Melbourne residential communities rfr h2 2012


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Melbourne residential communities rfr h2 2012

  1. 1. SECOND HALF 2012 | RESIDENTIAL RESEARCH & FORECAST REPORT MELBOURNE COMMUNITIES Consumer Sentiment Defines Market The decline in the Melbourne residential land market has continued during the past 12 months due to low consumer sentiment as well as a drop in population growth. Positive consumer sentiment is vital to maintaining growth in residential land sales and is driven by factors including job security and lot values. Moreover, consumer sentiment generally reflects economic stability. With the recent economic uncertainty within the state over the last 12 months, as well as continued instability globally, consumer sentiment within Victoria has remained below the 100 point index, whereby the market is deemed to be in equilibrium, since February. Global capital markets remain volatile and job security tentative which is causing consumers to be cautious in regards to spending. Deloitte Access Economics notes, employment growth across the Melbourne Statistical Division has weakened from 1.1% since March 2010 to 0.2% at June 2012. This is forecast to remain stagnant between 0.2% and 0.3% until the end of 2013. Coupled with an increase in the unemployment rate from 5.1% to 5.3% over the year to June 2012 these factors have led to a further decline in sentiment. The inability of both developers and purchasers to obtain finance for new developments have also hurt the residential property market in Victoria. Banks are wary of providing finance, preferring to deal with those developers who have existing relationships. While on the retail side purchasers are expected to have larger deposits due to the removal of the First Home Owners Bonus from the State government in June 2012 which should see a reduction in first home buyers’ real purchasing power. With prevailing consumer sentiment not expected to change in the short to medium term, Evergreen, Truganina developers have continued to adjust prices to draw buyers back to the market albeit with One of only six new estates released in 2012, limited success. Evergreen is being marketed by Colliers International. Population growth has historically driven demand in the residential market as new residents entering the state have required housing according to the ABS. Overseas migration has been RECENT PERFORMANCE OF THE RESIDENTIAL the largest component of overall population growth in Victoria according to the Australian Bureau COMMUNITIES MARKET: of Statistics (ABS), comprising an average of 62% of total population growth since 2004. WEST The Victorian population increased by 447,634 persons from the 2005 to 2009 financial years of which 65% consisted of overseas migration. However, since 2009 overseas migration has NORTH steadily declined, dropping by nearly 30,000 persons over the 2009 to 2010 financial year and SOUTH EAST a further 7,889 persons from 2010 to 2011. Over this same period the population growth level has decreased by a similar amount of persons which has led to decreased demand for residential property. KEY HIGHLIGHTS RESIDENTIAL LAND MARKET INDICATORS - SECOND HALF 2012 • 5 estates have sold out since the last 1 Region Median Price Sold to Date Remaining Yield* Number of Projects reporting period. West $205,000 10,715 26,344 32 • f the current land estates operating in O Melbourne’s growth corridors, an estimated North $210,000 5,116 5,599 20 21,970 lots have sold. South East $198,750 6,151 10,715 24 • Median land prices have decreased by Total $205,000 21,982 42,658 76 $10,000 from $215,000 to $205,000 over the *Includes lots that have yet to sell and that have not been released to market. six months to December 2011 but increased ** Median prices exclude rebates 7% over the year. Source: Colliers International Research
  2. 2. RESEARCH FORECAST REPORT | SECOND HALF 2012 | RESIDENTIAL | MELBOURNE“On June 11 Reduced demand is also reflected in the housing approval levels recorded by the ABS. In Melbourne’s growth corridor building approval levels between January and July 2012 are2012 Minister for tracking below 2011 levels equivalent to 2,089 fewer approvals to date. The largest change has been recorded in the LGA of Wyndham where there has been an 80% reduction inPlanning Matthew approvals during 2012 from the same time last year. The smallest change in building approvals was recorded in the LGAs of Hume and Casey where there has only been a declineGuy proposed of 2% and 4% respectively. Colliers International anticipates building approval figures in 2012changes to will not reach the same levels as 2011 due to lower consumer sentiment as well as the removal of the First Home Owners Boost.the zoning Government policy on development is also changing and will affect the development of residential property throughout Victoria. On June 11 2012 Minister for Planning Matthew Guy proposed changes to the zoning of commercial, industrial, and residential land uses. Within the newof commercial, covenants residential land would be placed into one of three categories; the Residential Growth Zone, General Residential Zone and Neighbourhood Residential Zone.industrial, and The Neighbourhood Residential Zone will have the most stringent regulations including heightresidential land controls, consideration of minimum lot sizes and regulations on subdivision. The Residential Growth Zone will be introduced to make clear what areas in Victoria are being targeted foruses” densification. The biggest change with this system is the local councils’ ability to decide which areas will be categorised. With many councils opposed to densification it is anticipated that councils in the outer suburbs will zone themselves in the Neighbourhood Residential Zone, retarding growth. Currently these reforms are open to feedback, but it is assumed that after the consultation period ends in September 2012 implementation will be enforced. MELBOURNE STATISTICAL DIVISION EMPLOYMENT GROWTH 1.20% 1.10% 1.00% 0.80% Forecast 0.60% 0.40% 0.20% 0.21% 0.04% 0.00% Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 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 Source: Deloitte Access Economics HOUSE APPROVALS IN THE MELBOURNE GROWTH CORRIDORS 18,000 16,000 14,000 12,000 Number of approvals 10,000 8,000 6,000 4,000 2,000 0 2005 2006 2007 2008 2009 2010 2011 Jan - July 2012 Shire of Melton City of Wyndham City of Hume City of Whittlesea Shire of Cardinia City of Casey Source: Australian Bereau of Statistics COLLIERS INTERNATIONAL | P. 2
  3. 3. RESEARCH FORECAST REPORT | SECOND HALF 2012 | RESIDENTIAL | MELBOURNE TRANSPORT AND INFRASTRUCTURE The most important infrastructure development in the Victorian pipeline is the $10 billion East West Link. The proposed 18 kilometre tunnel would connect the Eastern Freeway to the Western Ring Road and help alleviate traffic congestion across the Westgate Bridge. This would increase accessibility and reduce travel time to the Western suburbs, a key concern for potential buyers in this corridor. Currently, the Victorian Government is compiling a business case for the project in order to obtain funding from the Federal Government. The business case is expected to be completed early next year. Over the first half of 2012 several minor rail infrastructure projects were completed, including four new railway stations and the South Morang Rail Extension. The State Government has placed a focus on upgrading the rail system to help ease traffic congestion and encourage commuting from the outer suburbs of Melbourne. Over the next two years further upgrades to railway lines and two road projects are expected to be completed. Rail projects include the Sunbury Electrification Project in the North, which will add a metro service to the Northern growth corridor, more than doubling its capacity to transport individuals into Melbourne’s CBD, while the road infrastructure upgrades at Clyde Road and Hallam Road in the South East are also due for completion by December of this year. OUTER MELBOURNE INFRASTRUCTURE UPDATE Estimated Infrastructure Project Location Status Completion Current Description Date RAIL Sunbury Rail Electrification Northern Region Under Construction 2012 Electrification of the Sunbury line from Watergardens to Sunbury, enabling metro access from the Sunbury and Diggers Rest stations. The train stations will also be refurbished allowing for an extra 500 car parks at the Diggers Rest Station and a further 100 car parks at the Sunbury Station. Cranbourne East Rail South Eastern Region Planning N/A The project will extend the Cranbourne rail line to Cranbourne East Extension and includes a new station at Cranbourne East. Regional Rail Link Western Region Under Construction 2016 The Regional Rail Link project aims to give Geelong, Bendigo and Ballarat trains their own dedicated tracks through the metropolitan system from Sunshine to Southern Cross Station. The line will also incorporate the construction of two stations at Tarneit and Wyndham Vale. Once complete the Regional Rail Link will provide services for up to an extra 9000 passengers during peak times. Williams Landing Project Western Region Under Construction 2012 Creation of a new premium train station at the Williams Landing Town Centre. The project includes plans for 500 car spaces as well as a designated bus terminal and taxi ranks. The station will be located on the Werribee line. ROAD North-East Link Northern Region Planning N/A Planning has commenced for a road connection between the Metropolitan Ring Road in Greensborough and the Eastern Freeway in Bulleen. The road will provide a section of the major orbital road surrounding Melbourne connecting new employment hubs providing easier access for residents of the Northern suburbs to the Melbourne Airport. Aitken Boulevard Northern Region Under Construction 2013 A Private Public Partnership between the Federal Government and Peet Ltd., Stockland and Lend Lease has been put in place to build a new street between Mickleham and Sydney Roads. The new street will improve traffic flow and connectivity in the area while significantly reducing congestion for local residents. It will also act as a vital link between new communities in Craigieburn, providing easy access to amenities within new Northern communities. East West Link Western Region Planning N/A Planning has begun for a tunnel to connect the Western Ring Road to the City Link Freeway. The tunnel would alleviate major traffic from Westgate bridge improving access to the Outer Western suburbs. M80 Upgrade Northern and Western Region Under Construction 2015 The creation of new lanes to ensure three to six lanes in each direction as well as new dedicated merging lanes to increase safety. Hallam Road Upgrade South Eastern Region Under Construction 2013 The number of lanes will be increased to three between Pound and Ormond Roads. A shared bus lane/left turn lane will be constructed. Cooper Street - Epping Northern Region Planning 2013 An additional lane will be added to Cooper Street between the Hume Freeway and Edgars Road. Dedicated bus lanes for on and off ramps to Hume Freeway will be added to provide less congested roadways for the Northern Regions residents.Source: Department of Transport/ Melbourne Water/ South East Water/ City West Water/ Colliers International Research COLLIERS INTERNATIONAL | P. 3
  4. 4. RESEARCH FORECAST REPORT | SECOND HALF 2012 | RESIDENTIAL | MELBOURNE OUTER MELBOURNE INFRASTRUCTURE UPDATE Estimated Infrastructure Project Location Status Completion Current Description Date ROAD (CONTINUED) Outer Melbourne Ring Road/ Northern and Western Region Planning N/A A proposal has been made to accommodate a 100 kilometre long high- E6 Transport Corridor speed transport link for pedestrians and freight in Melbournes North and West, creating an opportunity for new road and rail transport links through the Werribee, Melton, Tullamarine, Craigieburn/Mickleham and Epping/ Thomastown areas. Construction is not likely to commence until 2020. Narre Warren - Cranbourne South Eastern Region Committed 2015 Currently in pre-construction phase the project will encompass the Road creation of three lanes each way between Ormond and Glasscocks Roads, with two lanes each way for other sections, intersection improvements at Ormond and Glasscocks Roads and a shared path for cyclists and pedestrians along the east side of Narre Warren-Cranbourne Road. Project funding has been confirmed, pre-construction planning will continue during 2012 and major works are likely to start by late 2013. Yan Yean Road Northern Region Planning N/A A planning study is currently underway to identify and determine the road reservation requirements for the future duplication of Yan Yean Road between Diamond Creek Road and north of Kurrak Road. The study will be used to create a proposal to construct a four lane divided roadway. Plenty Road Upgrade Northern Region Under Construction 2012 Widen Plenty Road into a four lane divided roadway from Gordons Road to Riverdale Boulevard. Due for completion in Spring 2012. Palmers Road Rail Overpass Western Region Under Construction 2012 Part of the Williams Landing Project. The project involves the extension of Palmers Road beyond the Princes Freeway and across the Werribee rail line as well as the widening of the overpass from three lanes to five lanes. Clyde Road Upgrade South Eastern Region Under Construction 2013 Two additional lanes will be created each way between High Street and Kangan Drive. The High Street and Enterprise Avenue intersections will be upgraded. WATER West Werribee Dual Water Western Region Under Construction 2014 The project will provide recycled water to Melbournes Western suburbs Supply Project and includes several major initiatives including: the creation of a salt reduction plant and pump station at the Western Treatment Plant; laying approximately 34 kilometres of transfer mains for both the recycled and drinking water; and building storage tanks for recycled and drinking water storage. Cardinia South Sewerage South Eastern Region Planning N/A Capacity constraints in the Lang Lang and Koo Wee Rup treatment plants Project are currently being investigated. Troups Creek Stormwater Western Region Under Construction 2012 An on-site treatment facility is being built as a joint partnership Recycling Project between Melbourne Water and Places Victoria to produce recycled stormwater for use in the brown water system.Source: Department of Transport/ Melbourne Water/ South East Water/ City West Water/ Colliers International Research MELBOURNE COMMUNITIES Hume Whittlesea Nillumbik Melton Metropolitan Yarra Ranges Inner Metropolitan City Wyndham Knox Cardinia CaseyPrepared by Colliers International Research COLLIERS INTERNATIONAL | P. 4
  5. 5. RESEARCH FORECAST REPORT | SECOND HALF 2012 | RESIDENTIAL | MELBOURNE Western Region Colliers International has identified 32 operating estates in the Western Region of Melbourne that are currently under construction. Upon completion these estates will comprise approximately 46,008 lots. This is a decrease in total lots from Colliers International’s last report whereby a total of 47,991 lots were identified. Of these estates approximately 23% of the stock available has already sold. During the past six months seven estates (Alamanda, Arndell at Trugnanina, Tarneit Gardens, The Reserve, The Rise, Wyndella, and Riverina) have practically completed and have hence been removed from analysis in this report. The Point Cook Thirty30 estate has ceased construction since the last reporting period and has also been removed from this analysis.Maplewood, Melton Of the current estates available one is nearing completion; Featherbrook. This estate has107 lots have already transacted since Maplewood approximately 25 lots left remaining for sale.launched in 2011. Two new estates have been released to the market over the past six months. Gateway, developed by Central Equity, and Evergreen Estate are located in the suburb of Truganina and will comprise only 338 lots upon completion. Released in February this year, Gateway has already sold 52 lots (24%) in the first two stages. Over 100 sales have occurred at both Allura and Atherstone since the last reporting period, having sold 120 and 105 each respectively. Featherbrook, Forsyth Park, Eynesbury Estate, and Aspire have all sold over 40 lots since the last report. The Western Region of Melbourne continues to maintain its competitiveness in the market offering the lowest weighted average asking price of the three corridors. From a sample of 160 lots currently available for sale in the region the weighted average asking price was $205,344, excluding incentives, and the weighted average lot size was 438m2. WESTERN REGION MARKET ACTIVITY - RESIDENTIAL ESTATES Year Estate Remaining Estate Name Suburb LGA Total Number Number Sold Commenced Yield* Alamanda Point Cook Wyndham 2007 1,500 N/A N/A Bellevue Truganina Wyndham 2011 325 59 266 Bluestone Wyndham Vale Wyndham 2008 1,200 N/A N/A Featherbrook Point Cook Wyndham 2007 1,100 1,075 25 Heartlands Tarneit Wyndham 2010 1,100 N/A N/A Kingsford Point Cook Wyndham 2009 567 N/A N/A Manhattan Place Tarneit Wyndham 2009 187 N/A N/A Manor Lakes Wyndham Vale Wyndham 2002 9,000 3,000 6,000 Meadow Springs Truganina Wyndham N/A 162 54 108 Paragon Point Cook Wyndham N/A 350 46 304 Parkbrook Point Cook Wyndham 2011 325 100 225 Saltwater Coast Point Cook Wyndham N/A 2,500 625 1,875 Saratoga Point Cook Wyndham N/A 700 N/A N/A Waterhaven Point Cook Wyndham 2009 600 300 300 Williams Landing Williams Landing Wyndham 2008 2,500 850 1,650 Evergreen Truganina Wyndham 2012 132 15 117 Forsyth Park Truganina Wyndham 2012 473 59 414 Gateway Truganina Wyndham 2012 214 52 162 Allura Truganina Wyndham 2011 1,300 250 1,050 Arnolds Creek Melton West Melton 2008 1,700 1,105 595 Botanica Springs Brookfield Melton N/A 2,000 N/A N/A *Includes lots that have yet to sell and that have not been released to market Source: Colliers International Research COLLIERS INTERNATIONAL | P. 5
  6. 6. RESEARCH FORECAST REPORT | SECOND HALF 2012 | RESIDENTIAL | MELBOURNE Western Region WESTERN REGION MARKET ACTIVITY - RESIDENTIAL ESTATES Year Estate Remaining Estate Name Suburb LGA Total Number Number Sold Commenced Yield* Eynesbury Estate Eynesbury Melton 2010 4,500 873 3,627 Maplewood Melton Melton 2011 626 107 519 Peppermint Grove Melton West Melton 2010 452 45 407 Silverdale Melton Melton N/A 267 N/A N/A Waterford Melton Melton 2010 3,200 30 3,170 Aspire Plumpton Melton 2011 700 135 565 Atherstone South Melton Melton 2012 4,900 115 4,785 Encore Plumpton Melton 2011 158 N/A N/A Toolern Waters Toolern Melton 2012 920 N/A N/A Penny Royal Melton West Melton 2011 350 N/A N/A Taylors Hill Caroline Springs Melton 2002 2,000 1,820 180 *Includes lots that have yet to sell and that have not been released to market Source: Colliers International Research COLLIERS INTERNATIONAL | P. 6
  7. 7. RESEARCH FORECAST REPORT | SECOND HALF 2012 | RESIDENTIAL | MELBOURNE Northern Region In the Northern Region two new estates have been released while three previous estates have been completed. This takes the total number of lots available in the region to 21,250 of which 24% has already been sold (5,116 lots). Approximately 58% of the total number of lots in the Northern Region are within the LGA of Whittlesea, down from 66% six months earlier. Over the last six months Carlingford estate sold the eight remaining lots available and was therefore removed from analysis in this report. Palisades and Vantage Point have also been removed due to their completion status. Orchard Grove, a development by Metro Property, has sold approximately 100 lots since it began marketing in April 2011; this is equivalent to 57% of its total stock. Other notable sales resultsBrookhaven, Sunbury have occurred in the Everton Gardens estate which has sold an estimated 43 lots since the lastSince marketing began in the second half of 2010 reporting period. This estate is currently marketing its second of five stages with the third stageBrookhaven has sold 19% of its total stock. being released in the fourth quarter of this year. NORTHERN REGION MARKET ACTIVITY - RESIDENTIAL ESTATES Year Estate Remaining Estate Name Suburb LGA Total Number Number Sold Commenced Yield* Aurora Epping North Whittlesea N/A 2,213 N/A N/A Bridge Inn Rise Doreen Whittlesea 2009 190 110 80 Eucalypt Wollert Whittlesea 2010 1,300 350 950 Everton Gardens Mernda Whittlesea 2010 250 93 157 Fairview Mernda Whittlesea 2010 481 190 291 Lyndarum Epping North Whittlesea 2010 600 201 399 Mernda Villages Mernda Whittlesea 2006 3,000 1,800 1,200 Mosaic Lalor Whittlesea 2010 850 326 524 Renaissance Rise Mernda Whittlesea 2008 719 139 580 Summerhill North Epping Whittlesea 2009 687 549 138 Eden Gardens Epping North Whittlesea N/A 450 300 150 Orchard Grove Doreen Whittlesea 2011 175 100 75 Riverstone at Doreen Whittlesea 2009 1,200 620 580 Plenty River Berry Lane Mernda Whittlesea 2010 268 135 133 Panorama Doreen Doreen Whittlesea 2010 125 57 68 Brookhaven Sunbury Hume 2010 245 46 199 Canterbury Hills Sunbury Hume 1990 1,404 N/A N/A Highlands Craigieburn Hume 2008 4,764 N/A N/A Jacksons Hill The South Valley Hume 1997 2,572 N/A N/A Providence at Greenvale 2010 150 100 50 Hume Greenvale *Includes lots that have yet to sell and that have not been released to market Source: Colliers International Research COLLIERS INTERNATIONAL | P. 7