ANZ RESEARCH

AUSTRALIAN PROPERTY AUSTRALIAN HOUSING CHARTBOOK

JULY 2012 CONTRIBUTORS
David Cannington Senior Economist +61 3 9273 4274 David.Cannington@anz.com Paul Braddick Head of Property Research +61 3 9273 5987 Paul.Braddick@anz.com Ivan Colhoun Head of Australian Economics & Property Research +61 2 9227 1780 Ivan.Colhoun@anz.com

The Australian housing market has shown tentative signs of stabilisation in 2012, following a period of considerable softness through 2011. Sales activity has improved, albeit from extreme lows, buoyed by the positive impact of underlying strength in housing market fundamentals, further consolidation of household financial stability and improving housing affordability. Financial uncertainty stemming from the European sovereign debt crisis has driven Australian households to further strengthen their financial positions. Household savings have continued to increase and household income growth remains solid while household credit growth has been sluggish for almost four years. Nonetheless, divergent economic performance across states will maintain softer labour market conditions outside of the resources states. This presents a higher risk of household financial pressure and an increased likelihood of some distressed sales in housing markets outside of the resources states, particularly in Tasmania and Victoria. Despite 2011 Census data showing the Australian population level to be lower than previously estimated (294,000 lower at 22.324 million), weak housing construction continues to drive further tightening of housing market balances. Forward indicators suggest net overseas migration, while slow to pick up to the end of 2011, will increase through 2012 and weak building approvals are adding further upward pressure to the outlook for the existing undersupply of housing. This tightness in the housing market is maintaining low rental vacancy rates and driving upward pressure on rents, particularly in the Sydney, Perth and Brisbane markets. Softening house prices and low mortgage rates have combined to improve housing affordability. Increased global economic uncertainty and job security concerns in some sectors of the economy are weighing on sentiment and house prices, however improving housing affordability and strengthening housing market fundamentals should support further stabilisation in housing market activity and house prices through the second half of 2012. Improved housing affordability, tightening housing market balance pressures and upward pressure on rents are likely to support both first home buyer and investor housing market activity in the years ahead. Looking through the distortions created by first home buyer policy incentives, first home buyer and investor housing finance growth improved moderately in the first quarter of 2012.
Real rents (lhs) Real rents - forecast (lhs) Annual change in housing market balance - 12 month lag (rhs) Annual change in housing market balance - forecast, 12 month lag (rhs)

AUSTRALIAN HOUSING MARKET BALANCE AND RENTS

7 6 5 4
Annual % change

70 60 50 40
Dwellings ('000s)

3 2 1 0 -1 -2 -3 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13

30 20 10 0 -10 -20 -30

Sources: ABS, ANZ

Excess

Shortage

Australian Housing Chartbook / 9 July 2012 / 2 of 13

KEY INDICATORS
MARKET ACTIVITY CONTINUES TO BE DRIVEN BY WEAK SENTIMENT
Indicators show that household caution continues to drive a wedge between housing market activity and underlying fundamentals. While recently showing some gradual improvement, market activity (sales, days on market, prices) remains soft, fuelled by global economic and financial market uncertainty and a protracted behavioural shift towards increased debt aversion. Recent growth in first home buyer housing finance signals the positive impact of both improving housing affordability and tight market fundamentals. The removal of the NSW first home buyer stamp duty exemptions for existing homes from 1 January 2012 has temporarily dampened this impact. Despite 2011 Census data showing the Australian population level to be lower than previously estimated (-294,000), population growth and underlying housing demand remains little changed and net migration remains a significant pressure on the housing stock. Consequently, the fundamentals of the Australian housing market remain generally solid. Skills shortages, particularly in the mining and related professional services sectors, have driven recent increases in net arrivals, indicating population growth is about to re-accelerate. Combined with a weak outlook for residential construction, we expect the underlying shortage of housing to increase in the years ahead, pushing rental vacancies lower, rents higher and eventually supporting house prices.
House prices
600 550 500 450
Dwellings ('000s)

Market balance
450 400 350 300 250 200 150
Shortage Cumulative market balance Cumulative market balance (ex-migration surge) Completions Underlying demand Underlying demand (ex-migration surge) Forecasts

Australian capital cities average

400
$000 (sa)

350 300 250 200 150 100 50 0 86 88 90 92 94 96 98 00 02 04 06 08 10 12

100 50 0 -50 -100 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

Population growth
400 350 10,000 300
Annualised - 000's

Building approvals
12,000
Private sector houses (Trend) Private sector other residential* (Trend) Private sector houses (Seas Adj) Private sector other residential* (Seas Adj)

250 200 150

Number

8,000

6,000

4,000 100 50 Net Movements 0 01 02 03 04 05 06 07 08 09 10 11 12 Net Overseas Migration 0

* Flats, units, apartments, semi-detached/row/terrace houses

2,000

98

99

00

01

02

03

04

05

06

07

08

09

10

11

12

Housing finance
120 Upgrader Investor First home buyer
12

Rents vs vacancies
Rental vacancy rate (4-qtr moving ave, rhs) Rent growth (nominal, lhs) CPI (core, lhs) 6

100

10

60

40

20

0 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

Q4-1991 Q4-1993 Q4-1995 Q4-1997 Q4-1999 Q4-2001 Q4-2003 Q4-2005 Q4-2007 Q4-2009 Q4-2011

Sources: ABS, Residex, REIA, ANZ

% of total rental stock

$bil, annualised trend

80
Annual % change

Excess

Australian Housing Chartbook / 9 July 2012 / 3 of 13

VALUATION MEASURES
AUSTRALIAN HOUSE PRICE SOFTNESS REFLECTS BETTER VALUE WITHOUT ECONOMIC STRESS
A combination of lower interest rates, falling house prices and rising household incomes has driven Australian house purchase affordability to better than long-run average levels. In contrast to many other developed economies, this has happened in the absence of a significant economic downturn and the associated stress on household finances. ANZ analysis of long-run trends in house prices, household income and interest rates (ignoring other drivers of house price growth, including housing market balance and mortgage lending criteria) shows the recent softness in Australian house prices has been mainly driven by weak household sentiment rather than economic fundamentals, with prices continuing to fall below expected house prices at current household income levels and mortgage rates. Cross-country comparisons using partial valuation measures - often used to contend the case of overvaluation of Australian house prices - continue to reflect broader economic and housing market differences, while revealing little about the future direction of house prices. These measures, including house price to income ratios and rental yields, do not address other drivers of house prices, including economic growth and unemployment, population growth, housing stock, net household wealth, household financial stability, government policy, housing credit risk and mortgage lending standards.
House prices and house purchasing power*
$700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 -$100,000
* Represents the average households purchasing power over the median priced home ** Calculated using trend discounted variable bank mortgage rate *** Calculated using average household disposable income

House price to purchasing power*

60
House price deviation from house purchasing power (% of actual house price) Australia US UK NZ Canada

Interest rate contribution to simulated house price** Income growth contribution to simulated house price*** Actual house prices

40

$542,404

20

-20

-40

-60
* Represents the average households purchasing power over the median priced home

87

89

91

93

95

97

99

01

03

05

07

09

11

-80

Mar 84

Mar 87

Mar 90

Mar 93

Mar 96

Mar 99

Mar 02

Mar 05

Mar 08

Mar 11

International house prices

Australia US UK NZ Canada China Singapore Hong Kong House price to average household disposable income ratio

House price to income ratios

7

230 210
House price index (March 2002=100)

190 170 150 130 110 90 70 50 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11

3
Australia US UK NZ Canada

2 Jan 92 Jan 94 Jan 96 Jan 98 Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Jan 10 Jan 12

Housing affordability
50
Mortgage costs as % of mean household disposable income

International rental yield

16
Aust US UK

45 40 35 30 25 20 15
Australia US UK NZ Canada

14

12
Rental yield (%)

10

10 Jan 92 Jan 94 Jan 96 Jan 98 Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Jan 10 Jan 12

2 Mar 96 Mar 98 Mar 00 Mar 02 Mar 04 Mar 06 Mar 08 Mar 10 Mar 12

Sources: ABS, RBA, RP Data-Rismark, S&P/Case-Shiller, Nationwide, RBNZ, Teranet National Bank, Global Property Guide, ANZ

Australian Housing Chartbook / 9 July 2012 / 4 of 13

UNDERLYING DEMAND
LEADING INDICATORS SUGGEST POPULATION GROWTH WILL SUPPORT UNDERLYING DEMAND
Since 2006, net overseas migration has largely driven Australian population growth and supported strong underlying demand for housing. While recent data show moderation in net permanent and long-term arrivals, annualised net movements of 300,000 at May 2012 are expected to drive population growth and continue to support underlying demand for housing in the years ahead. While interstate migration activity is higher than post-GFC levels, it remains low as a share of population. This measure is expected to pick-up moderately through 2012-13 due to divergence in labour market conditions and housing affordability across states and territories. While divergent economic conditions across states and territories are already driving strong population growth and demand for housing in WA (with 15 of the top 20 fastest growing local government areas), moderate population growth in NSW and Victoria will continue to support the significant existing shortage of housing in these states (see Appendix). Combined with weak dwelling construction, population growth is already squeezing rental markets, driving increases in rental growth and yields, and building fundamental demand for first home buyers and lower priced housing.
Market balance: Australia
450 400 350 300
Dwellings ('000s)

Permanent and long-term arrivals and departures

800 700 600 Annualised - 000's 500 400 300 200 100 0 01 02 03 04 05 06 07 08 09 10 11 12 Total Permanent and Long Term Arrivals Total Permanent and Long Term Departures

Cumulative market balance Cumulative market balance (ex-migration surge) Completions Underlying demand Underlying demand (ex-migration surge)

250 200 150 100 50 0 -50 -100 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

Shortage

Net overseas migration

120
NSW VIC QLD SA WA TAS

Excess

Net interstate migration

60
NSW VIC QLD SA WA TAS

100

40

Annual Rolling Sum - 000's

Annual Rolling Sum - 000's

80

20

60

40

-20

20

-40

-20 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

-60 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

Gross interstate migration

2.2 2.1 % of Australia's population per annum 2.0 1.9 1.8 1.7 1.6 1.5 1.4 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 440 410 380 '000s per annum 350 320 290 260 230 200

Top 20 fastest growing populations

Perth (WA) Wyndham (VIC) Melton (VIC) Serpentine-Jarrahdale (WA) Cardinia (VIC) Wanneroo (WA) Whittlesea (VIC) Capel (WA) Kwinana (WA) Mandurah (WA) Armadale (WA) Leonora (WA) Chittering (WA) Murray (WA) Rockingham (WA) Busselton (WA) Ipswich (QLD) Port Hedland (WA) Dardanup (WA) Harvey (WA) 0 2 4 6 CAGR % (2007-11) 8 10 12

% of Australia's population

By number

Sources: ABS, ANZ

Australian Housing Chartbook / 9 July 2012 / 5 of 13

SUPPLY
HOUSING CONSTRUCTION DOWNTURN APPROACHING 1990S RECESSION LEVEL
The outlook for residential building remains weak with the current dwelling construction downturn indicating completions are approximately 15% lower from the peak of the cycle (March 2011). The severity of the slowdown has been sharper than previous building contractions and the loss in residential building activity in the current downturn is expected to be only slightly less than during the early 1990s recession. While soft house prices, weak house sales and tight credit conditions continue to dampen developer sentiment, financial market volatility and global economic uncertainty have also likely weighed on residential construction plans. Annualised trend completions (134,000 dwellings), while improving in recent months, remain well below long-run average levels and significantly below our estimate of underlying housing demand of 196,000 for 2011-12. Despite the recent interest rate cuts, weak housing market sentiment will continue to weigh on housing construction until early 2013, before building activity is expected to recover in the second half of 2013. Looking through monthly volatility in building approvals, trend housing construction levels continue to be strongest in Victoria, though approvals are well below late-2010 peak levels. NSW has shown the most resilience in the current construction downturn, with building approvals 55% higher than the lowest point in the GFC. Approvals of flat, unit and townhouse buildings continue to show that housing affordability and land availability constraints are driving an increasing share of total dwelling approvals, especially in Sydney and Melbourne.
Dwelling cycle comparison
110 6
NSW VIC

Building approvals
QLD SA WA TAS NT ACT

100
Dwelling completions index (cycle peak=100)

Sep 1989 - December 1991 March 2007 - June Number (000's, trend) Forecast (March 2012 - March 2014) March 2011 - December 2011

90

80
December 1994 - December 1996

70 1 60 0 1 2 3 4 5 6 7 8 9 0 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Quarters from peak

Building approvals & construction finance

30 16 6

Residential vs non-residential building

Residential (trend) Residential (sa) Non-residential (trend) Non-residential (sa)

5 25
$bil, real annualised trend

14
Number (000's, trend)

20

12

Value ($bil/month)

15

10 1 Housing construction finance (lhs) Total dwelling approvals (rhs) 8 98 99 00 01 02 03 04 05 06 07 08 09 10 11 0 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

10

Private sector building activity

12,000
Private sector houses (Trend) Private sector other residential* (Trend) Private sector houses (Seas Adj) Private sector other residential* (Seas Adj)

Non-house* share of total dwelling approvals

70
Sydney Melbourne Brisbane Australia

10,000
% of total dwelling approvals (trend)

60

8,000
Number

50

40

6,000

30

4,000

20

2,000

10
* Flats, units, apartments, semi-detached/row/terrace houses * Flats, units, apartments, semi-detached/row/terrace houses

0 07 08 09 10 11 12

98

99

00

01

02

03

04

05

06

85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

Sources: ABS, ANZ

Australian Housing Chartbook / 9 July 2012 / 6 of 13

PRICES
HOUSE PRICES WEAKEN FURTHER ON GLOBAL ECONOMIC UNCERTAINTY
With the exception of Darwin and Canberra, house prices have weakened across all other capital cities in the year to June 2012. However, through 2012 monthly changes in house prices have been extremely volatile, particularly at the high-price end of the market. House price falls from peak to May 2012 for the most expensive 20% of suburbs have been more than double price falls for remaining 80% of suburbs. This has most likely reflected the negative impact on house prices of increased volatility in equity markets and weak consumer sentiment. Despite weakening in recent months, Sydney dwelling (house and unit) prices have continued to outperform most other Australian capital cities since the peak of the current price cycle, due to the increasing pressure of stronger population growth on weak housing construction and a degree of resilience after an extended period of prior price underperformance in houses and especially units. In the absence of a sharp global economic downturn and escalating domestic unemployment, improving housing affordability, solid household financial positions and strong housing market fundamentals should support modest house price growth into 2013. While previous structural and policy drivers have now been capitalised into house price growth, we expect prices to increase at a moderate 4-5% in annual terms by the end of 2014.
House prices
650 600 550 500
$000 (sa)

House prices, selected measures

650
Rest of state

Australian capital cities average

ABS (-6.1%)*

Residex (-3.2%)*

RP Data Rismark (-5.6%)*

Median capital city house price ($000's)

550

450

450 400 350 300 250 200 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11

350

250

150

* Price declines reflect peak prices to prices as of March 2012

Dec 96 Jun 98 Dec 99 Jun 01 Dec 02 Jun 04 Dec 05 Jun 07 Dec 08 Jun 10 Dec 11

House prices, capital cities

750 700 650 600 550 500 450
$000 (sa) $000 (sa)
Melbourne Sydney Brisbane Perth Adelaide Hobart Darwin Canberra

Non-house dwelling prices, capital cities

750 700 650 600 550 500 450 400 350 300 250 200 150 100 50 0
Melbourne Sydney Brisbane Perth Adelaide Hobart Darwin Canberra

400 350 300 250 200 150 100 50 0 Dec 95 Dec 97 Dec 99 Dec 01 Dec 03 Dec 05 Dec 07 Dec 09 Dec 11

Dec 95

Dec 97

Dec 99

Dec 01

Dec 03

Dec 05

Dec 07

Dec 09

Dec 11

House prices, price range

125 6 4 120 2 0 -2 110 -4 -6 105 -8 100
Highest 20% (-7.8%)* Middle 60% (-4.4%)* Lowest 20% (-4.5%)*

Dwelling prices & housing market shortage

Cumulative state dwelling shortage mutiple of annual completions at June 2011 Capital city % price decline from peak to June 2012

Index (Dec 2008=100)

115

-10 -12 -14 NSW/Sydney VIC/Melbourne QLD/Brisbane SA/Adelaide WA/Perth

95 Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11

* Peak to current prices

Sources: ABS, RP Data-Rismark, Residex, ANZ

Australian Housing Chartbook / 9 July 2012 / 7 of 13

AFFORDABILITY
LOWER HOUSE PRICES AND MORTGAGE RATES CONTINUE TO IMPROVE HOUSING AFFORDABILITY
Softening house prices, rising household incomes and lower mortgage rates have continued to improve Australian housing affordability. This has been reflected in improved consumer expectations of the best time to buy a house and lower mortgage delinquency rates through 2012. Previous episodes of improving housing affordability (in the early and mid-90s) were largely driven by significant reductions in interest rates (and steady growth in household incomes). With interest rates at relatively low levels and expectations of moderate growth in household income, improvements in housing affordability through 2012-13 are expected to be driven more by household income gains and weaker house prices than in the past. Despite Melbourne house prices experiencing the largest falls over the past year, Melbourne housing remains the least affordable to purchase across Australian capital cities. Strong growth in WA household income and weak house price growth has maintained Perth house deposit affordability compared to other major capital cities (ranked 6th across Australian capital cities compared to equal 1st before the GFC).
Housing affordability
Index Worse time to buy a home

Housing affordability, factor contribution

70
Mortgage rates Household disposable income House prices
Forecasts

45

-8 -6 -4 -2 0 2 4 6 1985 1988 1991 1994 1997 2000 2003 2006 2009

Mortgage repayments (% of mean household disposable income)

Imrpoves affordability Worsens affordability

35

110

30

130

25
Forecast

150

20 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Housing affordability (lhs)

170

Better time to buy a home

Contribution to housing affordability (ppts)

40

90

Melbourne Institute-Westpac consumer sentiment index: house purchase indicator (trend, inverted rhs)

2012

2015

House deposit* affordability, capital cities

180
% of average annual state household disposable income

Mortgage delinquencies
Hobart

Sydney

Melbourne

Brisbane

Adelaide

Perth

NSW & ACT

Mortgage delinquencies 90+ days (% of total mortgages, sa)

VIC

QLD

SA

WA

TAS

Australia

1 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 Oct 05 Oct 06 Oct 07 Oct 08 Oct 09 Oct 10 Oct 11

160 140 120 100 80 60 40 20 0

* Calculated for 20% of capital city house price

86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

Household disposable income

NSW VIC QLD SA WA TAS

Housing loan interest rates

18
Standard variable rate Discounted variable rate 3-year fixed rate

14 16 12 14
Annual % change (trend)

10
% per annum

12

8 6 4 2 0 00 01 02 03 04 05 06 07 08 09 10 11

10

4 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

Sources: ABS, RBA, Residex, Melbourne Institute-WBC, ANZ

Australian Housing Chartbook / 9 July 2012 / 8 of 13

MARKET ACTIVITY
HOME SALES ACTIVITY REMAINS WEAK
Housing market activity continues to be weighed down by weak household confidence, most likely driven by ongoing financial market volatility and an uncertain global economic outlook. Despite continued softening in house prices and improving housing affordability, residential home sales are running at 17-year lows and housing finance activity remains soft. Home sales levels are running at around 100,000/month, well below the pre-GFC peak of 140,000/month and tracking below the 120,000/month sales levels seen in 2009. While auction clearance rates and days on market have shown some improvement more recently, they also remain well below recent peak levels, suggesting continued divergence between the expectations of home buyers and vendors. With ongoing softness in house prices and escalating uncertainty around the prospects for the global economy, the outlook for housing market sales continues to look weak over the second half of the year. However, recent interest rate cuts and the potential for further rate cuts should drive improvements in housing affordability, eventually rousing market sales activity from the current lows, especially for first home buyers.
Housing finance
120 First home buyer Upgrader (excl. refin.) Investor (excl. refin.)
70

ANZ/PCA property industry confidence index

House price growth expectations*
Dec qtr 2011 Mar qtr 2012 Jun qtr 2012

100
Annual house price growth expectations (net balance)

60 50 40 30 20 10 0 -10 -20 -30

$bil, annualised trend

80

60

40

20

0 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

-40 NSW VIC QLD WA SA TAS NT ACT AUS

* Data for December quarter 2011 and March quarter 2012 shows expectations for "the next quarter". June quarter 2012 shows expectations for "the next 12 months".

Monthly sales
170 160 150 140
'000s (sa) index Better time to buy a home Worse time to buy a home

Days on market
70

Monthly residential home sales (lhs)

Westpac house purchase indicator (trend, rhs)

120 110 100 90 80 70 60 50 Inner Sydney 40 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Inner Melbourne Inner Brisbane Central Perth

90

110 130 120 110 100 90 80 Mar 95 Mar 97 Mar 99 Mar 01 Mar 03 Mar 05 Mar 07 Mar 09 Mar 11

130

150

170

Auctions, major capital cities

900 800 700
number/week (trend)

Days on market (sa)

Auction clearance rates, major capital cities

Perth

Sydney

Melbourne

Brisbane

100% 90% 80%

% of total auction results(trend)

Sydney

Melbourne

Brisbane

Perth

600 500 400 300 200 100 0 May 08 Nov 08 May 09 Nov 09 May 10 Nov 10 May 11 Nov 11 May 12

70% 60% 50% 40% 30% 20% 10% 0% May-08 Nov-08 May-09 Nov-09 May-10 Nov-10 May-11 Nov-11 May-12

Sources: ABS, RP Data, PCA/ANZ, Melbourne Institute-WBC, ANZ

Australian Housing Chartbook / 9 July 2012 / 9 of 13

REGIONAL PERSPECTIVE
REGIONAL HOUSE PRICES OUTPERFORMING CAPITAL CITIES
Despite being lower in annual growth terms, regional house prices have been more stable than capital city house prices, which have seen larger price falls across all major states and territories. Across states/territories and regions, house price growth has continued to differ, reflecting varying economic performance across Australian industries. NSW regional house prices were the strongest across states and territories in the year to March 2012, with the central inland regions of Orange and Dubbo showing the greatest house price growth. Queensland has shown the greatest intra-state variation in regional house prices, reflecting the divergent economic performance of regions exposed to the tourism sector (ie Cairns, Gold Coast) and mining-related services (Gladstone, Mount Isa). House price growth in WA regional centres has counter-intuitively been the weakest, with house prices in many centres lower in the year to March. Of note, house price growth in the Greenough River and Moore regions were much weaker in March 2012 (-6.5% and -4.7% respectively) compared to September 2011 (+1.3% and +0.6% respectively). Nonetheless, the economic benefits from major mining and energy projects in WA should boost house prices in many WA major regional centres over the next 12-18 months.
House prices: capital cities & rest of state
20 Australian capital cities Australia rest of state $450
NSW Victoria Queensland WA Australia

House prices: non-capital city regions

15

$400

10
Annual % change $000 (original)

$350

$300

$250

-5

$200

-10 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12

$150 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12

NSW regional house price growth

Orange Dubbo Newcastle Southern Tablelands Wollongong Coffs Harbour Wagga Wagga Regional NSW Port Macquarie Lower South Coast Sydney Lower Murrumbidgee Northern Tablelands Richmond-Tweed Hastings -6 -4 -2 0 2 4 6 8

Victoria regional house price growth

Bendigo Latrobe Valley Warrnambool South Wimmera Mildura Ballarat East Gippsland Geelong West Ovens-Murray East Mallee Wodonga North Goulburn Regional Victoria Shepparton Melbourne -6 -4 -2 0 2 4 6 8

Capital growth (%, year to Mar 2012)

Capital growth (%, year to Mar 2012)

Queensland regional house price growth

Gladstone North West Mackay Rockhampton Darling Downs Lower West Moreton Regional QLD Toowoomba Central West Townsville Cairns Brisbane Wide Bay-Burnett Bundaberg Gold Coast -8 -6 -4 -2 0 2 4 6 8 10 12 14 16 Johnston Kalgoorlie Regional WA Bunbury Gascoyne Fitzroy Perth Geraldton Moore King Avon Blackwood Greenough River Vasse Hotham

WA regional house price growth

-10

-8

-6

-4

-2

Capital growth (%, year to Mar 2012)

Capital growth (%, year to Mar 2012)

Sources: Residex, RP Data-Rismark, ANZ

Australian Housing Chartbook / 9 July 2012 / 10 of 13

REGIONAL PERSPECTIVE
REGIONAL HOUSE PRICES (CONTINUED)
Regional house price growth in South Australia, Tasmania and the territories have also reflected differing regional economic performance. While regional house price growth in most states have been dispersed between increases and decreases, Tasmanias regional house prices were all lower in the year to March 2012, reflecting the relatively soft economy and weak labour market conditions.

While we continue to expect continued divergence within South Australia and ACT regional housing markets, a broadly soft economic outlook for the South Australia and ACT economies combined with relatively balanced housing markets should contain house price growth in the coming year across most regions.
The outlook for house price growth across the Northern Territory regions is buoyant, with significant mining and energy investment (ie Icthys gas project) expected to drive solid state economic growth and broad regional house price increases through the second half of 2012 and through 2013.
10%+ annual house price declines (March 2012), regions
Tas SA NT Vic ACT NSW Qld WA -10 0 10 20 30 40 50 60 70

Employment growth by state (year to May 2012)

Change in employment over latest 12 months (trend, 000s)

SA regional house price growth

West Coast Barossa Lower North Lincoln Whyalla Riverland Lower South East Yorke Mt Lofty Ranges Murray Mallee Regional SA Upper South East Flinders Ranges McLaren Vale Adelaide -6 -4 -2 0 2 4 6 8 10

Tasmania regional house price growth

Central North North Eastern North Western Burnie-Devonport Launceston Southern Hobart Lyell -12 -10 -8 -6 -4 -2 0 2

Capital growth (%, year to Mar 2012)

Capital growth (%, year to Mar 2012)

NT regional house price growth

Barkly

ACT regional house price growth

North Canberra Gungahlin-Hall

Finniss Tuggeranong Darwin Woden Valley Canberra Belconnen Central Weston Creek-Stromlo Palmerston South Canberra -8 -6 -4 -2 0 2 4 6 8 10 12 14 -4 -2 0
Capital growth (%, year to Mar 2012)

Lower Top End

Capital growth (%, year to Mar 2012)

Sources: ABS, Residex, ANZ

Australian Housing Chartbook / 9 July 2012 / 11 of 13

IMPORTANT NOTICE
STATE/TERRITORY UNDERLYING HOUSING MARKET BALANCE
NSW housing market balance
180 160 140 120 100 80 60 40 20 0 -20 Shortage Surplus 91 90 80 70 60 50 40 30 20 10 0 -10 Underlying demand 5 Completions Shortage -5 -10 95 97 99 01 03 05 07 09 11 13 5 4 3 Underlying demand Completions 2 1 0 Shortage Surplus 91 8 6 4 2 0 Surplus -2 91 93 95 97 99 01 Completions 03 05 07 09 11 13 Surplus -3 91 93 95 97 99 01 03 05 07 09 11 13 Shortage Underlying demand Shortage 0 3 '000 93 95 97 99 01 03 05 07 09 11 13 6 -1 -2 -3 91 93 95 97 99 01 03 05 07 09 11 13 Surplus Completions Shortage Underlying demand Surplus 91 93 95 97 99 01 03 05 07 09 11 13 Shortage 0 15 Underlying demand 10 Completions 93 95 97 99 01 03 05 07 09 11 13 Underlying demand Completions '000 70 60 50 40 30 20 10 0 -10 -20 Surplus 91 93 20 '000 95 97 99 01 03 05 07 09 11 13 Shortage Underlying demand Completions '000

Victoria housing market balance

Queensland housing market balance

'000

SA housing market balance

-20 Surplus 91 93 80 70 60 50 40 30 20 10 0 -10 -20 '000

WA housing market balance

'000

TAS housing market balance

NT housing market balance

'000

ACT housing market balance

Completions Underlying demand

Sources: ABS, ANZ

Australian Housing Chartbook / 9 July 2012 / 12 of 13

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