Residential Developer Market Intelligence
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Residential Developer
Market Intelligence
MAJOR RESEARCH PARTNER
Q1 –2019
Welcome to the Q1-2019 edition of the UDIA NSW Residential Developer Market Intelligence (RDMI)
report. The quarterly RDMI aims to provide a targeted residential market performance update across
the Greater Sydney, Lower Hunter, Central Coast, Illawarra and ACT housing markets.
This publication is prepared with the understanding that residential property market dynamics are
complex and nuanced, and thus quality, timely market intelligence is essential for market participants
supplying new products.
The publication draws upon a range of information sources including exclusive and bespoke data
provided by CoreLogic - our key research partner. A key feature of the RDMI report is the inclusion of
‘bottom-up’ insights provided by our leading developer members on the state-of-play in their regional
market of operational focus.
The RDMI reporting output and content inclusions continues to evolve, and in this edition we
are pleased to present a new dashboard headline indicators section - in the opposing page. This
dashboard highlights the continuation of challenging market conditions facing the development
sector as the property downturn continues to unfold across the State.
UDIA NSW expects the subdued demand profile for new residential products to persist for at least
the next six months and most likely into the 2020 calendar year. Underpinned by a ‘credit crunch’ for
both retail consumers and developers in the wake of the Banking Royal Commission, we expect the
soft market conditions to continue to put downward pressure on pricing and sales volumes over the
coming period.
I trust the data and insights in this RDMI are of value for you and your organisation, and would
welcome any feedback or thoughts about the publication emailed to tadams@udiansw.com.au
Toby Adams
General Manager – Strategy & Research
UDIA NSW
Cover Image: No. 1 Lacey by Cornerstone Property
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Market Performance Headline Metrics
Median House Volume of House Median Unit Sale Volume of Unit Change in Approvals
Sale Price (set- Sales (settled) Price (settled) Sales (settled) (12 months to Feb 2018
tled) (3-month (3-month change) (3-month change) (3-month change) vs 12 months Feb 2019)
change)
Greater
Sydney -1.6% -6.3% -0.2% -1.4% -17%
Central -1.5% -7.6% -0.9% -4.2% 26%
Coast
Lower -0.3% -6.2% -1.1% -8.4% -15%
Hunter
Illawarra -1.3% -6.2% -0.5% -4.5% 12%
ACT 1.2% -3.2% -0.2% -1.4% 60%
Economic Cash Rate and Average Lending Rates
Snapshot
• The latest ABS statistics to Septmber 2018 show
a 34% drop in the natural population increase
from the previous quarter. The strong population
growth in NSW remains bolstered primarily by net
overseas migration. In Q3-2018, NSW experienced
a net increase of 35,500 people which was 39% of
the total net Australian population increase for the
quarter.
• In February 2019, NSW’s unemployment rate was
4.3% which is significantly lower than the national
average. This is below even the low national average
of 5%, with total employment growing in NSW by
2.3% over the preceding 12 months.
Source: RBA
• The official cash rate has remained steady at 1.5%
for 31 months now since August 2016.
• Consumer sentiment across the two major indices
fell slightly to start the year (4.4%, ANZ Roy-Morgan;
5.3% Westpac-Melbourne Institute)
Consumer Price Index (CPI)
Population Growth (NSW)
Source: ABS
Source: ABS
NSW Employment/Unemployment Consumer Sentiment
(Seasonally Adjusted)
Source: ABS
Source: Roy Morgan
National Housing Affordability Ratio (National)
Housing Snapshot 7.5
7.0
• The total volume of residential dwelling approvals
Dwelling Price to Income Ratio
continues to decline in most capital cities. In the year 6.5
to February 2019, the Sydney approval pipeline has
contracted by 17% and Melbourne’s by 13%. 6.0
• First home buyers accounted for 18% of national
house sales in January 2019, a proportion that has
been largely maintained since October 2017. 5.5
• The national housing affordability ratio for detached
dwellings (x7.8) and multi-units (x6.4) has improved 5.0
marginally in recent months on the back of falling Detached
pricing in Sydney and Melbourne. 4.5
Multi-unit
• The median sale price for new units in Sydney in
December 2018 was $735k, which was 24% higher
than Melbourne and 41% higher than Brisbane. 4.0
• The median sale price for new detached houses in
2
4
6
8
10
12
14
16
18
0
0
0
0
20
20
20
20
20
20
20
20
20
Sydney was $975k, down 3% from the March 2018
Source: CoreLogic
high.
First Home Buyers Australia, Proportion
and Loan Size Total Approvals 12 Months to Jan 2018
vs 12 Months to Jan 2019
Multi-unit
Detached
Dwellings
Source: ABS
Source: ABS
Median Unit Price (New): Capital Cities Median House Price (New): Capital Cities
Source: CoreLogic
Source: CoreLogic
Greater Residency Vacancy Rate (Sydney, Monthly)
Sydney
• Greater Sydney is continuing to feel the effects of the
current property downturn, with a decline in approvals,
the ongoing retraction of detached housing price, an
increase in the residential vacancy rate, and auction
stock and clearance levels falling short of early 2018
numbers.
• The approvals decline has been felt across the Greater
Sydney region, with every district experiencing
reduction in total approvals over the last year. The
Eastern City has recorded the greatest reduction with
total dwelling approvals contracting by 34%. This
was followed by the South District (which contracted Source: REINSW
by 30%) and the Western City (which contracted by
15%).
• Median whole-of-market house price in Greater Total Approvals (Sydney, Monthly)
Sydney has fallen by 1.6% in the last 3 months, and
the volume of house sales has fallen by 6.3%. New
detached house price has fallen by 1.5% in the last 3
months.
• Median whole-of-market unit price has contracted by
0.2%, with the volume of unit sales down 1.4% over the
last 3 months. New unit price has increased by 0.3%.
Change in New House and New Unit Price
(Rolling 3 month Average) (Sydney)
Source: ABS
Approvals by District 12 months to Jan 2018
vs 12 months to Jan 2019
Source: CoreLogic
Weekly Auction Clearance Rates (Sydney)
Source: ABS
Source: CoreLogic
Greater Median Sale Price by Quartile, Houses,
Sydney Greater Sydney (12 months to Jan 2019)
Upper
Apartment Supply Snapshot Quartile:
$1,500,000
Current Twelve Month
Upper
Change
Quart
Median:
$950,9
Total Apartment Completions (Cal. Year) 33,270 16% $950,000
Media
Lower $720,0
Quartile: Lower
Total Apartment Yield Under Construction 41,975 55% $690,000 Quart
$572,0
Total Apartment Yields Approved 65,647 -26%
$0 $0
Median Sale Price of New Units $720,000 -1.3%
Jan 2019 Source: CoreLogic
Vacancy Rate (Residential) 3.2% 2.3%
(Feb 2019) (Feb 2018)
$540 -0.9%
Median Asking Rent (Residential)
Median Sale Price by Quartile, Units,
Upper Sydney (12 months to Jan 2019)
Greater
Median Rental Yield
3.9% N/A Quartile:
$1,500,000
Source: CoreLogic Upper
Quartile:
Median Days on Market, Selected LGAs (12 months to Jan 2019) Median:
$950,950
$950,000
Median:
Lower $720,000
Quartile: Lower
$690,000 Quartile:
$572,000
$0 $0
Source: CoreLogic
Source: CoreLogic
Developer Insight
“There is no doubt that negative sentiment combined with lending policies
is having a significant impact across Sydney’s market. Sales activity has
decreased with most buyers preferring to wait on the sidelines. There is some
settlement risk to work through in 2019, particularly in lower quality areas with
localised over-supply. On the positive side, we are seeing increased first home
buyer activity spurred by improved affordability while the fundamentals of
population growth and economic activity remain strong. The re-election of the
State Liberal government will provide policy continuity to underpin industry
investment, however housing approvals have fallen sharply suggesting that
Sydney’s housing supply targets will not be met in coming years. We expect to
see a period of undersupply that will coincide with an improvement in market
conditions. ”
Mike Williams – Head of Strategy & Acquisitions, Legacy Property
Greater Sydney (Detached)
LGA 3 Month % Change in Median Sales Price
(Whole of Market, as at 31/01/2019)
% %
0%
1 14
15 1. Ryde
16 13 12
2 2. Canada Bay
3. Strathfield
3 4 11 4. Burwood
5 8 10 5. Inner West
9 6. Georges River
7 7. Bayside
6 8. Sydney
9. Randwick
10. Waverly
11. Woolhara
12. Mosman
13. North Sydney
14. Willoughby
15. Lane Cove
16. Hunters Hill
Source: CoreLogic
Spotlight on South District: LGA Market Update
Source: CoreLogic
Greater Sydney (Multi Unit)
3 Month % Change in Median Sales Price
(Whole of Market, as at 31/01/2019)
% %
0%
1 14
15
16 13 12 1. Ryde
2 2. Canada Bay
3. Strathfield
3 4 11 4. Burwood
5 8 10
5. Inner West
9 6. Georges River
7 7. Bayside
6 8. Sydney
9. Randwick
10. Waverly
11. Woolhara
12. Mosman
13. North Sydney
14. Willoughby
15. Lane Cove
16. Hunters Hill
Source: CoreLogic
Spotlight on North District: LGA Market Update
Source: CoreLogic
Central Approvals (Central Coast, Monthly)
Coast
• Approvals in the Central Coast have dropped off in
recent months, with rolling annual dwelling approvals
falling 5% over the 3 months to February 2019.
• The price of new houses and units has remained
relatively flat in the 3 months to January 2019, with
the median new house price falling by 2% and the
median unit price remaining at $585k.
• Whole of market house and unit prices were similarly
stable, despite sales volumes beginning to decline.
The volume of house sales was down 7.6% in the
3 months to January 2019, while unit sale volumes Source: ABS
were down 4.2%. Approvals (Central Coast) by Dwelling Type,
• The suburbs with the greatest 3-month movement
in median house price were Wyong Creek (23.6% 12 Months to Feb 2018 vs 12 Months to Feb 2019
increase), Kilcare (21.4% increase) and West
Gosford (14.3% decrease). The greatest 3-month
movements in unit prices were in Wamberal (13.4%
increase), Booker Bay (13.3% decrease) and Toukley
(6% decrease).
Median New House and Unit Price
(Central Coast, Monthly)
Source: ABS
Completions (Central Coast, Monthly)
Source: CoreLogic
Vacancy Rates (Central Coast, Monthly) Source: NSW DPE
Weekly Rents (Central Coast, Jan 2019)
Median 12 Month Rental
Asking Change in Yield
Rent Asking Rent
Houses $450 0.0% 3.6%
Multi-Unit $390 2.6% 4.1%
Source: CoreLogic
Source: REINSWCentral Coast 3 Month % Change in Median Sales Price
(Whole of Market, as at 31/01/2019)
15%
% %
24%
0%
Source: CoreLogic
Central Coast Update as at 31/01/2019
Source: CoreLogicLower Approvals (Greater Newcastle, Monthly)
Hunter
• Lower Hunter approvals are also in decline, falling
16% in the 3 months to February 2019.
• New house and unit prices are starting to show signs
of contraction. House prices in Newcastle and Lake
Macquarie fell by 1%, while the rest of the Hunter
had no change. Unit prices across the Hunter fell
by 2%. Established house prices were stable, while
established unit prices dropped by 1%.
• Sales volumes have begun to decline in the Lower
Hunter, with house sales down 6.2% and unit sales
down 8.4%.
• The suburbs with the greatest 3-month movement Source: ABS
in median house price were Croudace Bay (20.9%
increase), Holmesville (13.7% increase) and Salt Ash Approvals by LGA Jan 2018 vs Jan 2019
(13.4% increase). Those with the greatest 3-month
movement in median unit price were Hamilton
(22.9% increase), the Junction (19.9% decrease)
and Edgeworth (14.7% decrease).
Median New House and Unit Price
(Hunter, Monthly)
Source: NSW DPE, ABS
Source: CoreLogic Weekly Rents (Newcastle LGAs, Jan 2019)
Median 12 Month Rental
Residency Vacancy Rates (Hunter, Monthly) Asking Change in Yield
Rent Asking Rent
$370 5.7% 4.8%
Cessnock $290 0.0% 5.6%
$430 2.4% 4.1%
Lake Macquarie $370 2.8% 4.6%
$410 2.5% 4.5%
Maitland $320 10.3% 5.3%
$450 4.7% 3.7%
Newcastle $405 2.5% 4.0%
$430 2.4% 4.2%
Port Stephens $350 6.1% 4.4%
Source: CoreLogic
Source: REINSWLower Hunter
Local Government Area (LGA) 3 Month Change in Median Sales Price
(Whole of Market, as at 31/01/2019)
Maitland City
↑ 0.0% Port Stephens
↓ 1.4% ↓ 0.9%
↓ 2.9%
Cessnock
↑ 0.1%
↑ 0.0%
Lake Macquarie Newcastle
0.0% ↓ 0.8%
0.0% ↓ 1.0%
Source: CoreLogic
LGA Market Update as at 31/01/2019
Source: CoreLogic
Developer Insight
“While demand for product in the Newcastle region has reduced slightly off a strong base
in line with the overall slowdown in investor lending, quality well-priced properties remain
attractive and Newcastle represents a value proposition within a dynamic labour market. The
overall Newcastle fundamentals remain sound.”
Suzanne Pitson – General Manager of Sales and Marketing, DHAApprovals (Illawarra, Quarterly)
Illawarra
• Dwelling approvals in the Illawarra have started
to slow, increasing by just 3% in the 3 months to
February 2019.
• New house and unit prices have remained flat over
the last 3 months, with the median new house
price falling just 0.5%. The established market
fared slightly less well, with the median house price
dropping 1.3% and the median unit price falling
0.5%.
• Sales volumes are starting to decline, with house
sales down 6% and unit sales down 4.5%.
• The suburbs that experienced the greatest
movement in median house price over the 3
months to January 2019 were Bawley Point (15.4%
increase), Minnamurra (15% decrease) and Dolphin Source: NSW DPE, ABS
Point (14.2% decrease). The suburbs with greatest
3-month movement in median unit price included
Coniston (15.1% increase), West Wollongong (11.7% Approvals by LGA, 12 Months to Feb 2018
increase) and Gerringong (7.8% decrease). vs 12 Months to Feb 2019
Median New House and Unit Price
(Illawarra, Monthly)
Source: CoreLogic Source: NSW DPE, ABS
Residency Vacancy Rates (Illawarra, Monthly)
Weekly Rents (Illawarra LGAs, Jan 2019)
Median 12 Month Rental
Asking Change in Yield
Rent Asking Rent
$580 3.6% 3.3%
Kiama $470 4.4% 4.0%
$500 0.0% 4.0%
Shellharbour $420 5.0% 4.2%
$395 3.9% 3.7%
Shoalhaven $330 0.0% 4.1%
$510 2.0% 3.5%
Wollongong $400 0.0% 3.5%
Source: REINSW
Source: CoreLogicIllawarra
Local Government Area (LGA) 3 Month Change in Median Sales Price
(Whole of Market, as at 31/01/2019)
Wollongong
Kiama
↓ 1.3%
↓ 3.2% ↓ 0.5%
↓ 0.4%
Shellharbour
0.0%
↓ 1.0%
Shoalhaven
↓ 0.7%
0.0%
Source: CoreLogic
LGA Market Update as at 31/01/2019
Source: CoreLogic
Developer Insight
“Sale prices have been flat or marginally lower over the last quarter, coming
off a high base. In general, prices in the region have fared slightly better than
Sydney, although there has been significant growth in listings for units over
the last year. Demand for greenfield and detached housing products remain
strong, buoyed by strong employment and population growth. However, we
continue to see some potential buyers struggling with financing as a result
of the changes at the major lenders. We need to continue releasing a steady
supply of serviced land in the urban release areas to keep prices affordable, as
well as pushing for caps on developer taxes and charges in the face of lower
sale prices.”
Alby Peros – Development Manager, StocklandACT & Approvals (New, ACT, by Dwelling Type) 12
Months to Feb 2018 vs 12 Months to Feb 2019
Queanbeyan
• Approvals in the ACT & Queanbeyan have also
slowed, increasing by just 1% in the 3 months to
February 2019.
• The median house price in the ACT has increased
by 1.2% to $658k, while unit prices remained flat at
$426k.
• Sales volumes have fallen slightly over the last 3
months, with house sales down 3.2% and unit sales
down 1.4%.
• The suburbs with the most significant 3-month
movement in median house price were Kingston
(29% increase), Forrest (14.3% decrease) and Oxley
(14% decrease). Those with the greatest 3-month
movement in median unit price were Chifley (26.2%
increase), Barton (23% increase) and Weston
(21.8% increase). Source: ABS
Weekly Auction Clearance Rates (ACT)
Approvals (New, Queanbeyan, by Dwelling
Type) 12 Months to Feb 2018
vs 12 Months to Feb 2019)
Source: ABS
Completions (ACT, Quarterly)
Source: CoreLogic
Approvals (ACT & Queanbeyan, Monthly)
Source: ABS
Source: ABSACT & Queanbeyan
3 Month Change in Median Sales Price (Houses), as at 31/01/2019
15%
% 29%%
0%
ACT
Queanbeyan Urban
(NSW)
Source: CoreLogic
LGA Market Update as at 31/01/2019
Source: CoreLogicNational Property Clock
Adapted from Herron Todd White, Month in Review
April 2019
Dubbo
Mid North Coast
HOUSES
Hobart Canberra
Sunshine Coast Central Coast
Illawarra
Adelaide
Melbourne
Albury
Newcastle
Launceston
Sydney
Brisbane Darwin
Cairns South West WA
Alice Springs
Perth
Rockhampton
Lismore
Mid North Coast
Hobart
Sunshine Coast
Central Coast
Coffs Harbour
Gold Coast
UNITS
Canberra Newcastle
Bathurst
Illawarra Perth
Dubbo
Melbourne Sydney
Brisbane
Adelaide
South West WA
Ipswich
Cairns Source: Herron Todd White,
Whitsunday Month in Review, April 2019ABOUT UDIA
THE URBAN DEVELOPMENT INSTITUTE
OF AUSTRALIA (UDIA) IS THE PEAK BODY
REPRESENTING THE URBAN DEVELOPMENT
INDUSTRY IN AUSTRALIA.
Officially established in 1963, UDIA NSW has grown to become the leading industry
body representing the interest of the NSW property development sector.
UDIA NSW aims to secure the viability and sustainability of the urban development
industry for the benefit of our members and the communities they create by
advocating for more liveable, affordable and connected cities.
We represent the leading participants in the industry and have more than 500
member companies across the entire spectrum of the industry including developers,
institutional investors, third party logistics providers, financiers, builders, suppliers,
architects, engineers, lawyers, town planners, academics and state and local
government bodies. A quarter of these members are based in regional NSW.
UDIA NSW members are represented by an elected council of 13 leading industry
practitioners who are responsible for the strategic direction of the Institute. UDIA
NSW also has an extensive committee and regional chapter structure that involves
more than 300 of the development industry’s key stakeholders in policy formulation.
UDIA NSW OFFICE
UDIA NEW SOUTH WALES
02 9262 1214
LEVEL 5, 56 CLARENCE ST.
SYDNEY, NSW 2000
www.udiansw.com.au
udia@udiansw.com.auImage: Wivenhoe Village by Mbark
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