacancies by the PCa is not yet available, however, there is little doubt that the vacancy rates have climbed over recent months. In our last commentary it was reported that some major real estate firms were tipping rental rates climbing to $1,000/m2. Office rates never reached this height (peaking between $700/m2 to $800/m2) due to the state of global economics, and it is clear that demand for office accommodation has passed its peak and entered a downward phase. Currently there is an abundance of office space advertised for rent in the metropolitan area, and with an additional 300,000m2 under construction, there is little doubt that vacancies will continue to rise. Most forecasters anticipate these increases to reach normal vacancy rates, ranging between 10% to 12%. Sales activity has diminished with really only private and syndicate investors remaining active in the market.

It is, however, important to bear in mind that these declining conditions are commencing from record high levels of property and rental values, with vacancies at almost zero. The additional office space under construction are not instantly adding to stock, but rather coming on in stages over the next two to three years. Many planned projects have already been suspended due to high construction costs, general economic conditions, weak investor sentiment and increased scrutiny investors face acquiring credit. The new stock will lift the standards of office space accommodation and will provide opportunities for the older stocks to refurbish.

The current global instabilities make it very difficult to forecast how far the Perth office market will contract, although it is clear that these conditions will continue to impact most heavily on sale turnovers. Landgate records a total of 72 office sales over the last six months for the entire Perth area, and only nine of those sales being over $5M. It is anticipated that selling rates of office properties to remain flat, as holders of these investments are currently enjoying relatively robust returns and are obviously aware of current market conditions. Of the office space under construction, most is already pre-

committed at high rates. However, this is unlikely to provide impetus for further construction activity for the economics previously outlined. as new projects finalise, the additional availability of space in the Perth CbD and inner city suburbs such as West Perth, Subiaco, Claremont and nedlands, will most certainly exert most of the downward pressures in the outer lying suburban office markets, as businesses view the potential of moving to better locations. Incentives offered to prospective tenants have been non-existent over the last 12 to 24 months, however as vacancy rates normalise, it is likely that we will see a return of incentives in the market place to maintain face rents.

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Office Phone Email

abu Dhabi, uae +971 02 4173581 [email protected], Sa 08 8231 6818 [email protected]/Wodonga, nSW/VIC 02 6041 1333 [email protected] bairnsdale, VIC 03 5152 6909 [email protected], nSW 02 6334 4650 [email protected] brisbane Commercial, QLD 07 3002 0900 [email protected] brisbane residential Offices, QLD 07 3353 7500 [email protected] brisbane – rural Queensland, QLD 0417 753 446 [email protected], Wa 08 9791 6204 [email protected]/Wide bay, QLD 07 4154 3355 [email protected] busselton, Wa 08 9754 2982 [email protected], QLD 07 4057 0200 [email protected] Canberra, aCT 02 6273 9888 [email protected] Darwin, nT 08 8941 4833 [email protected] Deniliquin, nSW 03 5881 4947 [email protected], nSW 02 6884 2999 [email protected] echuca, nSW 03 5480 2601 [email protected], QLD 07 4980 7738 [email protected] Gladstone, QLD 07 4972 3833 [email protected] Gold Coast, QLD 07 5584 1600 [email protected] Goondiwindi, QLD 07 4671 5300 [email protected] Gosford, nSW 1300 489 825 [email protected] Griffith, nSW 02 6964 4222 [email protected] bay, QLD 07 4124 0047 [email protected], TaS 03 6244 6795 [email protected], VIC 03 5382 6541 [email protected], QLD 07 3282 9522 [email protected] Launceston, TaS 03 6334 4997 [email protected], nSW 02 6953 8007 [email protected], QLD 07 4957 7348 [email protected] Melbourne, VIC 03 9642 2000 [email protected] Mildura, VIC 03 5021 0455 [email protected], nSW 02 6372 7733 [email protected] newcastle, nSW 02 4929 3800 [email protected], nSW 02 8882 7100 [email protected], Wa 08 9388 9288 [email protected] Port Macquarie, nSW 1300 489 825 [email protected], QLD 07 4927 4655 [email protected] roma, QLD 07 4622 6200 [email protected] Sale, VIC 03 5143 1880 [email protected] Coast (Mooloolaba), QLD 07 5444 7277 [email protected] Swan Hill, VIC 03 5032 1620 [email protected], nSW 02 9221 8911 [email protected] Tamworth, nSW 02 6766 9898 [email protected] Toowoomba, QLD 07 4639 7600 [email protected] Townsville, QLD 07 4724 2000 [email protected] Tralagon, VIC 03 5176 4300 [email protected] Heads, nSW 07 5523 2211 [email protected] Wagga Wagga, nSW 02 6921 9303 [email protected], QLD 07 4948 2157 [email protected], nSW 02 4221 0205 [email protected], nSW 02 6382 5921 [email protected]

Visit us at www.htw.com.au for past issues of this publication

Contacts

The information contained in this report is provided in good faith and has been derived from sources believed to be reliable and accurate. However, the report is not intended to be comprehensive or render advice and neither Herron Todd White nor any persons involved in the preparation of this report, accepts any form of liability for its contents.

This report is Copyright, and cannot be reproduced without written permission of Herron Todd White.© Herron Todd White Copyright 2009

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nOrTHern nSW

as is usually the case, little sales activity has occurred over the Christmas/new year holiday season. The reported sale late last year of adjoining barraba district properties burindi and Lugwardine to Macquarie Pastoral for in excess of $20M supports the view that values at the top end of the market, in good rainfall zones, are so far holding up reasonably well. This follows the sale of the nearby Plumbthorpe aggregation 12 months earlier, also for in excess of $20M.

With so much (and with increasing frequency and severity) bad economic news now engulfing the mindset of the broader economy, and by default, the rural property market, together with reduced sales activity, it is very difficult to predict the direction of rural property values over the next 12 months. ultimate sale prices will largely depend on the willingness of the vendor to sell and their financial situation. buyers can undoubtedly bargain harder and become more discerning in their property selection as the level of listings, across the full spectrum of property types, increases or does not decline.

as we suggested late last year, we expect to see a more pronounced two-tiered rural property market emerging in 2009, where larger good quality property experiencing good seasonal conditions will hold value, whilst inferior property with more anxious vendors will come under increasing downward price pressure, unless the number of potential buyers increases significantly.

Concerns about the volatility of rural commodity prices as a result of the global economic downturn and financial crisis may result in the delay of investor decisions for those who take a relatively short-term view of investing, whilst the longer-term investors (corporate, institutions etc.) appear to be more optimistic about the longer-term prospects for rural commodities.

Contact:

robin Gardiner Ph: (02) 6766 9898

In this month’s issue of the rural review, we look to the year ahead, which is certain to be an interesting one for farmers and graziers alike given the many and varied local and global market influences likely to affect the rural economy. Whether it be environmental or economic, 2009 is likely to have it all with the continuing global financial crisis, the looming global food crisis, droughts, floods, water rights, world commodity prices, the threat of cheap imports and carbon trading just some of the issues the rural sector will be influenced by.

although farmers aren’t immune to the global financial crisis, the global food crisis is providing some underlying demand and reason for optimism for the year ahead. an abare report in December maintained its forecast’s for farm export earnings for the year, while at the same time downgrading its forecast for minerals and export earnings. Many expert commentators believe this is a sign of the relative resilience of demand for agricultural produce. Current benefits for the australian agricultural sector including low interest rates, the low exchange rate which is buoying exports, and falling world fertiliser and fuel prices. So in summary, there is reason for optimism for the year ahead.

Climate again appears to be a tale in two. With northern australia receiving good summer rainfall, and in the case of north West Queensland, drought breaking rain, while Southern australia continues to be gripped by a long term drought, severe enough in some districts to have experts questioning the very survival of some industries. Market evidence is now suggesting a more pronounced two tiered rural property market emerging in 2009, where larger good quality property experiencing good seasonal conditions will hold value whilst inferior property with more anxious vendors will come under increasing downward price pressure, unless the number of potential buyers increases significantly.

Danny Glasson Ph: (07) 4057 0200

1 february 2009

rural – Market Directions

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SOuTHern nSW

aLbury

a continuing dry summer to kick start 2009 has put pressure on livestock operations within Southern nSW and northern Victoria. feed shortages have been evident within the district as are poor yielding crops from the 2008 harvest. Locusts have been a problem, with the second hatching now under way.

There are no rural sales to report as purchasers are cautiously waiting to see how the 2009 season pans out. If the dry continues, we anticipate more farms to be offered on the market in coming months, and the big question is whether there are any potential buyers out there?

Water storages within the area are: Lake Hume (20.17%) and Dartmouth (22.52%), as at 21st January 2009.

WaGGa WaGGa

In the november 2008 edition of the MIr we wrote about ‘bulgary Station’ being placed on the market. This station has since sold with the new owners believed to be the australian agribusiness Group. The selling price estimated to be about $25M. This prestige property is located near Galore west of Wagga Wagga and consists of 4,401Ha and has 25km frontage to the Murrumbidgee river, 3,910.5MGL surface water and 2,000MGL ground water, 1,000Ha irrigated, and five homesteads. This sale shows that while we are still in an extended ongoing drought, properties with good water will sell even in the current economic climate.

2009 has started as a dry year with little rain falling over the area in the first three weeks of the new year. after another bad year in 2008, the ever optimistic farmers are hopeful for a good 2009 crop. There has been some sales of rural properties over the past few months and the affect of another year of failed crops has not been seen by the market as yet with expectations that the number of properties coming up for sale will increase in 2009. This may have a downward affect on property values.

LeeTOn

There is subdued interest and even less activity across all rural sectors in the region. On the back of another poor winter crop season and low water allocations for the region rice farmers, there is little economic activity to report this month.

Surprisingly, there remains steady demand for viticulture properties with young plantings and modern drip irrigation systems and adequate water entitlements to service the plantings. Sale prices have settled back to a more reasonable level compared to those from early 2008.

In contrast, demand for citrus properties continues to slip, with plantings in good condition being next to worthless and properties transacting for little more than land value.

There are a number of dry land properties getting prepared for listing on the market with vendors having finally had enough of the drought and pulling the pin, either voluntarily or with a slight push from anxious lenders. This will put further strain on dry land rural values which, to date, have held their own across the region.

There is little guts left in the rural economy across the region and the next six months will be make or break, not just for the farming community, but for the people, businesses and towns who depend on agriculture for their livelihood. all are struggling immensely with the effects of one of the most severe droughts in modern times.

Contact:

David Shuter Ph: (02) 6041 1333

SOuTHern QLD

The year has started off with a large degree of uncertainty in the broader economy. In the rural sector, Queensland and parts of nSW have received rain, in some instances exceptional amounts. Southern QLD and northern nSW are on track for another good grain growing and pasture production season.

Commodity prices are relatively stable with most grains below last year’s highs, but highly variable with quality discounts for damage, protein and screenings. Cattle prices are relatively stable. Overall, even with the softening of commodity prices in uS Dollar terms, the discounting of the australian Dollar has help to maintain domestic prices.

It is anticipated that interest rates will fall again in february when the rba meet. This will place agriculture in a relatively strong position with low interest rates and fair to good prices and good seasonal outlooks in many regions.

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We do not anticipate values rising significantly, if at all, in the short term, given the poor cash flow opportunities in recent years there are some catch-up’s to be made, and the cautious nature of many, given the economic conditions around the globe, appears to have deteriorated even further since Christmas.

The government commenced its water buy back last year and we are yet to see the results of this. This year will pose many challenges with the global economy, water buy backs and the evolution of the emissions trading scheme. On the later, we hope to bring to you updates as they may affect rural property values and the implications that may have regarding possible policy trends.

Contact:

Shaun Hendy Ph: (07) 4671 5300,

Doug Knight Ph: (07) 4339 2119

far nOrTH QLD

far north Queensland has experienced a very wet January and one of the best wet seasons for many years, particularly across the Gulf and north Western Queensland where over 500mm has fallen since December 26. It has been drought breaking rains, and for some, ended one of the worst droughts for many years. although this is good news in the long term, right now it means thousands of stranded cattle, which were weakened from the long dry, are now left starving on small islands in a sea of water left by Cyclone Charlotte and subsequent monsoonal weather.

...this year will pose many challenges with the global economy, water buy backs and the evolution of emissions trading scheme....

The wet season is a traditionally quiet time for the far northern grazing industry; however this wet season appears to be a lot quieter than most with agents having few properties to market and even fewer selling. The global financial crisis continues to be a major concern for buyers and many continue with a wait and see approach. The only active purchaser over the past six months has been the Queensland Government’s environmental Protection agency which purchased Mary Valley Station and is in the process of finalising the purchase of battle Camp Station and Crosby Creek Station on the Peninsula.

Coastal agricultural markets have started the year slowly with continuing low world sugar prices dampening the demand for sugar cane farms and the ongoing threat of banana imports from the Philippines resulting in very few banana farm sales.

This is also a quite time of the year for the forestry industry after a very active 2008 saw many hundreds of hectares of agricultural land being converted to teak or eucalypt production. The continued global financial crisis may have a negative affect on this industry as the supply of cashed up investors is likely to dry up.

Contact:

Danny Glasson Ph: (07) 4057 0200

nOrTHern QLD

and the rain tumbles down in January! as sure as it has rained in January across north Queensland, confidence in the north Queensland cattle industry is healthy.

Competition looks set to be between restockers, live export buyers and feedlotters for a good start to 2009.

for areas in the north west of the state, there will be some much needed infrastructure repair required when drier conditions appear. While roads, fences and dams are repaired, grass response will be eagerly celebrated. With grass in hand, heifers and cows will be in demand.

Livecorp Statistics for 2008 reveal that 83,698 head were exported from Queensland in 2008. This represented 11.3% of the national export behind northern Territory (47%) and Western australia (34.8%). The Queensland contribution of 11.3% may seem like only a small contribution to the nnational quota, however provides an attractive market option for graziers in north Queensland. Market options and diversity are beneficial business tools for north Queensland as it means that ‘not all the eggs are in the one basket,’ so to speak.

Given the continuance of the low australian dollar, north Queensland graziers will look to benefit from this market option which is expected will provide competition against other selling options towards backgrounding and fattening supply options.

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The low australian dollar does not just benefit live exports, the feedlot sector is benefiting too. The October to December 2008 survey conducted by the australian Lot feeders association (aLfa) and MLa reveals that 73.8% of feedlot turnoff is for export markets.

Given the price competitiveness of our beef commodity (dead or alive), then while the australian dollar is low, then it is reasonable to assume positive prices for cattle throughout 2009. The following graph shows the recent Queensland Cattle Market Index trends against that of the australian dollar (against uS$).

On an annualised basis, 2008 saw a strengthening in the QCMI from 2007. The QCMI in 2008 was below the three stronger years of 2004 to 2006. With competition expected at this stage to be strong for cattle heading into 2009, the question begs to be asked: Will the cattle market of 2009 equal previous strengths or outperform the peak of 2005?

Contact:

roger Hill Ph: (07) 4724 2000

nOrTHern TerrITOry

January is normally expected to be wet in the top end, and this year has not disappointed with heavy rains experienced across all areas. Severe flooding has seen the barkly Highway washed away at ranken river, leaving Queensland cut off from the rest of australia except through nSW. The rain was a great boon to northern Territory pastoralists especially in the barkly Tableland which generally had a very poor wet season in 2007/2008.

The big news in the northern Territory pastoral sector is the announcement of the sale of the Packer family’s 90% interest in Consolidated Pastoral Company (CPC)

for a figure reportedly in excess of $400M. CPC controls 16 properties, mainly across northern australia, with a combined total of more than 300,000 head of cattle under management. These properties include a swathe across the Territory and east Kimberley, including the iconic newcastle Waters on the barkly Tableland through to Carlton Hill, which virtually surrounds Kununurra Western australia. Their aggregation of pastoral properties must rank as one of the Territory’s best, given the scale and quality of their holdings. CPC also has interests in Indonesian feedlots, extending into the live export supply chain.

The prospective purchaser is Terra firma, a London-based private equity firm and this imminent sale confirms that there is still interest from the top end of town for large-scale quality pastoral property. This interest is coming from overseas firms as well as australian interests. However until some of these deals are actually consummated it is difficult to assess whether this represents a further rise in beast area values or a stabilising at current levels.

Demand is more subdued for smaller family type operations but again there is a relative lack of firm sales evidence. Generally speaking, we do not believe that beast area values in the Territory have retreated yet.

In fact, the generally favourable start to the season, good demand for live export cattle, falling fuel prices and low interest rates may add up to an attractive investment environment for those who are brave enough to face the challenges presented by the northern Territory pastoral industry and the international financial situation.

Contact:

frank Peacocke Ph: (08) 8941 4833

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Comparative Property Market Indicators - January 2009

Comparative Analysis of Capital City Property Markets

To discuss the applicability of the Capital City indicators to individual properties or situations, contact your local Herron Todd White office:

Sydney (02) 9221 8911Melbourne (03) 9642 2000brisbane Commercial (07) 3002 0900brisbane residential (07) 3353 7500adelaide (08) 8231 6818Perth (08) 9388 9288Hobart (03) 6244 6795Darwin (08) 8941 4833Canberra (02) 6273 9888

Comparative Analysis of New South Wales/ACT Property Markets

To discuss the applicability of the nSW/aCT indicators to individual proper-ties or situations, contact your local Herron Todd White office:

albury (02) 6041 1333bathurst (02) 6334 4650Canberra/Queanbeyan (02) 6273 9888Dubbo (02) 6884 2999Gosford 1300 489 825Griffith (02) 6964 4222Leeton (02) 6953 8007Mudgee (02) 6372 7733newcastle/Central Coast (02) 4929 3800norwest (02) 8882 7100Sydney (02) 9221 8911Port Macquarie 1300 489 825Tamworth (02) 6766 9898Tweed Coast (02) 5523 2211Wagga Wagga (02) 6921 9303Wollongong (02) 4221 0205young (02) 6382 5921

The following pages present a generalised overview of the state of property markets in Capital City, new South Wales/aCT, Queensland, Victorian/Tasmanian & South australia/northern Territory/Western australia locations using financing risk-rating scales. They are not a guide to individual property assessments.

for further information contact rick Carr, research Director, Herron Todd White, on (07) 4057 0200, or by email on [email protected]

Comparative Analysis of Victorian/Tasmanian Markets

To discuss the applicability of the Victorian/Tasmanian indicators to individual properties or situations, contact your local Herron Todd White office:

bairnsdale (03) 5152 6909Deniliquin (03) 5881 4947echuca (03) 5480 2601Horsham (03) 5382 6541Melbourne (03) 9642 2000Mildura (03) 5021 0455Sale (03) 5143 1880Swan Hill (03) 5032 1620Traralgon (03) 5176 4300Wodonga (02) 6041 1333Hobart (03) 6244 6795Launceston (03) 6334 4997

Page 39: February 2009 Month In Review

��

The month in review

Ma

rKeT

InD

ICaT

OrS

Comparative Analysis of Queensland Property Markets

To discuss the applicability of the Queensland indicators to individual properties or situations, contact your local Herron Todd White office:

brisbane Commercial (07) 3002 0900brisbane residential (07) 3353 7500bundaberg/Wide bay (07) 4154 3355Cairns (07) 4057 0200emerald (07) 4980 7738Gladstone (07) 4972 3833Gold Coast (07) 5584 1600Hervey bay (07) 4124 0047Ipswich (07) 3282 9522Mackay (07) 4957 7348rockhampton (07) 4927 4655Sunshine Coast (Mooloolaba) (07) 5444 7277Toowoomba (07) 4639 7600Townsville (07) 4724 2000Whitsunday (07) 4948 2157

Comparative Property Market Indicators - January 2009

Herron Todd White acknowledges the assistance of Countrywide Valuers (Bendigo), Ridge Valuers (Geelong), Roger Cussen Property Specialist (Warrnambool) & Valwest Pty Ltd (Geraldton WA) in compiling these pages.

Comparative Analysis of South Australia/Northern Territory/Western Australian Property Markets

To discuss the applicability of the South australian/northern Territory and Western australian indicators to individual properties or situations, contact your local Herron Todd White office:

adelaide (08) 8231 6818bunbury (08) 9791 6204busselton (08) 9754 2982Perth (08) 9388 9288Darwin (08) 8941 4833

The following pages present a generalised overview of the state of property markets in Capital City, new South Wales/aCT, Queensland, Victorian/Tasmanian & South australia/northern Territory/Western australia locations using financing risk-rating scales. They are not a guide to individual property assessments.

for further information contact rick Carr, research Director, Herron Todd White, on (07) 4057 0200, or by email on [email protected]

Page 40: February 2009 Month In Review

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

Capital City Property Market Indicators as at January 2009 – Houses

40

Capital City Property Market Indicators as at January 2009 – Houses Factor Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra

Rental Vacancy Situation Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Balanced market Balanced market Balanced market Shortage of available property relative to demand

Balanced market

Rental Vacancy Trend Steady Tightening Steady Steady Steady Steady Steady Steady

Demand for New Houses Fair Very soft Soft Soft Soft Fair Strong Fair

Trend in New House Construction Steady Declining significantly

Declining Declining Steady Steady Steady Steady

Volume of House Sales Declining Declining Declining Declining Declining Increasing Steady Increasing

Stage of Property Cycle Declining market Declining market Declining market Peak of market Declining market Declining market Peak of market Bottom of market

Are New Properties Sold at Prices Exceeding Their Potential Resale Value

Occasionally Occasionally Occasionally Almost never Occasionally Occasionally Frequently Occasionally

Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating

Rental Vacancy Trend

Sydney

MelbourneBrisbane

AdelaidePerth

HobartDarwin

Canberra

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

Stage of Property Cycle

Sydney

MelbourneBrisbane

AdelaidePerth

HobartDarwin

Canberra

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Demand for New Houses

Sydney

MelbourneBrisbane

AdelaidePerth

HobartDarwin

Canberra

Very Strong

Strong

Fair

Soft

Very Soft

Very Strong

Strong

Fair

Soft

Very Soft

Page 41: February 2009 Month In Review

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

Capital City Property Market Indicators as at January 2009 – Units

41

Capital City Property Market Indicators as at January 2009 – Units Factor Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra

Rental Vacancy Situation Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Balanced market Shortage of available property relative to demand

Balanced market Shortage of available property relative to demand

Balanced market

Rental Vacancy Trend Steady Tightening Steady Steady Steady Steady Steady Steady

Demand for New Units Fair Very soft Soft Soft Fair Fair Strong Fair

Trend in New Unit Construction Steady Declining significantly

Declining Declining Steady Steady Steady Steady

Volume of Unit Sales Steady Steady - Declining Declining Declining Steady Increasing Increasing Increasing

Stage of Property Cycle Declining market Declining market Declining market Peak of market Declining market Declining market Peak of market Bottom of market

Are New Properties Sold at Prices Exceeding Their Potential Resale Value

Occasionally Occasionally Occasionally Almost never Occasionally Occasionally Almost never Occasionally

Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating

Rental Vacancy Trend

Sydney

MelbourneBrisbane

AdelaidePerth

HobartDarwin

Canberra

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

Stage of Property Cycle

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Sydney

MelbourneBrisbane

AdelaidePerth

HobartDarwin

Canberra

Demand for New Units

Sydney

MelbourneBrisbane

AdelaidePerth

HobartDarwin

Canberra

Very Strong

Strong

Fair

Soft

Very Soft

Very Strong

Strong

Fair

Soft

Very Soft

Page 42: February 2009 Month In Review

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

1

Capital City Property Market Indicators as at January 2009 – Office

42

Capital City Property Market Indicators as at January 2009 – Office Premises Factor Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra

Rental Vacancy Situation Over-supply of available property relative to demand

Balanced market Shortage of available property relative to demand - Balanced market

Shortage of available property relative to demand

Shortage of available property relative to demand - Balanced market

Balanced market Shortage of available property relative to demand

Balanced market - Over-supply of available property relative to demand

Rental Vacancy Trend Increasing Steady - Increasing Steady Steady Increasing Steady Tightening Steady

Rental Rate Trend Declining Stable Stable - Declining Stable Declining Stable Increasing Stable

Volume of Property Sales Declining Declining significantly

Declining Declining Steady Increasing Increasing Declining

Stage of Property Cycle Declining market Peak of market - Declining market

Declining market Peak of market Peak of market - Declining market

Rising market Peak of market Declining market

Local Economic Situation Contraction Flat - Contraction Severe contraction Flat Contraction Steady growth Steady growth Contraction

Value Difference between Quality Properties with National Tenants, and Comparable Properties with Local Tenants

Significant Small - Significant Significant - Large Significant Small - Significant Small Significant Small

Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating

Rental Vacancy Trend

Sydney

MelbourneBrisbane

AdelaidePerth

HobartDarwin

Canberra

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

Stage of Property Cycle

Sydney

MelbourneBrisbane

AdelaidePerth

HobartDarwin

Canberra

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Local Economic Situation

Sydney

MelbourneBrisbane

AdelaidePerth

HobartDarwin

Canberra

StrongGrowth

SteadyGrowth

Flat

Contraction

SevereContraction

StrongGrowth

SteadyGrowth

Flat

Contraction

SevereContraction

Page 43: February 2009 Month In Review

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

New South Wales Property Market Indicators as at January 2009 – Houses

43

New South Wales Property Market Indicators as at January 2009 – Houses

Factor Albury BathurstCan-berra/ Q’beyan

Central Coast Dubbo Griffith Mudgee New-

castle Orange Sydney Tam-worth

Tweed Coast

Wagga Wagga

Wollon-gong

Rental Vacancy Situation Balanced market

Shortage of available property relative to demand

Balanced market

Shortage of available property relative to demand - Balanced market

Shortage of available property relative to demand

Balanced market

Balanced market

Shortage of available property relative to demand

Balanced market

Shortage of available property relative to demand

Balanced market

Balanced market

Balanced market

Balanced market

Rental Vacancy Trend Steady Tightening Steady Steady Tightening Steady Steady Tightening - Steady

Steady Steady Tightening - Steady

Steady Steady Tightening

Demand for New Houses Fair Soft Fair Soft Soft Soft - Fair Soft Very soft - Soft

Soft Fair Fair Soft Soft Soft

Trend in New House Construction Steady Declining Steady Declining Declining Declining Increasing strongly

Declining Declining Steady Steady - Increasing

Declining Declining Declining

Volume of House Sales Steady Increasing Increasing Steady Increasing Increasing Steady Declining - Declining significant-ly

Steady Declining Declining Declining Increasing Declining

Stage of Property Cycle Start of recovery

Declining market

Bottom of market

Bottom of market

Start of recovery

Bottom of market - Start of recovery

Declining market

Declining market

Declining market

Declining market

Peak of market - Declining market

Declining market

Rising market - Peak of market

Rising market

Are New Properties Sold at Prices Exceeding Their Potential Resale Value

Occasion-ally

Almost never

Occasion-ally

Almost never

Occasion-ally

Almost never

Almost never

Almost never

Occasion-ally

Occasion-ally

Occasion-ally

Occasion-ally

Occasion-ally

Occasion-ally

Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating

Rental Vacancy Trend

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

Albury

Bathur

st

C'berra

/ Q'be

yan

Centra

l Coa

stDub

boGriff

ithMud

gee

Newca

stle

Orang

eSyd

ney

Tamwor

thTw

eed Coa

stW

agga

Wag

gaW

ollon

gong

Stage of Property Cycle

Albury

Bathur

st

C'berra

/ Q'be

yan

Centra

l Coa

stDub

boGriff

ithMud

gee

Newca

stle

Orang

eSyd

ney

Tamwor

thTw

eed Coa

stW

agga

Wag

gaW

ollon

gong

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Demand for New Houses

Very Strong

Strong

Fair

Soft

Very Soft

Very Strong

Strong

Fair

Soft

Very Soft

Albury

Bathu

rst

C'berra

/ Q'be

yan

Centra

l Coa

stDub

boGriff

ithMud

gee

Newca

stle

Orang

eSy

dney

Tamwort

hTw

eed Coa

stW

agga

Wag

gaW

ollon

gong

Page 44: February 2009 Month In Review

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

New South Wales Property Market Indicators as at January 2009 – Units

44

New South Wales Property Market Indicators as at January 2009 – Units

Factor Albury BathurstCan-berra/ Q’beyan

Central Coast Dubbo Griffith Mudgee New-

castle Orange Sydney Tam-worth

Tweed Coast

Wagga Wagga

Wollon-gong

Rental Vacancy Situation Balanced market

Shortage of available property relative to demand

Balanced market

Shortage of available property relative to demand - Balanced market

Balanced market

Balanced market

Balanced market

Balanced market

Balanced market

Shortage of available property relative to demand

Shortage of available property relative to demand - Balanced market

Balanced market

Balanced market

Balanced market

Rental Vacancy Trend Steady Tightening Steady Steady Tightening Steady Steady Tightening - Steady

Steady Steady Tightening Steady Steady Steady

Demand for New Units Fair Soft Fair Soft Soft Soft - Fair Soft Very soft - Soft

Soft Fair Soft - Fair Very soft Soft Soft

Trend in New Unit Construction Steady Declining Steady Declining Declining significant-ly

Declining Increasing strongly

Declining significant-ly - Declining

Declining Steady Steady Declining Declining Declining

Volume of Unit Sales Steady Steady Increasing Steady Steady Steady Steady Declining - Declining significant-ly

Steady Steady Declining Declining significant-ly

Increasing Declining

Stage of Property Cycle Start of recovery

Declining market

Bottom of market

Bottom of market

Start of recovery

Bottom of market - Start of recovery

Declining market

Declining market

Declining market

Declining market

Peak of market - Declining market

Declining market

Rising market - Peak of market

Rising market

Are New Properties Sold at Prices Exceeding Their Potential Resale Value

Occasion-ally

Almost never

Occasion-ally

Almost never

Almost never

Occasion-ally

Almost never

Almost never

Almost never

Occasion-ally

Occasion-ally

Frequently Occasion-ally

Very frequently

Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating

Rental Vacancy Trend

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

Albury

Bathurs

t

C'berra

/ Q'be

yan

Centra

l Coa

stDub

boGriff

ithMud

gee

Newca

stle

Orange

Sydne

yTa

mworth

Twee

d Coast

Wag

gaW

agga

Woll

ongo

ng

Stage of Property Cycle

Albury

Bathu

rst

C'berra

/ Q'be

yan

Centra

l Coa

stDub

boGriff

ithMud

gee

Newca

stle

Orange

Sydn

eyTa

mworth

Twee

d Coast

Wag

gaW

agga

Woll

ongo

ng

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Demand for New Units

Very Strong

Strong

Fair

Soft

Very Soft

Very Strong

Strong

Fair

Soft

Very Soft

Albury

Bathu

rst

C'berra

/ Q'be

yan

Centra

l Coa

stDub

boGriff

ithMud

gee

Newca

stle

Orange

Sydn

eyTa

mworth

Twee

d Coast

Wag

gaW

agga

Woll

ongo

ng

Page 45: February 2009 Month In Review

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

New South Wales Property Market Indicators as at January 2009 – Office

45

New South Wales Property Market Indicators as at January 2009 – Office Premises

Factor Albury BathurstCan-berra/ Q’beyan

Central Coast Dubbo Griffith Mudgee New-

castle Orange Sydney Tam-worth

Tweed Coast

Wagga Wagga

Wollon-gong

Rental Vacancy Situation Shortage of available property relative to demand

Over-supply of available property relative to demand

Balanced market - Over-supply of available property relative to demand

Over-supply of available property relative to demand

Over-supply of available property relative to demand

Over-supply of available property relative to demand

Balanced market

Over-supply of available property relative to demand

Balanced market

Over-supply of available property relative to demand

Shortage of available property relative to demand

Balanced market

Balanced market

Over-supply of available property relative to demand

Rental Vacancy Trend Steady Increasing Steady Steady Steady Steady - Increasing

Increasing Increasing Steady Increasing Steady - Increasing

Steady Steady Increasing

Rental Rate Trend Increasing Declining Stable Stable Stable Stable - Declining

Declining Declining Stable Declining Increasing Stable Stable Declining

Volume of Property Sales Declining Declining Declining Declining Declining Declining Declining Declining Declining Declining Declining Declining significant-ly

Declining Declining

Stage of Property Cycle Declining market

Declining market

Declining market

Declining market

Declining market

Declining market

Declining market

Declining market

Declining market

Declining market

Peak of market - Declining market

Declining market

Declining market

Declining market

Local Economic Situation Contrac-tion

Flat Contrac-tion

Flat Flat Contrac-tion - Severe contraction

Contrac-tion

Contrac-tion

Flat Contrac-tion

Flat Flat Flat - Contrac-tion

Contrac-tion

Value Difference between Quality Properties with National Tenants, and Comparable Properties with Local Tenants

Significant Significant Small Small Small Significant - Large

Significant Significant Significant Significant Significant Significant Significant Small

Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating

Rental Vacancy Trend

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

Albury

Bathurs

tC'be

rra/Q

'beya

nCen

tral C

oast

Dubbo

Griffith

Mudge

eNew

castl

eOran

geSyd

ney

Tamwort

hTw

eed Coa

stW

agga

Wag

gaW

ollon

gong

Stage of Property Cycle

Albury

Bathu

rstC'be

rra/Q

'beya

nCen

tral C

oast

Dubbo

Griffith

Mudge

eNew

castl

eOran

geSy

dney

Tamwor

thTw

eed Coa

stW

agga

Wag

gaW

ollon

gong

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Local Economic Situation

StrongGrowth

SteadyGrowth

Flat

Contraction

SevereContraction

StrongGrowth

SteadyGrowth

Flat

Contraction

SevereContraction

Albury

Bathu

rstC'be

rra/Q

'beya

nCen

tral C

oast

Dubbo

Griffith

Mudge

eNew

castl

eOran

geSy

dney

Tamwor

thTw

eed Coa

stW

agga

Wag

gaW

ollon

gong

Page 46: February 2009 Month In Review

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

Queensland Property Market Indicators as at January 2009 – Houses

46

Queensland Property Market Indicators as at January 2009 – Houses

Factor Cairns Towns-ville

Whit-sunday Mackay Rock-

hampton Emerald Glad–stone

Bunda-berg

Hervey Bay

Sun-shine Coast

Brisbane Gold Coast Ipswich Too-

woombaRental Vacancy Situation Balanced

market - Over-supply of available property relative to demand

Shortage of available property relative to demand

Over-supply of available property relative to demand

Shortage of available property relative to demand

Balanced market

Shortage of available property relative to demand

Shortage of available property relative to demand

Balanced market

Shortage of available property relative to demand - Balanced market

Balanced market

Shortage of available property relative to demand

Balanced market

Balanced market

Shortage of available property relative to demand

Rental Vacancy Trend Increasing Steady Steady Steady Increasing Steady Steady Increasing Steady Steady Steady Steady Steady Tightening sharply - Tightening

Demand for New Houses Soft - Fair Fair Strong Fair Fair Soft Soft Soft - Fair Soft - Fair Soft Soft Soft Soft Soft - Fair

Trend in New House Construction

Declining Increasing Declining Steady Steady Declining Steady Declining Declining - Steady

Declining Declining Declining Declining Declining -Steady

Volume of House Sales Steady Increasing Steady Steady Steady Steady Increasing Steady - Declining

Declining Declining significantly

Declining Declining Declining Increasing - Steady

Stage of Property Cycle Declining market

Bottom of market

Bottom of market

Peak of market

Bottom of market

Declining market

Bottom of market

Peak of market

Peak of market - Declining market

Declining market

Declining market

Declining market

Declining market

Bottom of market

Are New Properties Sold at Prices Exceeding Their Potential Resale Value

Occasion-ally

Occasion-ally

Almost never

Occasion-ally

Occasion-ally

Occasion-ally

Almost never

Occasion-ally

Occasion-ally

Occasion-ally

Occasion-ally

Occasion-ally

Frequently Almost never - Occasion-ally

Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating

Rental Vacancy Trend

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

Cairns

Towns

ville

Whit

sund

ayMac

kay

Rockh

ampto

nEmera

ldGlad

stone

Bund

aberg

Hervey

BaySun

shine

Coast

Brisba

neGold

Coast

Ipswich

Toow

oomba

Stage of Property Cycle

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Cairns

Towns

ville

Whit

sund

ayMac

kay

Rockh

ampto

nEm

erald

Gladsto

neBu

ndab

erg

Herve

y BaySu

nshin

e Coast

Brisb

ane

GoldCoa

stIps

wichTo

owoo

mba

Demand for New Houses

Very Strong

Strong

Fair

Soft

Very Soft

Very Strong

Strong

Fair

Soft

Very Soft

Cairns

Towns

ville

Whit

sund

ayMac

kay

Rockh

ampto

nEm

erald

Gladsto

neBu

ndab

erg

Herve

y BaySu

nshin

e Coast

Brisb

ane

GoldCoa

stIps

wichTo

owoo

mba

Page 47: February 2009 Month In Review

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

Queensland Property Market Indicators as at January 2009 – Units

47

Queensland Property Market Indicators as at January 2009 – Units

Factor Cairns Towns-ville

Whit-sunday Mackay Rock-

hampton Emerald Glad-stone

Bunda-berg

Hervey Bay

Sun-shine Coast

Brisbane Gold Coast Ipswich Too-

woombaRental Vacancy Situation Over-

supply of available property relative to demand

Shortage of available property relative to demand

Over-supply of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Balanced market - Over-supply of available property relative to demand

Shortage of available property relative to demand - Balanced market

Balanced market

Shortage of available property relative to demand

Balanced market

Balanced market

Shortage of available property relative to demand

Rental Vacancy Trend Increasing Steady Increasing Steady Steady Steady Steady Increasing Steady Steady Steady Steady Steady Tightening sharply - Tightening

Demand for New Units Soft - Fair Soft Fair Fair Fair Soft Soft Soft - Fair Soft Soft Soft Very soft Soft Soft - Fair

Trend in New Unit Construction

Declining Declining Steady Steady Steady Declining Steady Declining significantly

Declining significantly - Declining

Declining Declining Declining Declining Declining -Steady

Volume of Unit Sales Steady Increasing Steady Steady Steady Steady Increasing Declining Declining - Declining significantly

Declining significantly

Declining Declining significantly

Declining Increasing - Steady

Stage of Property Cycle Declining market

Bottom of market

Declining market

Peak of market

Bottom of market

Declining market

Bottom of market

Peak of market - Declining market

Peak of market - Declining market

Declining market

Declining market

Declining market

Declining market

Bottom of market

Are New Properties Sold at Prices Exceeding Their Potential Resale Value

Occasion-ally

Occasion-ally

Almost never

Occasion-ally

Almost never

Occasion-ally

Almost never

Occasion-ally

Occasion-ally

Occasion-ally

Occasion-ally

Frequently Frequently Almost never - Occasion-ally

Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating

Rental Vacancy Trend

Cairns

Towns

ville

Whit

sund

ayMac

kay

Rockh

ampto

nEmera

ldGlad

stone

Bund

aberg

Hervey

BaySun

shine

Coast

Brisba

neGold

Coast

Ipswich

Toow

oomba

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

Stage of Property Cycle

Cairns

Towns

ville

Whit

sund

ayMac

kay

Rockh

ampto

nEm

erald

Gladsto

neBu

ndab

erg

Herve

y BaySu

nshin

e Coast

Brisb

ane

GoldCoa

stIps

wichTo

owoo

mba

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Demand for New Units

Cairns

Towns

ville

Whit

sund

ayMac

kay

Rockh

ampto

nEm

erald

Gladsto

neBu

ndab

erg

Herve

y BaySu

nshin

e Coast

Brisb

ane

GoldCoa

stIps

wichTo

owoo

mba

Very Strong

Strong

Fair

Soft

Very Soft

Very Strong

Strong

Fair

Soft

Very Soft

Page 48: February 2009 Month In Review

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

Queensland Property Market Indicators as at January 2009 – Office

48

Queensland Property Market Indicators as at January 2009 – Office Premises Factor Cairns Towns-

ville Whit-sunday Mackay Rock-

hampton Gladstone Bunda-berg

Hervey Bay

Sunshine Coast Brisbane Gold

Coast Too-woomba

Rental Vacancy Situation Balanced market

Balanced market

Over-supply of available property relative to demand

Shortage of available property relative to demand

Balanced market

Over-supply of available property relative to demand

Balanced market - Over-supply of available property relative to demand

Balanced market

Balanced market

Shortage of available property relative to demand - Balanced market

Over-supply of available property relative to demand

Over-supply of available property relative to demand

Rental Vacancy Trend Steady Steady Increasing Steady Steady Steady Steady - Increasing

Steady - Increasing

Steady - Increasing

Steady Increasing Steady - Increasing

Rental Rate Trend Stable Stable Stable Stable Stable Stable Stable Stable - Declining

Stable - Declining

Stable - Declining

Stable Stable - Declining

Volume of Property Sales Steady Declining Declining significantly

Steady - Declining

Increasing - Steady

Steady Steady - Declining

Steady - Declining

Steady Declining Declining - Declining significantly

Steady

Stage of Property Cycle Peak of market - Declining market

Declining market

Declining market

Peak of market

Peak of market - Declining market

Peak of market

Peak of market

Peak of market

Declining market

Declining market

Declining market

Peak of market - Declining market

Local Economic Situation Steady growth - Flat

Flat Flat Flat Flat - Contraction

Flat Flat Flat Flat Severe contraction

Contraction Flat

Value Difference between Quality Properties with National Tenants, and Comparable Properties with Local Tenants

Small Significant Nil Small Small - Significant

Small Small - Significant

Small - Significant

Small - Significant

Significant - Large

Significant - Large

Significant

Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating

Rental Vacancy Trend

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

Cairns

Towns

ville

Whitsu

nday

Mackay

Rockh

ampton

Gladsto

ne

Bundab

erg

Hervey Bay

Sunsh

ineCoa

st

Brisban

e

GoldCoa

st

Toow

oomba

Stage of Property Cycle

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Cairns

Towns

ville

Whitsu

nday

Mackay

Rockh

ampton

Gladsto

ne

Bundab

erg

Hervey Bay

Sunsh

ineCoa

st

Brisban

e

GoldCoa

st

Toow

oomba

Local Economic Situation

StrongGrowth

SteadyGrowth

Flat

Contraction

SevereContraction

StrongGrowth

SteadyGrowth

Flat

Contraction

SevereContraction

Cairns

Towns

ville

Whitsu

nday

Macka

y

Rockham

pton

Gladston

e

Bundab

erg

Hervey Bay

Sunsh

ineCoa

st

Brisba

ne

GoldCoas

t

Toow

oomba

Page 49: February 2009 Month In Review

The month in review

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

Victoria & Tasmania Property Market Indicators as at January 2009 – Houses

49

Victorian and Tasmanian Property Market Indicators as at January 2009 – Houses

Factor Bendigo Echuca Geelong Gippsland Mel-bourne Mildura Wanga-

ratta Warrnam-bool Wodonga

Burnie -Devon-port

Hobart Laun-ceston

Rental Vacancy Situation Balanced market

Over-supply of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Balanced market

Balanced market

Balanced market

Balanced market

Balanced market

Balanced market

Balanced market

Rental Vacancy Trend Steady Steady Tightening Tightening Tightening Steady Steady Tightening - Steady

Steady Steady Steady Steady

Demand for New Houses Soft Soft Strong Soft Very soft Soft Fair Soft - Fair Fair Fair Fair Fair

Trend in New House Construction Declining Steady Steady Declining Declining significantly

Steady Steady Steady Steady Steady Steady Steady

Volume of House Sales Declining Declining Steady Declining Declining Increasing Steady Declining Steady Increasing Increasing Increasing

Stage of Property Cycle Declining market

Bottom of market

Peak of market - Declining market

Declining market

Declining market

Bottom of market

Start of recovery

Declining market

Start of recovery

Declining market

Declining market

Declining market

Are New Properties Sold at Prices Exceeding Their Potential Resale Value

Almost never

Almost never

Almost never

Occasionally Occasionally Almost never

Occasionally Almost never

Occasionally Occasionally Occasionally Occasionally

Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating

Rental Vacancy Trend

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

Bendig

o

Echuc

a

Geelon

g

Gippsla

nd

Melbou

rne

Mildura

Wangara

tta

Warrnam

bool

Wodong

a

Burnie-

Devon

port

Hobart

Laun

cesto

n

Stage of Property Cycle

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Bendig

o

Echuc

a

Geelon

g

Gippsla

nd

Melbou

rne

Mildura

Wangara

tta

Warrnam

bool

Wodong

a

Burnie-

Devon

port

Hobart

Laun

cesto

n

Demand for New Houses

Very Strong

Strong

Fair

Soft

Very Soft

Very Strong

Strong

Fair

Soft

Very Soft

Bendig

o

Echuca

Geelon

g

Gippsla

nd

Melbourn

e

Mildura

Wangara

tta

Warrnam

bool

Wodon

ga

Burnie-

Devonp

ort

Hobart

Launc

eston

Page 50: February 2009 Month In Review

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

Victoria & Tasmania Property Market Indicators as at January 2009 – Units

50

Victorian and Tasmanian Property Market Indicators as at January 2009 – Units

Factor Bendigo Echuca Geelong Gippsland Mel-bourne Mildura Wanga-

ratta Warrnam-bool Wodonga

Burnie -Devon-port

Hobart Laun-ceston

Rental Vacancy Situation Balanced market

Over-supply of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Balanced market

Balanced market

Balanced market

Balanced market

Balanced market

Balanced market

Balanced market

Rental Vacancy Trend Steady Steady Tightening Tightening Tightening Steady Steady Tightening - Steady

Steady Steady Steady Steady

Demand for New Units Soft Soft Fair Soft Very soft Soft Fair Soft - Fair Fair Fair Fair Fair

Trend in New Unit Construction Declining Steady Steady Declining Declining significantly

Steady Steady Declining Steady Steady Steady Steady

Volume of Unit Sales Declining Steady Steady Declining Steady - Declining

Increasing Steady Declining Steady Increasing Increasing Increasing

Stage of Property Cycle Declining market

Bottom of market

Peak of market - Declining market

Declining market

Declining market

Bottom of market

Start of recovery

Declining market

Start of recovery

Declining market

Declining market

Declining market

Are New Properties Sold at Prices Exceeding Their Potential Resale Value

Almost never

Almost never

Almost never

Occasionally Occasionally Occasionally Occasionally Almost never

Occasionally Occasionally Occasionally Occasionally

Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating

Rental Vacancy Trend

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

Bendig

o

Echuca

Geelon

g

Gippsla

nd

Melbourn

e

Mildura

Wangara

tta

Warrnam

bool

Wodon

ga

Burnie-

Devonp

ort

Hobart

Launc

eston

Stage of Property Cycle

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Bendig

o

Echuca

Geelon

g

Gippsla

nd

Melbourn

e

Mildura

Wangara

tta

Warrnam

bool

Wodon

ga

Burnie-

Devonp

ort

Hobart

Launc

eston

Demand for New Units

Very Strong

Strong

Fair

Soft

Very Soft

Very Strong

Strong

Fair

Soft

Very Soft

Bendig

o

Echuca

Geelon

g

Gippsla

nd

Melbourn

e

Mildura

Wangara

tta

Warrnam

bool

Wodon

ga

Burnie-

Devonp

ort

Hobart

Launc

eston

Page 51: February 2009 Month In Review

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

Victoria & Tasmania Property Market Indicators as at January 2009 – Office

51

Victorian and Tasmanian Property Market Indicators as at January 2009 – Office Premises

Factor Bendigo Echuca Geelong Gippsland Mel-bourne Mildura Wanga-

ratta Warrnam-bool Wodonga

Burnie -Devon-port

Hobart Laun-ceston

Rental Vacancy Situation Balanced market

Balanced market

Balanced market

Balanced market

Balanced market

Over-supply of available property relative to demand

Shortage of available property relative to demand

Balanced market

Shortage of available property relative to demand

Balanced market

Balanced market

Balanced market

Rental Vacancy Trend Increasing Steady Steady Steady Steady - Increasing

Increasing Steady Steady Steady Steady Steady Steady

Rental Rate Trend Stable Stable Stable Stable Stable Stable Increasing Stable Increasing Stable Stable Stable

Volume of Property Sales Declining Declining Steady Declining Declining significantly

Declining Declining Declining Declining Increasing Increasing Increasing

Stage of Property Cycle Declining market

Declining market

Peak of market - Declining market

Declining market

Peak of market - Declining market

Bottom of market

Declining market

Declining market

Declining market

Rising market

Rising market

Rising market

Local Economic Situation Flat Contraction Flat - Contraction

Flat Flat - Contraction

Contraction Contraction Flat - Contraction

Contraction Steady growth

Steady growth

Steady growth

Value Difference between Quality Properties with National Tenants, and Comparable Properties with Local Tenants

Small Small Small Small Small - Significant

Small Significant Small Significant Small Small Small

Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating

Rental Vacancy Trend

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

Bendig

o

Echuca

Geelon

g

Gippsla

nd

Melbourn

e

Mildura

Wangara

tta

Warrnam

bool

Wodon

ga

Burnie-

Devonp

ort

Hobart

Launc

eston

Stage of Property Cycle

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Bendig

o

Echuca

Geelon

g

Gippsla

nd

Melbourn

e

Mildura

Wangara

tta

Warrnam

bool

Wodon

ga

Burnie-

Devonp

ort

Hobart

Launc

eston

Local Economic Situation

StrongGrowth

SteadyGrowth

Flat

Contraction

SevereContraction

StrongGrowth

SteadyGrowth

Flat

Contraction

SevereContraction

Bendig

o

Echuca

Geelon

g

Gippsla

nd

Melbourn

e

Mildura

Wangara

tta

Warrnam

bool

Wodon

ga

Burnie-

Devonp

ort

Hobart

Launc

eston

Page 52: February 2009 Month In Review

The month in review

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

Northern Territory, South Australia & Western Australia Property Market Indicators as at January 2009 – Houses

52

SA, NT and WA Property Market Indicators as at January 2009 – Houses Factor Adelaide Adelaide Hills Barossa

Valley Iron Triangle Alice Springs Darwin South West WA Geraldton Perth

Rental Vacancy Situation Balanced market Shortage of available property relative to demand

Shortage of available property relative to demand - Balanced market

Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Balanced market Balanced market

Rental Vacancy Trend Steady Tightening Tightening Tightening Steady Steady Tightening Steady Steady

Demand for New Houses Soft Soft Fair Fair Strong Strong Soft Soft Soft

Trend in New House Construction Declining Steady Steady Steady Steady Steady Declining Steady Steady

Volume of House Sales Declining Declining Declining Declining Steady Steady Increasing Declining Declining

Stage of Property Cycle Peak of market Declining market Declining market Peak of market Peak of market Peak of market Bottom of market Declining market Declining market

Are New Properties Sold at Prices Exceeding Their Potential Resale Value

Almost never Almost never Almost never Almost never Occasionally Frequently Occasionally Almost never Occasionally

Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating

Rental Vacancy Trend

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

Adelaide

Adelaide Hills

Barossa Valley

Iron Triangle

Alice SpringsDarwin

South West WA

GeraldtonPerth

Stage of Property Cycle

Adelaide

Adelaide Hills

Barossa Valley

Iron Triangle

Alice SpringsDarwin

South West WA

GeraldtonPerth

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Demand for New Houses

Very Strong

Strong

Fair

Soft

Very Soft

Very Strong

Strong

Fair

Soft

Very Soft

Adelaide

Adelaide Hills

Barossa Valley

Iron Triangle

Alice SpringsDarwin

South West WA

GeraldtonPerth

Page 53: February 2009 Month In Review

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

Northern Territory, South Australia & Western Australia Property Market Indicators as at January 2009 – Units

53

SA, NT and WA Property Market Indicators as at January 2009 – Units Factor Adelaide Adelaide Hills Barossa

Valley Iron Triangle Alice Springs Darwin South West WA Geraldton Perth

Rental Vacancy Situation Balanced market Shortage of available property relative to demand

Shortage of available property relative to demand - Balanced market

Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Shortage of available property relative to demand

Rental Vacancy Trend Steady Tightening Tightening Tightening Steady Steady Tightening Steady Steady

Demand for New Units Soft Soft Fair Fair Strong Strong Soft Fair Fair

Trend in New Unit Construction Declining Steady Steady Steady Steady Steady Declining Steady Steady

Volume of Unit Sales Declining Declining Declining Declining Steady Increasing Increasing Steady Steady

Stage of Property Cycle Peak of market Declining market Declining market Peak of market Peak of market Peak of market Bottom of market Declining market Declining market

Are New Properties Sold at Prices Exceeding Their Potential Resale Value

Almost never Almost never Almost never Almost never Occasionally Almost never Occasionally Almost never Occasionally

Red entries indicate change from previous month to a higher risk-rating Blue entries indicate change from previous month to a lower risk-rating

Rental Vacancy Trend

Adelaide

Adelaide Hills

Barossa Valley

Iron Triangle

Alice SpringsDarwin

South West WA

GeraldtonPerth

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

Stage of Property Cycle

Adelaide

Adelaide Hills

Barossa Valley

Iron Triangle

Alice SpringsDarwin

South West WA

GeraldtonPerth

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Demand for New Units

Adelaide

Adelaide Hills

Barossa Valley

Iron Triangle

Alice SpringsDarwin

South West WA

GeraldtonPerth

Very Strong

Strong

Fair

Soft

Very Soft

Very Strong

Strong

Fair

Soft

Very Soft

Page 54: February 2009 Month In Review

© Herron Todd White Copyright 2009No responsibility is accepted to any third party that may use or rely on the whole or any part of the content of this publication.

markeT iNdiCaTors

The month in review

Northern Territory, South Australia & Western Australia Property Market Indicators as at January 2009 – Office

54

SA, NT and WA Property Market Indicators as at January 2009 – Office Premises Factor Adelaide Adelaide Hills Barossa

Valley Iron Triangle Alice Springs Darwin South West WA Geraldton Perth

Rental Vacancy Situation Shortage of available property relative to demand

Shortage of available property relative to demand

Balanced market Shortage of available property relative to demand

Balanced market Shortage of available property relative to demand

Balanced market Shortage of available property relative to demand

Shortage of available property relative to demand - Balanced market

Rental Vacancy Trend Steady Tightening Steady Tightening Steady Tightening Steady Tightening Increasing

Rental Rate Trend Stable Stable Stable Increasing Stable Increasing Increasing Increasing Declining

Volume of Property Sales Declining Steady Steady Steady Steady Increasing Declining Increasing Steady

Stage of Property Cycle Peak of market Peak of market Peak of market Rising market Rising market Peak of market Peak of market Rising market - Peak of market

Peak of market - Declining market

Local Economic Situation Flat Flat Contraction Contraction Steady growth Steady growth Steady growth Steady growth Contraction

Value Difference between Quality Properties with National Tenants, and Comparable Properties with Local Tenants

Significant Small Small - Significant

Small - Significant

Significant Significant Small Nil Small - Significant

Red entries indicate change from 3 months ago to a higher risk-rating Blue entries indicate change from 3 months ago to a lower risk-rating

Rental Vacancy Trend

Adelaide

Adelaide Hills

Barossa Valley

Iron Triangle

Alice SpringsDarwin

South West WA

GeraldtonPerth

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

TighteningSharply

Tightening

Steady

Increasing

IncreasingSharply

Stage of Property Cycle

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Start ofRecovery

Bottom ofMarket

RisingMarket

Peak ofMarket

DecliningMarket

Adelaide

Adelaide Hills

Barossa Valley

Iron Triangle

Alice SpringsDarwin

South West WA

GeraldtonPerth

Local Economic Situation

StrongGrowth

SteadyGrowth

Flat

Contraction

SevereContraction

StrongGrowth

SteadyGrowth

Flat

Contraction

SevereContraction

Adelaide

Adelaide Hills

Barossa Valley

Iron Triangle

Alice SpringsDarwin

South West WA

GeraldtonPerth