ANZ RESEARCH

AUSTRALIAN PROPERTY
AUSTRALIAN HOUSING CHARTBOOK
JULY 2012 • The Australian housing market has shown tentative signs of stabilisation in 2012,
following a period of considerable softness through 2011. Sales activity has improved,
CONTRIBUTORS albeit from extreme lows, buoyed by the positive impact of underlying strength in housing
market fundamentals, further consolidation of household financial stability and improving
David Cannington
Senior Economist
housing affordability.
+61 3 9273 4274 • Financial uncertainty stemming from the European sovereign debt crisis has driven
David.Cannington@anz.com
Australian households to further strengthen their financial positions. Household
Paul Braddick savings have continued to increase and household income growth remains solid while
Head of Property household credit growth has been sluggish for almost four years.
Research
+61 3 9273 5987 • Nonetheless, divergent economic performance across states will maintain softer
Paul.Braddick@anz.com labour market conditions outside of the resources states. This presents a higher risk of
Ivan Colhoun household financial pressure and an increased likelihood of some distressed sales in housing
Head of Australian markets outside of the resources states, particularly in Tasmania and Victoria.
Economics & Property
Research • Despite 2011 Census data showing the Australian population level to be lower than
+61 2 9227 1780 previously estimated (294,000 lower at 22.324 million), weak housing construction
Ivan.Colhoun@anz.com continues to drive further tightening of housing market balances. Forward indicators
suggest net overseas migration, while slow to pick up to the end of 2011, will increase through
2012 and weak building approvals are adding further upward pressure to the outlook for the
existing undersupply of housing. This tightness in the housing market is maintaining low rental
vacancy rates and driving upward pressure on rents, particularly in the Sydney, Perth and
Brisbane markets.
• Softening house prices and low mortgage rates have combined to improve housing
affordability. Increased global economic uncertainty and job security concerns in some
sectors of the economy are weighing on sentiment and house prices, however improving
housing affordability and strengthening housing market fundamentals should support further
stabilisation in housing market activity and house prices through the second half of 2012.
• Improved housing affordability, tightening housing market balance pressures and
upward pressure on rents are likely to support both first home buyer and investor
housing market activity in the years ahead. Looking through the distortions created by
first home buyer policy incentives, first home buyer and investor housing finance growth
improved moderately in the first quarter of 2012.

AUSTRALIAN HOUSING MARKET BALANCE AND RENTS

Real rents (lhs)
Real rents - forecast (lhs)
Annual change in housing market balance - 12 month lag (rhs)
Annual change in housing market balance - forecast, 12 month lag (rhs)
7 70

6 60

5 50

4 40
Annual % change

3 30
Dwellings ('000s)

2 20
Shortage

1 10

0 0
Excess

-1 -10

-2 -20

-3 -30
85 87 89 91 93 95 97 99 01 03 05 07 09 11 13

Sources: ABS, ANZ

 Australian Housing Chartbook / 9 July 2012 / 2 of 13

KEY INDICATORS

MARKET ACTIVITY CONTINUES TO BE DRIVEN BY WEAK SENTIMENT

• Indicators show that household caution continues to drive a wedge between housing market activity and
underlying fundamentals. While recently showing some gradual improvement, market activity (sales, days on
market, prices) remains soft, fuelled by global economic and financial market uncertainty and a protracted
behavioural shift towards increased debt aversion.
• Recent growth in first home buyer housing finance signals the positive impact of both improving housing
affordability and tight market fundamentals. The removal of the NSW first home buyer stamp duty exemptions for
existing homes from 1 January 2012 has temporarily dampened this impact.
• Despite 2011 Census data showing the Australian population level to be lower than previously estimated
(-294,000), population growth and underlying housing demand remains little changed and net migration remains
a significant pressure on the housing stock. Consequently, the fundamentals of the Australian housing market
remain generally solid. Skills shortages, particularly in the mining and related professional services sectors, have
driven recent increases in net arrivals, indicating population growth is about to re-accelerate. Combined with a
weak outlook for residential construction, we expect the underlying shortage of housing to increase in the years
ahead, pushing rental vacancies lower, rents higher and eventually supporting house prices.
House prices Market balance
450
600 Cumulative market balance Forecasts
Australian capital cities average Cumulative market balance (ex-migration surge)
550 400 Completions
Underlying demand
Underlying demand (ex-migration surge)
500 350

450 300

400 250
Dwellings ('000s)

350
200
$000 (sa)

300
150
250
100

Shortage
200
50
150
0
100

Excess
50 -50

0 -100
86 88 90 92 94 96 98 00 02 04 06 08 10 12 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14

Population growth Building approvals

400 Private sector houses (Trend) Private sector houses (Seas Adj)
12,000 Private sector other residential* (Trend) Private sector other residential* (Seas Adj)

350

10,000
300

8,000
Annualised - 000's

250
Number

200 6,000

150
4,000

100

2,000
50
Net Movements Net Overseas Migration
* Flats, units, apartments, semi-detached/row/terrace houses
0 0
01 02 03 04 05 06 07 08 09 10 11 12 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

Housing finance Rents vs vacancies

120 12 6
Upgrader Investor First home buyer Rental vacancy rate (4-qtr moving ave, rhs)
Rent growth (nominal, lhs)
CPI (core, lhs)
100 10 5

80 8 4
% of total rental stock
$bil, annualised trend

Annual % change

60 6 3

40 4 2

20 2 1

0 0 0
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 Q4-1991 Q4-1993 Q4-1995 Q4-1997 Q4-1999 Q4-2001 Q4-2003 Q4-2005 Q4-2007 Q4-2009 Q4-2011

Sources: ABS, Residex, REIA, ANZ

 Australian Housing Chartbook / 9 July 2012 / 3 of 13

VALUATION MEASURES

AUSTRALIAN HOUSE PRICE SOFTNESS REFLECTS BETTER VALUE WITHOUT ECONOMIC STRESS
• A combination of lower interest rates, falling house prices and rising household incomes has driven Australian
house purchase affordability to better than long-run average levels. In contrast to many other developed
economies, this has happened in the absence of a significant economic downturn and the associated stress on
household finances.
• ANZ analysis of long-run trends in house prices, household income and interest rates (ignoring other drivers of
house price growth, including housing market balance and mortgage lending criteria) shows the recent softness in
Australian house prices has been mainly driven by weak household sentiment rather than economic fundamentals,
with prices continuing to fall below expected house prices at current household income levels and mortgage rates.
• Cross-country comparisons using partial valuation measures - often used to contend the case of overvaluation of
Australian house prices - continue to reflect broader economic and housing market differences, while revealing
little about the future direction of house prices. These measures, including house price to income ratios and rental
yields, do not address ‘other drivers’ of house prices, including economic growth and unemployment, population
growth, housing stock, net household wealth, household financial stability, government policy, housing credit risk
and mortgage lending standards.
House prices and house purchasing power* House price to purchasing power*
$700,000 60 Australia US UK NZ Canada
Interest rate contribution to simulated house price**
Income growth contribution to simulated house price***
Actual house prices
House price deviation from house purchasing power

$600,000 40

$542,404
$500,000
20
(% of actual house price)

$400,000
0

$300,000
-20

$200,000
-40
$100,000

-60
$0
87 89 91 93 95 97 99 01 03 05 07 09 11 * Represents the average households purchasing power over the median priced home
* Represents the average households purchasing power over the median priced home -80
-$100,000 ** Calculated using trend discounted variable bank mortgage rate
Mar 84 Mar 87 Mar 90 Mar 93 Mar 96 Mar 99 Mar 02 Mar 05 Mar 08 Mar 11
*** Calculated using average household disposable income

International house prices House price to income ratios

Australia US UK NZ Canada China Singapore Hong Kong 7
230
House price to average household disposable income ratio

210
6
190
House price index (March 2002=100)

170
5
150

130
4

110

90 3

70
Australia US UK NZ Canada

50 2
Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Jan 92 Jan 94 Jan 96 Jan 98 Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Jan 10 Jan 12

Housing affordability International rental yield

50 16
Mortgage costs as % of mean household disposable income

Aust US UK
45 14

40
12

35
Rental yield (%)

10
30
8
25

6
20

15 4

Australia US UK NZ Canada
10 2
Jan 92 Jan 94 Jan 96 Jan 98 Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Jan 10 Jan 12 Mar 96 Mar 98 Mar 00 Mar 02 Mar 04 Mar 06 Mar 08 Mar 10 Mar 12

Sources: ABS, RBA, RP Data-Rismark, S&P/Case-Shiller, Nationwide, RBNZ, Teranet National Bank, Global Property Guide, ANZ
 Australian Housing Chartbook / 9 July 2012 / 4 of 13

UNDERLYING DEMAND

LEADING INDICATORS SUGGEST POPULATION GROWTH WILL SUPPORT UNDERLYING DEMAND

• Since 2006, net overseas migration has largely driven Australian population growth and supported strong
underlying demand for housing. While recent data show moderation in net permanent and long-term arrivals,
annualised net movements of 300,000 at May 2012 are expected to drive population growth and continue to
support underlying demand for housing in the years ahead.
• While interstate migration activity is higher than post-GFC levels, it remains low as a share of population. This
measure is expected to pick-up moderately through 2012-13 due to divergence in labour market conditions and
housing affordability across states and territories.
• While divergent economic conditions across states and territories are already driving strong population growth and
demand for housing in WA (with 15 of the top 20 fastest growing local government areas), moderate population
growth in NSW and Victoria will continue to support the significant existing shortage of housing in these states
(see Appendix). Combined with weak dwelling construction, population growth is already squeezing rental
markets, driving increases in rental growth and yields, and building fundamental demand for first home buyers
and lower priced housing.
Market balance: Australia Permanent and long-term arrivals and departures
450 800
Cumulative market balance
Cumulative market balance (ex-migration surge)
400 Completions
Underlying demand 700
Underlying demand (ex-migration surge)
350

300 600
Annualised - 000's

250
500
Dwellings ('000s)

200
400
150

100 300
Shortage

50
200
0
Total Permanent and Long Term Arrivals
100
Excess

-50 Total Permanent and Long Term Departures

-100 0
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 01 02 03 04 05 06 07 08 09 10 11 12

Net overseas migration Net interstate migration

120 60
NSW VIC QLD SA WA TAS NSW VIC QLD SA WA TAS

100
40

80
Annual Rolling Sum - 000's

Annual Rolling Sum - 000's

20

60
0
40

-20
20

-40
0

-20 -60
91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

Gross interstate migration Top 20 fastest growing populations

2.2 440 Perth (WA)
Wyndham (VIC)
Melton (VIC)
2.1 410
Serpentine-Jarrahdale (WA)
% of Australia's population per annum

Cardinia (VIC)
2.0 380 Wanneroo (WA)
Whittlesea (VIC)
'000s per annum

Capel (WA)
1.9 350
Kwinana (WA)
Mandurah (WA)
1.8 320 Armadale (WA)
Leonora (WA)
Chittering (WA)
1.7 290
Murray (WA)
Rockingham (WA)
1.6 260 Busselton (WA)
Ipswich (QLD)
Port Hedland (WA)
1.5 230
% of Australia's population By number Dardanup (WA)
Harvey (WA)
1.4 200
0 2 4 6 8 10 12
83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 CAGR % (2007-11)

Sources: ABS, ANZ

 Australian Housing Chartbook / 9 July 2012 / 5 of 13

SUPPLY

HOUSING CONSTRUCTION DOWNTURN APPROACHING 1990’S RECESSION LEVEL

• The outlook for residential building remains weak with the current dwelling construction downturn indicating
completions are approximately 15% lower from the peak of the cycle (March 2011). The severity of the slowdown
has been sharper than previous building contractions and the loss in residential building activity in the current
downturn is expected to be only slightly less than during the early 1990’s recession.
• While soft house prices, weak house sales and tight credit conditions continue to dampen developer sentiment,
financial market volatility and global economic uncertainty have also likely weighed on residential construction
plans. Annualised trend completions (134,000 dwellings), while improving in recent months, remain well below
long-run average levels and significantly below our estimate of underlying housing demand of 196,000 for
2011-12. Despite the recent interest rate cuts, weak housing market sentiment will continue to weigh on housing
construction until early 2013, before building activity is expected to recover in the second half of 2013.
• Looking through monthly volatility in building approvals, trend housing construction levels continue to be
strongest in Victoria, though approvals are well below late-2010 peak levels. NSW has shown the most resilience
in the current construction downturn, with building approvals 55% higher than the lowest point in the GFC.
Approvals of flat, unit and townhouse buildings continue to show that housing affordability and land availability
constraints are driving an increasing share of total dwelling approvals, especially in Sydney and Melbourne.
Dwelling cycle comparison Building approvals
110 6 NSW VIC QLD SA WA TAS NT ACT

Sep 1989 - December 1991 5

100
March 2007 - June
Dwelling completions index

Forecast (March 2012 - March 2014) 4

Number (000's, trend)
(cycle peak=100)

90
March 2011 - December 2011
3
80

December 1994 - December 1996 2

70

60
0 1 2 3 4 5 6 7 8 9 0
Quarters from peak 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

Building approvals & construction finance Residential vs non-residential building

30 16 Residential (trend) Non-residential (trend)
6 Residential (sa) Non-residential (sa)

5
25 14
$bil, real annualised trend

4
Number (000's, trend)

Value ($bil/month)

20 12 3

15 10

Housing construction finance (lhs) Total dwelling approvals (rhs)

10 8 0
98 99 00 01 02 03 04 05 06 07 08 09 10 11 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

Private sector building activity Non-house* share of total dwelling approvals

Private sector houses (Trend) Private sector houses (Seas Adj)
12,000 Private sector other residential* (Trend) Private sector other residential* (Seas Adj) Sydney Melbourne Brisbane Australia
70

60
10,000
% of total dwelling approvals (trend)

50
8,000

40
Number

6,000

30

4,000
20

2,000
10

* Flats, units, apartments, semi-detached/row/terrace houses * Flats, units, apartments, semi-detached/row/terrace houses
0 0
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

Sources: ABS, ANZ

 Australian Housing Chartbook / 9 July 2012 / 6 of 13

PRICES

HOUSE PRICES WEAKEN FURTHER ON GLOBAL ECONOMIC UNCERTAINTY

• With the exception of Darwin and Canberra, house prices have weakened across all other capital cities in the year
to June 2012. However, through 2012 monthly changes in house prices have been extremely volatile, particularly
at the high-price end of the market. House price falls from peak to May 2012 for the most expensive 20% of
suburbs have been more than double price falls for remaining 80% of suburbs. This has most likely reflected the
negative impact on house prices of increased volatility in equity markets and weak consumer sentiment.
• Despite weakening in recent months, Sydney dwelling (house and unit) prices have continued to outperform most
other Australian capital cities since the peak of the current price cycle, due to the increasing pressure of stronger
population growth on weak housing construction and a degree of resilience after an extended period of prior price
underperformance in houses and especially units.
• In the absence of a sharp global economic downturn and escalating domestic unemployment, improving housing
affordability, solid household financial positions and strong housing market fundamentals should support modest
house price growth into 2013. While previous structural and policy drivers have now been capitalised into house
price growth, we expect prices to increase at a moderate 4-5% in annual terms by the end of 2014.
House prices House prices, selected measures
650 650
Australian capital cities average Rest of state ABS (-6.1%)* Residex (-3.2%)* RP Data Rismark (-5.6%)*

600

550
Median capital city house price ($000's)

550

500
450
450
$000 (sa)

400
350
350

300
250

250

* Price declines reflect peak prices to prices as of March 2012

200 150
Dec 04 Dec 05 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 96 Jun 98 Dec 99 Jun 01 Dec 02 Jun 04 Dec 05 Jun 07 Dec 08 Jun 10 Dec 11

House prices, capital cities Non-house dwelling prices, capital cities

750 750
Melbourne Sydney Brisbane Perth Adelaide Hobart Darwin Canberra
700 700 Melbourne Sydney Brisbane Perth Adelaide Hobart Darwin Canberra

650 650
600 600
550 550
500 500
450 450
$000 (sa)
$000 (sa)

400 400
350 350
300 300
250 250
200 200
150 150
100 100
50 50
0 0
Dec 95 Dec 97 Dec 99 Dec 01 Dec 03 Dec 05 Dec 07 Dec 09 Dec 11 Dec 95 Dec 97 Dec 99 Dec 01 Dec 03 Dec 05 Dec 07 Dec 09 Dec 11

House prices, price range Dwelling prices & housing market shortage
125 6 Cumulative state dwelling shortage mutiple of annual completions at June 2011
Capital city % price decline from peak to June 2012
4
120
2

0
Index (Dec 2008=100)

115

-2

110 -4

-6
105
-8

100 -10

Highest 20% (-7.8%)* Middle 60% (-4.4%)* Lowest 20% (-4.5%)* -12
95
-14
Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Jun 11 Dec 11
NSW/Sydney VIC/Melbourne QLD/Brisbane SA/Adelaide WA/Perth
* Peak to current prices

Sources: ABS, RP Data-Rismark, Residex, ANZ

 Australian Housing Chartbook / 9 July 2012 / 7 of 13

AFFORDABILITY

LOWER HOUSE PRICES AND MORTGAGE RATES CONTINUE TO IMPROVE HOUSING AFFORDABILITY
• Softening house prices, rising household incomes and lower mortgage rates have continued to improve Australian
housing affordability. This has been reflected in improved consumer expectations of the best time to buy a house
and lower mortgage delinquency rates through 2012.
• Previous episodes of improving housing affordability (in the early and mid-90s) were largely driven by significant
reductions in interest rates (and steady growth in household incomes). With interest rates at relatively low levels
and expectations of moderate growth in household income, improvements in housing affordability through
2012-13 are expected to be driven more by household income gains and weaker house prices than in the past.
• Despite Melbourne house prices experiencing the largest falls over the past year, Melbourne housing remains the
least affordable to purchase across Australian capital cities. Strong growth in WA household income and weak
house price growth has maintained Perth house deposit affordability compared to other major capital cities
(ranked 6th across Australian capital cities compared to equal 1st before the GFC).
Housing affordability Housing affordability, factor contribution
45 70 Mortgage rates Household disposable income House prices
Worse time to buy a home

-8 Forecasts
(% of mean household disposable income)

40 90
-6
Imrpoves affordability

Contribution to housing affordability (ppts)

Mortgage repayments

-4
35 110
Index

-2
Better time to buy a home

30 130
0
Worsens affordability

25 150 2
Forecast

4
20 170
86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Housing affordability (lhs) 6
Melbourne Institute-Westpac consumer sentiment index: house purchase indicator (trend, inverted rhs) 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015

House deposit* affordability, capital cities Mortgage delinquencies

180 NSW & ACT VIC QLD SA WA TAS Australia
Sydney Melbourne Brisbane Adelaide Perth Hobart 1
% of average annual state household disposable income

Mortgage delinquencies 90+ days (% of total mortgages, sa)

160
0.9

140 0.8

120 0.7

0.6
100
0.5
80
0.4
60
0.3
40
0.2

20 0.1
* Calculated for 20% of capital city house price
0 0
86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 Oct 05 Oct 06 Oct 07 Oct 08 Oct 09 Oct 10 Oct 11

Household disposable income Housing loan interest rates

NSW VIC QLD SA WA TAS 18 Standard variable rate Discounted variable rate 3-year fixed rate

14
16

12
14
10
Annual % change (trend)

% per annum

12
8

10
6

8
4

2 6

0 4
00 01 02 03 04 05 06 07 08 09 10 11 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

Sources: ABS, RBA, Residex, Melbourne Institute-WBC, ANZ

 Australian Housing Chartbook / 9 July 2012 / 8 of 13

MARKET ACTIVITY

HOME SALES ACTIVITY REMAINS WEAK

• Housing market activity continues to be weighed down by weak household confidence, most likely driven by
ongoing financial market volatility and an uncertain global economic outlook. Despite continued softening in house
prices and improving housing affordability, residential home sales are running at 17-year lows and housing finance
activity remains soft.
• Home sales levels are running at around 100,000/month, well below the pre-GFC peak of 140,000/month and
tracking below the 120,000/month sales levels seen in 2009. While auction clearance rates and days on market
have shown some improvement more recently, they also remain well below recent peak levels, suggesting
continued divergence between the expectations of home buyers and vendors.
• With ongoing softness in house prices and escalating uncertainty around the prospects for the global economy,
the outlook for housing market sales continues to look weak over the second half of the year. However, recent
interest rate cuts and the potential for further rate cuts should drive improvements in housing affordability,
eventually rousing market sales activity from the current lows, especially for first home buyers.
Housing finance ANZ/PCA property industry confidence index
120 House price growth expectations*
First home buyer Upgrader (excl. refin.) Investor (excl. refin.)
Dec qtr 2011 Mar qtr 2012 Jun qtr 2012
70

100 60
Annual house price growth expectations

50

80 40
$bil, annualised trend

30
(net balance)

60 20

10

0
40
-10

-20
20
-30

-40
0 NSW VIC QLD WA SA TAS NT ACT AUS
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 * Data for December quarter 2011 and March quarter 2012 shows expectations for "the next quarter". June quarter 2012 shows expectations for "the next 12 months".

Monthly sales Days on market

170 70 120
Monthly residential home sales (lhs) Westpac house purchase indicator (trend, rhs)
Worse time to buy a home

160 110

90
150 100
Days on market (sa)

140
90
110
130
'000s (sa)

index

80
120
Better time to buy a home

130 70
110

60
100
150
50
90
Inner Sydney Inner Melbourne Inner Brisbane Central Perth
80 170 40
Mar 95 Mar 97 Mar 99 Mar 01 Mar 03 Mar 05 Mar 07 Mar 09 Mar 11 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12

Auctions, major capital cities Auction clearance rates, major capital cities

Sydney Melbourne Brisbane Perth Sydney Melbourne Brisbane Perth

900 100%

800 90%

80%
700
% of total auction results(trend)

70%
600
number/week (trend)

60%
500
50%
400
40%
300
30%
200
20%

100 10%

0 0%
May 08 Nov 08 May 09 Nov 09 May 10 Nov 10 May 11 Nov 11 May 12 May-08 Nov-08 May-09 Nov-09 May-10 Nov-10 May-11 Nov-11 May-12

Sources: ABS, RP Data, PCA/ANZ, Melbourne Institute-WBC, ANZ

 Australian Housing Chartbook / 9 July 2012 / 9 of 13

REGIONAL PERSPECTIVE

REGIONAL HOUSE PRICES OUTPERFORMING CAPITAL CITIES

• Despite being lower in annual growth terms, regional house prices have been more stable than capital city house
prices, which have seen larger price falls across all major states and territories. Across states/territories and
regions, house price growth has continued to differ, reflecting varying economic performance across Australian
industries. NSW regional house prices were the strongest across states and territories in the year to March 2012,
with the central inland regions of Orange and Dubbo showing the greatest house price growth.
• Queensland has shown the greatest intra-state variation in regional house prices, reflecting the divergent
economic performance of regions exposed to the tourism sector (ie Cairns, Gold Coast) and mining-related
services (Gladstone, Mount Isa).
• House price growth in WA regional centres has counter-intuitively been the weakest, with house prices in many
centres lower in the year to March. Of note, house price growth in the Greenough River and Moore regions were
much weaker in March 2012 (-6.5% and -4.7% respectively) compared to September 2011 (+1.3% and +0.6%
respectively). Nonetheless, the economic benefits from major mining and energy projects in WA should boost
house prices in many WA major regional centres over the next 12-18 months.
House prices: capital cities & rest of state House prices: non-capital city regions
20 $450
Australian capital cities Australia rest of state
NSW Victoria Queensland WA Australia

15 $400

10 $350
Annual % change

$000 (original)

5 $300

0 $250

-5 $200

-10 $150
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12

NSW regional house price growth Victoria regional house price growth
Orange Bendigo
Dubbo Latrobe Valley
Newcastle Warrnambool
Southern Tablelands South Wimmera
Wollongong Mildura
Coffs Harbour Ballarat
Wagga Wagga East Gippsland
Regional NSW Geelong
Port Macquarie West Ovens-Murray
Lower South Coast East Mallee
Sydney Wodonga
Lower Murrumbidgee North Goulburn
Northern Tablelands Regional Victoria
Richmond-Tweed Shepparton
Hastings Melbourne

-6 -4 -2 0 2 4 6 8 -6 -4 -2 0 2 4 6 8
Capital growth (%, year to Mar 2012) Capital growth (%, year to Mar 2012)

Queensland regional house price growth WA regional house price growth

Gladstone Johnston
North West Kalgoorlie
Mackay Regional WA
Rockhampton Bunbury
Darling Downs Gascoyne
Lower West Moreton Fitzroy
Regional QLD Perth
Toowoomba Geraldton
Central West Moore
Townsville King
Cairns Avon
Brisbane Blackwood
Wide Bay-Burnett Greenough River
Bundaberg Vasse
Gold Coast Hotham

-8 -6 -4 -2 0 2 4 6 8 10 12 14 16 -10 -8 -6 -4 -2 0 2 4
Capital growth (%, year to Mar 2012) Capital growth (%, year to Mar 2012)

Sources: Residex, RP Data-Rismark, ANZ

 Australian Housing Chartbook / 9 July 2012 / 10 of 13

REGIONAL PERSPECTIVE

REGIONAL HOUSE PRICES (CONTINUED)

• Regional house price growth in South Australia, Tasmania and the territories have also reflected differing regional
economic performance. While regional house price growth in most states have been dispersed between increases
and decreases, Tasmania’s regional house prices were all lower in the year to March 2012, reflecting the relatively
soft economy and weak labour market conditions.
• While we continue to expect continued divergence within South Australia and ACT regional housing
markets, a broadly soft economic outlook for the South Australia and ACT economies combined with
relatively balanced housing markets should contain house price growth in the coming year across most
regions.
• The outlook for house price growth across the Northern Territory regions is buoyant, with significant mining and
energy investment (ie Icthys gas project) expected to drive solid state economic growth and broad regional house
price increases through the second half of 2012 and through 2013.
10%+ annual house price declines (March 2012), regions Employment growth by state (year to May 2012)

Tas

SA

NT

Vic

ACT

NSW

Qld

WA

-10 0 10 20 30 40 50 60 70
Change in employment over latest 12 months (trend, 000s)

SA regional house price growth Tasmania regional house price growth

West Coast
Central North
Barossa
Lower North
North Eastern
Lincoln
Whyalla
North Western
Riverland
Lower South East Burnie-Devonport
Yorke
Mt Lofty Ranges Launceston
Murray Mallee
Regional SA Southern
Upper South East
Flinders Ranges Hobart

McLaren Vale
Adelaide Lyell

-6 -4 -2 0 2 4 6 8 10 -12 -10 -8 -6 -4 -2 0 2
Capital growth (%, year to Mar 2012) Capital growth (%, year to Mar 2012)

NT regional house price growth ACT regional house price growth

North Canberra
Barkly

Gungahlin-Hall
Finniss
Tuggeranong

Darwin
Woden Valley

Canberra
Lower Top End

Belconnen
Central
Weston Creek-Stromlo

Palmerston
South Canberra

-8 -6 -4 -2 0 2 4 6 8 10 12 14 -4 -2 0 2 4
Capital growth (%, year to Mar 2012) Capital growth (%, year to Mar 2012)

Sources: ABS, Residex, ANZ

 Australian Housing Chartbook / 9 July 2012 / 11 of 13

IMPORTANT NOTICE

STATE/TERRITORY UNDERLYING HOUSING MARKET BALANCE

NSW housing market balance Victoria housing market balance
180 '000 '000
70
160
60
140
50
120 Underlying demand
40
100
30
80 Completions
Underlying demand 20
60
40 10
Completions Shortage
20 0
Shortage
0 -10
-20 Surplus -20 Surplus
91 93 95 97 99 01 03 05 07 09 11 13 91 93 95 97 99 01 03 05 07 09 11 13
Queensland housing market balance SA housing market balance
90 '000 20 '000
80
70 15
60 Underlying demand
10
50
Underlying demand Completions
40
5
30
Completions Shortage
20
0
10 Shortage
0 -5
-10 Surplus
-20 Surplus -10
91 93 95 97 99 01 03 05 07 09 11 13 91 93 95 97 99 01 03 05 07 09 11 13
WA housing market balance TAS housing market balance
80 '000 5 '000
70 4
60 Underlying demand
3
50 Underlying demand
40 2
Completions
30 Completions 1
20 Shortage
0
10
Shortage -1
0
Surplus
-10 -2

-20 Surplus -3
91 93 95 97 99 01 03 05 07 09 11 13 91 93 95 97 99 01 03 05 07 09 11 13
NT housing market balance ACT housing market balance
8 '000 6 '000

Completions
6
Underlying demand
3
4
Underlying demand
Shortage Shortage
2
0

0
Surplus Surplus
Completions
-2 -3
91 93 95 97 99 01 03 05 07 09 11 13 91 93 95 97 99 01 03 05 07 09 11 13
Sources: ABS, ANZ
 Australian Housing Chartbook / 9 July 2012 / 12 of 13

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 Australian Housing Chartbook / 9 July 2012 / 13 of 13

IMPORTANT NOTICE

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