reiq business luncheon slide presentation
Upload: lj-gilland-real-estate-pty-ltd-httpwwwljgrealestatecomauindexphplanch
Post on 14-Jun-2015
325 views
DESCRIPTION
Valued InformationTRANSCRIPT
![Page 1: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/1.jpg)
REIQ Business luncheon March 2011 Bill Evans.
![Page 2: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/2.jpg)
0 10 20 30
availabilty of stock
staffing
market volatility*
consumer confidence
interest rates
finance/funding
%
Dec-10
Source: NAB,
Westpac Economics
* including volatility in
financial, economic and
market conditions
Industry opinions: critical challenges
2
![Page 3: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/3.jpg)
Current Forecasts-March 2011
Latest Sept-11 Dec-11 June-12
RBA Cash 4.75 5.00 5.00 5.25
3yr swap 5.27 5.40 5.60 5.80
10yr 5.44 5.60 5.50 5.80
US 10 yr 3.34 3.20 3.20 3.80
AUD/USD 1.03 1.05 0.99 0.93
USD/JPY 81 83 79 85
USD/EUR 1.42 1.43 1.45 1.35
3
![Page 4: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/4.jpg)
To date, HH debt reduction has been limited
0
3
6
9
12
15
0
3
6
9
12
15
1990 1994 1998 2002 2006 2010
$trn
Other*
Households
Nonfarm nonfinancial firms
Government
Rest of World
Sources: Federal Reserve, Westpac Economics
March „08
$trn
*nonfinancial noncorporate and farm
4
![Page 5: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/5.jpg)
House prices have declined for 5 months
100
120
140
160
180
200
220
240
100
120
140
160
180
200
220
240
Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Jan 10
Index Index
20-city index
10-city index
Source: Factset
S&P Case-Shiller index
Prices have fallen 4.3% in five months
to Dec ‟10 and are 31% from peak.
5
![Page 6: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/6.jpg)
Contributions to real GDP growth
3.2 3.7 4.1 3.0 3.0 2.8 2.8 2.9 3.2 3.4
1.1 1.4
1.5
1.2 1.1 1.1 0.9 1.0 1.1 1.2
4.4
5.6 6.1
4.6
8.7
5.6 4.6
3.3 4.0
5.0
2.6
2.0
2.5
0.8
-3.7
0.8
0.8
1.0
0.8
-5
0
5
10
15
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
ppt cont.
Net exports Gross investment Public consumption Private consumption
Sources: CEIC, Westpac.
Contribution to full year growth.
6
![Page 7: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/7.jpg)
A pending overhang of property
50
100
150
200
250
50
100
150
200
250
Aug-06 Aug-07 Aug-08 Aug-09 Aug-10
index index
Completions
Sales
Starts
Sources: CEIC, Westpac. Aug-2006 = 100.
Underlying data in sqm.
7
![Page 8: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/8.jpg)
0
5
10
15
20
0
5
10
15
20
25
30
35
40
Mar-01 Mar-03 Mar-05 Mar-07 Mar-09 Mar-11
%pa %yr
Loan growth (lhs)
RRR (rhs)
Sources: Westpac Economics, CEIC
“Sound”,
Easing bias
“Sound”,
tightening bias
“Sound”,
tightening bias
“Appropriately
Loose”
“Prudent” “Appropriately
Tight”
“Tight”
“Tight”
China’s monetary & credit policy stance
8
![Page 9: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/9.jpg)
Australian commodity forecasts
40
140
240
340
440
540
640
40
140
240
340
440
540
640
Dec-83 Nov-87 Nov-91 Nov-95 Nov-99 Nov-03 Nov-07 Nov-11
index index
metals, rurals & oil bulks
Sources: Westpac Economics, Bloomberg, ABS
9
![Page 10: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/10.jpg)
AUD susceptible to event risk
0.80
0.85
0.90
0.95
1.00
1.05
0.80
0.85
0.90
0.95
1.00
1.05
Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10
USD USD
Source: Bloomberg
Ireland
crisis
Greece
crisis
10
![Page 11: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/11.jpg)
CPI: selected discretionary items*
-3
-2
-1
0
1
2
3
4
-3
-2
-1
0
1
2
3
4
Dec-02 Dec-04 Dec-06 Dec-08 Dec-10
%yr 6m % ann'sd
6mth% annualised
%yr
Sources: ABS, Westpac Economics
* Ice cream/other dairy; cakes/biscuits; snacks/confectionery; meals out/take away;
clothing & footwear; house purchase; house repairs/maintenance; furniture/furnishings;
h/hld appliances, utensils, tools; hairdressing/personal care services; motor vehicles;
MV parts/accessories; AV & computing; sports & rec. equipt; toys/games/hobbies;
other rec. activities; domestic holidays
11
![Page 12: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/12.jpg)
CPI inflation: underlying still moderating
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
-1
0
1
2
3
4
5
6
7
8
9
Sep-94 Sep-98 Sep-02 Sep-06 Sep-10
%qtr %yr
avg RBA core CPI* %qtr (rhs)
headline CPI %yr (lhs)
avg RBA core CPI* %yr (lhs)
Sources: ABS, RBA, Westpac Economics
* average of s.a. trimmed mean
& weighted median CPI ex GST
effect in 2000/01
12
![Page 13: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/13.jpg)
Mortgage rate expectations by state
70
75
80
85
90
95
100
70
75
80
85
90
95
100
Aus NSW VIC QLD SA WA
net% net%
Feb-10
Jun-10
Aug-10
Feb-11
% reporting expected
rise minus % reporting
expected fall
13
![Page 14: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/14.jpg)
Pace of employment growth to slow in 2011H1
-50
0
50
100
150
200
250
300
-1
0
1
2
3
4
Jun-03 Jun-05 Jun-07 Jun-09 Jun-11
`000 %yr
6mth change (rhs)
% yr (lhs)
Sources: ABS, Westpac Economics
14
![Page 15: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/15.jpg)
-9
-6
-3
0
3
-9
-6
-3
0
3
Sep-85 Sep-90 Sep-95 Sep-00 Sep-05 Sep-10
% GDP % GDP
Trade balance Income position
Current account
Sources: ABS, Westpac Economics
f/c to
end-2012
Rolling annual
Current account balance
15
![Page 16: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/16.jpg)
Net public debt: G7 chalk, Australian cheese
0
10
20
30
40
50
60
70
80
90
100
0
10
20
30
40
50
60
70
80
90
100
US UK Germany France Canada Australia
1990 2000
2009 2015
%GDP
Sources: Westpac, IMF, Australian Treasury.
%GDP
16
![Page 17: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/17.jpg)
The Australian dollar: actual versus fitted
0.40
0.50
0.60
0.70
0.80
0.90
1.00
1.10
0.40
0.50
0.60
0.70
0.80
0.90
1.00
1.10
Jan-91 Jan-95 Jan-99 Jan-03 Jan-07 Jan-11
USD USD
Fair value band
AUD/USD actual
AUD/USD forecast
Sources: RBA, Westpac Economics
17
![Page 18: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/18.jpg)
-1.4
4.3
2.1
3.2 2.8 2.7
-1.3
1.5
2.2 2.7
2.9 2.9 3.1 3.4
-2
-1
0
1
2
3
4
5
Qld NSW Aus SA Vic WA Tas
% ann
Dec-09 yr Dec-10 yr
Sources: ABS, Westpac Economics
Domestic demand growth, by state
Qld: lagging – for now
18
![Page 19: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/19.jpg)
Output effects from the Floods and Cyclones
Activity loss
March quarter: Coal: $2.2bn
Farm: $2.5bn
Tourism: $300m
Other: $500m
June/September: $1.5bn (coal/tourism)
Rebuilding
Government: Commonwealth: $5.6bn
States: $1bn
Private: Housing: $2.5bn
19
![Page 20: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/20.jpg)
Dwelling completions – Qld’s capacity to rebuild
0
10
20
30
40
50
60
0
10
20
30
40
50
60
1987 1991 1995 1999 2003 2007 2011
„000 '000
Sources: ABS, Westpac
decade avg
f/c
+5.5k
flood
rebuild
20
![Page 21: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/21.jpg)
-2
0
2
4
6
8
10
-2
0
2
4
6
8
10
1991/92 1995/96 1999/00 2003/04 2007/08 2011/12
% ann % ann
GSP GSP, ex floods State demand
Sources: ABS, Qld Gov't, Westpac Economics
Qld Gov‟t
fcasts
2010/11: 1.25% (3.0%); 2011/12: 5.0% (4.25%)
Qld: 5% growth in 2011/12
21
![Page 22: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/22.jpg)
CAPEX plans by industry
-20
0
20
40
60
80
-20
0
20
40
60
80
2007 2008 2009 2010 2011f 2012f
% chg, yr avg % chg, yr avg
mining
manufacturing
services
total
History in real terms,
Expectations in nominal
Sources: ABS, Westpac Economics
financial years 5th est. 1st est.
22
![Page 23: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/23.jpg)
Mining investment boom ... Coming to Qld Business investment : share of GSP
0
5
10
15
20
25
30
35
Dec-89 Dec-97 Dec-05
NSW Vic Tas
% of GSP
Sources: ABS, Westpac Economics
0
5
10
15
20
25
30
35
Dec-89 Dec-97 Dec-05
SA Qld WA
% of GSP
23
![Page 24: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/24.jpg)
Firms: hiring ... under investing
-20
-15
-10
-5
0
5
10
15
20
25
30
-4
-2
0
2
4
6
Dec-80 Dec-85 Dec-90 Dec-95 Dec-00 Dec-05 Dec-10
% ann % ann
Jobs (lhs)
Equipment * (rhs)
Sources: ABS; Westpac Economics * smoothed
Consumer recession
in NSW & Vic Asian crisis
AUD “collapse” Deleveraging
24
![Page 25: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/25.jpg)
Household savings ratio-cyclical high
-5
0
5
10
15
20
25
-5
0
5
10
15
20
25
Sep-59 Sep-69 Sep-79 Sep-89 Sep-99 Sep-09
% income % income
Sources: ABS, Factset, Westpac Economics
post 2006 avg doubled
equates to ~$122bn
25
![Page 26: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/26.jpg)
Funding costs / deposit rates bid up
-250
-200
-150
-100
-50
0
50
100
150
200
250
-250
-200
-150
-100
-50
0
50
100
150
200
250
Oct-90 Oct-95 Oct-00 Oct-05 Oct-10
bps bps
spread: 1yr term deposit vs 90 day bank bills
Sources: RBA, Westpac Economics
26
![Page 27: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/27.jpg)
Essential: rising costs an added drag
-15
-10
-5
0
5
10
15
20
25
Mar-97 Mar-07 Mar-02 Mar-97 Mar-07
-15
-10
-5
0
5
10
15
20
25 % %
nominal spend
real
prices
*ann avg %ch
figures in brackets
show %total spend
water (1%)
Sources: ABS, Westpac
electricity (2%) fuel (5%)
27
![Page 28: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/28.jpg)
Australia’s emissions profile
0
50
100
150
200
250
300
0
50
100
150
200
250
300
Stationary energy
Transport Fugitive emissions
Waste & industrial
processess
Agriculture
Source: Department of Climate Change
National Greenhouse Gas Inventory 2006; Mt CO2-e
28
![Page 29: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/29.jpg)
Consumer sentiment and job security
80
100
120
140
160
180
200 70
80
90
100
110
120
130
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
index index
consumer sentiment index (lhs)
unemployment expectations (rhs) Sources: Westpac-Melbourne Institute
29
![Page 30: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/30.jpg)
Consumer sentiment: family finances
70
80
90
100
110
120
130
70
80
90
100
110
120
130
Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
index index
consumer sentiment index
consumer sentiment - family finances Sources: Westpac-Melbourne Institute
30
![Page 31: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/31.jpg)
Household financial ratios
0
20
40
60
80
100
120
140
160
180
Mar-77 Mar-87 Mar-97 Mar-07 Mar-77 Mar-87 Mar-97 Mar-07
0
5
10
15
20
25
30
35 % %
total housing own-occ housing
*all figures are to 2010Q3
debt to assets (rhs) debt to income (lhs)
Sources: RBA, Westpac
31
![Page 32: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/32.jpg)
House price growth: all dwellings
-20
-10
0
10
20
30
40
50
60
70
-20
-10
0
10
20
30
40
50
60
70
Oct-03 Oct-05 Oct-07 Oct-09 Oct-03 Oct-05 Oct-07 Oct-09
% %
Bris Melb Adel Syd Perth
Sources: RP Data-Rismark,
Residex, Westpac
*six-monthly growth
rates, annualised
32
![Page 33: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/33.jpg)
House price growth stalls
-15
-5
5
15
25
35
45
-15
-5
5
15
25
35
45
Mar-90 Mar-94 Mar-98 Mar-02 Mar-06 Mar-10
% ann % ann
Brisbane
capital cities avg.
Sources: ABS; Westpac Economics
*six-monthly growth rates, annualised
33
![Page 34: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/34.jpg)
Price-income ratios: various measures
0
1
2
3
4
5
6
7
8
9
10
0
1
2
3
4
5
6
7
8
9
10
Sydney Melbourne Brisbane Adelaide Perth
times times
house price to state median income house price to capital city median income all dwelling price to capital city median income unit price to capital city median income
Source: APM, RP Data-Residex, ABS, Westpac
June 2008
units
%total
stock:
38% 28% 21% 24%
22%
34
![Page 35: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/35.jpg)
Housing affordability vs long run trend
20
25
30
35
40
45
50
55
60
65
70
20
25
30
35
40
45
50
55
60
65
70
Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10
% %
Sydney
Melbourne
Brisbane
Perth
Sources: REIA, ABS, RBA, Westpac
deteriorate
improve
35
![Page 36: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/36.jpg)
40
60
80
100
120
140
160
180
40
60
80
100
120
140
160
180
Mar-08 Mar-09 Mar-10 Mar-11 Mar-08 Mar-09 Mar-10 Mar-11
index index
NSW Vic Qld WA
Source: Melbourne Institute, Westpac Economics
*smoothed
‘Time to buy a dwelling’ by state
36
![Page 37: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/37.jpg)
Population vs dwelling stock
0
50
100
150
200
250
300
350
400
450
500
0
50
100
150
200
250
300
350
400
450
500
1950s 1960s 1970s 1980s 1990s 2000s last 3 years
thousands thousands
population
dwelling completions
dwelling stock*
Source: ABS, Westpac
annual average change
* net of demolitions – implied by Census
data to 2006; Westpac estimates thereafter
37
![Page 38: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/38.jpg)
Population vs dwelling stock: Qld
0
20
40
60
80
100
120
140
0
20
40
60
80
100
120
140
1950s 1960s 1970s 1980s 1990s 2000s last 3 years
thousands thousands
population
dwelling completions
dwelling stock*
Source: ABS, Westpac
annual average change
* net of demolitions – implied by Census data
to 2006; Westpac estimates thereafter
38
![Page 39: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/39.jpg)
0.5
1.0
1.5
2.0
2.5
3.0
3.5
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Jun-82 Jun-90 Jun-98 Jun-06
% ann % ann
Qld (lhs) Aust (rhs)
Sources: ABS, Westpac Economics
Population growth: sharp slowdown
39
![Page 40: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/40.jpg)
Population growth in perspective
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
1926 1936 1946 1956 1966 1976 1986 1996 2006
ann% ann%
population
contribution from net migration
contribution from natural increase
Sources: ABS, Westpac Economics
40
![Page 41: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/41.jpg)
Migrant inflows vs student visas
0
100
200
300
400
500
600
0
100
200
300
400
500
600
2003 2004 2005 2006 2007 2008 2009 2010
thousands thousands
student visas granted migrant arrivals
Source: ABS, Dept of Immigration and
Citizenship, Westpac Economics
*financial years
50k
drop
67k
drop
41
![Page 42: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/42.jpg)
Australian bank funding sources
10
20
30
40
50
10
20
30
40
50
Jun-02 Jun-04 Jun-06 Jun-08 Jun-10
% %
Domestic deposits
Short term debt
Long term debt
Sources: RBA, APRA, ABS, Westpac.
42
![Page 43: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/43.jpg)
Major Banks’ Bond Issuance
-40
-20
0
20
40
60
-40
-20
0
20
40
60
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12
$bn $bn
Onshore* Offshore* Maturities Net issuance
Source: RBA
AUD equivalent
* Latest quarter issuance to date
43
![Page 44: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/44.jpg)
Westpac business lending by sector
31.4
7.6
6.2
7.2
9 6.1 4.6
27.9
Property
Agriculture
Accom, Restaurant
Manufacturing
Retail
Wholesale trade
Transport
Other
Sources: Westpac.
44
![Page 45: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/45.jpg)
Total dwelling approvals – Victoria rules!
40
60
80
100
120
140
160
180
200
40
60
80
100
120
140
160
180
200
Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10
index index
Vic (36%) WA (13%)
Qld (17%) NSW (19%)
Sources: ABS, Westpac
smoothed, Sep 2005 = 100
figures in brackets show %total
45
![Page 46: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/46.jpg)
Unit approvals- Victoria overheated?
0
50
100
150
200
250
300
350
400
450
500
0
50
100
150
200
250
300
350
400
450
500
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
index index
Vic (36%) WA (5%)
Qld (13%) NSW (20%)
Sources: ABS, Westpac
smoothed, Jan 2006 = 100
figures in brackets show %total
46
![Page 47: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/47.jpg)
QLD mortgage arrears well above national
0.0
0.5
1.0
1.5
2.0
2.5
0.0
0.5
1.0
1.5
2.0
2.5
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
% %
Average REDS
SPIN
Source: Westpac Economics
47
![Page 48: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/48.jpg)
Foreign bank claims on Australia
0
100
200
300
400
500
0
25
50
75
100
125
Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10
$USbn
Japanese (lhs)
European (rhs)
Sources: BIS, Westpac.
$USbn
48
![Page 49: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/49.jpg)
Mortgage assets: structural shifts
50
100
150
200
250
300
350
400
Mar-02 Mar-04 Mar-06 Mar-08 Mar-10
Banks
Securitisation vehicles
index
Sources: APRA, ABS, Westpac.
49
![Page 50: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/50.jpg)
Lending finance- steady recovery
0
10
20
30
40
50
60
70
80
90
0
5
10
15
20
Jan-85 Jan-90 Jan-95 Jan-00 Jan-05 Jan-10
$bn $bn
construction only (lhs)
investor housing - individuals (rhs)
Sources: ABS, Westpac Economics
*smoothed, annualised
50
![Page 51: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/51.jpg)
Non res showing no recovery
0.0
0.5
1.0
1.5
2.0
2.5
3.0
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Apr-87 Apr-91 Apr-95 Apr-99 Apr-03 Apr-07 Apr-11
AUDbn/mth AUDbn/mth
units (surpassed prev peak, now 11% lower)
non res (still 41% below pre-crisis peak)*
Sources: ABS, Westpac Economics
Private dwelling approvals,
trend, nominal
* excluding education
51
![Page 52: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/52.jpg)
Brisbane office market – also a constraint ... as supply continues
-50
0
50
100
150
200
250
1990 1994 1998 2002 2006 2010
-4
0
4
8
12
16
20 %
Net absorption Net supply
Vacancy rate
Sources: PCA, Westpac Property
‟000 sqr meters Westpac Property
forecasts to 2012
Vacancy rate
11.3% 2009
13.0% 2011
52
![Page 53: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/53.jpg)
Disclaimer Key points
• The two key challenges for the industry are interest rates and credit availability – both are of equal concern to industry participants.
• The interest rate outlook will be affected by the global growth outlook; the sustainability of the mining boom and prospects for the cautious consumer.
• US growth prospects are less than robust; China is tightening policy and Europe‟s problems are structural.
• Australian consumers are cautious and look to stay that way with house prices under pressure and housing affordability stretched.
• Any easing in consumer caution is likely to lead to higher rates since the mining boom will continue unabated.
• The mining boom is set to strengthen further maintaining pressure on rates through 2012 – QLD will benefit from this.
• The Australian dollar will be resilient to increasing global risk although it should weaken somewhat in 2012.
53
![Page 54: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/54.jpg)
Disclaimer Key points
• The key to Australia‟s world class house prices has been the increasing imbalance between new supply and population growth although there is clear oversupply in places like the Gold Coast.
• Population growth has slowed sharply particularly in QLD taking some pressure off underlying demand.
• New funding pressures have eased for the major banks as they take advantage of the rising savings rate to fund books through retail deposits – although maturities remain a challenge.
• Foreign banks and securitisers have lost considerable ground to the majors who now dominate new lending QLD‟s reliance on regional banks has been a weakness for the state.
• There is clear evidence that approvals and lending for developments is slowly improving although Victoria is dominating activity.
54
![Page 55: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/55.jpg)
Disclaimer Key points
• There is a clear diversity in terms of approvals across the states with Victoria showing signs of being overheated while QLD is lagging. • Property dominates banks‟ loan books although approvals for non residential have not recovered since the GFC while apartments are showing upward momentum.
• While there is some improvement in residential prospects for non residential particularly in Brisbane/Gold Coast are not sound.
• The stability and improvement in the housing industry is likely to need to await rate cuts which should begin in 2013 following another “round” of rate hikes in 2012.
55
![Page 56: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/56.jpg)
Westpac Institutional Bank is a division of Westpac Banking Corporation ABN 33 007 457 141.
Information current as at date above. This information has been prepared without taking account of your
objectives, financial situation or needs. Because of this you should, before acting on this information,
consider its appropriateness, having regard to your objectives, financial situation or needs. Westpac‟s
financial services guide can be obtained by calling 132 032, visiting www.westpac.com.au or visiting any
Westpac Branch. The information may contain material provided directly by third parties, and while such
material is published with permission, Westpac accepts no responsibility for the accuracy or
completeness of any such material. Except where contrary to law, Westpac intends by this notice to
exclude liability for the information. The information is subject to change without notice and Westpac is
under no obligation to update the information or correct any inaccuracy which may become apparent at a
later date. Westpac Banking Corporation is registered in England as a branch (branch number
BR000106) and is authorised and regulated by The Financial Services Authority. Westpac Europe
Limited is a company registered in England (number 05660023) and is authorised and regulated by The
Financial Services Authority. If you wish to be removed from our e-mail, fax or mailing list please send an
e-mail to [email protected] or fax us on +61 2 8254 6934 or write to Westpac Economics at
Level 2, 275 Kent Street, Sydney NSW 2000. Please state your full name, telephone/fax number and
company details on all correspondence. © 2011 Westpac Banking Corporation. Past performance is not a
reliable indicator of future performance. The forecasts given in this document are predictive in character.
Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are
reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and
uncertainties. The ultimate outcomes may differ substantially from these forecasts.
Disclaimer Disclaimer
![Page 57: Reiq Business Luncheon Slide Presentation](https://reader035.vdocument.in/reader035/viewer/2022062220/557cc074d8b42a59078b4af5/html5/thumbnails/57.jpg)