property report melbourne

7/27/2019 Property Report Melbourne

1/16

Sydney Market

ULY 2010 EDITION


2/16

NATIONAL SUMMARY

The Australian economy was one of the few developed economies to come through the

Global Financial Crisis (GFC) in relatively good form due largely to the strength of our

banking system, aggressive action by the RBA and Government, and a stable housing

sec tor. With the world economy again looking shaky, the RBA is adopting a prudentwait and see strategy before making further dec isions on interest rate movements.

The key drivers to Australia continuing to be one of the worlds more stable economies

will be attributed to numerous resource projects - through ongoing investment in coal,

iron ore and LNG along with an undersupplied housing market and interest rates at a

level that has scope to fall if need be. With the resources super profits tax now

watered-down and China (Australias leading trading partner) continuing to grow at a

solid pace, it is hard to see many countries boasting a better medium term outlook. It is

this stability that is now leading the Australian dollar to becoming increasingly demanded

as a prime reserve currency for central bankers.

The major factor for the housing market is that Australia now boasts one of the strongest

population growth rates in the world; going from averaging circa 225,000 new persons ayear to circa 425,000 now. Such dramatic increases in population (coupled with lowinterest rates and inadequate housing supply) placed significant pressure on property

prices which have grown strongly over the past year in all states.

However, recent increases in interest rates and the removal of first homebuyer stimulus

have seen demand (as predicated by finance approvals) fall across the board and

growth over the past quarter has been slow in most major capitals except Sydney which,

as predicted in earlier versions of this report, has been the best performing market thus farin 2010. Nevertheless, while the nationa l market has slowed of late, the overwhelming

undersupply issue remains. So should capital growth moderate going forward, investorsare likely to see increased yields with rental rates under continued pressure.

-2.0%-1.0%0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%

National Economic Activity

On a final demand basis the Australian economy

recorded growth of 4.0% over the yea r to March 2010.

While notably higher than growth in production (GDP), this

demand result highlights a very strong rebound in the

Australian domestic economy.

As mentioned, provided Chinas now more stable growth

of circa 8% continues, demand for Australia c ommodities

should remain strong providing a very stable outlook for

the market.

Da ta Sourc es: ABS, MLG Resea rc h


3/16

NATIONAL SUMMARY

Demand Growth by State

Victoria was the strongest performer amongst the major

states rec ording a growth rate of 5.3% for the year. The worst

performing state economy over the past 12 months was

Queensland, which struggled with a lack of tourism and did

not post any growth.

Going forward, with a strong rebound in resources and

exceptional population growth Queensland is sure to return

to positive territory.

5.2%

5.3%

0.0%

5.2%

4.6%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%

New South Wales

Vic toria

Queensland

South A ustralia

Western A ustralia

Confidence Levels Consumer & Business

The Westpac Consumer and NAB Business Confidence

surveys provide a strong guide as to the public's perception

of the economy; both of which have returned to strong

historic levels.

The Westpac Consumer index currently stands at 117.1,

which shows a notable increase of 31.7 over the past 12

months to March 2010. The NAB business confidence index

also posted a significant increase rising by 40.6.

70.0

80.0

90.0

100.0

110.0

120.0

130.0

-40

-30

-20

-10

0

10

20

30

NAB Business (LHS) Westpac Co nsumer (RHS)

Interest Rates & Affordability

According to the RBA the standard variable mortgage rate is

7.4% as at J une 2010, with the RBA cash rate target sitting at

4.5%. For mortgage rates this shows a notable rise of 160 basis

points over the past 12 months and sits slightly above the 10-

yr average of 7.25%.

With the global economy again showing signs of instability

and share markets posting losses, the RBA is likely to take a

wait and see approach to interest rate decisions.

-

2.00

4.00

6.00

8.00

10.00

12.00

Std Ho using Int. Ra te (%) Ho using A ffo rd ab ility Ra tio

RBA C ash Rate (%)

Finance Approvals & Purchaser Profiles502,316 housing loan approvals were granted in Australia

during the 3 months to April 2010. This shows a fa ll in approva l

activity over the past 3 months of 92,210 or 15.5%.

This notable fall from the mid-09 peak in finance approvals is

attributed to the reduction of first homebuyer stimulus and

rises in mortgage rates. However, as can be seen this level of

circa 500,000 approva ls is a fairly historic norm.

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000800,000

First Home Buyers Non First Home Buyers Investors

Da ta Sourc es: RBA , ABS, NAB, Westpa c , MLG Resea rc h


4/16

NATIONAL SUMMARY

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%7.0%

National Inflation

As at the March quarter of 2010 Australia's consumer

price index level stands at 2.1%. This is within the RBA's

target range of 2-3% indicating a neutral stance on

monetary policy is likely warranted by the Reserve Bank.

However, as interest rates are at historic lows the RBA

should be mindful to restrain any possible rise in inflation.

But with the global economy showing signs of a stalling in

the recovery process, the RBA will be very cautious not to

unduly dampen the domestic economy.

-

100.00

200.00

300.00

400.00

500.00

600.00

Ho using Pric e s Unit Pric e s

Housing & Unit Prices

The median housing price in Australia is currently $518,600

according to the latest REI numbers for March 2010. This

shows a notable rise from the year prior of 18.6%. Unit

values also grew notably, rising by 17.3% over the period

to an average level of $412,700.

Over the past 10 years housing and unit prices have

recorded average annual compound growth levels of

8.9% and 7.8% respec tively.

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

Natural Increase Net Migration

Population Growth

In the year to J anuary 2010 Australia's estimated

population stood at 22.16 million people. This shows total

annual population growth of 2.0%. As can be seen the

number of new persons in the c ountry is virtually double

historic rates.

The main contributor to this rise in population was a

significant change in net migration, which increased by

277,710 persons. Natural population growth (births) also

rose throughout the year by 155,642 persons.

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

500,000

Popula tion G rowth Dwe lling Approva ls

Dwelling Approvals & Population

Australian dwelling approvals over the year to March

2010 stood at 158,484, growing by 21,433 over the prior

year.

When compared to population growth this equates to

2.73 dwellings being approved for every person increase

in population, which is notably higher than the long term

historical requirement of 2.35.

Da ta Sourc es: REIA, A BS, MLG Resea rc h


5/16

STATE COMPARISON CHARTS

Housing Values History Housing & Other Median Values - Latest

-

100

200

300400

500

600

700

Sydney Melbourne Brisbane Perth

610

525

455

500

419

450

375

410

- 100 200 300 400 500 600 700

Sydney

Melbourne

Brisbane

Perth

Other Dwellings Housing

Median Rentals Housing & Other Vacancy Rates - Latest

380

330

350

380

410

340

350

350

- 50 100 150 200 250 300 350 400 450

Sydney

Melbourne

Brisbane

Perth

1.1

1.5

3.8

4.1

- 1.0 2.0 3.0 4.0 5.0

Sydney

Melbourne

Brisba ne

Perth

Other Ho using

Rental Yields - Latest Dwelling Approvals - 12 months to

3.2%

3.3%

4.0%

4.0%

5.1%

3.9%

4.9%

4.4%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%

Sydney

Melbourne

Brisbane

Perth

Other Housing

0

10,000

20,000

30,000

40,000

50,000

60,000

NSW VIC QLD WA

Population Growth 12 Months to Population Growth per Dwelling Approval

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

NSW VIC QLD WA

3.7

2.2

3.4

2.5

1.8

1.5

1.8

1.6

- 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0

NSW

VIC

QLD

WA

Historic Requirement

Current

Da ta Sourc es: REIA, A BS, MLG Resea rc h


6/16

SYDNEY MARKET

With a population of 7.2 million people across greater New South Wales (which representsalmost a third of the nation) Sydney is Australias largest and most densely populated city.

The key driver of the Sydney economy is its position as the nations corporate and financ ial

capital, and it is also a major financial centre in the Asia-Pac ific region.Between 2003 and 2009 property prices in Sydney remained largely static. Now however,

with dwelling supply exceptionally tight and population growing strongly Sydney has begun

to post strong capital ga ins, as forecast in earlier versions of this report. This has led toSydney boasting the lowest level of vacancy in the country and corresponding strong

growth in rents and yields.

The low level of dwelling supply in Sydney cannot be emphasised enough. With hindrances

for developers on finance, government costs and a general lack of sites, Sydney is building

less per person increase in population than any other state and significantly less than it was

20 years ago! Over the past year NSW had only 7,299 more dwellings approved than WA; astate less than one third of Sydneys size. In terms of dwellings per person, currently Sydney is

building just one dwelling for every 3.7 person increase in population. Unquestionably this isgoing to continue to put pressure on rental levels and property prices going forward and

with Sydney units already the highest yielding in the country, Sydneys position as the

nations premier investment market going forward seems virtually assured.

To bolster this much needed supply the NSW State Government has introduced zero stamp

duty incentives for off the plan purchases under $600k. However in MLGs experience as a

project marketer dealing with developers, demand is not the problem it is finance

requirements and Sydneys exhaustive and expensive development approvals process.

Nevertheless, the initiative at least shows the government is mindful of the problem and is

great news for investors.

NSW&Sydney KeyStatistics Asat 3monthchange 12monthchange

NSW

Population

7,191,505

Jan

10

+0.4%

pts

+1.6%

pts

NSWUnemploymentRate 5.6% May10 0.8%pts 1.3%pts

NSWNewDwellingApprovals(12monthsto) 30,990 Mar10 +15.2%pts +21.4%pts

NSWFin.Approvals Occupiers(3monthsto) 41,072 Apr10 5.7%pts +8.5%pts

NSWFin.Approvals Investors(3monthsto) 35,936 Apr10 10.3%pts 2.6%pts

SydneyMedianHousePrice $609,500 Mar10 +5.6%pts +8.6%pts

SydneyMedianPriceOtherDwellings $418,900 Mar10 +5.3%pts +15.1%pts

SydneyVacancyRate 1.1% Mar10 0.2%pts 0.1%pts

SydneyMedianRent 3bedroomhouse $380 Mar10 +5.6%pts +8.6%pts

SydneyMedianUnitRent 2bedroomunit $410 Mar10 +2.5%pts +2.5%pts

SydneyImpliedGrossRentalYield Houses 3.2% Mar10 0.1%pts 0.2%pts

SydneyImpliedGrossRentalYield Units 5.1% Mar10 0.1%pts 0.6%pts


7/16

SYDNEY MARKET

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

M edia n House Pric e M edian O ther Pric e


According to the latest da ta from the REI the median housing

price in Sydney stood at $609,500 in the March 2010 quarter,

while other dwelling sales averaged $418,900. This shows a

notable rise over the past 12 months for housing of 15.7% and asignificant appreciation of 15.1% for other dwellings.

As can be seen, Sydney has largely bucked the national trend

and continued to show strong growth over the past quarter.

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

-

50

100150

200

250

300

350

400

450House Rent/ Wk ($ RHS)

Other Rent/Wk ($ RHS)

Vacancy Rate (% LHS)

Rents and Vacancy Levels

Average rental rates for housing in Sydney rose by 8.6% to

average $380 per week, while units and other dwellings stood at

$410; showing growth of 2.5%. Vacancy rates for the quarter

remained low at just 1.1%.

With the reduction of first home buyer stimulus, the major

purchasing category is now moving to investors. This coupled

with the overwhelming lack of dwelling supply should keep

rental pressure on an upward trajec tory.

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

Implied Housing Yield Implied Other Yield

Property Yields

Implied rental yields on housing investments in Sydney averaged

3.2% in the March 2010 quarter, while rental income on other

dwellings was notably higher at 5.1%.

This yield on units and other dwellings is the strongest of

Australias major states which, when coupled with vacancies

also at rec ord lows, shows income returns from residential

property investment in NSW are extremely healthy.

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Dwelling Approvals Population Growth


New South Wales dwelling approvals over the year to March

2010 stood at 30,990, growing by 5,454 over the prior year.

When compared to population growth this equates to just one

dwelling being approved for every 3.74 person increase in

population, which is substantially lower than the long term

historical requirement of one per every 1.75 people.

It is this dire shortage of dwellings relative to population that is

likely to have a strong upward impact on prices for Sydney

property.

-60,000-40,000

-20,000-

20,00040,000

60,00080,000

100,000120,000140,000

160,000

Natural Growth Net Overseas Migration Net Interstate Migration

Population Growth

The latest figures from the ABS for J anuary 2010 estimates the

New South Wales population at 7.19 million people. This shows

total annual population growth of 1.6% (115,798 people) which is

substantially higher than the long term average growth rate of

1.2% per annum.

The main contributor to this rise in population was a significant

change in Net Overseas Migration, which increased by 83,787

persons.

Da ta Sou rce s: REIA, ABS, MLG Resea rc h


8/16

MELBOURNE MARKET

In terms of population Victoria is the second largest state in Australia with over 5.4 million

people and also the second largest national economy. The Victorian economy has

continued to perform strongly in recent years, emerging not only unscathed by the GFC,but posting solid gains. The strong performance of the Victorian property market has been

underpinned by one major factor population growth.

Since 2005 Victorias population has grown rapidly, going from increasing by circa 60,000people a year to almost 120,000 people a year. This dramatic increase has seen both

property values and rentals grow strongly in-line, whilst vacancy plummeted to one of the

lowest levels in the country at just 1.5%.

To boost demand in regional housing and relieve some of the pressure on metropolitanMelbourne, new transport infrastructure projects continue to assist housing development

along the main growth corridors. The $4.3 billion Regional Rail Express project will linkGeelong, Ballarat and Bendigo with Melbourne via a dedicated express train service.

Unlike NSW however, the Victorian stamp duty incentives for new dwellings and planningprocesses have unquestionably been the best in the country, which has led to new dwelling

approvals remaining at relatively healthy levels. While the market is still notablyundersupplied relative to the circa 115,000 people a year (over 2,200 people a week)

growth in population, buyers in Victoria can afford to be more selective due to the betterplanning processes evident in Victoria. Because of this, MLG recommend investors focus on

quality stock with a significant point of difference in terms of location, views or design.

Melbournes growth over the past year has led the nation with houses and units rising by23.4% and 25.0% respectively. Over the past quarter however, pricing growth has stalled

with the reduction of first home owners grants and interest rate rises. Regardless of this, the

continued demand pressure on accommodation in Melbourne remains evident as shown

by strong rises over the quarter in both rents and yields.

Vic&Melbourne KeyStatistics Asat 3monthchange 12monthchange

VicPopulation 5,496,408 Jan10 +0.4%pts +2.1%pts

VicUnemploymentRate 5.7% May10 0.2%pts 0.7%pts

VicNewDwellingApprovals(12monthsto) 52,584 Mar10 2.2%pts +26.2%pts

VICFin.Approvals Occupiers(3monthsto) 65,566 Apr10 6.2%pts 15.5%pts

VICFin.Approvals Investors(3monthsto) 34,153 Apr10 7.5%pts 8.1%pts

MelbourneMedianHousePrice $524,500 Mar10 2.0%pts +23.4%pts

MelbourneMedianPriceOtherDwellings $450,000 Mar10 +2.0%pts +25.0%pts

MelbourneVacancyRate 1.5% Mar10 +0.20pts +0.10pts

MelbourneMedianRent 3bedroomhouse $330 Mar10 +6.5%pts +6.5%pts

MelbourneMedianUnitRent 2bedroomunit $340 Mar10 +5.9%pts +6.3%pts

MelbourneImpliedGrossRentalYield Houses 3.3% Mar10 +0.3%pts 0.5%pts

MelbourneImpliedGrossRentalYield Units 3.9% Mar10 +0.1%pts 0.7%pts


9/16

MELBOURNE MARKET

-

100,000

200,000

300,000

400,000

500,000

600,000

M edian House Pric e M edian O ther Pric e


The latest data from the REI shows the median housing price in

Melbourne stood at $524,500 in the March 2010 quarter, while

other dwelling sales averaged $450,000.While growth stalled over the March quarter, the chart shows

a notable rise over the past 12 months for housing of 23.4%

and a significant apprec iation of 25.0% for other dwellings.

-

1.0

2.0

3.0

4.0

5.0

6.0

-

50

100

150

200

250

300

350

400House ($Rent/ Wk RHS)

O ther ($Rent/ Wk RHS)

Va c anc y Rate (% LHS)


Average rental rates for housing in Melbourne rose by 6.5% to

average $330 per week, while units and other dwellings stood

at $340; showing growth of 6.3%.

Melbournes vacancy rate remained low at about 1.6% and

so demonstrates an undersupplied rental market similar to

Sydney. New dwelling construction is unlikely to satisfy current

demand and rents will remain high in the short term.

0.0%

1.0%2.0%

3.0%

4.0%5.0%

6.0%

7.0%

8.0%


Property Yields

Implied rental yields on housing investments in Melbourne

averaged 3.3% in the March 2010 quarter, while rental income

on other dwellings was slightly higher at 3.9%.

This moderation of yields is due to Melbournes exceptional

capital growth which rose higher than rental returns.

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000



Victorian dwelling approvals over the year to March 2010

stood at 52,584, growing by 3,808 over the prior year.

When compared to population growth this equates to only

one dwelling being approved for every 2.18 person increase in

population, which is substantially lower than the long term

historical requirement of one per every 1.53 people, showing

an undersupply is still apparent.

-40,000

-20,000

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000


Population Growth

The latest figures from the ABS for J anuary 2010 estimate the

Victorian population at 5.5 million people. This shows total

annual population growth of 2.1% (114,580 people) which is

notably higher than the long term average growth rate of

1.3% per annum.

The main contributor to this rise in population was a significant

change in Net Overseas Migration, which increased by 77,502

persons.

Da ta Sou rce s: REIA, ABS, MLG Resea rc h


10/16

BRISBANE MARKET

The Queensland economy slowed over the past year as the mining boom of recent years

stalled, at the same time as housing investment and tourism also declined. Despite this

recent slump, anticipation is beginning to mount that the resources sec tor investment boomwill be reignited, driven by the LNG wave. Major LNG finds such as in Gladstone is likely to

see the state return to its reputation of abundance and capitalise on both its strong

resources sector and leading population growth.

The Queensland Government also has a major infrastructure expenditure program with

some of the major projects including: the $5.5bn Brisbane North Urban Corridor, $5.2bn

Pacific Motorway, $3.6bn Ipswich Motorway $2bn North Coat Rail Line, $1.6bn Traveston

Crossing Dam and a $1.2bn Abbott Point Multi-Purpose Harbour; in addition to the

enormous $14.2bn Brisbane Inner City Rail which is currently at the planning stage. Through

projects such as these, it is expected that the Queensland government will grow

productivity in Brisbane, essentially sustaining the economy until private construction

improves.

Queenslands strength of population growth means dwellings approved per person are very

low. Currently, Queensland is approving fewer dwellings than it was 20 years ago, but

Queenslands population is growing approximately 23,500 people a year faster than it was

20 years ago! This now equates to only one dwelling approved per every 3.4 person

increase in population. This extremely low level of approvals has put pressure on housing

with rents growing strongly and making yields in Brisbane extremely healthy with houses and

units at 4.0% and 4.9% respectively.

Whilst Queenslands property performance has been subdued over the start of 2010, with

finance approvals falling over 25% during the year for both occupiers and investors, this

would appear to be more of a pause before growth resumes led by a strong resources

sec tor and shortage of supply.

Qld&Brisbane KeyStatistics Asat 3monthchange 12monthchange

QldPopulation 4,472,957 Jan10 +0.5%pts +2.4%pts

QldUnemploymentRate 6.0% May10 0.6%pts +0.1%pts

QldNewDwellingApprovals(12monthsto) 31,306 Mar10 3.6%pts 4.3%pts

QLDFin.Approvals Occupiers(3monthsto) 28,413 Apr10 9.9%pts 25.4%pts

QLDFin.Approvals Investors(3monthsto) 24,768 Apr10 8.7%pts 25.3%pts

BrisbaneMedianHousePrice $455,000 Mar10 +0.9%pts +14.0%pts

BrisbaneMedianPriceOtherDwellings $375,000 Mar10 1.7%pts +8.7%pts

BrisbaneVacancyRate 3.8% Mar10 +0.50pts +1.20pts

BrisbaneMedian

Rent

3bedroom

house

$350

Mar

10

+2.9%

pts

+2.9%

pts

BrisbaneMedianUnitRent 2bedroomunit $350 Mar10 +4.5%pts +6.1%pts

BrisbaneImpliedGrossRentalYield Houses 4.0% Mar10 +0.1%pts 0.4%pts

BrisbaneImpliedGrossRentalYield Units 4.9% Mar10 +0.3%pts 0.1%pts


11/16

BRISBANE MARKET

-50,000

100,000150,000200,000250,000300,000

350,000400,000450,000500,000

Median House Price (RHS) Median Other Price (RHS)


Solid growth has returned to the Brisbane market, where

according to the latest data from the REI the median

housing price in Brisbane stood at $455,000 in the March

2010 quarter. Other units and dwelling sales averaged

$375,000.

This shows a notable rise over the past 12 months for

housing of 14.0% and a significant appreciation of 8.7% for

other dwellings.

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

-

50

100

150

200

250

300

350

400House ($Rent/Wk RHS)

Other ($Rent/ Wk RHS)

Vac ancy Rate (% LHS)


Similarly trending upwards, average rental rates for housing

in Brisbane rose by 2.9% to average $350 per week, while

units and other dwellings stood at $350; showing verystrong growth of 6.1%.

Conversely, vacanc y rates softened in Brisbane for the

quarter to remain above the average over recent years at

3.8%.

0.0%1.0%2.0%

3.0%4.0%5.0%6.0%7.0%8.0%9.0%


Property Yields

Brisbane rental yields have moderated with implied rental

yields on housing investments averaging 4.0% in the

December 2009 quarter, while rental income on other

dwellings was slightly higher at 4.9%.

Yields are forecast to remain around these already

attractive levels.

-20,000

40,000

60,000

80,000

100,000

120,000

140,000



Queensland dwelling approvals over the year to March

2010 stood at 31,306, growing by 2,698 over the prior year.

When compared to population growth this equates to just

one dwelling being approved for every 3.4 person increase

in population, which is substantially lower than the longterm historica l requirement of one per every 2.2 people.

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000


Population Growth

The latest figures from the ABS for J anuary 2010 estimates

the Queensland population at 4.47 million people. This

shows total annual population growth of 2.4% (106,560

people) which is in line with the states exceptional long

term average. The main contributor to this rise in

population was a significant change in Net OverseasMigration, which increased by 53,265 persons.

Da ta Sourc es: REIA, ABS, MLG Resea rc h


12/16

PERTH MARKET

Despite being a relatively small economy compared to NSW and Victoria, Western Australia

is rich in a number of natural resources, including gold, iron ore and natural gas. While falling

global commodity prices saw Western Australias stellar economic growth interrupted

during the peak of the GFC, a strong recovery is now evident.

With Chinas continued growth spurring demand for the states exports and a number of

major investment projects committed to or under way, Western Australia is set to be on the

cusp of yet another surge in the resource sector; this time being led by LNG and iron ore.

Notable resource projects include the $45b Gorgon project (the single largest ever

Australian resource investment), the $12bn Pluto LNG development, BHP Billitons $10bn

Rapid Growth 4 and 5 iron ore expansion projects and CITIC Pacifics $5bn Sino Iron Oreproject.

To satisfy these projects labor requirements Western Australias population growth is now

leading the country. And as with the resources sector, a resurgence in property demand

again looks likely, however capital growth rates are unlikely to be near the exceptional

levels experienced over the past 7 years. This is evidenced by the moderate growth seenover the first quarter of 2010 and the significant reduction in finance approvals of circa14.5% to both occupiers and investors.

Looking forward, low supply relative to population growth is likely to continue to keep

pressure on rentals and we would expect yields to rise closer to 5% over coming periods.

With vacancy levels falling 0.7% over the past quarter alone, this trend appears to already

be underway.

WA&Perth KeyStatistics Asat 3monthchange 12monthchange

WAPopulation

2,270,276

Jan

10

+0.5%

pts

+2.7%

pts

WAUnemploymentRate 5.4% May10 +0.0%pts 0.6%pts

WANewDwellingApprovals(12monthsto) 23,544 Mar10 +9.4%pts +17.0%pts

WAFin.Approvals Occupiers(3monthsto) 17,265 Apr10 14.4%pts 15.4%pts

WAFin.Approvals Investors(3monthsto) 16,095 Apr10 14.8%pts 13.2%pts

PerthMedianHousePrice $500,000 Mar10 +3.1%pts +16.3%pts

PerthMedianPriceOtherDwellings $410,000 Mar10 +1.0%pts +17.5%pts

PerthVacancyRate 4.1% Mar10 0.70pts +1.20pts

PerthMedianRent 3bedroomhouse $380 Mar10 +4.1%pts +1.3%pts

PerthMedianUnitRent 2bedroomunit $350 Mar10 +0.0%pts +0.0%pts

PerthImplied

Gross

Rental

Yield

Houses

4.0%

Mar

10

0.1%

pts

0.6%

pts

PerthImpliedGrossRentalYield Units 4.4% Mar10 0.2%pts 0.7%pts


13/16

PERTH MARKET

-

100,000

200,000

300,000

400,000

500,000

600,000

Median House Price (RHS) Median Other Price (RHS)


Ac cording to the latest data from the REI the median housing

price in Perth stood at $500,000 in the March 2010 quarter, whileother dwelling sales averaged $410,000. This shows a notable rise

over the past 12 months for housing of 16.3% and a significant

appreciation of 17.5% for other dwellings.

-

1.02.03.04.0

5.06.0

7.0

8.09.0

10.0

-

50

100

150

200

250

300

350

400House ($Rent/ Wk RHS)

Other ($Rent/ Wk RHS)Vac ancy Rate (% LHS)


Average rental rates for housing in Perth rose by 1.3% to

average $380 per week, while units and other dwellings

remained unchanged at $350 per week.The minimal rise in rental growth was due to many first home

buyers moving into home ownership, however, with interest rates

increasing, pressure on rental rates should resume. Vacancy

rates for the quarter fell sharply but remained above recent lows

at 4.1%.

0.0%

1.0%

2.0%3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%


Property Yields

Implied rental yields on housing investments in Perth averaged

4.0% in the March 2010 quarter, while rental income on other

dwellings were slightly higher at 4.4%.

Going forward, yields are expected to rise closer to 5% as rentals

and housing prices grow overall.

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000



Western Australia dwelling approvals over the year to March

2010 stood at 23,544, growing by 3,413 over the prior year. This

remains largely unchanged from 20 years ago.

Further, when compared to population growth, which is now

growing by circa 65,000 people a year as opposed to the

historic 30,000 the pressure on rentals and pricing is apparent.

-10,000

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Natural Growth Net Overseas Migration Net Interstate M igration

Population Growth

The latest figures from the ABS for J anuary 2010 estimates the

Western Australia population at 2.27 million people. This shows

total annual population growth of 2.6% (58,668 people) which is

slightly higher than the long term average growth rate of 2.4%

per annum.The main contributor to this rise in population was a

significant change in net overseas migration, which increased

by 42,806 persons. This migration can be a ttributed to

employment conditions and wage growth in resource rich areas

such as Western Australia in recent years.

Da ta So urc e s: REIA, ABS, MLG Resea rc h


14/16

FEATURED PROJECTS

Proximity on Queens, Melbourne

Be one of the first to stake your claim on Melbournes next

iconic address. A superbly beautiful residential building, in a

simply superb location.

From the c lassic porte cochere entry, to the majestic sweep

of its terraces and gardens, Proximity is uncompromisingly

elegant, and surprisingly spacious. 1, 2 & 3 bedroom

apartments starting from $335,000.

Divercity, Sydney (Waterloo)

Located in the rapidly evolving suburb of Waterloo, just 4km

from the Sydney CBD, Divercity will be built by the highly-

regarded development and c onstruction group Becton,

and brings a new benchmark for quality to the area.

Overall, Divercity offers investors and owner-occupiers alike

a c hanc e to secure property that boasts the highest level of

build quality, city convenience, growth potential and

tenant demand. Stage 1 sold out in just 3 months and with

just limited stock in stages 2 and 3, register your interest

today, before you miss out!

Pulse on Inkerman, Melbourne (St Kilda)

Pulse on Inkerman sets the benc hmark in terms of luxury, low

rise, boutique apartment living. Designed by award winning

Melbourne group, Architec ts EAT, Pulse on Inkerman

apartments reflect incredible attention to detail in every

aspect of their design and finish.

St Kilda is one of Melbournes truly iconic suburbs. Centrally

located, Pulse on Inkerman provides the perfec t base from

which to launch yourself into all the colour, fun and

excitement that St Kilda has to offer.


15/16

FEATURED PROJECTS

Newleaf, Sydney (Bonnyrigg)

Newleaf, Bonnyrigg is an innovative $470m urban renewal

development, which will see the area completely

transformed into a highly desirable place of residence

offering a wide range of facilities and open areas. The

major Public Private Partnership will incorporate brand new

dwellings, roads and general infrastructure with significant

improvements to amenity and c ommunity.

Such renewal projects have typically shown capital growth

levels well above market averages and Newleaf is likely to

be no exception.

Pinnacle, Gladstone QLD

Pinnacle offers MLG clients a rare opportunity to acquire

one of 49 stylishly designed one and two bedroom

apartments that are perfectly positioned to offer

exceptional investment potential, as the premier residential

address in the centre of one of Australias most excitinggrowth regions Gladstone.

With $77b worth of resource based projects earmarked for

the town and limited property supply strong upside is

evident. 1, 2 & 3 bedroom apartments are available

starting from just $385,000.

Riverside Hamilton, Brisbane

Hamilton Harbour is river prec inct living in Brisbane's

prestigious suburb of Hamilton. Combining designer

apartments with views out of every aspect, unprecedented

retail and lifestyle amenity, this lively hub is set to become a

destination in its own right.

Hamilton Harbour is perfec tly positioned just 9 minutes from

the CBD and 9 minutes from the airport, while architecture is

inspired by its proximity to the river and the city. 1, 2 & 3

bedroom apartments are available starting from $325,000.


16/16

FEATURED PROJECTS

MLG OFFICES

PERTHPh: +618 9421 2700

Fax: +618 9221 1288

E: [email protected]

MELBOURNEPh: +613 9867 4200

Fax: +613 8610 1275


SYDNEYPh: +612 8587 1000

Fax: +612 8587 1001


BRISBANEPh: +617 3013 5700

Fax: +617 3112 1948


SINGAPOREPh: +65 6276 8684

Fax: +65 6276 8645


MALAYSIAPh: +603 2169 7015

Fax: +603 2169 6168


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