Victoria s Residential Building Market in 2017

Transcription

1 Victoria s Residential Building Market in 2017 Shane Garrett, HIA Senior Economist HIA Industry Outlook Breakfast Melbourne, February 2017

2 New dwelling starts have peaked in VIC Number Sep-96 Sep-97 Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Total Dwelling Starts Victoria Source: ABS ,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 Seasonally Adjusted Trend

3 Sep-88 Sep-89 Sep-90 Sep-91 Sep-92 Sep-93 Sep-94 Sep-95 Sep-96 Sep-97 Sep-98 Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Number but detached are still doing quite well Total Dwelling Starts by type Victoria Source: ABS ,000 17,000 15,000 13,000 11,000 9,000 7,000 5,000 3,000 Detached Total

4 Detached houses still represent a big share Victorian Dwelling Commencements by Dwelling Type - Year to Sep 2016 Source: HIA Economics, ABS 40,000 35,000 36,120 30,000 25,000 20,000 15,000 10,000 8,865 16,349 5, ,434 Houses One Storey Two or more storeys In a one or two storey block Semi-detached, row or terrace houses, townhouses 1,146 1,824 In a three storey block In a four or more storey block Flats units or apartments

5 with detached approvals back ahead of multi-units... Number Dec-88 Dec-89 Dec-90 Dec-91 Dec-92 Dec-93 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Trend Building Approvals in Victoria Source: ,000 3,500 3,000 2,500 2,000 1,500 1, Detached Multi-units

6 with high rise starting to fall back VIC Approvals by type - Dec 2016 'qtr' vs Dec 2015 'qtr' Source: ABS % 36.9% 30.0% 20.0% 13.1% 10.0% 6.7% 0.0% -1.6% -10.0% -20.0% -15.3% Detached Semi-detached/ townhouse 1 or 2 storey 3 storey 4+ storey

7 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Outstanding workload is still healthy Snapshot of the Building Activity Pipeline - Flats, units and apartments Source: HIA Economics, ABS , ABS ,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 - Under construction (RHS) Approved (1 month lag) Not yet commenced Commenced Completed

8 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Value $m (moving annual total) Investors still represent a big slice of the action Lending for Rental Properties - Victoria Source: ABS Lending Finance 41,000 4,500 36,000 31,000 26,000 21,000 16,000 4,000 3,500 3,000 2,500 2,000 1,500 1, ,000 - Existing (lhs) Construction (rhs)

9 FHB activity has steadied out Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 First Home Buyers Victoria Source: ABS Housing Finance % 25.0% 20.0% 15.0% 10.0% 5.0% 0 0.0% First home buyers - Dwellings financed (no.) Proportion

10 but other areas of lending are a little weak VIC - Finance by Market Segments - Dec 2016 Qtr on Dec 2015 Qtr 15% 13.3% 10% 5% 3.9% 1.2% 0% -5% -4.4% -2.6% -5.3% -10% Source: ABS, HIA Established Homes New Homes First Home Buyers Trade up Buyers Investors in New Homes* Investors in Established Homes*

11 VIC: the powerhouse of Australia s labour market Employment Creation in Victoria and Australia, year to January 2017 Source: ABS NSW VIC QLD SA WA TAS NT ACT Total Full-Time

12 and is also towering on the population stakes Annual Population Growth to June Qtr 2016 Source: HIA Economics, ABS % 2.0% 2.1% 1.5% 1.4% 1.4% 1.3% 1.0% 1.0% 0.5% 0.5% 0.5% 0.2% 0.0% NSW VIC QLD SA WA TAS NT ACT

13 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Migration from other states to VIC is up Victoria's Population Growth by Component - Moving Annual Total Source: ABS , ,000 80,000 60,000 40,000 20, % 35% 30% 25% 20% 15% 10% 5% -20,000 0% Total MAT Natural Increase MAT Net Overseas Migration MAT Net Interstate Migration MAT VIC's share of national net overseas migration (rhs)

14 especially from NSW, SA and WA Sources of Net Interstate Migration to Victoria, ,000 6,000 5,828 5,000 4,000 3,682 3,965 3,000 2,000 1, Source: ABS NSW QLD SA WA TAS NT ACT

15 Migrants tend to flock to the rental market but % change in index Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 CPI Rental Growth Melbourne Source: ABS Annual (RHS)

16 Dollars will the foreign investor surcharge bite? Comparison of Transaction Taxes for Residential Investors based on Dec 2016 Prices 90,000 80,000 70,000 60,000 50,000 72,910 83,426 40,000 30,000 33,830 33,542 35,015 20,000 15,435 10,000 0 Sydney Melbourne Brisbane Domestic Investor Foreign Investor Source: State Budgets; CoreLogic HIA

17 Dollars per Month Stamp Duty costs every month Monthly Cost of Investor Stamp Duty based on Dec 2016 Dwelling Prices Sydney Melbourne Brisbane Domestic Investor Foreign Investor Source: State Budgets; CoreLogic, HIA, RBA

18 How age affects housing demand Median Population Age and Persons per Dwelling by State, TAS SA NSW AUS VIC QLD WA ACT NT Source: ABS Median Age Persons per Dwelling 0.0

19 Housing valuations have become more elevated Ratio of Median Dwelling Price to Average Earnings by Capital City, Dec 2016 quarter Source: CoreLogic; ABS Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra 8 Capitals

20 Mortgage Repayment Burden Mortgage Repayments as a Proportion of Average Earnings by Capital City, Dec 2016 quarter Source: CoreLogic; ABS; RBA 60% 54.8% 50% 40% 30% 45.4% 35.2% 32.2% 31.0% 25.5% 35.2% 39.2% 41.7% 20% 10% 0% Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra 8 Capitals

21 House Prices are expensive in rental terms Dwelling Price to Rent Ratio by Capital City, 2011 and 2016 Source: CoreLogic Sydney Melbourne Brisbane Adelaide Perth Hobart Darwin Canberra All Capitals Dec-11 Dec-16

22 Thousand dwellings commenced Outlook: new dwelling starts VIC Housing Starts Forecasts Source: HIA Economics 45.0 Forecast /09 (a) 2009/10 (a) 2010/11 (a) 2011/12 (a) 2012/13 (a) 2013/14 (a) 2014/15 (a) 2015/16 (a) 2016/ / /19 Detached Multi

23 Renovations activity has battled higher $ million (moving annual total) Sep-1999 Sep-2000 Sep-2001 Sep-2002 Sep-2003 Sep-2004 Sep-2005 Sep-2006 Sep-2007 Sep-2008 Sep-2009 Sep-2010 Sep-2011 Sep-2012 Sep-2013 Sep-2014 Sep-2015 Sep-2016 Renovations investment in Victoria - Moving annual total Source: ABS State Final Demand 8,500 8,000 7,500 7,000 6,500 6,000 5,500 5,000 4,500 4,000

24 Dec-2008 Jun-2009 Dec-2009 Jun-2010 Dec-2010 Jun-2011 Dec-2011 Jun-2012 Dec-2012 Jun-2013 Dec-2013 Jun-2014 Dec-2014 Jun-2015 Dec-2015 Jun-2016 Dec-2016 Jun-2017 Dec-2017 Jun-2018 Dec-2018 Jun-2019 Dec-2019 Jun-2020 Dec-2020 Jun-2021 Dec-2021 Jun-2022 Dec-2022 Jun-2023 Dec-2023 Jun-2024 Dec-2024 Jun-2025 Dec-2025 Jun-2026 Dec-2026 Thousands of Dwellings The ageing of VIC s Housing Stock will Private Detached Houses by Vintage, Victoria Source: ABS 20 to 29 Years

25 Value of Investment (millions) help to boost renovations demand VIC Renovations Forecasts Source: HIA Economics 8,200 8,000 7,800 7,592 7,634 7,661 7,682 7,697 7,459 7,561 7,600 Forecast 7,876 7,932 7,400 7,200 7,000 6,800 6,750 6,926 7,188 6,939 6,600 6,400 6,200 6, (a) 2007 (a) 2008 (a) 2009 (a) 2010 (a) 2011 (a) 2012 (a) 2013 (a) 2014 (a) 2015 (a)

26 THANK YOU FOR YOUR TIME Shane Garrett HIA Senior Economist