Residential Developer Market Intelligence
MAJOR RESEARCH PARTNER
Q1 –2019
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Welcome to the Q1-2019 edition of the UDIA NSW Residential Developer Market Intelligence (RDMI) report. The quarterly RDMI aims to provide a targeted residential market performance update across the Greater Sydney, Lower Hunter, Central Coast, Illawarra and ACT housing markets.
This publication is prepared with the understanding that residential property market dynamics are complex and nuanced, and thus quality, timely market intelligence is essential for market participants supplying new products.
The publication draws upon a range of information sources including exclusive and bespoke data provided by CoreLogic - our key research partner. A key feature of the RDMI report is the inclusion of ‘bottom-up’ insights provided by our leading developer members on the state-of-play in their regional market of operational focus.
The RDMI reporting output and content inclusions continues to evolve, and in this edition we are pleased to present a new dashboard headline indicators section - in the opposing page. This dashboard highlights the continuation of challenging market conditions facing the development sector as the property downturn continues to unfold across the State.
UDIA NSW expects the subdued demand profile for new residential products to persist for at least the next six months and most likely into the 2020 calendar year. Underpinned by a ‘credit crunch’ for both retail consumers and developers in the wake of the Banking Royal Commission, we expect the soft market conditions to continue to put downward pressure on pricing and sales volumes over the coming period.
I trust the data and insights in this RDMI are of value for you and your organisation, and would welcome any feedback or thoughts about the publication emailed to [email protected]
Cover Image: No. 1 Lacey by Cornerstone Property
Toby Adams
General Manager – Strategy & Research
UDIA NSW
Market Performance Headline Metrics
Greater Sydney
Central Coast
Lower Hunter
ACT
Median House Sale Price (set-tled) (3-month
change)
Median Unit Sale Price (settled)
(3-month change)
Volume of House Sales (settled)
(3-month change)
Volume of Unit Sales (settled)
(3-month change)
Change in Approvals (12 months to Feb 2018 vs 12 months Feb 2019)
-1.6% -6.3% -0.2% -1.4% -17%
-1.5% -7.6% -0.9% -4.2% 26%
-0.3% -6.2% -1.1% -8.4% -15%
-1.3% -6.2% -0.5% -4.5% 12%Illawarra
1.2% -3.2% -0.2% -1.4% 60%
Population Growth (NSW)
Source: ABS
NSW Employment/Unemployment (Seasonally Adjusted)
Source: ABS
Consumer Price Index (CPI)
Source: ABS
Cash Rate and Average Lending Rates
Source: RBA
Consumer Sentiment
Source: Roy Morgan
Economic Snapshot
• The latest ABS statistics to Septmber 2018 show a 34% drop in the natural population increase from the previous quarter. The strong population growth in NSW remains bolstered primarily by net overseas migration. In Q3-2018, NSW experienced a net increase of 35,500 people which was 39% of the total net Australian population increase for the quarter.
• In February 2019, NSW’s unemployment rate was 4.3% which is significantly lower than the national average. This is below even the low national average of 5%, with total employment growing in NSW by 2.3% over the preceding 12 months.
• The official cash rate has remained steady at 1.5% for 31 months now since August 2016.
• Consumer sentiment across the two major indices fell slightly to start the year (4.4%, ANZ Roy-Morgan; 5.3% Westpac-Melbourne Institute)
Median House Price (New): Capital Cities
Source: CoreLogic
Median Unit Price (New): Capital Cities
Source: CoreLogic
National Housing Snapshot
First Home Buyers Australia, Proportion and Loan Size
Source: ABS
Total Approvals 12 Months to Jan 2018 vs 12 Months to Jan 2019
Source: ABS
Housing Affordability Ratio (National)
Source: CoreLogic
Detached
Multi-unit
20022004
20062008
20102012
20142016
2018
Dw
ellin
g P
rice
to
Inco
me
Rat
io
7.5
7.0
6.5
6.0
5.0
5.5
4.5
4.0
Dw
ellin
gs
Multi-unit
Detached
• The total volume of residential dwelling approvals continues to decline in most capital cities. In the year to February 2019, the Sydney approval pipeline has contracted by 17% and Melbourne’s by 13%.
• First home buyers accounted for 18% of national house sales in January 2019, a proportion that has been largely maintained since October 2017.
• The national housing affordability ratio for detached dwellings (x7.8) and multi-units (x6.4) has improved marginally in recent months on the back of falling pricing in Sydney and Melbourne.
• The median sale price for new units in Sydney in December 2018 was $735k, which was 24% higher than Melbourne and 41% higher than Brisbane.
• The median sale price for new detached houses in Sydney was $975k, down 3% from the March 2018 high.
Change in New House and New Unit Price (Rolling 3 month Average) (Sydney)
Source: CoreLogic
Weekly Auction Clearance Rates (Sydney)
Source: CoreLogic
Greater Sydney
Source: REINSW
Residency Vacancy Rate (Sydney, Monthly)
Approvals by District 12 months to Jan 2018 vs 12 months to Jan 2019
Source: ABS
Total Approvals (Sydney, Monthly)
Source: ABS
• Greater Sydney is continuing to feel the effects of the current property downturn, with a decline in approvals, the ongoing retraction of detached housing price, an increase in the residential vacancy rate, and auction stock and clearance levels falling short of early 2018 numbers.
• The approvals decline has been felt across the Greater Sydney region, with every district experiencing reduction in total approvals over the last year. The Eastern City has recorded the greatest reduction with total dwelling approvals contracting by 34%. This was followed by the South District (which contracted by 30%) and the Western City (which contracted by 15%).
• Median whole-of-market house price in Greater Sydney has fallen by 1.6% in the last 3 months, and the volume of house sales has fallen by 6.3%. New detached house price has fallen by 1.5% in the last 3 months.
• Median whole-of-market unit price has contracted by 0.2%, with the volume of unit sales down 1.4% over the last 3 months. New unit price has increased by 0.3%.
Apartment Supply Snapshot
Median Sale Price by Quartile, Houses, Greater Sydney (12 months to Jan 2019)
Median Sale Price by Quartile, Units, Greater Sydney (12 months to Jan 2019)
Median Days on Market, Selected LGAs (12 months to Jan 2019)
Total Apartment Completions (Cal. Year)
Total Apartment Yield Under Construction
Total Apartment Yields Approved
Median Sale Price of New Units
Vacancy Rate (Residential)
Median Asking Rent (Residential)
Median Rental Yield
33,270
41,975
$720,000 Jan 2019
16%
55%
2.3% (Feb 2018)
-26%
-1.3%
-0.9%
N/A
65,647
3.2% (Feb 2019)
$540
3.9%
Source: CoreLogic
Source: CoreLogic
Source: CoreLogic
Source: CoreLogic
Twelve Month Change
Current
Greater Sydney
Approvals by District 12 months to Jan 2018 vs 12 months to Jan 2019
“There is no doubt that negative sentiment combined with lending policies is having a significant impact across Sydney’s market. Sales activity has decreased with most buyers preferring to wait on the sidelines. There is some settlement risk to work through in 2019, particularly in lower quality areas with localised over-supply. On the positive side, we are seeing increased first home buyer activity spurred by improved affordability while the fundamentals of population growth and economic activity remain strong. The re-election of the State Liberal government will provide policy continuity to underpin industry investment, however housing approvals have fallen sharply suggesting that Sydney’s housing supply targets will not be met in coming years. We expect to see a period of undersupply that will coincide with an improvement in market conditions. ”
Mike Williams – Head of Strategy & Acquisitions, Legacy Property
Developer Insight
Median:$950,000
Upper Quartile:$1,500,000
Lower Quartile:$690,000
Median:$720,000
Upper Quartile:$950,950
Lower Quartile:$572,000
$0 $0
Median:$950,000
Upper Quartile:$1,500,000
Lower Quartile:$690,000
Median:$720,000
Upper Quartile:$950,950
Lower Quartile:$572,000
$0 $0
LGA 3 Month % Change in Median Sales Price (Whole of Market, as at 31/01/2019)
Greater Sydney (Detached)
Source: CoreLogic
Spotlight on South District: LGA Market Update
1. Ryde2. Canada Bay3. Strathfield4. Burwood5. Inner West6. Georges River7. Bayside8. Sydney9. Randwick10. Waverly11. Woolhara12. Mosman13. North Sydney14. Willoughby15. Lane Cove16. Hunters Hill
1
2
3 4 5
67
8
910
1 1
1213
1415
16
Source: CoreLogic
0%%%
3 Month % Change in Median Sales Price (Whole of Market, as at 31/01/2019)
Greater Sydney (Multi Unit)
Source: CoreLogic
Spotlight on North District: LGA Market Update
Source: CoreLogic
1. Ryde2. Canada Bay3. Strathfield4. Burwood5. Inner West6. Georges River7. Bayside8. Sydney9. Randwick10. Waverly11. Woolhara12. Mosman13. North Sydney14. Willoughby15. Lane Cove16. Hunters Hill
1
2
3 4 5
67
8
910
1 1
1213
1415
16
0%
%%
Approvals (Central Coast, Monthly)
Source: ABS
Source: ABS
Approvals (Central Coast) by Dwelling Type,12 Months to Feb 2018 vs 12 Months to Feb 2019
Completions (Central Coast, Monthly)
Weekly Rents (Central Coast, Jan 2019)
Source: NSW DPE
Source: CoreLogic
Houses $450 0.0% 3.6%
$390 2.6% 4.1%
Median Asking
Rent
12 Month Change in
Asking Rent
Rental Yield
Source: CoreLogic
Multi-Unit
Vacancy Rates (Central Coast, Monthly)
Source: REINSW
Central Coast
• Approvals in the Central Coast have dropped off in recent months, with rolling annual dwelling approvals falling 5% over the 3 months to February 2019.
• The price of new houses and units has remained relatively flat in the 3 months to January 2019, with the median new house price falling by 2% and the median unit price remaining at $585k.
• Whole of market house and unit prices were similarly stable, despite sales volumes beginning to decline. The volume of house sales was down 7.6% in the 3 months to January 2019, while unit sale volumes were down 4.2%.
• The suburbs with the greatest 3-month movement in median house price were Wyong Creek (23.6% increase), Kilcare (21.4% increase) and West Gosford (14.3% decrease). The greatest 3-month movements in unit prices were in Wamberal (13.4% increase), Booker Bay (13.3% decrease) and Toukley (6% decrease).
Median New House and Unit Price (Central Coast, Monthly)
Central Coast
Central Coast Update as at 31/01/2019
Source: CoreLogic
Source: CoreLogic
3 Month % Change in Median Sales Price (Whole of Market, as at 31/01/2019)
0%
%% 24%15%
Residency Vacancy Rates (Hunter, Monthly)
Source: REINSW
Approvals (Greater Newcastle, Monthly)
Source: ABS
Approvals by LGA Jan 2018 vs Jan 2019
Source: NSW DPE, ABS
Source: CoreLogic
Lower Hunter
Weekly Rents (Newcastle LGAs, Jan 2019)
Source: CoreLogic
Cessnock$370$290
5.7%0.0%
4.8%5.6%
$430$370
$410$320
$450$405
$430$350
2.4%2.8%
2.5%10.3%
4.7%2.5%
2.4%6.1%
4.1%4.6%
4.5%5.3%
3.7%4.0%
4.2%4.4%
Median Asking
Rent
12 Month Change in
Asking Rent
Rental Yield
Lake Macquarie
Maitland
Newcastle
Port Stephens
• Lower Hunter approvals are also in decline, falling 16% in the 3 months to February 2019.
• New house and unit prices are starting to show signs of contraction. House prices in Newcastle and Lake Macquarie fell by 1%, while the rest of the Hunter had no change. Unit prices across the Hunter fell by 2%. Established house prices were stable, while established unit prices dropped by 1%.
• Sales volumes have begun to decline in the Lower Hunter, with house sales down 6.2% and unit sales down 8.4%.
• The suburbs with the greatest 3-month movement in median house price were Croudace Bay (20.9% increase), Holmesville (13.7% increase) and Salt Ash (13.4% increase). Those with the greatest 3-month movement in median unit price were Hamilton (22.9% increase), the Junction (19.9% decrease) and Edgeworth (14.7% decrease).
Median New House and Unit Price (Hunter, Monthly)
Lower HunterLocal Government Area (LGA) 3 Month Change in Median Sales Price (Whole of Market, as at 31/01/2019)
LGA Market Update as at 31/01/2019
Cessnock
Maitland City
Port Stephens
Lake Macquarie Newcastle
Source: CoreLogic
Source: CoreLogic
Developer Insight “While demand for product in the Newcastle region has reduced slightly off a strong base in line with the overall slowdown in investor lending, quality well-priced properties remain attractive and Newcastle represents a value proposition within a dynamic labour market. The overall Newcastle fundamentals remain sound.”
Suzanne Pitson – General Manager of Sales and Marketing, DHA
↑ 0.1%
↑ 0.0%
↑ 0.0%
↓ 1.4%
0.0%
0.0%↓ 0.8%
↓ 1.0%
↓ 0.9%
↓ 2.9%
Illawarra
Residency Vacancy Rates (Illawarra, Monthly)
Source: REINSW
Approvals by LGA, 12 Months to Feb 2018 vs 12 Months to Feb 2019
Source: NSW DPE, ABS
Median New House and Unit Price (Illawarra, Monthly)
Approvals (Illawarra, Quarterly)
Source: NSW DPE, ABS
Weekly Rents (Illawarra LGAs, Jan 2019)
Source: CoreLogic
Kiama
Median Asking
Rent
12 Month Change in
Asking Rent
Rental Yield
Shellharbour
Shoalhaven
Wollongong
$580$470
3.6%4.4%
3.3%4.0%
$500$420
$395$330
$510$400
0.0%5.0%
3.9%0.0%
2.0%0.0%
4.0%4.2%
3.7%4.1%
3.5%3.5%
• Dwelling approvals in the Illawarra have started to slow, increasing by just 3% in the 3 months to February 2019.
• New house and unit prices have remained flat over the last 3 months, with the median new house price falling just 0.5%. The established market fared slightly less well, with the median house price dropping 1.3% and the median unit price falling 0.5%.
• Sales volumes are starting to decline, with house sales down 6% and unit sales down 4.5%.
• The suburbs that experienced the greatest movement in median house price over the 3 months to January 2019 were Bawley Point (15.4% increase), Minnamurra (15% decrease) and Dolphin Point (14.2% decrease). The suburbs with greatest 3-month movement in median unit price included Coniston (15.1% increase), West Wollongong (11.7% increase) and Gerringong (7.8% decrease).
Source: CoreLogic
WollongongKiama
Shellharbour
Source: CoreLogic
Source: CoreLogic
Shoalhaven
LGA Market Update as at 31/01/2019
IllawarraLocal Government Area (LGA) 3 Month Change in Median Sales Price (Whole of Market, as at 31/01/2019)
↓ 3.2%
↓ 0.4%
0.0%
↓ 1.0%
↓ 0.7%
0.0%
“Sale prices have been flat or marginally lower over the last quarter, coming off a high base. In general, prices in the region have fared slightly better than Sydney, although there has been significant growth in listings for units over the last year. Demand for greenfield and detached housing products remain strong, buoyed by strong employment and population growth. However, we continue to see some potential buyers struggling with financing as a result of the changes at the major lenders. We need to continue releasing a steady supply of serviced land in the urban release areas to keep prices affordable, as well as pushing for caps on developer taxes and charges in the face of lower sale prices.”
Alby Peros – Development Manager, Stockland
↓ 1.3%
↓ 0.5%
Developer Insight
Approvals (ACT & Queanbeyan, Monthly)
Source: ABS
Approvals (New, ACT, by Dwelling Type) 12 Months to Feb 2018 vs 12 Months to Feb 2019
Approvals (New, Queanbeyan, by Dwelling Type) 12 Months to Feb 2018 vs 12 Months to Feb 2019)
Source: ABS
Source: ABS
Completions (ACT, Quarterly)
Source: ABS
Weekly Auction Clearance Rates (ACT)
Source: CoreLogic
ACT & Queanbeyan
• Approvals in the ACT & Queanbeyan have also slowed, increasing by just 1% in the 3 months to February 2019.
• The median house price in the ACT has increased by 1.2% to $658k, while unit prices remained flat at $426k.
• Sales volumes have fallen slightly over the last 3 months, with house sales down 3.2% and unit sales down 1.4%.
• The suburbs with the most significant 3-month movement in median house price were Kingston (29% increase), Forrest (14.3% decrease) and Oxley (14% decrease). Those with the greatest 3-month movement in median unit price were Chifley (26.2% increase), Barton (23% increase) and Weston (21.8% increase).
ACT & Queanbeyan3 Month Change in Median Sales Price (Houses), as at 31/01/2019
LGA Market Update as at 31/01/2019
Source: CoreLogic
Source: CoreLogic
Queanbeyan Urban (NSW)
ACT
0%% %15% 29%
National Property ClockAdapted from Herron Todd White, Month in Review
April 2019
Illawarra Melbourne Newcastle Sydney
Canberra Central Coast
Dubbo Mid North Coast
Hobart Sunshine Coast
Adelaide Albury Launceston
Brisbane Cairns
Alice Springs Perth Rockhampton
Darwin South West WA
Canberra Illawarra Melbourne
Newcastle Perth Sydney
Central Coast Coffs Harbour Gold Coast
Lismore Mid North Coast
Hobart Sunshine Coast
Bathurst Dubbo
Adelaide Ipswich
Cairns Whitsunday
Brisbane South West WA
HOUSES
UNITS
Source: Herron Todd White, Month in Review, April 2019
THE URBAN DEVELOPMENT INSTITUTE OF AUSTRALIA (UDIA) IS THE PEAK BODY
REPRESENTING THE URBAN DEVELOPMENT INDUSTRY IN AUSTRALIA.
UDIA NSW OFFICE
Officially established in 1963, UDIA NSW has grown to become the leading industry body representing the interest of the NSW property development sector.
UDIA NSW aims to secure the viability and sustainability of the urban development industry for the benefit of our members and the communities they create by
advocating for more liveable, affordable and connected cities.
We represent the leading participants in the industry and have more than 500 member companies across the entire spectrum of the industry including developers, institutional investors, third party logistics providers, financiers, builders, suppliers,
architects, engineers, lawyers, town planners, academics and state and local government bodies. A quarter of these members are based in regional NSW.
UDIA NSW members are represented by an elected council of 13 leading industry practitioners who are responsible for the strategic direction of the Institute. UDIA
NSW also has an extensive committee and regional chapter structure that involves more than 300 of the development industry’s key stakeholders in policy formulation.
UDIA NEW SOUTH WALES 02 9262 1214
LEVEL 5, 56 CLARENCE ST. SYDNEY, NSW 2000 www.udiansw.com.au
ABOUT UDIA
Source: Herron Todd White, Month in Review, April 2019
Image: Wivenhoe Village by Mbark
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