The Outlook for Residential Land in Melbourne

Transcription

1 The Outlook for Residential Land in Melbourne Extract to indicate the general nature of the report RESIDENTIAL PROPERTY

2 BIS Shrapnel Pty Limited August 2015 The information contained in this report is the property of BIS Shrapnel Pty Limited and is confidential. All rights reserved. No part of this report may be reproduced or transmitted in any form, nor may any part of or any information contained in this report be distributed or disclosed to any person who is not a full-time employee of the Subscriber without the prior written consent of BIS Shrapnel Pty Limited. The Subscriber agrees to take all reasonable measures to safeguard this confidentiality. The Subscriber may not, under any circumstances, use information in this report for promotional purposes. Note: Although great care has been taken to ensure accuracy and completeness in this project, BIS Shrapnel Pty Ltd has not independently verified, and does not accept responsibility for, the completeness and accuracy of the factual information on which its opinions and assumptions are based, which information has been derived from public authorities or government bodies. R6251/AR/sf BIS Shrapnel contact: Angie Zigomanis BIS Shrapnel Pty Limited Level 40, Rialto South Tower 525 Collins Street Melbourne VIC 3000 Australia Tel. +61 (0) Fax +61 (0) Acknowledgement This report has been prepared by Andrew Raponi with assistance from Angie Zigomanis. Administrative support was provided by Sylvia Foo.

3 Contents The Outlook for Residential Land in Melbourne Contents EXECUTIVE SUMMARY... I 1. INTRODUCTION Regions covered by this report MELBOURNE MARKET OVERVIEW Economic conditions, inflation and interest rates National The Victorian economy Home loan activity First home buyers Type of dwelling Demand Population growth Underlying demand and stock deficiency Detached house vs. other dwellings Residential dwelling supply Total dwelling commencements Changing trends in dwelling composition Median house price forecasts OUTER MELBOURNE LAND MARKET Population analysis Land production Land market trends Comparison between land and house prices Lot sizes Forecast prices GROWTH AREAS LAND MARKET Population growth Employment growth New housing costs House build costs New house premium New detached house approvals Land production Potential land supply Growth Areas lot production BIS Shrapnel Pty Limited 2015

4 The Outlook for Residential Land in Melbourne Contents 4.6 Lot prices Lot sizes and prices per sqm Western Growth Areas lot price and forecasts Northern Growth Areas lot price and forecasts South East Growth Areas lot price and forecasts APPENDIX A... A1 BIS Shrapnel Pty Limited 2015

5 List of tables The Outlook for Residential Land in Melbourne Table I: Table II: Table III: List of Tables Dwelling Commencements, Greater Melbourne, 1994 to viii New detached house approvals and lot production, Outer Melbourne, 1992 to xiii Median house and land price, 1987 to xvi Table 2.1: Key economic indicators, Victoria Table 2.2: Population change components and estimated resident population, Victoria Table 2.3: Greater Melbourne headship ratios, 2001 to Table 2.4: Dwelling commencements, Greater Melbourne, 1994 to Table 2.5: Melbourne Median House Price, Quarterly Medians Table 3.1: Population Projections, Greater Melbourne Regions ( 000s) Table 3.2: New detached house approvals and lot production, Outer Melbourne, 1992 to Table 3.3: Median house and land price, Outer Melbourne, 1987 to Table 4.1: Population projections, Growth Areas ( 000s) Table 4.2: Employment, Growth Areas at March Table 4.3: New house premium, Growth Areas, Table 4.4: New house building approvals, Growth Areas, 1992 to Table 4.5: Lots in development pipeline, Urban Development Program, Table 4.6: Lot production, Growth Areas, 1992 to Table 4.7: Median house price and median land price, Western Growth Areas, 1992 to Table 4.8: Median house price and median land price, Northern Growth Areas, 1992 to Table 4.9: Median house price and median land price, South East Growth Areas, 1992 to Table A1: Table A2: Table A3: Table A4: Table A5: Table A6: Table A7: Table A8: Table A9: Population growth, Greater Melbourne, Regional Victoria and Victoria, 1987 to A3 Underlying demand components, Greater Melbourne, 1987 to A4 Dwelling completions, underlying demand and residential stock deficiency/excess, Greater Melbourne, 1987 to A5 Median land prices, Wyndham Growth Area suburbs, 2000 to A6 Number of land sales, Wyndham Growth Area suburbs, 2000 to A7 Median lot size, Wyndham Growth Area suburbs, 2000 to A8 Median land prices, Melton Growth Area suburbs, 2000 to A9 Number of land sales, Melton Growth Area suburbs, 2000 to A10 Median lot size, Melton Growth Area suburbs, 2000 to A11 Table A10: Median land prices, Hume Growth Area suburbs, 2000 to A12 Table A11: Number of land sales, Hume Growth Area suburbs, 2000 to A13 Table A12: Median lot size, Hume Growth Area suburbs, 2000 to A14 Table A13: Median land prices, Wallan Beveridge Growth Area suburbs, 2000 to A15 Table A14: Number of land sales, Wallan Beveridge Growth Area suburbs, 2000 to A16 Table A15: Median lot size, Wallan Beveridge Growth Area suburbs, 2000 to A17 Table A16: Median land prices, Whittlesea Growth Area suburbs, 2000 to A18 Table A17: Number of land sales, Whittlesea Growth Area suburbs, 2000 to A19 Table A18: Median lot size, Whittlesea Growth Area suburbs, 2000 to A20 BIS Shrapnel Pty Limited 2015

6 The Outlook for Residential Land in Melbourne List of tables Table A19: Median land prices, Cardinia Growth Area suburbs, 2000 to A21 Table A20: Number of land sales, Cardinia Growth Area suburbs, 2000 to A22 Table A21: Median lot size, Cardinia Growth Area suburbs, 2000 to A23 Table A22: Median land prices, Casey Growth Area suburbs, 2000 to A24 Table A23: Number of land sales, Casey Growth Area suburbs, 2000 to A25 Table A24: Median lot size, Casey Growth Area suburbs, 2000 to A26 BIS Shrapnel Pty Ltd 2015

7 List of charts The Outlook for Residential Land in Melbourne Chart I: Chart II: Chart III: Chart IV: Chart V: Chart VI: List of Charts New detached house approvals and lots produced, Outer Melbourne, 1992 to iv Underlying residential demand, supply and underlying stock deficiency/excess, Greater Melbourne, 1992 to v Stock deficiency/excess, detached house vs. other dwellings, Greater Melbourne, 2006 to vi Housing affordability*, Melbourne, 1991 to x Median land price as a proportion of median house price, Outer Melbourne, 1987 to xi Rise in Growth Areas median land value vs. value per sqm, 1992 to xiv Chart 1.1: Greater Melbourne regions... 4 Chart 1.2: Greater Melbourne residential land regions... 5 Chart 2.1: Cash rate, housing rate and CPI, Australia Chart 2.2: Approved first home buyer loans, moving annual total, Victoria Chart 2.3: Number of home loans approved for owner occupation, Victoria Chart 2.4: Value of home loans approved to investors, Victoria Chart 2.5: Chart 2.6: Underlying residential demand, supply and underlying stock deficiency/excess, Greater Melbourne, 1987 to Stock deficiency/excess, detached house vs. other dwellings, Greater Melbourne, 2006 to Chart 2.7: Proportion of total completions by dwelling type, Greater Melbourne, 1997 to Chart 2.8: Housing affordability*, Greater Melbourne, 1991 to Chart 3.1: Share of Greater Melbourne s population growth by inner, middle and outer ring Chart 3.2: Chart 3.3: Median land price as a proportion of the median house price, Outer Melbourne, 1987 to Median land price and construction cost in comparison with median house price and new house commencements, Outer Melbourne, 1987 to Chart 3.4: Outer Melbourne median lot size (square metres), 1987 to Chart 4.1: Average house build cost ($ 000s), Growth Areas, Chart 4.2: Share of new detached house approvals, Greater Melbourne regions, 1992 to Chart 4.3: Share of new detached house approvals, Growth Areas, 1992 to Chart 4.4: Share of lot production, Growth Areas, 1992 to Chart 4.5: Median lot sizes, Growth Areas, 1992 to Chart 4.6: Rise in Growth Areas median land value vs. value per sqm, 1992 to Chart 4.7: Ratio of median land price to median house price, Western Growth Areas, 1992 to Chart 4.8: Share of Land Sales by price point, Western Growth Areas, Chart 4.9: Ratio of median land price to median house price, Northern Growth Areas, 1992 to Chart 4.10: Share of Land Sales by price point, Northern Growth Areas, Chart 4.11: Ratio of median land price to median house price, South East Growth Areas, 1992 to Chart 4.12: Share of Land Sales by price point, South East Growth Areas, BIS Shrapnel Pty Limited 2015

8 Introduction The Outlook for Residential Land in Melbourne 1. INTRODUCTION The residential land market in Melbourne has experienced strengthening demand for house/land packages over the past two years to , underpinned by high net overseas migration inflows and record net interstate migration inflows driving solid population growth. Purchaser sentiment has also been buoyed by low borrowing costs, with the standard variable interest rate reducing to a historical low of 5.45 per cent in May New detached house commencements across Greater Melbourne (majority occur in Outer Melbourne) have escalated, rising by an estimated 22 per cent over the two years to to 22,400 starts. After just 9,250 lots were released in in Outer Melbourne (its lowest level in sixteen years), lot production has surged in to an estimated record of 19,900 lots. However, escalating new house demand has so far not translated into land price growth, with the Outer Melbourne preliminary median land value at June 2015 of $208,500, just surpassing the previous peak at June The number of new subdivisions/estates has increased markedly in recent years, creating a more competitive environment, which in turn has limited land price growth. Conversely, the median house price in Outer Melbourne is estimated to have increased by a sizeable 16 per cent during the two years to , resulting in more attractive affordability for a house/land package compared to an established house. Will this translate into a continuation of strong new house demand and finally drive an upturn in land prices? The Outlook for Residential Land in Melbourne 2015 to 2020 aims to address the issues confronting the Melbourne residential land market. In undertaking the analysis, the study takes a top down approach to determine the demand for land starting with forecasts of the demand and supply of residential dwellings, which can then be translated into the demand for broadhectare land. The report provides: Forecasts for population growth and underlying demand; Forecasts for new dwelling commencements, split between detached houses, medium density (semi detached, terraces, townhouses, and flats, units, apartments in buildings of one to three storeys), and high density (flats, units, apartments in buildings four storeys and above) dwellings; Analysis and forecasts of broadhectare land production in Melbourne. Identification of the residential growth corridors and analysis of the trends and forecasts in their broadhectare lot production; Forecasts for residential house and vacant broadhectare land price growth for Melbourne and the Growth Area regions. The forecasts for new dwelling activity, land production and price growth are provided annually to BIS Shrapnel Pty Limited

9 The Outlook for Residential Land in Melbourne Introduction 1.1 Regions covered by this report Chapter 3 In Chapter 3, this report examines residential land development across Greater Melbourne Capital City Statistical Area (GCCSA) as defined by the Australian Bureau of Statistics. Local Government Areas (LGAs) and Statistical Areas (SAs) within Greater Melbourne are grouped into inner, middle and outer regions as illustrated by the following hierarchy: Chart 1.1: Greater Melbourne regions Inner & Middle Melbourne Melbourne, Port Phillip and Yarra LGAs; Hobsons Bay, Maribyrnong and Moonee Valley LGAs; Moreland, Darebin and Banyule LGAs; Boroondara, Stonnington, Manningham Whitehorse and Monash LGAs; and Bayside, Glen Eira, Kingston and Greater Dandenong LGAs. Outer Melbourne South West (Wyndham LGA); West (Brimbank and Melton LGAs, plus Bacchus Marsh SA2); North West (Hume LGA, plus Wallan SA2 and Macedon Ranges SA3); North (Whittlesea and Nillumbik LGAs, plus Kinglake SA2); East (Knox, Maroondah and Yarra Ranges LGAs); South East (Cardinia and Casey LGAs); Peninsula (Frankston and Mornington Peninsula LGAs). 4 BIS Shrapnel Pty Limited 2015

10 Introduction The Outlook for Residential Land in Melbourne Chart 1.2: Greater Melbourne residential land regions Chapter 4 In Chapter 4, the focus is centred on the Growth Area regions where the majority of Greater Melbourne s new broadhectare activity is currently occurring. This includes: Western Growth Area Wyndham Local Government Area Melton Local Government Area Northern Growth Area Hume Local Government Area Whittlesea Local Government Area Wallan Beveridge (Refers to Wallan Statistical Area Level 2 region) South East Growth Area Cardinia Local Government Area Casey Local Government Area. BIS Shrapnel Pty Limited

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