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Page 1: The Report - Whitehorse

W H I T E H O R S E 1

Page 2: The Report - Whitehorse

2 T H E J E L L I S C R A I G R E P O R T

Whitehorse

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 Whitehorse.

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 Whitehorse 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.

The demand for property within the city of Whitehorse

is driven by:

— The need for medium density housing as the population of

Whitehorse grows by an estimated 19,000 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 Whitehorse is known for its quiet tree-lined residential

streets, abundance of parklands, local shopping centre hubs

and diverse range of community facilities. As the home of many

reputable schools and major educational institutions, the area

continues to attract large numbers of young adults and families

based on proximity to education, employment opportunities and

the extensive public transport system that efficiently connects

local residents to the CBD.

Buyer interest extends across all suburbs of Whitehorse,

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 $2 million

and $3 million

— Medium density townhouses and apartments for the retiring

workforce and student accommodation

Page 3: The Report - Whitehorse

W H I T E H O R S E 3

Demand for residential property will continue throughout Whitehorse.

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

Page 4: The Report - Whitehorse

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

Page 5: The Report - Whitehorse

W H I T E H O R S E 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 TI 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

Page 6: The Report - Whitehorse

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.

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%.

D E B T I N C O M E R A T I O ( % )

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

Page 7: The Report - Whitehorse

W H I T E H O R S E 7

D E B T L E V E L S I N W H I T E H O R S E

Households with medium to high income

make up the largest proportion of the

population in Whitehorse.

Parents and homebuilders comprise 20%

of all households, followed by the young

workforce at 15%, and older workers at

12%, which largely reflects the proportion

of home ownership versus rental dwellings

in the area.

24%W H I T E H O R S E

RENTINGOWNED WITH

MORTGAGE

Source: Source: ABS Census 2011, .iD Consulting Pty Ltd

32%

OWNED OUTRIGHT

39%

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.

Page 8: The Report - Whitehorse

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

Page 9: The Report - Whitehorse

W H I T E H O R S E 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.

Page 10: The Report - Whitehorse

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 30% of households in

Whitehorse speak a language other than

English, with Mandarin, Cantonese and

Greek comprising the top three.

30%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 Whitehorse 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

1.5m

Source: ABS Census 2011, City of Melbourne, iD Consulting Pty Ltd

Page 11: The Report - Whitehorse

W H I T E H O R S E 11

Whitehorse fast facts

34% of households in Whitehorse

are couples with children,

followed by couples without

children at 25%.

There are 63 primary and

secondary schools in the eastern

suburbs, and 41,000 students live

in the area.

Box Hill is forecast for the

greatest increase in residential

developments over the next 10

years.

Source: City of Whitehorse;

Urban Melbourne, .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

Box Hill is fast becoming the apartment

powerhouse of Melbourne’s middle-ring

suburbs at the peak of high density living.

Sky One Box Hill high-rise is set to become

the new landmark within Whitehorse, at

36 levels tall with 434 apartments that

sit atop a 3 level retail, dining and health

emporium.

The value of building approvals within the

city of Whitehorse was $801 million in

the financial year at May 2016, and the

number of residential dwellings is expected

to increase by an average of 520 dwellings

per year.

As part of the local council’s vision to

provide a quality environmental education

facility for the community, the new

Blackburn Lake Sanctuary Visitor’s Centre

was officially opened in April 2016.

Featuring an impressive glass façade and

wing like roof design, the project cost

approximately $470,000.

Plans are also underway to upgrade Elgar

Park in Mont Albert North, which includes

improvements to pedestrian and cyclist

safety along the Koonung Creek Trail, 2 new

pavilion buildings and much needed work

on the sporting ovals.

Source: City of Whitehorse; Urban Melbourne, .iD Consulting Pty Ltd

Source: City of Whitehorse

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.

Page 12: The Report - Whitehorse

12 T H E J E L L I S C R A I G R E P O R T

Whitehorse snapshot

P O P U L A T I O N G R O W T H F O R E C A S T

2016

167,6002036

186,365CHANGE 2016-36

+11.20%

W H I T E H O R S E

L A N D A R E A64.3 km2

P O P U L A T I O N D E N S I T Y2577 people / km2

Source: .iD Consulting Pty Ltd

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: REIV March 2015/2016

W H I T E H O R S E

T O P F I V E S U B U R B S B Y P R O J E C T E D P O P U L A T I O N C H A N G E 2 0 1 6 - 3 6 ( % )

0 10,000 20,000

Mitcham

Forest Hill

Blackburn

Burwood East

Box Hill

Whitehorse - PROJECT POPULATION

+9.9%

+25.0%

+29.7%

+22.4%

+22.3%

+22.2%

+20.6%

+20.5%

+19.0%

+17.3%

+17.2%

+16.4%

+15.4%

+12.9%

+19.2%

+27.1%

2031

Whitehorse

0 370,000 740,000 1,110,000 1,480,000 1,850,000

Vermont

Blackburn North

Blackburn South

Vermont South

Box Hill

Nunawading

Burwood East

Mitcham

Blackburn

Box Hill North

Box Hill South

Forest Hill

Burwood

Mont Albert North

+14.5%

$1,427,000$1,100,000

$1,200,000$960,000

$900,000$735,000

$1,180,000$965,000

$1,100,000$900,000

$1,200,000$995,000

$905,000$751,000

$988,000$830,000

$880,000$750,000

$1,512,000$1,290,000

$1,036,000$890,000

$950,000$823,000

$950,000$830,000

20162015

2016

+29.0%

+13.4%$850,500$750,030

0 10,000 20,000

Mitcham

Forest Hill

Blackburn

Burwood East

Box Hill

Whitehorse - PROJECT POPULATION

+9.9%

+25.0%

+29.7%

+22.4%

+22.3%

+22.2%

+20.6%

+20.5%

+19.0%

+17.3%

+17.2%

+16.4%

+15.4%

+12.9%

+19.2%

+27.1%

2031

Whitehorse

0 370,000 740,000 1,110,000 1,480,000 1,850,000

Vermont

Blackburn North

Blackburn South

Vermont South

Box Hill

Nunawading

Burwood East

Mitcham

Blackburn

Box Hill North

Box Hill South

Forest Hill

Burwood

Mont Albert North

+14.5%

$1,427,000$1,100,000

$1,200,000$960,000

$900,000$735,000

$1,180,000$965,000

$1,100,000$900,000

$1,200,000$995,000

$905,000$751,000

$988,000$830,000

$880,000$750,000

$1,512,000$1,290,000

$1,036,000$890,000

$950,000$823,000

$950,000$830,000

20162015

2016

+29.0%

+13.4%$850,500$750,030

Page 13: The Report - Whitehorse

W H I T E H O R S E 13

T O P F I V E S U B U R B S B Y 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 )

Box Hill

$1.51mMont Albert N.

$1.42m

Blackburn

$1.20mBurwood

$1.20mBox Hill S.

$1.18mSource: REIV March 2016

P O P U L A T I O N M O V E M E N T

W H I T E H O R S E

Source: .iD Consulting Pty Ltd

N E T M I G R A T I O Nmovement of persons

100 - 199

200 - 499

500+

dotted line denotes outflow

Banyule

Whitehorse - Nunawading W. Whitehorse -

Nunawading E.

Whitehorse - Box Hill

Wyndham

MorningtonPeninsula

Barwon

Frankston

Manningham

Yarra Ranges

Maroondah

Knox

Casey

Gippsland

Boroondara

Monash

Overseas

+7,000

+3,750

+2,800L O C A L W A R D S

Whitehorse - Box Hill Box HillBox Hill NthBox Hill SthBurwood

Whitehorse - Nunawading W.BlackburnBlackburn Nth

Whitehorse - Nunawading E.Forest HillMitcham

Mont Albert NthMont AlbertSurrey Hills

NunawadingVermont Sth

Blackburn SthBurwood East

$ $ $ $ $

Page 14: The Report - Whitehorse

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

3 Ashcroft Grove, BLACKBURN SOUTH

5 Lalwa Street, BLACKBURN

10A Wellington Avenue, BLACKBURN

14 Southey St, BLACKBURN NORTH

3 Benares Street, MITCHAM

6 Francis Street, BLACKBURN

14 Cootamundra Cres, BLACKBURN

23 Sandgate Rd, BLACKBURN SOUTH

3 Bracknell Court, VERMONT SOUTH

9 Sunshine Avenue, MITCHAM

15 Kerr Street, BLACKBURN

16 Molleton Street, BLACKBURN

SOLD

SOLD

SOLD

SOLD

SOLD

SOLD

SOLD

SOLD

SOLD

SOLD

SOLD

SOLD

Page 15: The Report - Whitehorse

W H I T E H O R S E 15

16 Salisbury Avenue, BLACKBURN

19 Norway Avenue, BLACKBURN

26 & 26A Oxford St, NUNAWADING

51 Neville Street, BOX HILL SOUTH

16 Trafalgar Ct, BLACKBURN SOUTH

19 Raleigh Street, BLACKBURN SOUTH

45 Kerr Street, BLACKBURN

66 Laburnum Street, BLACKBURN 74 Blackburn Road, BLACKBURN

18 Tisane Avenue, FOREST HILL

25 Esdale Street, BLACKBURN

47 Owen Street, MITCHAM

SOLD

SOLD

SOLD

SOLD

SOLD

SOLD

SOLD

SOLD

SOLD

SOLD

SOLD

SOLD

Page 16: The Report - Whitehorse

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