1 CBRE RESEARCH | © 2020 CBRE, INC. CBRE RESEARCH | APAC AUSTRALIA RESIDENTIAL REAL ESTATE MARKET OUTLOOKRE S IDE NT IA L M A RK E T O UT L O O K 2 0 2 0 | CB RE CBRE RESEARCH | © 2020 CBRE, INC. RE S IDE NT IA L M A RK E T O UT L O O K 2 0 2 0 | CB RE CBRE RESEARCH | © 2020 CBRE, INC. FOR 2020 2 A year on from the clouds of uncertainty which welcomed 2019, the start of 2020 presents a much more positive outlook for Australia’s residential markets. Strong price growth has returned to Sydney and Melbourne and is expected to spread to more affordable markets, Brisbane in particular. RESIDENTIAL MARKET OUTLOOK Apartment supply cycles in the major capitals are past their peak and vacancy levels are well controlled. With cost of debt low and lending volumes starting to turn, investors should gradually return. This should encourage well placed developers to begin marketing larger projects again so they are at the forefront of the next development cycle post-2021. Craig Godber Associate Director, Head of Residential Research T + 61 7 3833 9888 E craig.godber@cbre.com.auRE S IDE NT IA L M A RK E T O UT L O O K 2 0 2 0 | CB RE CBRE RESEARCH | © 2020 CBRE, INC. SUPPLY CYCLES RESETTING THE RETURN OF PRICE GROWTH 0102THE RETURN OF PRICE GROWTH REAL ESTATE MARKET OUTLOOK 2020RE S IDE NT IA L M A RK E T O UT L O O K 2 0 2 0 | CB RE CBRE RESEARCH | © 2020 CBRE, INC. -4% -3% -2% -1% 1% 2% 3% 4% 5% Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Quarterly Price Change, Australian Residential 5 THE RETURN OF PRICE GROWTH HO U S E SUN I TS RISE 2.5% December appears to have been stronger. IN NATIONAL PRICES IN SEPTEMBER THE LATTER HALF OF 2019 SAW THE Source: Australian Bureau of Statistics; CBRE Research (December Quarter estimate)RE S IDE NT IA L M A RK E T O UT L O O K 2 0 2 0 | CB RE CBRE RESEARCH | © 2020 CBRE, INC. SYDNEY AND MELBOURNE ARE LEADING THE WAY 6 Source: CBRE Research THE RETURN OF PRICE GROWTH BUT OTHER CAPITALS NOW LOOK TO BE FOLLOWING MARKET10 YEAR P.A.2019 (EST.)2020 (FORECAST) Sydney6.7%5.7%8.0%1.0%7%-12%5%-10% Melbourne5.5%3.8%9.0%7.0%7%-12%5%-10% Brisbane1.7%0.7%0.0%0.0%5%-10%2%-7% Perth-0.2%-1.1%-6.0%-3.0%0%-2%0%-2% Adelaide2.2%2.2%1.0%4.0%0%-5%0%-5% Canberra3.0%1.6%-4.0%0.0%0%-5%0%-2% National4.2%3.8%5.0%2.0%5%-10%3%-6% Australian residential price growth, historic and forecast HO U S E SUN I TSHO U S E SUN I TSHO U S E SUN I TS CBRE RESEARCH | © 2020 CBRE, INC.RE S IDE NT IA L M A RK E T O UT L O O K 2 0 2 0 | CB RE CBRE RESEARCH | © 2020 CBRE, INC. 2019 WAS THE TURNING POINT 7 Loosening of APRA’s macroprudential controls Three 25bp interest rate cuts by the RBA – one more to come Coalition’s victory in the May federal election Dwelling construction starts falling THE RETURN OF PRICE GROWTH CBRE RESEARCH | © 2020 CBRE, INC. RE S IDE NT IA L M A RK E T O UT L O O K 2 0 2 0 | CB RERE S IDE NT IA L M A RK E T O UT L O O K 2 0 2 0 | CB RE CBRE RESEARCH | © 2020 CBRE, INC. LARGELY A SYDNEY AND MELBOURNE ISSUE 8 THE RETURN OF PRICE GROWTH Dwelling prices in most markets outside of Sydney and Melbourne have grown less than wages over the past decade. Price growth relative to wage price inflation (WPI) over the past decade -50% -30% -10% 10% 30% 50% 70% over the past decade. 30% WPI INCREASED HO U S E SUN I TS SYDNEYMELBOURNEBRISBANEPERTHADELAIDECANBERRA Source: Australian Bureau of Statistics; CBRE Research RE S IDE NT IA L M A RK E T O UT L O O K 2 0 2 0 | CB RE CBRE RESEARCH | © 2020 CBRE, INC. 9 THE RETURN OF PRICE GROWTH PRICING PUSHES SYDNEYSIDERS TO -75% -55% -35% -15% 19982001200420072010201320162019 K 15K 30K 45K Queensland Net Interstate Migration and Sydney Relative House Price NE T INT E RS T A T E M IG RA T IO N (ye a r to ) HO US E P RI CE DI F F E RE NT IA L (a s a t q u a rt e r) PR I C E D I F F E R E N TI A L BR I S BA N E /S Y D N E Y at September BR I S BA N E N E T IN TE R S TA TE M IGR A TIO N Qld, ‘000 – year to March 50% provided there are jobs. DRIVES THE MOVE TO QUEENSLAND PRICE SPREAD OF ABOVE Source: Australian Bureau of Statistics; REIA; CBRE ResearchNext >

NOTE: This publication is pending deletion. The account which was used to upload this publication needs to be renewed in order for this publication to stay online.