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MPA Housing Affordability Seminar What some of the ‘numbers’ tell us about the housing task ahead
Paul Byrne, MPAAugust 2015
106,660
41,741
53,428
95,169
11,491 ‐
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Population Growth of Victoria‐ 2004/05 ‐ 2013/14Source: MPA analysis of ABS 3218.0 Regional Population Growth, Australia
Total VictoriaGrowth areasRest of MelbourneMelbourne TotalRest of Victoria
These are all in one year!
1,800 per week for Melbourne
Victoria’s population increasing by over 100,000 a year‐What are housing implications of such growth? We need lots!
Where growth is occurring across Melbourne‐ Annual Increases of around 20,000 per Region‐ Big shift in Central Region
What drives this growth‐ OS Migration, and‐ ‘Natural Increase’ – but this hides underlying numbers
‐ 73,969 Births in Victoria in 2013 (over 70 per week in Wyndham!)
‐ 35,842 Deaths in 2013
OS Migration makes up about 56% of the increase in Vic
Ageing Population – Big housing implications‐ but not just in places people usually expect
Melbourne DOUBLES over next 30 to 40 yearsBasically we’re planning for twice the population, twice the housing, twice the jobs, and twice the number of trips
+ 3.4 m
+ 1.7 m
+ 1.6 m
+ 12.7 m
Who we need to house‐ Shifting demographics, households and ageing ‐Must plan for all types of ‘households’, and we change over time
And in what types of Dwellings‐ Current and projected demands‐ Implications for supply, quality and affordability
Dwelling Growth: 2015‐2051By 2051, Melbourne will need an additional:
515,000 houses515,000 townhouses and units440,000 apartments
Evolution of the Unit and Apartment Market
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1973 1978 1983 1988 1993 1998 2003 2008 2013
Annual Townhouse, Unit and Apartment Building Approvals ‐VictoriaSource: MPA analysis of ABS building Approvals
Future requirement(avg p.a to 2050)
Going forward: 25,000 –30,000 pa. (most of this is in metro Melbourne)
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000
Maribyrnong Melbourne Port Phillip
Stonnington Yarra
Boroondara Knox
Manningham Maroondah
Monash Whitehorse Yarra Ranges
Banyule Darebin Hume
Mitchell Moreland Nillumbik
Whittlesea
Bayside Cardinia
Casey Frankston Glen Eira
Greater Dandenong Kingston
Mornington Peninsula
Brimbank Hobsons Bay
Melton Moonee Valley
Wyndham
Dwellings Approved
Building Approvals Residential Dwellings 2013‐14Source: ABS 8731.0
HousesSemi‐detached, row or terrace houses, townhouses ‐One storeySemi‐detached, row or terrace houses, townhouses ‐ Two or more storeysFlats units or apartments ‐ In a one or two storey blockFlats units or apartments ‐ In a three storey blockFlats units or apartments ‐ In a four or more storey block
Clear move for medium to higher density infill in different LGAs and subregions
Where Melbourne’s increased housing stock will be moving forward
• Central City “boom” of tall building permits. Issues are quality, publicdomain and consultation
• Middle ring has great potential, particularly in Clusters, major activity centres and long term urban renewal of old industrial areas close to the City
• Greenfields proceeding steadily. Success of program is clear and has good Council support
• Regional cities have potential to take greater role in growth
Melbourne’s growth precincts to meet most need ‐ Over 75% of the 1.6m new dwellings over next ~35 years
Melbourne Greenfield – Significant Affordability Advantage: Affects established markets
Apr‐Jun Quarter 2015Source: MPA analysis of CKC Research 4 National Land Survey Program Sydney itself recorded $412,750!
$150,000
$175,000
$200,000
$225,000
$250,000
$275,000
$300,000
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
Q1
2009
Q2
2009
Q3
2009
Q4
2009
Q1
2010
Q2
2010
Q3
2010
Q4
2010
Q1
2011
Q2
2011
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Med
ian
Pric
e
Lots on the market
Sydney/ Wollongong/ Newcastle Supply
Melbourne Supply
Sydney / Woolongong / Newcastle Median Price
Melbourne Median Price
Unlike Sydney, increased supply has significantly dampened prices in Melbourne
In depth planning, infrastructure coordination and innovation has improved supply, affordability and quality of Melbourne’s new areas
Impact of supply and competition
National Land Survey Report Greenfields – July 2015CKC Research 4
“Melbourne is clearly holding the trump card; very affordable land and a significant level of development capacity. Melbourne will endeavour to convert the current level of strong demand into price growth, however this may be thwarted by a lack of product choice combined with a high level of industry competition. The big question for Melbourne is whether demand will hold up over a prolonged period of time in order to underpin price growth. Melbourne's massive development capacity may see demand satisfied in record time, preventing it from exploiting the opportunity.”
Housing Price and Affordability – Metro Wide– Planning can directly affect new supply, quality and price
Price increases much greater in houses compared to apartments
Dwelling Sales per Year – Increasing numbers over time
Stronger growth rate in units compared to houses – more supply / competition
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Number of Sales of Houses and Units across Melbourne per Year
House Sales Unit Sales
Melbourne Housing Market: Median Prices – Houses versus Units: Relationship in prices varies significantly
TBCAs housing trends change not just about price differential
Significant Variation of House Prices across Melbourne
$500,000
What is affordable? Approx. $400,000 Mortgage?‐ Can purchase a $450,000 to $500,000 house
• In 2014, the median house price across Metro Melbourne was $550,000
• Interest Rate ~ 4.5%• 25 year Loan• Repayments of $2,224 a month ~ $26,700 P.A.
• Can be serviced by 30% of gross income of $89K – Household Income • Current Average total earnings for Victoria
» Males $66,650» Females $43,850» Persons $54,950
Outer Areas play key role in housing affordability– Need to deliver same role for units in infill precincts
In 2014, the median house price across Metro Melbourne was $550,000
Of the 51,500 houses sold, 23,000 (45%) were sold for less than $500,000
Mostly found in West and North areas and Outer South East Areas.
Units and Apartments Under $350,000
• In 2014, the median unit price across Metro Melbourne was $455,000
• Of the 15,800 Strata units* sold, 3,300 (21%) were sold for less than $350,000
• Mostly found in Inner Subregion and in the South East area.
• *Slightly different to the measured value from Valuer General
Variation in Unit Prices not nearly as marked
$350,000
Units and Apartments Under $350,000
Rental Stock across Melbourne
• In 2011 census, 389,644 dwellings being rented across Greater Melbourne – 27.2% of all occupied dwellings
• This comprised:– 184,000 separate houses 47%– 67,500 1 & 2 storey town houses 17%– 50,600 1 ‐ 3 storey apartments 13%– 35,600 4+ storey apartments 9%
Rental Stock across Melbourne
Median Rent of Houses
$810
$650 $7
00
$700
$580
$663
$510
$450
$425
$390 $430
$420
$420
$430
$440
$420
$388
$378
$350
$370
$360
$330
$340
$340 $375
$325
$330
$320
$320
$300
$313
$1,100
$995
$900
$870
$850
$810
$700
$600
$550
$550
$530
$510
$500
$500
$500
$497
$485
$460
$460
$440
$435
$410
$400
$395
$380
$380
$380
$380
$360
$360
$350
$0
$200
$400
$600
$800
$1,000
$1,200
Median Weekly Rent for Houses in Melbourne ‐ March 2015
3 bed 4 bed
$500
$300
Median Rent of Apartments and Flats
$360
$344
$335
$315
$315
$275
$275
$350
$275
$225
$270
$280
$280
$265
$219 $2
50 $270 $2
95
$288
$250
$230 $2
60
$238 $2
70
$258
$210
$220
$210 $228
$205
$185
$515
$490
$468
$450
$425
$400
$390
$390
$370
$370
$360
$352
$350
$345
$340
$340
$338
$335
$330
$320
$320
$310
$300
$300
$295
$290
$290
$280
$280
$270
$260
$0
$100
$200
$300
$400
$500
$600
Median Weekly Rent for Apartments and Flats in Melbourne ‐ March 2015
1 bed 2 bed
$500
$300
Public Housing: Approx. 36,800 dwellings (ABS 2011) ‐ 2.6 % of Melbourne’s Total Housing Stock
Houses
• Additional 440,000 houses needed 2015‐2051
• ~12,000 p.a.• 100‐150 active projects• Mostly greenfield (~400,000) and general infill
• Challenge ahead:Need to maintain strong pipeline of existing supply and affordability within already designated areas
2 to 3 storey units, town houses• Additional 495,000 dwellings needed 2015‐2051
• ~14,000 pa• ~900 projects pa (@15 per project)• Mostly MPA Precincts & general infill
• Challenge ahead:Far greater supplyneeded to achieveaffordability and good diversity in middle ring
Mid and high rise (4 storeys and above)
• Additional 460,000 dwellings neededfrom 2015‐2051
• ~13,000 pa• ~130 projects pa• Mostly in MPA Precincts
• Challenge ahead: Combining affordability with delivering good quality and diversity in designated strategic development precincts
MPA Housing Affordability Seminar What some of the ‘numbers’ tell us about the housing task ahead
Paul Byrne, MPAAugust 2015