National Land Survey
Perth Greenfield
Perth Greenfield Cycle – Sales PCM 1400 Peak at 1,247 Q1-2013 1200 1000 Lots Per Month 800 Q1-2020 443 600 Pre C19 Demand Range 550-600 lots pcm +20% 400 200 Bottom at 327 Q4-2018 0 20% lift for the quarter in terms of sales. Q2-2008 Q2-2010 Q2-2012 Q2-2014 Q2-2016 Q2-2018 Q2-2020
Net Activity 75, +49% Q1-2020 Net lot Sales and Change 105, -16% Per Month 109, +40% 120, +30% 29, +75%
April 2020 Sample Survey – Change in Sales MARKET NET SALES NEW RETURN RETURN RELEASES RATE RATE APRIL MARCH Melbourne -61% Drop -59% 38% 7% Sydney -80% Drop -38% 62% 9% SEQ -78% Drop -94% 60% 6% Perth -11% Drop +197% 49% 28%
Population based Demand
The Demand Pipe Line Perth Western Australia LOCAL NIM NOM
The Demand Pipe Line Perth Western Australia 49% -7% 58% LOCAL NIM NOM
Pipeline of Demand by Market 41 % 41 % 18 % 49 % 58 % -7 % Local NOM NIM Local NOM NIM 44 % 70 % -14 % 41 % 88 % -30 % Local NOM NIM Local NOM NIM 33 % 60 % 7 % Local NOM NIM
COVID on Net Overseas Migration
Net Overseas Migration- Forecast National The annual growth was 371,100 85% reduction in NOM people (1.5%)- [Sep 2019] for 2019/2020 year 62.5% was due to net overseas migration Headline Underlying Demand is 142,000 Dwellings per year. “The coronavirus crisis brings to an end 20 years of high migration to Australia. 89,000 Dwellings are On current policy settings, net migration in 2020 and 2021 will be close to zero, if not negative .” ABUL driven by NOM RIZVI *4,500-7,000 per year for WA
Existing Temporary Visa Stock Stock Dec 2019 2.43 million persons Stock March 2020 2.17 million persons Stock Dec 2020 1.82 million persons No. of existing Dwellings impacted by the drop in the stock of Temp Visa holders over the 2020 year… 90,000 dwellings Student; Skilled temporary, Bridging Visa, NZ citizens included – excluded are Visitor, Working Holiday, temp Graduates and Parents, Crew and Other Source: data.gov.au
Annual Intake of Temporary Visas Educational • 85% drop in 19/20 • 50% drop in 20/21 • Normal in 21/22 457 Visa • 85% drop in 19/20 • 85% drop in 20/21 • 25% drop in 21/22
Temporary Visas – Impact on New Demand Foreign Investment in New Property driven by either those living here or sponsored by parents buying from off shore Residential Property Only…. Equates to 5.4% of the Temporary Visa’s issued 11,000 Dwellings over a year at risk Source: Foreign Investment review Board Annual report 2017-18
Permanent Visas – Impact on New Demand 176,000 Visa’s processed per year since 2008 • 55% of these are for people already living in Australia; 35,000 possible change of housing preference not new • 45% for people not living in Australia; 29,000 additional dwellings per year. [est 1,500 pa wa] Source: Various Population flows publications and annual reports – Migration Reporting, Department of Home Affairs
Permanent Visas – Impact on New Demand • 25% reduction 2019/20 • Assumed that the Federal Government will continue to process existing applications; although at a lower level. • 50% reduction in 2020/21 • Assuming processing times reducing the number of applications being approved. • 25% above Normal levels 2021/22 • Effort to fast track PR intake and to offset prior year deficit
Timing – Deferral or Lost Demand 2020 2021 2022 Students Loss of Demand through to Mid 2021- No Catch-up 457 Visa Loss of Demand through to Mid 2021- No Catch-up Permanent Possible Deferral of Demand out to Mid 2021 NZ Citizens Possible NZ Deferral till late 2020 AU Citizens Benefit from forced capture till Mid 2021
COVID on Net Interstate Migration
Net Interstate Migration & Unemployment State NIM & Unemployment Sustained high levels 4000 12.0 NIM of unemployment will 3000 NIM- State 10.0 drive a net loss in NIM. 2000 Unemployment Rate 1000 8.0 NIM is being influenced 0 6.0 by boarder closures. -1000 -2000 4.0 The forecast assumes -3000 Unemployment 2.0 -4000 that NIM will remain at -5000 0.0 current levels. Jun-1981 Apr-1983 Feb-1985 Dec-1986 Oct-1988 Aug-1990 Jun-1992 Apr-1994 Feb-1996 Dec-1997 Oct-1999 Aug-2001 Jun-2003 Apr-2005 Feb-2007 Dec-2008 Oct-2010 Aug-2012 Jun-2014 Apr-2016 Feb-2018 Dec-2019 Oct-2021 Aug-2023 NIM Forecast NIM FORECAST UNEMPLOYMENT UNEMPLOYMENT - STATE [RHA]
Net Interstate Migration & Unemployment The long term loss of employment will drive NIM into a deeper loss, A loss of demand of 2,500 – 3,000 person per quarter or 925-1,111 dwellings pa. Moderate unemployment- forecasting loss of 1,000 p per qtr from late 2021.
COVID on Local Demand
First Home Buyers • Most reliable source of demand- need a home. Knows the market • Responsive to Buyer Grants, will be watching- hence high levels of inquiry • Limited depth of demand, can be brought forward. – cannot bring anything forward as this has already taken place across Perth
Second Plus Home Buyers • Less need to move; already have a home • Driven by broader housing market, prices • House prices will influence activity • Best product for lowest price filter; knows the market Once again, Perth Market has being dealing with low level demand for several years.
How many houses do we need?
Perth All Dwelling Demand [pcm] Modelled Underlying Housing Demand - All Types Total Dwelling Demand 3000 1,181 pcm Modest lift in “captured” All Private Dwellings per Month 2500 2008-2020 demand over next 12 2000 months. 1500 786 pcm 1000 Next 12 months 500 871 pcm 0 Q2-2008 Q2-2009 Q2-2010 Q2-2011 Q2-2012 Q2-2013 Q2-2014 Q2-2015 Q2-2016 Q2-2017 Q2-2018 Q2-2019 Q2-2020 Q2-2021 Q2-2022 Q2-2023 2020-2023
Underlying Demand Land – Perth Sales 442 Market Cycle & Forecast Demand Now 1800 Demand +20% 1600 Lots Per Month 1400 1200 Demand Forecast 1000 800 600 527 2020/21 400 200 Land Sales PCM 609 2021/22 0 Q2-08 Q2-09 Q2-10 Q2-11 Q2-12 Q2-13 Q2-14 Q2-15 Q2-16 Q2-17 Q2-18 Q2-19 Q2-20 Q2-21 Q2-22 620 2022/23 Net Monthly Land Sales Monthly Demand
Economic Impact on Timing
Overlay Unemployment 350 12.0 Expected Unemployment Unemployment Population 300 10.0 Spike is unlikely Unemployment Rate INDEX [ 100 DEC 2003] 250 to significantly 8.0 change or alter 200 timing of 6.0 150 current demand. 4.0 100 Impact = 2.0 18-20% 50 House Approvals B A reduction in 0 0.0 underlying Jun-1981 Oct-1982 Feb-1984 Jun-1985 Oct-1986 Feb-1988 Jun-1989 Oct-1990 Feb-1992 Jun-1993 Oct-1994 Feb-1996 Jun-1997 Oct-1998 Feb-2000 Jun-2001 Oct-2002 Feb-2004 Jun-2005 Oct-2006 Feb-2008 Jun-2009 Oct-2010 Feb-2012 Jun-2013 Oct-2014 Feb-2016 Jun-2017 Oct-2018 Feb-2020 Jun-2021 Oct-2022 demand Approvals Houses Unemployment 4 per. Mov. Avg. (Population Change)
Greenfield Market Cycle – Perth Scenario 1 2020/21 2021/22 2022/23 Underlying Demand PCM 527 609 620 Assuming that NIM is not impacted by high unemployment Timing of Underlying demand adjusted by 432 432 499 499 18% for unemployment- leading to unmet demand Underlying Demand PCM 352 482 514 Assuming NIM falls away due to employment issues [ lost demand from interstate ] Timing of Underlying demand adjusted by 288 395 18% for unemployment- leading to unmet demand
Greenfield Market Cycle-Underlying Demand Market Cycle & Forecast Demand 1800 1600 Lots Per Month 1400 Scenario 1 1200 Underlying demand – 1000 NIM no change 800 600 400 Scenario 2 200 Underlying demand – 0 NIM Impacted Q2-08 Q2-09 Q2-10 Q2-11 Q2-12 Q2-13 Q2-14 Q2-15 Q2-16 Q2-17 Q2-18 Q2-19 Q2-20 Q2-21 Q2-22 Net Monthly Land Sales Monthly Demand
400 South West North East 250 South West South East Forecast Demand – Scenario 1 350 200 300 105 pcm [q120] 138 pcm [q120] 250 150 200 97 pcm [f] 119 pcm [f] 100 150 100 85 pcm [af] 104 pcm [af] 50 50 0 0 Q1-2014 Q1-2020. Q1-2014 Q1-2020. 400 400 North West West South West South West 350 350 300 300 250 250 75 pcm 119 pcm [q120] 200 200 150 116 pcm [f] 181 pcm [f] 150 100 100 50 158 pcm [af] 101 pcm [af] 50 0 0 Q1-2014 Q1-2020. Q1-2014 Q1-2020.
Production Capacity The combined development capacity of all land estate
Number of Estates & Sales Number of Trading Estates & Market Cycle 221 250 1400 1200 estates NOW 200 Land Sales PCM 1000 Count of Estates 3.6 New Estates 150 800 per Quarter 600 100 90 400 50 200 estates during 0 0 Q2-08 Q2-10 Q2-12 Q2-14 Q2-16 Q2-18 GFC Maxi Large Moderate Small Micro Land Sales PCM
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