M A N N I N G H A M 1
2 T H E J E L L I S C R A I G R E P O R T
Manningham
Welcome to the Jellis Craig Report. This report is designed to provide an insight into the key economic, demographic and sociocultural factors that currently affect the Melbourne property market, particularly for suburbs within the city of Manningham.
This year’s report has defined the top five factors as:
1. The global liveability of Melbourne, which
continues to drive interest from abroad
2. Australia’s economic transition to a consumption
based open market experiencing slow growth
3. Record low cash rates and rising household
debt, which has led to tighter lending conditions
4. Changes to Australia’s foreign investment rules
and regulations
5. New developments that continue to
evolve in our city
As the Melbourne property market adapts to record low cash rates, new foreign investment regulations and revised lending conditions, the Manningham area has experienced a shift in the balance of owner-occupier and investor activity.
The property market in the inner east and south eastern suburbs will remain an attractive option for local and international buyers, however the changing environment has moderated price growth to a more sustainable level.
Jellis Craig Doncaster 8841 4888 1/1006 Doncaster Road, Doncaster East
The demand for property within the city of Manningham is
driven by:
— The need for medium density housing as the population of
Manningham grows by an estimated 18,000 people over the
next 20 years (source: .iD Consulting Pty Ltd)
— Historic low interest rates enabling buyers to access more
money, rebalancing the proportion of owner-occupiers within
the market
— The desire for homes in well-established residential locations
as families aspire to live near high-quality education and
transportation routes
— The growth of lone person households as the older workforce
and retiree segment of the population increases
The city of Manningham is known for its unique mix of city and
country living, with an abundance of parklands, thriving retail
hubs and a diverse range of community facilities. The area
continues to attract large numbers of young adults and families
based on proximity to education, employment opportunities and
direct transportation links, servicing a range of lifestyle needs for
residents of all ages.
Buyer interest extends across all suburbs of Manningham, with a
particular demand for:
— Larger four or five bedroom homes within walking distance to
local schools and transport links
— Prestige homes with luxury features such as home theatres,
swimming pools and tennis courts, priced between $2million
to $3 million
— Medium density townhouses and apartments for the retiring
workforce, empty nesters and student accommodation
M A N N I N G H A M 3
Demand for residential property will continue throughout Manningham.
1Global liveability of Melbourne
In 2015 Melbourne was named the world’s
most liveable city in The Economist’s Global
Liveability Ranking, for a fifth consecutive
year. The city scored 97.5 out of 100,
based on economic stability, access to
healthcare, cultural diversity, environmental
wellbeing, quality of education and
infrastructure.
Melbourne’s diverse population is estimated
at 4.35 million people, forecast to reach
8 million in 2051. Melbourne residents
come from 180 countries, speak over 233
languages and belong to more than 140
cultures. Immigration from China and India
accounted for 32% of overall population
growth in 2015, making Mandarin the
second most commonly spoken language
in Melbourne.
As overseas migration and foreign
investment interest increases, the real
estate sector is the largest foreign
investment type in Australia today. Foreign
investment approvals for Australian
residential real estate rose 75% to $61
billion in 2015, 36% of which was
accounted for by mainland China.
L O O K I N G A H E A D
As globalisation continues to strengthen the economic and financial integration of countries around the world, Melbourne has become
increasingly attractive for the investment and lifestyle opportunities offered. The world’s most global cities are interconnected, and serve
as local hubs with access to finance, production, trade and distribution of goods and services. The ability to meet these international demands
has become a crucial element that continues to drive population growth and foreign investment in Melbourne’s property market.
97.5100
Innovations in technology and the internet
have made it easier to research, locate and
transact international property, which is
expected to continue throughout 2016
as the Australian dollar remains low and
Melbourne continues to globalise.
International buyers will continue to seek
proximity to elite government and private
schools and drive demand for different
housing types, including apartments for
tertiary students, townhouses for one-child
families and larger homes for extended
families.
China will remain a dominant source of
investment, but interest from other Asian
countries such as India and Indonesia is
expected to increase.
Source: City of Melbourne, FIRB Annual Report 2014-15
4 T H E J E L L I S C R A I G R E P O R T
Australia’s mixed market economy is largely
based on trade, manufacturing, services
and finance. In 2016, moderating global
growth and a slowing Chinese economy
is prompting further transition of the
Australian economy.
Latest forecasts from the Reserve Bank of
Australia (RBA) show economic growth is
expected to remain under 2.5% in 2016,
before a recovery of up to 3% over the next
two years.
This cautious outlook reflects the cooling
of the Chinese economy and has slowed
the demand for Australian exports, such as
primary resources and agricultural produce.
International investment in Australia is now
a significant contributor to the economy
and the outlook into 2017 remains
optimistic. The lower Australian dollar
combined with the sustained low interest
rate environment provides exceptional
value for investors, particularly those
attracted to commercial and residential
property markets.
O V E R S E A S I N V E S T M E N T A N D E C O N O M I C G R O W T H
In Australia, the real estate sector received
the largest portion of foreign investment,
valued at $96.9 billion across residential
and commercial real estate in financial year
2014-15. Residential real estate investment
approvals totalled $60.7 billion, 75% more
than last year.
China was the largest investor in Australian
commercial and residential real estate,
followed by the United States, Singapore,
Malaysia and Korea.
Source: FIRB, Annual Report 2014-15.
2Slowing Australian economy and its
potential impact on real estate
C H I N A$24.36 billion
K O R E A $2.5 billion
M A L A Y S I A $3.46 billion
S I N G A P O R E$3.86 billion
U S A$7.1 billion
M E L B O U R N E M E D I A N
H O U S E P R I C E : $713,000;
8.3% annual increase.
M E L B O U R N E M E D I A N
U N I T P R I C E : $525,000;
4.2% annual increase.
Source: REIV March 2016 Quarter
M A N N I N G H A M 5
Stable economy
Freehold ownership availability
Sustained low-interest money market
Attractive business opportunities
High-quality lifestyle & clean environment
Proximity to Asia
High-quality & accessible educational
facilities
Relative value for money
D R I V E R S F O R I N T E R N A T I O N A L I N T E R E S TI N T E R N A T I O N A L I N T E R E S T I N M E L B O U R N E P R O P E R T Y I S B E I N G D R I V E N B Y
The swelling population of Victoria is driving the demand for housing, retail, education and the creation of new employment opportunities, particularly in the service and construction industries. As a result, the Victorian economy is less dependent on primary resources, than some other Australian states. Melbourne’s property market continues to attract the attention of Australian and international investors seeking both investment and lifestyle opportunities.
C O N T I N U E D I N T E R E S T I N M E L B O U R N E
L O O K I N G A H E A D
The residential property market is moderating
to a more sustainable level of growth,
following a period of rapid price growth
in many areas. The ongoing demand for
residential property and the low cost of
finance, will see buyer confidence remain
positive throughout 2016.
While there is some debate about the supply
and demand balance for new apartments in
some areas of Melbourne, the demand for
well-located, high-quality residential property
will remain strong.
Melbourne will remain an attractive market
over the next 12 months, with buyers
benefiting from a slight shift away from the
strong ‘seller’s market’ of 2015. Interest
from international investors may moderate
as tighter Foreign Investment Review Board
(FIRB) controls come into play, however
Melbourne will remain highly attractive
to overseas buyers.
C O N C E N T R A T I O N O F O V E R S E A S I N T E R E S T I N M E L B O U R N E CBD
MOUNTWAVERLEY
BLACKBURN
BAYSIDE
ARMADALE
HAWTHORNBALWYN
DONCASTER
Source: Australian Government Department of Employment
31.2%
18.6%
10.0%
13.7%
19.9%
2.7%3.5%
0.4%
Agriculture, foresty & fishing
Finance & insurance
Manufacturing
Mineral exploration & developement
Services
Tourism
Residential real estate
Commercial real estate
Source: FIRB, Annual Report 2014-15.
F O R E I G N I N V E S T M E N T A P P R O V A L S B Y I N D U S T R Y S E C T O R 2 0 1 4 - 1 5
6 T H E J E L L I S C R A I G R E P O R T
B A N K S T A N D A R D V A R I A B L E R A T E ( % )
Melbourne’s price growth has been
steadily increasing over the past three
decades. The median metropolitan house
price in 1985 was $80,200, and is now
$713,000.
D E B T I N C O M E R A T I O ( % )
M E L B O U R N E M E D I A N H O U S E P R I C E ( $ , 0 0 0 )
18
16
14
12
10
8
6
4
2
1985 1990 1995 2000 2005 2010 2015
800
700
600
500
400
300
200
100
Source: RBA 2015, AMP NATSEM Income and Wealth Report December 2015
3Household debt to income ratio
continues to rise
1985 1990 1995 2000 2005 2010 2015
Declining interest rates, low unemployment
and a strong economy have driven Australians
to take on more debt. The official RBA cash
rate dropped to 1.75% in May 2016.
For most Australians, the mortgage on their
home is the largest debt they will have in
their lifetime, and mortgage interest rates
have fallen from a peak of 16.5% in 1989
to the current level of 5-6%.
Australian households have more debt
compared to the size of the country’s
economy than any other in the world.
The ratio of household debt to disposable
income has almost tripled since 1988, from
64% to 185% in December 2015, reflecting
an annual growth rate of 5.3%, well above
the income growth rate of 1.3%.
1985 1990 1995 2000 2005 2010 2015
180
160
140
120
100
80
60
Source: RBA 2015, AMP NATSEM Income and Wealth Report December 2015 (note: dotted line denotes estimated debt to income ratio)
Source: REIV 2016
M A N N I N G H A M 7
D E B T L E V E L S I N M A N N I N G H A M
Households with medium to high income
make up the largest proportion of the
population within the city of Manningham.
Older workers and empty nesters comprise
25% of all households, followed by parents
and homebuilders at 20%, and seniors at
12%, which largely reflects the proportion
of home ownership versus rental dwellings
in the area.
16%M A N N I N G H A M
RENTINGOWNED WITH
MORTGAGE
Source: Source: ABS Census 2011, .iD Consulting Pty Ltd
32%
OWNED OUTRIGHT
48%
L O A N S T O I N V E S T O R S
5.1% L O A N S T O O W N E R - O C C U P I E R S
8.3%
H O U S I N G C R E D I T G R O W T H
A N N U A L G R O W T H
A N N U A L G R O W T H
Source: ABS Housing Finance Australia, March 2016, RBA
L O O K I N G A H E A D
From late-2013 to mid-2015, investors
accounted for about 40% of all loan
approvals in Australia, however investor
activity has subsided significantly in 2016.
Mortgage approvals to owner-occupiers
jumped 13.2% to $13.8 billion this year,
which excludes refinancing existing
dwellings. The changing nature of lending
suggests an emerging shift to a more
balanced market with increased owner-
occupier activity.
Australian banks are implementing tighter
lending conditions in response to the
Australian Prudential Regulation Authority
(APRA) review, which imposes stricter loan
to value ratios and criteria for local and
international investors. As a result it is
expected price growth will ease for some
parts of Melbourne’s property market over
the next 12 months.
The current low interest rate environment
is expected to continue throughout 2016,
stimulating the property market with the
low cost of borrowing money to finance the
purchase of dream homes and investment
properties.
However, it is prudent for both investors and
home buyers to take a longer term view, by
planning for rate rises in future years. Every
0.25% increase in interest rates would see
a significant impact on the disposable
income of Australian households.
8 T H E J E L L I S C R A I G R E P O R T
C H I N A’ S R E C E N T R E S T R I C T I O N S F O R F O R E I G N I N V E S T O R S
4Changes to foreign investment
rules and regulations
While Australia has become the second
most popular market for Chinese property
investors after the US, China has recently
introduced new international investment
controls in response to the current
slowdown in economic growth. Designed
to decelerate the level of capital outflow
from the Chinese economy, those wanting
to invest in Australia now need to comply
with new restrictions.
International investment into the Australian housing market has changed the way residential real estate is perceived within the global context.
Demand for Australian housing is driven by the sustained low-interest money market and competitive currency, which has made local real estate
prices relatively cheaper to international investors than to local buyers.
The desire for international investment by a growing middle class in China, Singapore and Malaysia has strengthened the level of capital
investment into Australia, prompting a review of Australia’s foreign investment framework.
The latest annual report of Australia’s FIRB
shows Chinese were the largest investors in
2015, with approved real estate investment
worth $24 billion. In response to the falling
yuan and prevention of capital outflow, the
Chinese government has limited individuals
to moving the equivalent of US$50,000 out
of the country each year.
C H A N G E S T O F O R E I G N I N V E S T M E N T F R A M E W O R K
The Australian Government has also
recently introduced changes to Australia’s
foreign investment framework to restore
the enforcement and compliance of laws
that govern foreign investment into local
real estate.
¥¥
¥
M E L B O U R N EV I C T O R I A
Source: FIRB 2016
M A N N I N G H A M 9
L O O K I N G A H E A D
Source: FIRB Annual Report 2014-15.
As Melbourne’s property market moderates
and the Chinese economy slows, international
investment in Australia is likely to decelerate
as offshore buyers become more cautious of
increased regulations and reforms.
APPLICATION FEES , STRICTER PENALTIES AND INCREASED REGUL ATION
Current laws encourage foreign investors
to buy homes before they are built,
generating new housing supply. In support
of this, foreign investors are required to
apply to the FIRB prior to expressing an
interest to purchase residential property.
The Australian Taxation Office (ATO) has
also implemented a more thorough review
process to ensure the appropriate fees are
paid before applications are processed.
10% NON-F INAL WITHHOLDING TAX PAYMENT FOR $2M+ PROPERT Y SALES
The Australian government has introduced
a 10% non-final withholding tax, which will
be applied to foreign residents who sell
land, buildings, residential and commercial
property in excess of $2 million. The tax
will come into effect from 1 July 2016,
after which point 10% of a sale price will be
withheld and paid to the ATO.
ADDITIONAL STAMP DUT Y FOR FOREIGN BUYERS TO INCREASE TO 7%
When property is purchased or acquired
in Victoria, land transfer duty, otherwise
known as stamp duty, must be paid.
Foreign investors who purchase or acquire
residential property are currently required
to pay an additional duty of 3%, which will
increase to 7% for purchases made on or
after 1 July 2016.
$
Source: ATO Fact Sheet 2015, FIRB Tax Conditions, State Revenue Office May 2016
$5.41 billion
Approved for new dwellings
$4.71 billion
Approved for existing properties
$0.84 billion
Approved for redevelopment
$1.26 billion
Approved for vacant land
$12.85 billion
Approved for development
FOREIGN INVESTMENT APPROVAL FOR VICTORIAN RESIDENTIAL REAL ESTATE
IN FINANCIAL YEAR 2014-15
International investment remains an
important element of the Australian
economy, and it is expected that the lower
Australian dollar in conjunction with the
low cash rate will support commercial and
residential property markets into 2017.
Melbourne will continue to offer attractive
opportunities for investors.
10 T H E J E L L I S C R A I G R E P O R T
59% of Melbourne’s population growth in
the last decade has come from overseas
migration, and 39% of households in the
city of Manningham speak a language other
than English, with Cantonese, Greek and
Mandarin comprising the top three.
39%
Source: ABS Census 2011, City of Melbourne, iD Consulting Pty Ltd
Melbourne’s population is expected to rise
to 8 million by 2051, stimulating significant
urban renewal within the inner city and
middle-ring suburbs.
Investment in Melbourne’s rail system is
a crucial development as living density
increases. Trips on metro trains are
expected to double to 1.5 million every
weekday by 2031.
Housing density across Manningham is
changing in line with current and forecast
population growth.
In the inner suburbs, demand for higher-
density living is adding many new high-rise
apartment blocks to the skyline. In the
middle suburbs, medium-density living is
gradually replacing the traditional quarter-
acre block, particularly near transport and
retail hubs.
In addition, urban renewal is taking place
across many of Melbourne’s inner suburbs,
leading to increased gentrification of
suburbs previously used as industrial or
commercial spaces.
8m
5Our evolving city
O U R C H A N G I N G C I T Y
1.5m
M A N N I N G H A M 11
Manningham fast facts
Couples with children make up the largest proportion of households in Manningham at 39%.
There are 63 primary and secondary schools in the eastern suburbs, and 41,000 students live in the area.
Doncaster is forecast for the greatest increase in residential developments over the next 10 years.
Source: ABS Census 2011,
.iD Consulting Pty Ltd
L O C A L P R O J E C T S O N T H E H O R I Z O N
The Doncaster Hill vision is to create a
mixed use sustainable urban village with
a community focused lifestyle. The 20
year strategy plans to attract 4,000 new
residential apartments and 5 million extra
visitors a year. Centred on the intersection
of Doncaster Road and Williamsons/Tram
Road in Doncaster, Doncaster Hill is set to
be the civic heart of Manningham.
The value of building approvals within the
city of Manningham was $437 million in the
financial year to date, and the number of
residential dwellings is expected to increase
by an average of 452 dwellings per year.
Land owned by Manningham Council
at 2-10 Montgomery Street, Doncaster
East is set to be transformed by a high
quality residential development, alongside
improved public open space, car parking
and a new purpose built preschool facility.
Source: City of Manningham, .iD Consulting Pty Ltd
Source: City of Manningham
L O O K I N G A H E A D
There will be an increased desire by
residents to access local services and
amenities by walking or cycling, rather than
the ‘highway life,’ which requires a strong
reliance on cars and parking.
With higher density and less indoor space,
the demand for local amenities, public
recreation space and parkland will increase.
Shared spaces will not only be in the
outdoor public places. New high-density
apartments will increasingly provide shared
recreation spaces, including BBQ areas,
gyms and swimming pools.
Commuters will look to alternate methods
of transport to access their places of
employment, and the demand for shorter
commute times will continue to grow.
12 T H E J E L L I S C R A I G R E P O R T
Manningham snapshot
M A N N I N G H A M
Source: REIV PDOL, Market Share 01 June 2015 - 31 May 2016
M A N N I N G H A M M A R K E T S H A R E Expressed as a percentage of total residential sales in Manningham June 2015 to May 2016
T O P F I V E S U B U R B S B Y P R I C E G R O W T HGrowth by % increase in median price over the past 12 months
Source: Source: REIV PDOL Annualised Median House Price May 2015/2016
M A N N I N G H A M
0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000
Templestowe
Templestowe Lower
Doncaster
Doncaster East
Donvale
+28.8%
+25.7%
+25.6%
+24.1%
+23.8%
Median May 2015Median May 2016
0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000
Templestowe
Templestowe Lower
Doncaster
Doncaster East
Donvale
+23.8%
+28.8%
+25.7%
+25.6%
+24.1%
$ 902,500
$1,162,500
$1,160,000
$923,000
$1,010,000
$1,269,000
$856,000
$1,062,500
$1,325,000
$1,070,000
$ 902,500
$1,162,500
$1,160,000
$923,000
$1,010,000
$1,269,000
$856,000
$1,062,500
$1,325,000
$1,070,000
18%
17%
9%
8%
7%
M A R K E T S H A R E G R O W T HGrowth by % increase in market over the past 12 months
JELLIS CRAIG GROWTH +29%
M A N N I N G H A M 13
S U B U R B S B Y J E L L I S C R A I G C U R R E N T M E D I A N H O U S E P R I C E ( $ , 0 0 0 , 0 0 0 )
Warrandyte
$1,450,000Templestowe
$1,390,000 Park Orchards
$1,300,000Doncaster
$1,220,000
Doncaster East
$1,180,000Templestowe Lower
$1,030,000Bulleen
$1,020,000Donvale
$930,000
Source: REIV Annualised Median House Price March 2016
T H E J E L L I S C R A I G F O U N D A T I O N
$ $ $ $
$ $ $ $
$522,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
$550,000
$600,000
$650,000
$700,000
$750,000
F U N D S R A I S E D S I N C E I N C E P T I O N November 2013 - March 2016
A dedication to active community service is central to the culture at Jellis Craig, and this commitment was formalised via the establishment of the Jellis Craig Foundation as a registered charity. The Foundation’s reach has been felt far and wide, changing the lives of many, from children in Asia to local community groups.
The Foundation has raised over $522,000 for its key charity partners since inception.
14 T H E J E L L I S C R A I G R E P O R T
E X C E P T I O N A L P R O P E R T Y S A L E S
15 Hillside Road, BULLEEN
4 Angelo Place, WONGA PARK
95 Bourke Street, BULLEEN
7 Bembooka Court, DONCASTER
8A Kanooka Ave, TEMPLESTOWE LOWER
20 Powers Street, DONVALE
23 Innisfallen Avenue, TEMPLESTOWE
7 Selwyn Court, TEMPLESTOWE
2 Daniel Court, PARK ORCHARDS
SOLD SOLD SOLD$1,025,000 $1,070,000 $1,100,000
SOLD SOLD SOLD$1,180,000 $1,150,000 $1,165,000
SOLD SOLD SOLD$1,195,000 $1,250,000 $1,250,000
1/2 Marshall Avenue, DONCASTER 90 Melissa Street, DONVALE 388 Yarra Road, WONGA PARK SOLD SOLD SOLD$1,300,000 $1,340,000 $1,360,000
M A N N I N G H A M 15
2 Pushkin Court, DONCASTER EAST
18-20 Daintree Ave, PARK ORCHARDS
9 Wensley Court, TEMPLESTOWE
126-132 Knees Rd, PARK ORCHARDS
6 Malei Court, TEMPLESTOWE
1 Golf Links Court, DONCASTER
76-78 McGowans Road, DONVALE
5 Fadaro Cres, WARRANDYTE SOUTH 8 Jamieson Road, WONGA PARK
5 Glendora Lane, DONCASTER EAST
6 Lautrec Court, DONCASTER EAST
5 Monckton Road, TEMPLESTOWE
SOLD SOLD SOLD$1,410,000 $1,510,000 $1,520,000
SOLD
SOLD
SOLD
SOLD
SOLD
SOLD
SOLD
SOLD
SOLD
$1,670,000
$1,930,000
$2,650,000
$1,680,000
$1,955,000
$2,810,000
$1,750,000
$2,398,000
$6,100,000
16 T H E J E L L I S C R A I G R E P O R T
E X C E P T I O N A L P R O P E R T Y S A L E S
38 Rocklea Road, BULLEEN
5 Chapel Court, DONCASTER
409/5 Sovereign Point Ct, DONCASTER
1A/56 St Clems Rd, DONCASTER EAST
129 High Street, DONCASTER
19 Marianne Way, DONCASTER
5 Wittig Street, DONCASTER
6/1 3 Niagara Road, DONVALE
3/283 George Street, DONCASTER
7 Botanic Drive, DONCASTER
1/3 Milan Street, DONCASTER EAST
3/18 20 Leslie Street, DONVALE
SOLD
SOLD
SOLD
SOLD
SOLD
SOLD
SOLD
SOLD
SOLD
SOLD
SOLD
SOLD
$1,445,000 $1,525,000 $1,385,000
$1,750,000 $1,650,000 $1,810,000
$1,540,000 $2,205,000 $770,000
$710,000 $750,000 $762,500
M A N N I N G H A M 17
42-44 Frogmore Cres, PARK ORCHARDS
1/67 Wood Street, TEMPLESTOWE
8 Eumeralla Ave, TEMPLESTOWE LOWER
42-56 Gold Memorial Rd, WARRANDYTE
166-168 Serpells Rd, TEMPLESTOWE
8a Leura Street DONCASTER EAST
3/51 John St, TEMPLESTOWE LOWER
13 Barooga Drive, WONGA PARK 55-57 Dudley Road, WONGA PARK
240 Williamsons Road, TEMPLESTOWE
26 Ashford St, TEMPLESTOWE LOWER
16 Amersham Drive, WARRANDYTE
SOLD
SOLD
SOLD
SOLD
SOLD
SOLD
SOLD
SOLD
SOLD
SOLD
SOLD
SOLD
$1,430,000 $3,660,000 $2,800,000
$1,150,000
$1,950,000
$1,500,000
$690,000
$828,888
$1,850,000
$1,800,000
$1,720,000
$1,700,000
16 T H E J E L L I S C R A I G R E P O R T
‘The Report’ has been prepared by Jellis Craig in good faith, as a general guide to the performance and outlook for particular areas of the Melbourne real estate market. The data and information provided in ‘The Report’ is provided by third parties for information purposes only and does not constitute advice or recommendations. It does not intend to predict future performance of particular suburbs, areas, properties or property types. You should consider your personal circumstances and obtain independent professional advice before making
any financial or investment decisions.
jelliscraig.com.au