Key Indicators for Land Release and Development in the Territory

December 2013

ECONOMIC

TRENDS

Key indicators for land release
and development in the Territory

Contents

SUMMARY

ECONOMY WIDE INDICATORS

National and ACT Economic Growth

Components of ACT Growth

Population Growth Rate

Population Growth Components

Labor Market

Job Vacancies

Public Sector Vacancies

THE ESTABLISHED REAL ESTATE MARKET

Real Estate Listings - Number

Real Estate Listings – Type

Real Estate Listings – Price Range

Canberra House and Unit Prices

Dwelling Price/Income Multiple

First Home Buyers

THE RENTAL MARKET

Rental Vacancy Rate

Rental Listings

Rental Market – Price Distribution

Rental Market – Listings by Property Type

Investor Finance and the Rent Component of Consumer Price Index

NEW HOME BUILDING

Leading Indicators of Building Activity

THE NEW RESIDENTIAL LAND MARKET

The Residential Land Pipeline

Single Block Settlements

Serviced Land Prices

OFFICE MARKET INDICATORS

Office Sector Supply and Vacancy Rates

New Office Construction

RETAIL MARKET INDICATORS

Retail Turnover

New Retail Construction

ACCOMMODATION MARKET INDICATORS

New Accommodation Construction

Tourist Accomodation Supply

Tourist Accomodation Demand

INDUSTRIAL SECTOR INDICATORS

New Industrial Construction

Other New Commercial Construction

The Economic Development Directorate makes no warranty regarding the accuracy or completeness of information in this publication and recommends obtaining independent legal and financial advice before considering purchasing land or making an offer to purchase land.

SUMMARY

ACT economy forecast to ease…

The Territory’s economy grew by 2.7 per cent between 2012 and 2013, slightly above the national GDP growth rate of 2.6per cent over the same period. Forecasts from ACT Treasury are for growth to ease into next year, down to 1.75 per cent in the year to June 2014 (refer to page 3).

Population growth above forecasts…

The ACT’s population increased by 8,258 personsin the 12 months up to June 2013, an increase well above the 10 year average of 4,965. The largest contributor to growth in the most recent 12 months has been natural increase (births minus deaths) at 3,711. Interstate migration recorded a net gain of 1,579 people while net overseas migration remained stable with 2,968 overseas migrants entering the ACT over the year(refer page 4).

Labour market weakening…

Annual trend employment growth fell to 0 per cent in November 2013. The ACT’s unemployment rate remains volatile, rising in the most recent month to 4.2 per cent. While this is lower than the rate recorded in the first two months of 2013, it is above the average rate from the past 4 years. Canberra based APS job listings are well down on the levels recorded from 2007 to 2011 with just 14ACT based vacancies advertised in January 2014 (refer pages 5 & 6).

Real estate market subdued as affordability improves…

Real estate listings have remained well down on the two year average with the number of listings falling slightly to be 1,883 in January 2014. Property listing prices have shifted downwards over the last year with the number of properties in the lower price ranges increasing. Compared to April 2013, the percentage of properties listed at prices below $400,000 has generally increased whilst the percentage of houses listed between $401,000 and $600,000 have fallen(refer pages 6, 7 & 8).

Renters facing better prospects…

Rental listings, particularly units and apartments, increased over the second half of 2013 and remained well above the 18 month average with the number of rental listings increasing in January 2013 to 2,533. Rental vacancies as recorded by the Real Estate Institute of Australia increased over the June 2013 quarter to be 4.5 per cent. Further, rental prices are falling ashighlighted by the increases in the properties listed within the lower price ranges of $201-$300 and $301-400(refer page 9).

New home building facing slower demand…

Although building approvals fell slightly in November 2013, building approvals rebounded in the second half of 2013 to be 4,751 in November 2013, 875 more approvals than in the previous year. However, approvals remain below the highs of 2011. For dwelling completions, after lagging behind approvals for the best part of five years, there were moredwellings completed in the year to November 2013 than approved, whilst the number of dwellings commenced have been patchy of late(refer page 12).

Land pipeline healthy but prices remain high…

The number of residential dwelling sites in the pipeline has increased in the June quarter, up 1,978 sites to 15,356. This increase is mostly attributed to an increase in the number of sites undergoing land servicing.The average price of serviced land has increased in 2013 with the average price of serviced land increasing by $14,331 to be $278,427in Gungahlinand by $10,731 to $382,483 n Molonglo
(refer page 13).

Office vacancy rates creeping up…

The most recent measure of office space and vacancy rates shows that there was 992,000sqm of
A-grade office space available in June 2013. The corresponding vacancy rate for A-grade space was 13.6per cent (refer page 15).

Territory retail patchy…

Monthly retail turnover has been patchy in 2013, with turnover averaging $405million per month in original terms. This is above the average of $393million per month for the same period last year. The most recent month of November 2013 saw turnover increase to $430 million (refer page 16).

Tourism accommodation…

There were 50 accommodation premises recorded by the ABS in the June 2013 quarter – the same as that recorded in the March quarter of 2013. This is down 19 per cent (or 12 establishments) on the peak recorded in December 2001. The number of rooms has increased steadily since December 2012 to 4,998 in the June 2013 quarter (refer page 17).

An easing inindustrial and other commercial building…

The level of new other commercial construction commencements remains well below the highs of March 2012, with only $39 million worth of new other commercial construction beginning in the September 2013 quarter, over $200 million less than the highs of March 2012. There was $32.8 million worth of new industrial premises construction commenced over the previous year to September 2013 (refer page 18).

ECONOMY WIDE INDICATORS

National and ACT Economic Growth

(Source: ABS 5206, ACT Treasury)

The most recent measure of economic growth for the Territory was annual growth of 2.7 per cent in 2012/13. This compares to a National GPD growth rate of 2.6 per cent over the same period.

Forecasts from ACT Treasury are for growth to easeover the next year, down to 1.75 per cent in the year to June 2014.

Components of ACT Growth

(Source: ABS 5206 – T29)

The level of spending in the local economy by the public sector rose whilst private sector spending easedin the period from September 2012 to September 2013.

Private sector growth continues to be negative (just over -2 per cent), while growth in spending on the consumption of goods and services, and capital investment in the public sector increased to 2.9 per cent.

Population Growth Rate

(Source: ABS 3101 – T4)

The ACT’s population grew by2.2 per cent in the year to June 2013. This remains well above the 10 year average of 1.2 per cent.

The National population grew by 1.8 per cent in the year to December 2012.This remains well above the 10 year average of 1.3 percent.

Population GrowthComponents

(Source: ABS 3101 – T2)

The ACT’s population has increased by 8,258 in the 12 months to June 2013 which is well above the 10 year average of 4,965.

The largest contributor to growth in the most recent 12 months has been natural increase (births minus deaths) at 3,711.

Interstate migration recorded a net gain of 1,579 people while net overseas migration remained stable with 2,968overseas migrants entering the ACT in the year toMarch 2013. This remains well above the 10 year average of 1,727overseas persons migrating to the ACT per annum.

Labor Market

(Source: ABS 6202 - T11)

Annual trend employment growth fell to0 per cent in November 2013.

The ACT’s unemployment rate remains volatile, rising in the most recent month to 4.2 per cent. Whilstlower than the highs of early 2013, it is above the average rate from the past 4 years.

Job Vacancies

(Source: ABS 6354 - T1)

ACT job vacancies have stabilised after a period of steep decline.

In November 2013, therewere 2,600 job vacancies, well below the 10 year average of 4,400.

Public Sector Vacancies

(Source:

Canberra based APS job listings are well down on the levels recorded from 2007 to 2011. In January2013 there were 14ACT based vacancies.

The series is volatile but remains well below the 5 year average of 336 ACT based Federal Public Service vacancies.

THE ESTABLISHED REAL ESTATE MARKET

Real Estate Listings - Number

(Source:www. allhomes.com.au)

Real estate listings have decreased slightly in January 2014 with 1,883 listings recorded.

Real Estate Listings – Type

(Source:

In January 2014, 54.7per cent of all listed established homes for sale were standard houses, 32.5 per centwhere units/apartments and 12.8 per centwere duplexes/townhouses.

Since April 2013, the proportion of listings that are duplexes/townhouseshas fallen whilst the proportion of standard houses and unit/studios have slightly increased.

Real Estate Listings – Price Range

(Source:

Currently, the prices of properties for sale within the ACT areconcentrated around the $401,000 to $500,000 price bracket.

Compared to April 2013, there has been an increase in the number of properties listed between $301,000 and $400,000.

Canberra House and Unit Prices

(Source: RPData )

According to the latest figures from RP-Data, the 3 month rolling medianhouseprice has increased to $549,495 in October 2013. This is down from the peak recorded in May 2013 of $555,000. For units, prices have also increased to $419,900 which is down slightly from the peak recorded in November 2012 of $421,000.

Dwelling Price/Income Multiple

(Source: ABS 6302.0 and RPData )

The multiple of annualised average weekly earnings to dwelling prices show a ratio of 6.2 for houses and 4.6 for units.

In both instances this is below the ACT Government’s affordability target of 6.8 and 5.2 respectively.

First Home Buyers

(Source: ABS 5609 T9b)

There has been a sharp decrease in the number of first home buyers, with the number of loans for first home buyers falling by 33per cent from June 2013.

The average loan size for November 2013 was $291,000, a decrease of $30,000 from November 2012.

THE RENTAL MARKET

Rental Vacancy Rate

(Source: Real Estate Institute of Australia)

Rental vacancies as recorded by the Real Estate Institute of Australia continued to increase over the September 2013 quarter to be 4.5per cent.

Rental vacancies are well above the ten year average vacancy rate of 2.4 per cent.

Rental Listings

(Source:

Rental listings have continued to rise. In January 2014there were 2,533 homes available for rent. Rental listings remain well above the 18 month average of 2,185.

Rental Market – Price Distribution

(Source:

There has been a significant increase in the number of properties listed between $300 and $400 and an increase in the number of properties listed in the $201-$300 range. The number of properties listed in the $401-$500, $501-$600 and $601-$700 all fell.

The majority of rental properties advertised were concentrated around the $401-500 per week mark. However there seems to be a shift to the lower rental brackets.

Rental Market – Listings by Property Type

(Source:

In January 2014 unit/studio properties represented a greater proportion of rental listings than in April 2013, representing just over half of all rental listings

31.6per cent of listings were forstandard houses whilst duplexes and townhouses made up 16.9per cent of rental listings.

Investor Finance and the Rent Component of Consumer Price Index

(Source: ABS 5671 T26, 6401 T12 )

Although volatile, the level of investor finance increased in November 2013 to be $164 million.

The level of investor finance in November 2013 was down from the mid year highs.

In September 2013 the annual growth in rents from CPI was 1.7 per cent in the year to September2013. This growth rate is well down on previous years, confirming that rents have stabilised in response to an increase in supply.

NEW HOME BUILDING

Leading Indicators of Building Activity

(Source: ABS 8731 T9, 8752 T35 & T38)

Dwelling approvals have rebounded from the lows of mid 2012. In the year to November 2013, 4,751 new dwellings were approved. The recent resurgence in approvals has been driven by the approval of a number of new apartment and townhouse developments over the last 12 months.

Dwelling completions have been increasing from the beginning of 2012. After lagging behind approvals for the best part of 5 years, the number of completions now exceeds the number of dwellings being approved.

The number of commencements continues to be volatile. In the September 2013 quarter, there were 557 fewer dwellings commenced.

Dwelling Approvals by Type

(Source: ABS 8731 T9)

The approval of separate houses has remained steady over the previous year, with an annualised figure of 1,578 for November 2013.

Approvals for units and apartments have increased over the last year, with3,173 units approved in the year ending November2013.

Dwelling Approvals by Type

(Source: ABS 8731 T9)

On a monthly basis there were 175 houses and 151units approved in November2013.

THE NEW RESIDENTIAL LAND MARKET

The Residential Land Pipeline

(Source: ACT Government)

The number of residential dwelling sites in the pipelinehas increasedin the September 2013 quarter, up1,978sites to 15,356. This increaseis mostly attributed to an increase in sites undergoing land servicing.

Single Block Settlements

(Source: ACT Government)

In total there were 229 blocks settled over the September 2013 quarter.

Serviced Land Prices

(Source: ACT Government)

The average price of serviced land in the ACT continued to increase, with the average price being $292,513 in the September 2013 quarter.

Average serviced land prices within Molonglo and Gungahlin increased in the September 2013 quarter.

There were no sales of serviced land in the districts of Woden/Weston and Belconnen during the September 2013 quarter.

OFFICE MARKET INDICATORS

Office Sector Supply and Vacancy Rates

(Source: Colliers International)

The most recent measure of office space and vacancy rates shows that there was 992,000sqm of A-grade office space available in June 2013. The corresponding vacancy rate for A-grade space was 13.6 per cent.

For B grade and C/D grade space there was 540,000sqm and 652,000sqm of space available for lease in June 2013. The corresponding vacancy rate was 9.1 per cent and 10.4 per cent respectively.

New Office Construction

(Source: ABS 8752 T68)

The commencement of new office projects has remained subdued in the 12 months toSeptember 2013. In theSeptember quarter there was an annualised $198 million worth of office space commenced, well down on the high of nearly $1.2 billion recorded in the year to March 2009.

RETAIL MARKET INDICATORS

Retail Turnover

(Source: ABS 8501 T11 &T12)

Monthly retail turnover hasbeen patchy inthe year to November 2013, with turnover averaging $405 million per month, in original terms.This is above the average of $393 million per month for the same period last year.In November 2013 retail sales totalled $430 million in original terms.

New Retail Construction

(Source: ABS 8752 T68)

There was $20 million worth of new retail space commenced in the September 2013 quarter. In annual terms, there was $64 million worth of work commenced in the year to September 2013.

ACCOMMODATION MARKET INDICATORS

New AccommodationConstruction

(Source: ABS 8752 T68)

For the second consecutive quarter, there was no new accommodation facilities commenced in the September 2013 quarter.In the year to September 2013, $58 million worth of work has been commenced.

Tourist Accomodation Supply

(Source: ABS 8635 T9)

The number of rooms has increased steadily since December 2012 to 4,998in the June 2013 quarter. This however is down on the peak recorded in December 2001 where there were 5,270 rooms across the ACT.

Tourist Accomodation Demand

(Source: ABS 8635 T9)

The room occupancy rate in the Territory in the Junequarter of 2013was 69 per cent, which is below the 5 year average but is well down on the recent peak in the March quarter of 2010 when the occupancy rate was 80 per cent.

INDUSTRIAL SECTOR INDICATORS

New Industrial Construction

(Source: ABS 8752 T68)

There was $32.8 million worth of new industrial premises construction commenced over the previous year to September 2013.

The level of new industrial premises construction in the September 2013 quarter was well below the previous year’s highs.

Other New Commercial Construction

(Source: ABS 8752 T68)

Although commencements of other commercial premises increased in the September 2013 quarter, the figures remain well below the March 2012 figures.There was $39 million worth of other new commercial construction commenced within the September 2013 quarter.

In annual terms, there was $187 million worth of other commercial premises commenced over the year to September2013.

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