Presentation Title

Next Gen Breakfast Series 2012

Market Update March 2013

SA Property Market – A snapshot

•  Metro median house price - $395,000 (1.2% increase over 12 months)

•  Central metro house price sits at $468,000 (1.2% up over 12 months)

•  Inner ring median house price is $595,000 (5.9% down over 12 months)

•  Units/apartments median price - $305,000 (1.4% drop over 12 months)

•  14% drop in volume of settlements against the 5 year average

The backdrop of the current market:

– Little movement in pricing since 2009 after 8 years of sustained growth since 2001

– Stock on the market is high at over 18,500 properties Statewide (double the same time 4 years ago)

– Finance lending is still very tight – First homebuyers are scarce and may be

encouraged to the new home market with the current build incentives

SA Property Market – A snapshot

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House price growth– Metro v State (2000-2012)

Settlement volumes – Houses metro (1996-2012)

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•  First homebuyers are a rare species…rarely sighted in the past few years

•  Recent State Government boost is targeted at new builds, so whilst it is a positive for the economy, it will take a while to turn over to existing stock

•  QBE withdrawing from builders insurance in SA may have an impact on new builds which could slow the economy further, but may turn attention back to existing stock for FHOB over time

Economic observations

•  Pricing is critical – need to capture buyers immediately otherwise it’s death by advertising and open inspections….

•  Developers are very quiet, not taking up properties ideal for redevelopment due to level of stock on the market

•  People are needing to sell before they look at buying causing a bottleneck of stock on the market

•  Buyers are not fussed if they miss out on a property – the emotion of buying is very cool

Agent observations

•  List to sell price shows a difference of -7.0% in middle metropolitan areas (sliding back from 5% 12 months ago)

•  Official data shows an average of 82 days on market, relatively stable on 12 months ago

•  Vendors not afraid to withdraw, hold or rent for 12 months or more to get the right price

•  Renovation market is also very flat – people are nervous about jobs and the economy

Market analysis observations

Average rental ($)– 3 brm houses (SA) (2003-2012)

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Bonds lodged – Dec quarter annually (Full State 2003-2012)

Long term population trends

•  Population in SA has grew by 8.4% over the 10 years to June 2011 (latest ABS stats)

•  This represents an additional 126,500 people living in the State

•  Realistically, this would represent demand for at least 40,000 properties

•  In the next decade, SA Government estimates of growth of 193,000 people

•  In the next 20 years, estimates of growth are by 350,000 people

Hot spots for growth in the past decade – metro (2001-2011)

SA2s  WITH  LARGEST  AND  FASTEST  POPULATION  GROWTH,  South  Australia    

ERP  at  30  June     PopulaCon  Change    2001     2011pr     2001-­‐2011pr    

SA2     no.     no.     no.     %    LARGEST  GROWTH    

Pooraka     8  700     18  800     10  100     117    Adelaide     6  800     13  900     7  000     103    Aldinga     8  400     14  500     6  100     72    Northgate  -­‐  Oakden  -­‐  Gilles  Plains     16  600     21  500     4  800     29    Munno  Para  West  -­‐  Angle  Vale     3  500     7  900     4  400     125    

FASTEST  GROWTH    

Munno  Para  West  -­‐  Angle  Vale     3  500     7  900     4  400     125    Pooraka     8  700     18  800     10  100     117    Adelaide     6  800     13  900     7  000     103    Aldinga     8  400     14  500     6  100     72    Gawler  -­‐  North     6  100     8  900     2  800     46    

Hot spots for growth in the past decade – regional (2001-2011)

•  The Fleurieu region represented the strongest regional growth of 9700 people

•  Barossa region grew by 3700 people •  Specifically, Murray Bridge had an increase of

3300 people •  Victor Harbor increased by 2900 people whilst

Goolwa also increased by 2700 •  Mount Gambier also grew by 2200 people

Population decline – Statewide (2001-2011) •  Modbury Heights declined by 1700 people •  Redwood Park dropped 1300 residents •  The Mid North regional area saw decline of 770

people •  Waikerie’s population dropped by 500 people •  Peterborough also fell by 500 people •  Tatiara in the South East declined by 480

residents

2013 and beyond..

•  Slight momentum in the market could indicate a small volume increase for 2013 in both sales and rentals

•  Lower interest rates seem to be encouraging investors back into the market – still awaiting the contracts to back this up

•  Recovery will be slow, in line with stronger economic performance

•  Predicting modest growth of 1-2% for the next 2-3 years