trends shaping perth: boom, busts and budgets

Booms, Busts and Budgets | 16 May 2014

Trends Shaping Perth

Presented by Brian HaratsisFriday 16th May 2014

Booms, Busts and Budgets (Breathers)^


Contents Budgets Cycles Structural Factors X Factors


Top 6 Budget Comments… Has that got something to do with pink batts

? Will the Eagles be able to afford some new

players ? Will the stadium be finished earlier ? It wont affect my holidays in Bali or

Broome ? Does this have to happen every year ? Will Grant Thornton invite me to this gig next

year ?


Budgets: Federal Headline Numbers

GDP: $1,567 Billion RBA Target Cash Rate: 2.5% Total Budget Spend: $415.7 bn Budget Spend per cent of GDP: 25%

Key Themes Business Sector

Infrastructure

Mining

Service Sector (Health+Education)


WA State Budget Headline Numbers

GSP: $252,999 billion Total Budget Spend: $28,508 bn Spend as a proportion of GSP: 11.3%

Key Themes Infrastructure

Forrest Field

Stadium

Roads

Health (Fiona Stanley)

GST


WA State Budget


Cycles Over the last 20 years WA has experienced high

volatility in growth and development due to national and local economic cycles driving: Interest Rates Business Investment House and Land Prices Immigration Gross State Product and wealth


High Medium and Long Term Growth Perth Population forecasts –up to 2051

Source: ABS Cat 3222.0 (2013)

Age range 2001 2011 2021 2031 2041 2051Population as at

June 30 (millions)

0-14 292,898 356,645 508,481 630,573 725,123 841,548 15-64 994,774 1,305,037 1,737,501 2,189,762 2,663,897 3,082,10565-84 148,760 208,075 313,366 429,172 541,873 705,027

85 and over 18,929 30,242 43,240 71,110 113,511 154,760Total 1,455,361 1,899,999 2,602,588 3,320,617 4,044,404 4,783,440

% of Population

0-14 20.1% 18.8% 19.5% 19.0% 17.9% 17.6%15-64 68.4% 68.7% 66.8% 65.9% 65.9% 64.4%65-84 10.2% 11.0% 12.0% 12.9% 13.4% 14.7%

85 and over 1.3% 1.6% 1.7% 2.1% 2.8% 3.2%


1829 1854 1879 1904 1929 1954 1979 2004 20290

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

2051

Long term growth: WA Perth population growth over 250 years

Source: ABS Cat 3222.0 (2013)

OPPORTUNITY PERIOD


Medium and Long Term Growth: Asia World population growth


Australian GDP Growth Cyclicality

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

-1%

0%

1%

2%

3%

4%

5%

6%

GDP (LHS) GDP Growth (RHS)


Cyclical Growth in WA

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

50,000

100,000

150,000

200,000

250,000

300,000

0%

1%

2%

3%

4%

5%

6%

7%

8%

GSP GSP Growth

90s AverageGrowth: 4.4%

00's Average Growth: 4.5%

10's Average Growth: 5.1%


Extreme Cyclical volatility: WA% Growth Growth No.

Western Australia (June 2012) 3.4% 79,000

Recent Peak Growth (2012) 3.4% 79,000

Recent Low Growth (2004/05) 1.6% 32,000

Decade Low Growth (2001/02) 1.2% 22,000

Australia Current Growth (2012) 1.7% 370,000

Australia Peak Growth (2009) 2.1% 442,500


Risk: Cyclical Population Equation Net Overseas migration to WA can shift by

over 20,000 people depending on economic circumstances

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-130

10,000

20,000

30,000

40,000

50,000

60,000

±60%

Source: ABS Cat.3412.0


Risk: Cyclical population equation WA’s Net Interstate Migration position has

been dependant on the economic cycle

1996

-97

1997

-98

1998

-99

1999

-200

0

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

-6,000

-4,000

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000


Structural Change: Mining and Services Population Employment Ageing (Health) Resources/Asia/

Deepening in the Service Sector

Tourism

Large Business Investment ($46.75 Bn in WA from mining alone in 2013)

48% of total Australian Exports come from mining

Resources to Asia (85%)


West Australian Capital Investment Capital Expenditure by Industry, Quarterly

0

2000

4000

6000

8000

10000

12000

14000

16000

18000

Mining Manufacturing Other

$ M

illio

ns


Perth Employment Forecasts

Education and Training

Retail Trade

Health Care and Social A

ssis...

Professional, Scientific, Techn...

Construction

Accom

modation and Food Se...

Adm

inistrative and Support ...

Manufacturing

Transport, Postal and Ware...

Other Services

Public Adm

inistration and Sa...

Mining

Rental, Hiring and Real Estate...

Arts and Recreation Services

Wholesale Trade

Financial and Insurance Serv...

Electricity, Gas, W

ater, Waste...

Information M

edia, Telecom...

Agriculture, Forestry, Fishing

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0 17.015.5

13.9 13.7

10.9

5.85.0

4.3 4.2 4.23.2 2.6 2.2 1.9

0.7 0.7 0.6

-0.6 -0.7

Growth in Perth Employment by Industry 2012-2017 (000’s)


Housing Sales and Prices in Perth

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

100,000

200,000

300,000

400,000

500,000

600,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

Median value Houses sold


Land Sales and Prices in Perth

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

50,000

100,000

150,000

200,000

250,000

300,000

350,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Median value Land sold


Property Price Comparison, Houses Land and Units

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

100,000

200,000

300,000

400,000

500,000

600,000

House Price Unit Price Land Price


What this means for you ? House values compounding at 6% p.a.


The megatrends… New City Shape / Pilbara / Northern Growth

Story Super-networks Job mobility Density of opportunity Life Expectancy Ageing in which place?


Megatrend 1: New City Shape High Density development in Perth is just

emerging

Building Approvals in Perth, Sydney and Melbourne

Source: ABS Cat.8731.0

Inner Outer Total

Houses Semi-

detachedFlats units or apartments Houses Semi-

detachedFlats units or apartments Houses Semi-

detachedFlats units or apartments

Melbourne 6% 9% 85% 61% 24% 15% 48% 20% 32%Perth 22% 11% 67% 68% 18% 14% 64% 18% 18%Syndey 3% 3% 94% 40% 38% 22% 27% 26% 48%


Who lives in apartments? Growth in dwelling type by family composition,

2001-2011 Couple family

with no children

Couple family with children

One parent family

Other family

TOTAL FAMILY

Lone person Group Other TOTAL

Separate house 27% 17% 18% 29% 21% 28% 30% 81% 24%Semi-detached 23% 71% -4% 5% 26% -2% 28% 72% 15%Flat, unit or apartment 128% 193% 51% 33% 114% 14% 67% 76% 49%Other dwelling -16% -32% -24% -21% -20% -19% -25% 98% -3%Total 30% 20% 15% 24% 23% 16% 33% 75% 24%

Couple family

with no children

Couple family with children

One parent family

Other family

TOTAL FAMILY

Lone person Group Other TOTAL

Separate house 28,602 28,344 8,128 1,485 66,559 18,947 3,859 8,713 98,078Semi-detached 3,562 4,490 -303 66 7,815 -741 1,136 2,003 10,213Flat, unit or apartment 7,828 3,176 1,202 262 12,468 3,580 1,794 3,174 21,016Other dwelling -140 -65 -33 -3 -241 -354 -24 512 -107Total 39,387 35,384 8,711 1,777 85,259 20,743 6,663 14,042 126,707

%

No.


Houses versus Apartments

Outer Perth Inner Perth Greater Perth

Semi-detached Flats units or apartments Houses Semi-detached Flats units or

apartments Houses Semi-detached Flats units or apartments Houses

2002 15% 5% 81% 11% 59% 30% 14% 11% 75%2003 14% 8% 78% 8% 66% 26% 13% 15% 73%2004 15% 14% 72% 12% 63% 24% 14% 19% 67%2005 16% 5% 78% 9% 73% 19% 15% 14% 71%2006 17% 10% 73% 9% 73% 18% 16% 17% 67%2007 19% 11% 69% 8% 74% 18% 18% 19% 63%2008 19% 11% 70% 5% 86% 9% 16% 28% 56%2009 17% 6% 77% 21% 24% 55% 18% 7% 76%2010 18% 8% 74% 5% 68% 26% 16% 14% 69%2011 15% 10% 74% 9% 57% 34% 15% 14% 71%2012 17% 13% 70% 6% 75% 19% 16% 20% 65%2013 18% 14% 68% 11% 67% 22% 18% 18% 64%

Building Approvals across Perth have trended towards higher densities over the previous decade

Sour

ce: A

BS C

at.8

731.

0


Innovation Multi Unit product and precincts Last homebuyer Health and Ageing (house for life)


Lifestyle solutions: Examples of Mixed Use and High Density Development

QV Melbourne – Residential, Retail and office multi use development in the heart of Melbourne.


Megatrend 3 | Super networks Domestic/ interstate/

international overlay Facility

mix/parks/offices Global “address” Only 50% of residents

in most inner suburbs of Perth are Australian-born.


Retirement Living v Retirement Villages Only 6-8% of the market live in retirement

villages

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Perth Adelaide Brisbane Capital City Average

Sydney Melbourne

Re

tire

me

nt

Vil

lage

Pe

net

rati

on

Rat

e

Me

diu

m a

nd

Hig

h D

en

sity

Dw

ell

ing

Shar

eRetirement Village Penetration Rate vs Medium and High Density Dwelling Share,

Capital Cities

Share of Medium/High Density Dwellings Retirement Village Penetration Rate


More people 65+ are working

5%

6%

7%

8%

9%

10%

11%

12%

Sep-

97

Feb-

98

Jul-9

8

Dec

-98

May

-99

Oct-

99

Mar

-00

Au

g-00

Jan-

01

Jun-

01

No

v-01

Ap

r-02

Sep-

02

Feb-

03

Jul-0

3

Dec

-03

May

-04

Oct-

04

Mar

-05

Au

g-05

Jan-

06

Jun-

06

No

v-06

Ap

r-07

Sep-

07

Feb-

08

Jul-0

8

Dec

-08

May

-09

Oct-

09

Mar

-10

Lab

ou

r Fo

rce

Par

tici

pati

on

Rat

e

Participation Rate in the Labour Force, People Aged 65+, Queensland


Megatrend 4 | Job mobility: Strategic centrality outside the CBD

20% of Australia’s workforce changes jobs annually 40% of Australia’s residents change dwellings

annually For employment mobility Maximising life chances/affordability

Stirling: high CBD access Joondalup: Regional Alternative Great Eastern Highway Corridors: Resources


New Perth Stadium

$2b project with $358m in new public transport infrastructure


Gateway WA – Perth Airport & freight access Accommodate a doubling

of airport passengers and freight volumes

Construction commenced January 2013

Jointly funded: Federal Govt. $686.4 million

WA State Govt. $317.5 million

Completion expected by 2017


Megatrend 5 | Density of Opportunity: Job Makers

Growth in value of inner and middle rings New service economy- CBD and strategic job

locations Growing human capital – The Job Makers

See job opportunities and the preservation of their high levels of income as their key drivers

‘Wealth Creators’ Invest in human capital, physical assets, future

household wealth and influence


X Factors Business Confidence Deregulation Private Sector infrastructure investment – No GST

solution Integration with the eastern Seaboard services sector Deepening the services sector involvement in

resources Global education and international tourism


Australian Economic Transition: Eastern Seaboard

Resources Construction New Service Economy

Western Australia Resource Construction

Resource Operations and Service Sector

Regional Growth

Global and national service sector integration


Thank you.

MacroPlan Dimasi is Australia’s first choice when seeking solutions which add value to important property, planning and economic development

projects.

We welcome the opportunity to discuss with you, key market trends as they relate to your business and

sector.

Please contact Brian Haratsis or Stuart McKnight on 08 9225 7200 or [email protected] to

arrange an appointment.

mailto:[email protected]

trends shaping perth: boom, busts and budgets

Real Estate

wa state budget

cyclical population

long term

high density

unit orapartment

abs cat

lone person

separate house