SlideShare una empresa de Scribd logo
1 de 57
Descargar para leer sin conexión
REIQ Business
luncheon
March 2011

Bill Evans.
Industry opinions: critical challenges


     finance/funding

       interest rates

consumer confidence
                                      Source: NAB,
                                      Westpac Economics

    market volatility*
                                      Dec-10
              staffing
                                  * including volatility in
                                  financial, economic and
  availabilty of stock            market conditions


                         0   10          20                    30
                                                              %

                                                                    2
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
To date, HH debt reduction has been limited

     $trn                                                                       $trn
15                                                                                     15
        Other*                 Sources: Federal Reserve, Westpac Economics
        Households
12      Nonfarm nonfinancial firms                                                     12
        Government
9       Rest of World                                                                  9
            *nonfinancial noncorporate and farm

6                                                                                      6


3                                                                                      3
                                                                         March „08
0                                                                                      0
 1990            1994                1998         2002          2006           2010


                                                                                            4
House prices have declined for 5 months

      Index                   S&P Case-Shiller index                          Index
240                                                                                   240
                                                                    Source: Factset
              20-city index
220                                                                                   220
              10-city index
200                                                                                   200

180                                                                                   180

160                                                                                   160

140                                                                                   140
                                     Prices have fallen 4.3% in five months
120                                  to Dec ‟10 and are 31% from peak.
                                                                                      120

100                                                                                   100
  Jan 00       Jan 02     Jan 04     Jan 06          Jan 08          Jan 10


                                                                                        5
Contributions to real GDP growth
     ppt cont.
15
                           2.5
                2.0

10    2.6
                                      0.8
                                                   0.8
                           6.1              8.7          0.8              0.8
                5.6                                               1.0
                                                                                5.0
      4.4                             4.6          5.6
                                                         4.6              4.0
                                                                  3.3
 5              1.4
                           1.5
      1.1                             1.2                                 1.1   1.2
                                            1.1    1.1   0.9      1.0
                3.7        4.1                                                  3.4
      3.2                             3.0   3.0    2.8   2.8      2.9     3.2

 0
                                                         Net exports
                                            -3.7         Gross investment
        Sources: CEIC, Westpac.                          Public consumption
        Contribution to full year growth.                Private consumption
-5
     2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


                                                                                      6
A pending overhang of property
      index                                                  index
250                                                                  250
      Sources: CEIC, Westpac. Aug-2006 = 100.
      Underlying data in sqm.


200               Completions                                        200
                  Sales
                  Starts
150                                                                  150


100                                                                  100


50                                                                   50
 Aug-06           Aug-07              Aug-08    Aug-09   Aug-10


                                                                          7
China’s monetary & credit policy stance

     %yr                                                                                             %pa
40                                                                                                             20
       Sources: Westpac Economics, CEIC
35
                           Loan growth (lhs)
30                                                                                                             15
                           RRR (rhs)
25
20                                                                                                             10
15
10                                                                                                             5
                                  “Tight”                              “Tight”
5      “Sound”,        “Sound”,                “Sound”,       “Appropriately     “Appropriately    “Prudent”
      Easing bias   tightening bias         tightening bias      Tight”             Loose”
0                                                                                                              0
Mar-01          Mar-03                Mar-05            Mar-07                 Mar-09             Mar-11


                                                                                                                    8
Australian commodity forecasts

      index                                            index
640                                                            640
          Sources: Westpac Economics, Bloomberg, ABS
540                                                            540

440           metals, rurals & oil           bulks             440

340                                                            340

240                                                            240

140                                                            140

 40                                                            40
  Dec-83 Nov-87 Nov-91 Nov-95 Nov-99 Nov-03 Nov-07 Nov-11


                                                                    9
AUD susceptible to event risk

       USD                                                              USD
1.05                                                                          1.05
        Source: Bloomberg
                               Greece
                                crisis
1.00                                                                          1.00

0.95                                                                          0.95


0.90                                                                          0.90

                                                              Ireland
0.85                                                           crisis         0.85


0.80                                                                          0.80
   Jan-10      Mar-10       May-10       Jul-10   Sep-10   Nov-10


                                                                                10
CPI: selected discretionary items*

     6m % ann'sd                                                                                  %yr
4                                                                                                         4
                                                                        Sources: ABS, Westpac Economics
                          6mth% annualised
3                         %yr
                                                                                                          3

2                                                                                                         2

1                                                                                                         1

0                                                                                                         0
     * Ice cream/other dairy; cakes/biscuits; snacks/confectionery; meals out/take away;
-1   clothing & footwear; house purchase; house repairs/maintenance; furniture/furnishings;               -1
     h/hld appliances, utensils, tools; hairdressing/personal care services; motor vehicles;
     MV parts/accessories; AV & computing; sports & rec. equipt; toys/games/hobbies;
-2   other rec. activities; domestic holidays                                                             -2

-3                                                                                                        -3
 Dec-02                Dec-04                  Dec-06                   Dec-08                 Dec-10


                                                                                                               11
CPI inflation: underlying still moderating

    %yr                                                                     %qtr
9                                                                                   4.5
          avg RBA core CPI* %qtr (rhs)           * average of s.a. trimmed mean
8                                                & weighted median CPI ex GST       4.0
          headline CPI %yr (lhs)                 effect in 2000/01
7         avg RBA core CPI* %yr (lhs)                                               3.5
6                                                                                   3.0
5                                                                                   2.5
4                                                                                   2.0
3                                                                                   1.5
2                                                                                   1.0
1                                                                                   0.5
0                                                                                   0.0
                                         Sources: ABS, RBA, Westpac Economics
-1                                                                                  -0.5
 Sep-94         Sep-98             Sep-02             Sep-06               Sep-10


                                                                                       12
Mortgage rate expectations by state

      net%                                           net%
100                                                             100
                Feb-10
                                       % reporting expected
95              Jun-10                 rise minus % reporting   95
                Aug-10                 expected fall

90              Feb-11                                          90

85                                                              85

80                                                              80

75                                                              75

70                                                              70
        Aus    NSW       VIC   QLD     SA          WA


                                                                     13
Pace of employment growth to slow in 2011H1

    %yr                                                          `000
                                                                        300
4    Sources: ABS, Westpac Economics       6mth change (rhs)
                                           % yr (lhs)                   250
3                                                                       200

2                                                                       150

                                                                        100
1
                                                                        50
0
                                                                        0

-1                                                                      -50
  Jun-03         Jun-05           Jun-07   Jun-09       Jun-11


                                                                             14
Current account balance

     % GDP                              Rolling annual             % GDP
3    Sources: ABS, Westpac Economics
                                                                             3


0                                                                            0


-3                                                                           -3


-6                                                                           -6
            Trade balance              Income position              f/c to
            Current account                                       end-2012
-9                                                                           -9
 Sep-85        Sep-90          Sep-95      Sep-00        Sep-05   Sep-10


                                                                                  15
Net public debt: G7 chalk, Australian cheese

      %GDP                                                       %GDP
100                                                                          100
                               Sources: Westpac, IMF, Australian Treasury.
 90                                                                          90
 80                                                  1990         2000       80
 70                                                                          70
 60                                                  2009         2015       60
 50                                                                          50
 40                                                                          40
 30                                                                          30
 20                                                                          20
 10                                                                          10
 0                                                                           0
        US      UK   Germany   France        Canada Australia


                                                                                  16
The Australian dollar: actual versus fitted

       USD                                                     USD
1.10                                                                  1.10
                  Fair value band
1.00              AUD/USD actual                                      1.00
                  AUD/USD forecast
0.90                                                                  0.90

0.80                                                                  0.80

0.70                                                                  0.70

0.60                                                                  0.60

0.50                                                                  0.50
         Sources: RBA, Westpac Economics
0.40                                                                  0.40
   Jan-91        Jan-95          Jan-99    Jan-03   Jan-07   Jan-11


                                                                        17
Qld: lagging – for now

     % ann          Domestic demand growth, by state
5
              4.3
                                            Dec-09 yr     Dec-10 yr
4
                                    3.2                                3.4
                                                             3.1
3                         2.7
                                       2.9       2.82.9   2.7
                2.2    2.1
2       1.5

1

0

-1
                        Sources: ABS, Westpac Economics
     -1.4                                                          -1.3
-2
       Qld    NSW        Aus          SA           Vic     WA         Tas


                                                                             18
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
Dwelling completions – Qld’s capacity to rebuild
      '000                                                     „000
60                                                                     60
                                                                f/c
        Sources: ABS, Westpac
                                                              +5.5k
50                                                            flood    50
                                                             rebuild
40                                     decade avg                      40

30                                                                     30

20                                                                     20

10                                                                     10

 0                                                                     0
     1987        1991           1995   1999    2003   2007     2011


                                                                            20
Qld: 5% growth in 2011/12

     % ann         2010/11: 1.25% (3.0%); 2011/12: 5.0% (4.25%)             % ann
10                                                                                  10
            GSP         GSP, ex floods              State demand        Qld Gov‟t
                                                                         fcasts
8                                                                                   8

6                                                                                   6

4                                                                                   4

2                                                                                   2

0                                                                                   0
       Sources: ABS, Qld Gov't, Westpac Economics
-2                                                                                  -2
 1991/92       1995/96          1999/00             2003/04   2007/08     2011/12

                                                                                         21
CAPEX plans by industry

      % chg, yr avg                                                 % chg, yr avg
80    Sources: ABS, Westpac Economics
                                                                                     80

                      mining        History in real terms,
60                                                                                   60
                      manufacturing Expectations in nominal
                      services
40                                                                                   40
                      total

20                                                                                   20


 0                                                                                   0
                                                              5th est.    1st est.
                                         financial years
-20                                                                                  -20
         2007           2008            2009         2010     2011f      2012f


                                                                                          22
Mining investment boom ... Coming to Qld
     Business investment : share of GSP
     % of GSP                                                    % of GSP
35                                                                          35
          Sources: ABS, Westpac Economics

30                                                                          30
                                                     SA   Qld   WA
25                                                                          25
           NSW          Vic       Tas
20                                                                          20

15                                                                          15

10                                                                          10

5                                                                           5

0                                                                           0
Dec-89     Dec-97          Dec-05           Dec-89    Dec-97    Dec-05

                                                                                 23
Firms: hiring ... under investing

     % ann                                                                        % ann
6    Sources: ABS; Westpac Economics   * smoothed
                                                                                            30
                                                                 Jobs (lhs)
                                                                 Equipment * (rhs)
                                                                                            25
4                                                                                           20
                                                                                            15
2                                                                                           10
                                                                                            5
0                                                                                           0
                                                        Consumer recession
                                                                                            -5
-2                                       Asian crisis   in NSW & Vic                        -10
                 AUD “collapse”                                              Deleveraging   -15
-4                                                                                          -20
Dec-80 Dec-85 Dec-90 Dec-95 Dec-00 Dec-05 Dec-10

                                                                                              24
Household savings ratio-cyclical high

     % income                                            % income
25                                                                       25

20                                   post 2006 avg doubled               20
                                     equates to ~$122bn

15                                                                       15

10                                                                       10

5                                                                        5

0                                                                        0
                              Sources: ABS, Factset, Westpac Economics
-5                                                                       -5
Sep-59     Sep-69   Sep-79   Sep-89          Sep-99            Sep-09


                                                                              25
Funding costs / deposit rates bid up

      bps                                                               bps
 250    Sources: RBA, Westpac Economics
                                                                                250
 200                                                                            200
 150                   spread: 1yr term deposit vs 90 day bank bills            150
 100                                                                            100
  50                                                                            50
   0                                                                            0
 -50                                                                            -50
-100                                                                            -100
-150                                                                            -150
-200                                                                            -200
-250                                                                            -250
   Oct-90             Oct-95            Oct-00         Oct-05          Oct-10


                                                                                  26
Essential: rising costs an added drag

      %    water (1%)        electricity (2%)         fuel (5%)         %
25                                                                           25
           nominal spend
20         real                                                              20
15         prices                                                            15
10                                                                           10
 5                                                                           5
 0                                                                           0
 -5                                                                          -5
       *ann avg %ch
       figures in brackets
-10    show %total spend
                                                                             -10
                                                     Sources: ABS, Westpac
-15                                                                          -15
  Mar-97          Mar-07     Mar-02         Mar-97           Mar-07


                                                                                  27
Australia’s emissions profile
           National Greenhouse Gas Inventory 2006; Mt CO2-e
300                                                                                300
                                            Source: Department of Climate Change

250                                                                                250

200                                                                                200

150                                                                                150

100                                                                                100

50                                                                                 50

 0                                                                                 0
       Stationary   Transport    Fugitive       Waste &          Agriculture
        energy                  emissions      industrial
                                              processess
                                                                                        28
Consumer sentiment and job security

      index                                                                  index
130                                                                                  80

120                                                                                  100

110                                                                                  120

100                                                                                  140

90                                                                                   160

80       consumer sentiment index (lhs)                                              180
                                             Sources: Westpac-Melbourne Institute
         unemployment expectations (rhs)
70                                                                                   200
 Jan-05       Jan-06   Jan-07   Jan-08     Jan-09      Jan-10         Jan-11


                                                                                          29
Consumer sentiment: family finances

      index                                                                   index
130                                                                                   130

120                                                                                   120

110                                                                                   110

100                                                                                   100

90                                                                                    90

80      consumer sentiment index                                                      80
        consumer sentiment - family finances Sources: Westpac-Melbourne Institute
70                                                                                    70
 Jan-05       Jan-06    Jan-07      Jan-08      Jan-09      Jan-10      Jan-11


                                                                                           30
Household financial ratios

      %    debt to income (lhs)      debt to assets (rhs)         %
180                                                                    35
          total
160       housing                                                      30
140       own-occ housing
                                                                       25
120
100                                                                    20
 80                                                                    15
 60
                                                                       10
 40
 20                                      *all figures are to 2010Q3    5
                                               Sources: RBA, Westpac
 0                                                                     0
 Mar-77 Mar-87 Mar-97 Mar-07 Mar-77 Mar-87 Mar-97 Mar-07


                                                                            31
House price growth: all dwellings

      %                                                     %
70                                                              70
60         Bris            Melb   Adel   Syd   Perth            60
50        *six-monthly growth                                   50
          rates, annualised
40                                                              40
30                                                              30
20                                                              20
10                                                              10
 0                                                              0
-10   Sources: RP Data-Rismark,                                 -10
      Residex, Westpac
-20                                                             -20
  Oct-03 Oct-05 Oct-07 Oct-09 Oct-03 Oct-05 Oct-07 Oct-09


                                                                     32
House price growth stalls

      % ann                                                     % ann
45                                                                      45
                Brisbane
35              capital cities avg.
                                                                        35

25       *six-monthly growth rates, annualised                          25

15                                                                      15

 5                                                                      5

 -5                                                                     -5
      Sources: ABS; Westpac Economics
-15                                                                     -15
  Mar-90        Mar-94           Mar-98      Mar-02   Mar-06   Mar-10


                                                                             33
Price-income ratios: various measures

     times                                                                times
10                                                                                 10
                house price to state median income                     June 2008
 9              house price to capital city median income                          9
 8              all dwelling price to capital city median income                   8
                unit price to capital city median income
 7           units  Source: APM, RP Data-Residex, ABS, Westpac                     7
             %total
 6           stock:                                                                6
                                                                             22%
             38%              28%                                24%
 5                                              21%                                5
 4                                                                                 4
 3                                                                                 3
 2                                                                                 2
 1                                                                                 1
 0                                                                                 0
       Sydney      Melbourne          Brisbane          Adelaide       Perth


                                                                                        34
Housing affordability vs long run trend
    %                                                                      %
70                                                                              70
65        Sydney                                                                65
60        Melbourne                                                             60
55        Brisbane                                                              55
          Perth
50                                                                              50
45                                                                              45
40                                                                              40
                               deteriorate
35                                                                              35
30                                                                              30
25                              improve      Sources: REIA, ABS, RBA, Westpac   25
20                                                                              20
 Dec-00    Dec-02     Dec-04      Dec-06      Dec-08           Dec-10


                                                                                     35
‘Time to buy a dwelling’ by state

      index                                                       index
180                                                                       180
       *smoothed                 NSW            Vic    Qld   WA
160                                                                       160

140                                                                       140

120                                                                       120

100                                                                       100

 80                                                                       80

 60                                                                       60
      Source: Melbourne Institute, Westpac Economics
 40                                                                       40
  Mar-08 Mar-09 Mar-10 Mar-11 Mar-08 Mar-09 Mar-10 Mar-11


                                                                               36
Population vs dwelling stock

      thousands                                                            thousands
500                                                                                    500
          population
450                                                 Source: ABS, Westpac               450
          dwelling completions
400                                                                                    400
          dwelling stock*
350    annual average change
                                                                                       350
300    * net of demolitions – implied by Census                                        300
       data to 2006; Westpac estimates thereafter
250                                                                                    250
200                                                                                    200
150                                                                                    150
100                                                                                    100
50                                                                                     50
 0                                                                                     0
       1950s     1960s       1970s       1980s        1990s        2000s      last 3
                                                                              years

                                                                                            37
Population vs dwelling stock: Qld

      thousands                                                           thousands
140                                                                                   140
         population                                Source: ABS, Westpac
120      dwelling completions                                                         120
         dwelling stock*
100                                                                                   100
       annual average change
       * net of demolitions – implied by Census data
80     to 2006; Westpac estimates thereafter                                          80

60                                                                                    60

40                                                                                    40

20                                                                                    20

 0                                                                                    0
       1950s     1960s       1970s       1980s         1990s     2000s      last 3
                                                                            years

                                                                                           38
Population growth: sharp slowdown

      % ann                                                         % ann
3.5                                                                         3.5

3.0                                      Qld (lhs)   Aust (rhs)             3.0

2.5                                                                         2.5

2.0                                                                         2.0

1.5                                                                         1.5

1.0                                                                         1.0
       Sources: ABS, Westpac Economics
0.5                                                                         0.5
  Jun-82                Jun-90              Jun-98         Jun-06


                                                                              39
Population growth in perspective

      ann%                                                     ann%
3.5                                                                      3.5
                          population
3.0                       contribution from net migration                3.0
2.5                       contribution from natural increase             2.5
2.0                                                                      2.0
1.5                                                                      1.5
1.0                                                                      1.0
0.5                                                                      0.5
0.0                                                                      0.0
                                       Sources: ABS, Westpac Economics
-0.5                                                                     -0.5
    1926 1936 1946 1956 1966 1976 1986 1996 2006


                                                                            40
Migrant inflows vs student visas

      thousands                                                  thousands
600                                                                          600
             student visas granted            migrant arrivals
                                                                    67k
500    *financial years                                                      500
                                                                    drop


400                                                                          400

300                                                                  50k     300
       Source: ABS, Dept of Immigration and                          drop
       Citizenship, Westpac Economics

200                                                                          200

100                                                                          100

 0                                                                           0
      2003 2004 2005 2006 2007 2008 2009 2010


                                                                                 41
Australian bank funding sources

     %                                                        %
50                                                                 50
             Sources: RBA, APRA, ABS, Westpac.



40                                                                 40
          Domestic deposits
          Short term debt
          Long term debt
30                                                                 30


20                                                                 20


10                                                                 10
 Jun-02       Jun-04               Jun-06        Jun-08   Jun-10


                                                                        42
Major Banks’ Bond Issuance

      $bn                                  AUD equivalent                     $bn
60                                                                                  60
            Onshore*                Offshore*      Maturities     Net issuance
                                                                      Source: RBA
40                                                                                  40

20                                                                                  20

 0                                                                                  0

-20                                                                                 -20
       * Latest quarter issuance to date

-40                                                                                 -40
   Mar-07        Mar-08           Mar-09        Mar-10   Mar-11     Mar-12


                                                                                         43
Westpac business lending by sector



                    6.1 4.6             Property
                9
                                        Agriculture
                                        Accom, Restaurant
          7.2
                              27.9      Manufacturing
         6.2                            Retail
                                        Wholesale trade
          7.6                           Transport
                                        Other

                     31.4            Sources: Westpac.




                                                            44
Total dwelling approvals – Victoria rules!

      index                                                 index
200                                                                 200
           Vic (36%)              WA (13%)
180                                                                 180
           Qld (17%)              NSW (19%)
160    smoothed, Sep 2005 = 100                                     160
       figures in brackets show %total
140                                                                 140
120                                                                 120
100                                                                 100
80                                                                  80
60     Sources: ABS, Westpac
                                                                    60
40                                                                  40
 Dec-05        Dec-06          Dec-07    Dec-08   Dec-09   Dec-10


                                                                         45
Unit approvals- Victoria overheated?

      index                                                  index
500                                                                   500
450         Vic (36%)              WA (5%)                            450
400         Qld (13%)              NSW (20%)                          400
        smoothed, Jan 2006 = 100
350     figures in brackets show %total
                                                                      350
300                                                                   300
250                                                                   250
200                                                                   200
150                                                                   150
100                                                                   100
 50    Sources: ABS, Westpac
                                                                      50
  0                                                                   0
  Jan-06          Jan-07         Jan-08    Jan-09   Jan-10   Jan-11


                                                                        46
QLD mortgage arrears well above national

      %                                                     %
2.5                                                             2.5
       Source: Westpac Economics


2.0                                                             2.0

1.5                                                             1.5


1.0                                                             1.0

0.5         Average REDS                                        0.5
            SPIN
0.0                                                             0.0
  Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10


                                                                  47
Foreign bank claims on Australia

      $USbn                                                  $USbn
125                                                                  500
          Japanese (lhs)
100       European (rhs)                                             400

75                                                                   300


50                                                                   200

25                                                                   100
                                Sources: BIS, Westpac.

 0                                                                   0
 Mar-05       Mar-06   Mar-07   Mar-08          Mar-09   Mar-10


                                                                         48
Mortgage assets: structural shifts

      index
400
          Banks
350
          Securitisation vehicles
300

250

200

150

100
                         Sources: APRA, ABS, Westpac.

50
 Mar-02        Mar-04           Mar-06             Mar-08   Mar-10


                                                                     49
Lending finance- steady recovery

     $bn                                                                      $bn
                                                                                    90
20         construction only (lhs)
                                                                                    80
           investor housing - individuals (rhs)                                     70
15                                                                                  60
      *smoothed, annualised
                                                                                    50
10                                                                                  40
                                                                                    30
 5                                                                                  20
                                                                                    10
                                                  Sources: ABS, Westpac Economics
0                                                                                   0
Jan-85         Jan-90       Jan-95       Jan-00     Jan-05          Jan-10


                                                                                         50
Non res showing no recovery

      AUDbn/mth                                                 AUDbn/mth
3.0                                                                               3.0
              units (surpassed prev peak, now 11% lower)
2.5           non res (still 41% below pre-crisis peak)*                          2.5
           Private dwelling approvals,
2.0        trend, nominal
                                                                                  2.0
           * excluding education
1.5                                                                               1.5

1.0                                                                               1.0

0.5                                                                               0.5
                                                Sources: ABS, Westpac Economics

0.0                                                                               0.0
  Apr-87     Apr-91      Apr-95     Apr-99   Apr-03        Apr-07        Apr-11


                                                                                    51
Brisbane office market – also a constraint
      ... as supply continues
       ‟000 sqr meters                                                                  %
250                                                                                         20
                                                                    Westpac Property
             Net absorption              Net supply                 forecasts to 2012
200          Vacancy rate                                                                   16
                                             Vacancy rate
150                                          11.3% 2009                                     12
                                             13.0% 2011

100                                                                                         8

50                                                                                          4

 0                                                                                          0
                            Sources: PCA, Westpac Property
-50                                                                                         -4
      1990     1994          1998           2002             2006        2010

                                                                                                 52
Key points Disclaimer

• 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
Key points Disclaimer

• 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
Key points Disclaimer

• 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
Disclaimer Disclaimer

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 economics@westpac.com.au 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.
Reiq Business Luncheon Slide Presentation

Más contenido relacionado

La actualidad más candente

2012 Investment Review (Us)
2012 Investment Review (Us)2012 Investment Review (Us)
2012 Investment Review (Us)andrewyoungkofc
 
Health Care Reform in Indiana 10/11/2011 Symposium
Health Care Reform in Indiana 10/11/2011 SymposiumHealth Care Reform in Indiana 10/11/2011 Symposium
Health Care Reform in Indiana 10/11/2011 SymposiumRobert Hutt
 
Housing And Labor Market Trends:Nevada
Housing And Labor Market Trends:NevadaHousing And Labor Market Trends:Nevada
Housing And Labor Market Trends:NevadaTodd A. Yankov
 
atmos enerrgy lehman090208
atmos enerrgy lehman090208atmos enerrgy lehman090208
atmos enerrgy lehman090208finance35
 
loews 2 CNA Lilienthal Mense
loews 2 CNA Lilienthal Mense loews 2 CNA Lilienthal Mense
loews 2 CNA Lilienthal Mense finance14
 
Morse Econ Tourism Transylvania Brevard 10 15 09
Morse Econ Tourism Transylvania Brevard 10 15 09Morse Econ Tourism Transylvania Brevard 10 15 09
Morse Econ Tourism Transylvania Brevard 10 15 09Steve Morse, Ph.D.
 
game stop 2007AnnualMeeting_GME
game stop 2007AnnualMeeting_GMEgame stop 2007AnnualMeeting_GME
game stop 2007AnnualMeeting_GMEfinance32
 
southwest airline ar03
southwest airline ar03southwest airline ar03
southwest airline ar03finance40
 
Todd Owens Economic Update
Todd Owens Economic UpdateTodd Owens Economic Update
Todd Owens Economic UpdateFCBR
 
Raytheon Reports 2006 Second Quarter Results
Raytheon Reports 2006 Second Quarter ResultsRaytheon Reports 2006 Second Quarter Results
Raytheon Reports 2006 Second Quarter Resultsfinance12
 
Metro area Market Data
Metro area Market DataMetro area Market Data
Metro area Market DataKent Meister
 
walgreen Walgreen Co. First Quarter 2008 Earnings Conference
walgreen Walgreen Co. First Quarter 2008 Earnings Conference walgreen Walgreen Co. First Quarter 2008 Earnings Conference
walgreen Walgreen Co. First Quarter 2008 Earnings Conference finance4
 
E-Updates_Apr12—Indian & Global Economic Indicators
E-Updates_Apr12—Indian & Global Economic IndicatorsE-Updates_Apr12—Indian & Global Economic Indicators
E-Updates_Apr12—Indian & Global Economic IndicatorsEcofin Surge
 

La actualidad más candente (17)

2012 Investment Review (Us)
2012 Investment Review (Us)2012 Investment Review (Us)
2012 Investment Review (Us)
 
6 realtor report
6 realtor report6 realtor report
6 realtor report
 
Health Care Reform in Indiana 10/11/2011 Symposium
Health Care Reform in Indiana 10/11/2011 SymposiumHealth Care Reform in Indiana 10/11/2011 Symposium
Health Care Reform in Indiana 10/11/2011 Symposium
 
Housing And Labor Market Trends:Nevada
Housing And Labor Market Trends:NevadaHousing And Labor Market Trends:Nevada
Housing And Labor Market Trends:Nevada
 
12 realtor report
12 realtor report12 realtor report
12 realtor report
 
atmos enerrgy lehman090208
atmos enerrgy lehman090208atmos enerrgy lehman090208
atmos enerrgy lehman090208
 
loews 2 CNA Lilienthal Mense
loews 2 CNA Lilienthal Mense loews 2 CNA Lilienthal Mense
loews 2 CNA Lilienthal Mense
 
KBHomeAR02
KBHomeAR02KBHomeAR02
KBHomeAR02
 
8 9 Cyn Lk
8 9 Cyn Lk8 9 Cyn Lk
8 9 Cyn Lk
 
Morse Econ Tourism Transylvania Brevard 10 15 09
Morse Econ Tourism Transylvania Brevard 10 15 09Morse Econ Tourism Transylvania Brevard 10 15 09
Morse Econ Tourism Transylvania Brevard 10 15 09
 
game stop 2007AnnualMeeting_GME
game stop 2007AnnualMeeting_GMEgame stop 2007AnnualMeeting_GME
game stop 2007AnnualMeeting_GME
 
southwest airline ar03
southwest airline ar03southwest airline ar03
southwest airline ar03
 
Todd Owens Economic Update
Todd Owens Economic UpdateTodd Owens Economic Update
Todd Owens Economic Update
 
Raytheon Reports 2006 Second Quarter Results
Raytheon Reports 2006 Second Quarter ResultsRaytheon Reports 2006 Second Quarter Results
Raytheon Reports 2006 Second Quarter Results
 
Metro area Market Data
Metro area Market DataMetro area Market Data
Metro area Market Data
 
walgreen Walgreen Co. First Quarter 2008 Earnings Conference
walgreen Walgreen Co. First Quarter 2008 Earnings Conference walgreen Walgreen Co. First Quarter 2008 Earnings Conference
walgreen Walgreen Co. First Quarter 2008 Earnings Conference
 
E-Updates_Apr12—Indian & Global Economic Indicators
E-Updates_Apr12—Indian & Global Economic IndicatorsE-Updates_Apr12—Indian & Global Economic Indicators
E-Updates_Apr12—Indian & Global Economic Indicators
 

Destacado (8)

Q Mssue 6 Milland
Q  Mssue 6 MillandQ  Mssue 6 Milland
Q Mssue 6 Milland
 
New Sustainability Dec Form Referenceguide
New Sustainability Dec Form ReferenceguideNew Sustainability Dec Form Referenceguide
New Sustainability Dec Form Referenceguide
 
The Change Book
The Change BookThe Change Book
The Change Book
 
Month In Review February 2012
Month In Review February 2012Month In Review February 2012
Month In Review February 2012
 
R E I Q
R  E  I  QR  E  I  Q
R E I Q
 
China
ChinaChina
China
 
R 7
R 7R 7
R 7
 
Month in-review-february-2013
Month in-review-february-2013Month in-review-february-2013
Month in-review-february-2013
 

Similar a Reiq Business Luncheon Slide Presentation

Wheres the-money-in-local-media
Wheres the-money-in-local-mediaWheres the-money-in-local-media
Wheres the-money-in-local-mediaMediative
 
Economic Outlook and International Markets (Miami, November 2012)
Economic Outlook and International Markets (Miami, November 2012)Economic Outlook and International Markets (Miami, November 2012)
Economic Outlook and International Markets (Miami, November 2012)Nar Res
 
Economic and Real Estate Market Update from National Association of REALTORS
Economic and Real Estate Market Update from National Association of REALTORSEconomic and Real Estate Market Update from National Association of REALTORS
Economic and Real Estate Market Update from National Association of REALTORSBrian Block
 
Annual Economic Update By Bny Mellon 5 3 12
Annual Economic Update By Bny Mellon 5 3 12Annual Economic Update By Bny Mellon 5 3 12
Annual Economic Update By Bny Mellon 5 3 12KatherineMorris
 
centex UBS /11 /11/08
centex  UBS /11 /11/08centex  UBS /11 /11/08
centex UBS /11 /11/08finance18
 
Apresentacao teleconferencia eng_4_t09
Apresentacao teleconferencia eng_4_t09Apresentacao teleconferencia eng_4_t09
Apresentacao teleconferencia eng_4_t09risantander
 
SEB Executive Summary January September 2008
SEB Executive Summary January September 2008SEB Executive Summary January September 2008
SEB Executive Summary January September 2008SEBgroup
 
Roberto Coronado, Outlook for the El Paso-Juarez Region, Federal Reserve Bank...
Roberto Coronado, Outlook for the El Paso-Juarez Region, Federal Reserve Bank...Roberto Coronado, Outlook for the El Paso-Juarez Region, Federal Reserve Bank...
Roberto Coronado, Outlook for the El Paso-Juarez Region, Federal Reserve Bank...The Paso del Norte Group
 
Eupdts March11-Indian & Global Economic Indicators
Eupdts March11-Indian & Global Economic IndicatorsEupdts March11-Indian & Global Economic Indicators
Eupdts March11-Indian & Global Economic IndicatorsEcofin Surge
 
Sri Lanka stock market weeekly foreign holding update 6 jan 2012
Sri Lanka stock market weeekly foreign holding update   6 jan 2012Sri Lanka stock market weeekly foreign holding update   6 jan 2012
Sri Lanka stock market weeekly foreign holding update 6 jan 2012Ishara Gamage
 
4Q 06Earnings Slides
4Q 06Earnings Slides4Q 06Earnings Slides
4Q 06Earnings Slidesfinance22
 

Similar a Reiq Business Luncheon Slide Presentation (20)

Wheres the-money-in-local-media
Wheres the-money-in-local-mediaWheres the-money-in-local-media
Wheres the-money-in-local-media
 
Economic Outlook and International Markets (Miami, November 2012)
Economic Outlook and International Markets (Miami, November 2012)Economic Outlook and International Markets (Miami, November 2012)
Economic Outlook and International Markets (Miami, November 2012)
 
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013Chris Caton's Economic Preview for AIM NSW & ACT, 2013
Chris Caton's Economic Preview for AIM NSW & ACT, 2013
 
Economic and Real Estate Market Update from National Association of REALTORS
Economic and Real Estate Market Update from National Association of REALTORSEconomic and Real Estate Market Update from National Association of REALTORS
Economic and Real Estate Market Update from National Association of REALTORS
 
Market Outlook with Lawrence Yun
Market Outlook with Lawrence YunMarket Outlook with Lawrence Yun
Market Outlook with Lawrence Yun
 
Feb 2013 market seminar
Feb 2013 market seminarFeb 2013 market seminar
Feb 2013 market seminar
 
Annual Economic Update By Bny Mellon 5 3 12
Annual Economic Update By Bny Mellon 5 3 12Annual Economic Update By Bny Mellon 5 3 12
Annual Economic Update By Bny Mellon 5 3 12
 
centex UBS /11 /11/08
centex  UBS /11 /11/08centex  UBS /11 /11/08
centex UBS /11 /11/08
 
Apresen
ApresenApresen
Apresen
 
Apresentacao teleconferencia eng_4_t09
Apresentacao teleconferencia eng_4_t09Apresentacao teleconferencia eng_4_t09
Apresentacao teleconferencia eng_4_t09
 
April 2009 Final
April 2009 FinalApril 2009 Final
April 2009 Final
 
SEB Executive Summary January September 2008
SEB Executive Summary January September 2008SEB Executive Summary January September 2008
SEB Executive Summary January September 2008
 
Roberto Coronado, Outlook for the El Paso-Juarez Region, Federal Reserve Bank...
Roberto Coronado, Outlook for the El Paso-Juarez Region, Federal Reserve Bank...Roberto Coronado, Outlook for the El Paso-Juarez Region, Federal Reserve Bank...
Roberto Coronado, Outlook for the El Paso-Juarez Region, Federal Reserve Bank...
 
Federal
Federal Federal
Federal
 
Eupdts mar11
Eupdts mar11Eupdts mar11
Eupdts mar11
 
Eupdts March11-Indian & Global Economic Indicators
Eupdts March11-Indian & Global Economic IndicatorsEupdts March11-Indian & Global Economic Indicators
Eupdts March11-Indian & Global Economic Indicators
 
Eupdts Mar11
Eupdts Mar11Eupdts Mar11
Eupdts Mar11
 
E-UpDates_Mar11
E-UpDates_Mar11E-UpDates_Mar11
E-UpDates_Mar11
 
Sri Lanka stock market weeekly foreign holding update 6 jan 2012
Sri Lanka stock market weeekly foreign holding update   6 jan 2012Sri Lanka stock market weeekly foreign holding update   6 jan 2012
Sri Lanka stock market weeekly foreign holding update 6 jan 2012
 
4Q 06Earnings Slides
4Q 06Earnings Slides4Q 06Earnings Slides
4Q 06Earnings Slides
 

Más de LJ Gilland Real Estate Pty Ltd

CoreLogic’s national Home Value Index (HVI) rose 0.7% in July marking a fift...
CoreLogic’s national Home Value Index (HVI) rose 0.7% in July  marking a fift...CoreLogic’s national Home Value Index (HVI) rose 0.7% in July  marking a fift...
CoreLogic’s national Home Value Index (HVI) rose 0.7% in July marking a fift...LJ Gilland Real Estate Pty Ltd
 
ASIC REPORT RE TIMESHARE 642 published-6-december-2019
ASIC REPORT RE TIMESHARE 642 published-6-december-2019ASIC REPORT RE TIMESHARE 642 published-6-december-2019
ASIC REPORT RE TIMESHARE 642 published-6-december-2019LJ Gilland Real Estate Pty Ltd
 
FIRB 2019 20 ANNUAL REPORT - Queensland is quickly becoming the a choice dest...
FIRB 2019 20 ANNUAL REPORT - Queensland is quickly becoming the a choice dest...FIRB 2019 20 ANNUAL REPORT - Queensland is quickly becoming the a choice dest...
FIRB 2019 20 ANNUAL REPORT - Queensland is quickly becoming the a choice dest...LJ Gilland Real Estate Pty Ltd
 
12 05 20 national vacancy rate increase in apr 2020_media release
12 05 20 national vacancy rate increase in apr 2020_media release12 05 20 national vacancy rate increase in apr 2020_media release
12 05 20 national vacancy rate increase in apr 2020_media releaseLJ Gilland Real Estate Pty Ltd
 

Más de LJ Gilland Real Estate Pty Ltd (20)

CoreLogic-HVI-Sep-2023-FINAL.pdf
CoreLogic-HVI-Sep-2023-FINAL.pdfCoreLogic-HVI-Sep-2023-FINAL.pdf
CoreLogic-HVI-Sep-2023-FINAL.pdf
 
CoreLogic’s national Home Value Index (HVI) rose 0.7% in July marking a fift...
CoreLogic’s national Home Value Index (HVI) rose 0.7% in July  marking a fift...CoreLogic’s national Home Value Index (HVI) rose 0.7% in July  marking a fift...
CoreLogic’s national Home Value Index (HVI) rose 0.7% in July marking a fift...
 
CoreLogic-HVI-JUN-2023-FINAL.pdf
CoreLogic-HVI-JUN-2023-FINAL.pdfCoreLogic-HVI-JUN-2023-FINAL.pdf
CoreLogic-HVI-JUN-2023-FINAL.pdf
 
CoreLogic-home-value-index-FEB-23-FINAL.pdf
CoreLogic-home-value-index-FEB-23-FINAL.pdfCoreLogic-home-value-index-FEB-23-FINAL.pdf
CoreLogic-home-value-index-FEB-23-FINAL.pdf
 
AU_Women_and_Property_2023_Research
AU_Women_and_Property_2023_ResearchAU_Women_and_Property_2023_Research
AU_Women_and_Property_2023_Research
 
Best of the Best 2022 Property Report
Best of the Best 2022 Property ReportBest of the Best 2022 Property Report
Best of the Best 2022 Property Report
 
Corelogic home value index dec 1 2021 final
Corelogic home value index dec 1 2021 finalCorelogic home value index dec 1 2021 final
Corelogic home value index dec 1 2021 final
 
ASIC REPORT RE TIMESHARE 642 published-6-december-2019
ASIC REPORT RE TIMESHARE 642 published-6-december-2019ASIC REPORT RE TIMESHARE 642 published-6-december-2019
ASIC REPORT RE TIMESHARE 642 published-6-december-2019
 
FIRB 2019 20 ANNUAL REPORT - Queensland is quickly becoming the a choice dest...
FIRB 2019 20 ANNUAL REPORT - Queensland is quickly becoming the a choice dest...FIRB 2019 20 ANNUAL REPORT - Queensland is quickly becoming the a choice dest...
FIRB 2019 20 ANNUAL REPORT - Queensland is quickly becoming the a choice dest...
 
Htw month-in-review-march-2021-residential
Htw month-in-review-march-2021-residentialHtw month-in-review-march-2021-residential
Htw month-in-review-march-2021-residential
 
Core logic home value index jan 2021 final
Core logic home value index jan 2021 finalCore logic home value index jan 2021 final
Core logic home value index jan 2021 final
 
Htw month-in-review-september-2020-residential
Htw month-in-review-september-2020-residentialHtw month-in-review-september-2020-residential
Htw month-in-review-september-2020-residential
 
12 05 20 national vacancy rate increase in apr 2020_media release
12 05 20 national vacancy rate increase in apr 2020_media release12 05 20 national vacancy rate increase in apr 2020_media release
12 05 20 national vacancy rate increase in apr 2020_media release
 
Core logic home value index may 2020 final
Core logic home value index may 2020 finalCore logic home value index may 2020 final
Core logic home value index may 2020 final
 
Covid 19_vs_property_2020
Covid 19_vs_property_2020Covid 19_vs_property_2020
Covid 19_vs_property_2020
 
htw-month-in-review-march-2020-residential
htw-month-in-review-march-2020-residentialhtw-month-in-review-march-2020-residential
htw-month-in-review-march-2020-residential
 
Core logic home value index feb 2020 final 0
Core logic home value index feb 2020 final 0Core logic home value index feb 2020 final 0
Core logic home value index feb 2020 final 0
 
Core logic home value index jan 2020 final
Core logic home value index jan 2020 finalCore logic home value index jan 2020 final
Core logic home value index jan 2020 final
 
htw-month-in-review-november-2019 v2-residential
htw-month-in-review-november-2019 v2-residentialhtw-month-in-review-november-2019 v2-residential
htw-month-in-review-november-2019 v2-residential
 
Core logic home value index Nov 19 final
Core logic home value index Nov 19 finalCore logic home value index Nov 19 final
Core logic home value index Nov 19 final
 

Reiq Business Luncheon Slide Presentation

  • 2. Industry opinions: critical challenges finance/funding interest rates consumer confidence Source: NAB, Westpac Economics market volatility* Dec-10 staffing * including volatility in financial, economic and availabilty of stock market conditions 0 10 20 30 % 2
  • 3. 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
  • 4. To date, HH debt reduction has been limited $trn $trn 15 15 Other* Sources: Federal Reserve, Westpac Economics Households 12 Nonfarm nonfinancial firms 12 Government 9 Rest of World 9 *nonfinancial noncorporate and farm 6 6 3 3 March „08 0 0 1990 1994 1998 2002 2006 2010 4
  • 5. House prices have declined for 5 months Index S&P Case-Shiller index Index 240 240 Source: Factset 20-city index 220 220 10-city index 200 200 180 180 160 160 140 140 Prices have fallen 4.3% in five months 120 to Dec ‟10 and are 31% from peak. 120 100 100 Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Jan 10 5
  • 6. Contributions to real GDP growth ppt cont. 15 2.5 2.0 10 2.6 0.8 0.8 6.1 8.7 0.8 0.8 5.6 1.0 5.0 4.4 4.6 5.6 4.6 4.0 3.3 5 1.4 1.5 1.1 1.2 1.1 1.2 1.1 1.1 0.9 1.0 3.7 4.1 3.4 3.2 3.0 3.0 2.8 2.8 2.9 3.2 0 Net exports -3.7 Gross investment Sources: CEIC, Westpac. Public consumption Contribution to full year growth. Private consumption -5 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 6
  • 7. A pending overhang of property index index 250 250 Sources: CEIC, Westpac. Aug-2006 = 100. Underlying data in sqm. 200 Completions 200 Sales Starts 150 150 100 100 50 50 Aug-06 Aug-07 Aug-08 Aug-09 Aug-10 7
  • 8. China’s monetary & credit policy stance %yr %pa 40 20 Sources: Westpac Economics, CEIC 35 Loan growth (lhs) 30 15 RRR (rhs) 25 20 10 15 10 5 “Tight” “Tight” 5 “Sound”, “Sound”, “Sound”, “Appropriately “Appropriately “Prudent” Easing bias tightening bias tightening bias Tight” Loose” 0 0 Mar-01 Mar-03 Mar-05 Mar-07 Mar-09 Mar-11 8
  • 9. Australian commodity forecasts index index 640 640 Sources: Westpac Economics, Bloomberg, ABS 540 540 440 metals, rurals & oil bulks 440 340 340 240 240 140 140 40 40 Dec-83 Nov-87 Nov-91 Nov-95 Nov-99 Nov-03 Nov-07 Nov-11 9
  • 10. AUD susceptible to event risk USD USD 1.05 1.05 Source: Bloomberg Greece crisis 1.00 1.00 0.95 0.95 0.90 0.90 Ireland 0.85 crisis 0.85 0.80 0.80 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 10
  • 11. CPI: selected discretionary items* 6m % ann'sd %yr 4 4 Sources: ABS, Westpac Economics 6mth% annualised 3 %yr 3 2 2 1 1 0 0 * Ice cream/other dairy; cakes/biscuits; snacks/confectionery; meals out/take away; -1 clothing & footwear; house purchase; house repairs/maintenance; furniture/furnishings; -1 h/hld appliances, utensils, tools; hairdressing/personal care services; motor vehicles; MV parts/accessories; AV & computing; sports & rec. equipt; toys/games/hobbies; -2 other rec. activities; domestic holidays -2 -3 -3 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10 11
  • 12. CPI inflation: underlying still moderating %yr %qtr 9 4.5 avg RBA core CPI* %qtr (rhs) * average of s.a. trimmed mean 8 & weighted median CPI ex GST 4.0 headline CPI %yr (lhs) effect in 2000/01 7 avg RBA core CPI* %yr (lhs) 3.5 6 3.0 5 2.5 4 2.0 3 1.5 2 1.0 1 0.5 0 0.0 Sources: ABS, RBA, Westpac Economics -1 -0.5 Sep-94 Sep-98 Sep-02 Sep-06 Sep-10 12
  • 13. Mortgage rate expectations by state net% net% 100 100 Feb-10 % reporting expected 95 Jun-10 rise minus % reporting 95 Aug-10 expected fall 90 Feb-11 90 85 85 80 80 75 75 70 70 Aus NSW VIC QLD SA WA 13
  • 14. Pace of employment growth to slow in 2011H1 %yr `000 300 4 Sources: ABS, Westpac Economics 6mth change (rhs) % yr (lhs) 250 3 200 2 150 100 1 50 0 0 -1 -50 Jun-03 Jun-05 Jun-07 Jun-09 Jun-11 14
  • 15. Current account balance % GDP Rolling annual % GDP 3 Sources: ABS, Westpac Economics 3 0 0 -3 -3 -6 -6 Trade balance Income position f/c to Current account end-2012 -9 -9 Sep-85 Sep-90 Sep-95 Sep-00 Sep-05 Sep-10 15
  • 16. Net public debt: G7 chalk, Australian cheese %GDP %GDP 100 100 Sources: Westpac, IMF, Australian Treasury. 90 90 80 1990 2000 80 70 70 60 2009 2015 60 50 50 40 40 30 30 20 20 10 10 0 0 US UK Germany France Canada Australia 16
  • 17. The Australian dollar: actual versus fitted USD USD 1.10 1.10 Fair value band 1.00 AUD/USD actual 1.00 AUD/USD forecast 0.90 0.90 0.80 0.80 0.70 0.70 0.60 0.60 0.50 0.50 Sources: RBA, Westpac Economics 0.40 0.40 Jan-91 Jan-95 Jan-99 Jan-03 Jan-07 Jan-11 17
  • 18. Qld: lagging – for now % ann Domestic demand growth, by state 5 4.3 Dec-09 yr Dec-10 yr 4 3.2 3.4 3.1 3 2.7 2.9 2.82.9 2.7 2.2 2.1 2 1.5 1 0 -1 Sources: ABS, Westpac Economics -1.4 -1.3 -2 Qld NSW Aus SA Vic WA Tas 18
  • 19. 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
  • 20. Dwelling completions – Qld’s capacity to rebuild '000 „000 60 60 f/c Sources: ABS, Westpac +5.5k 50 flood 50 rebuild 40 decade avg 40 30 30 20 20 10 10 0 0 1987 1991 1995 1999 2003 2007 2011 20
  • 21. Qld: 5% growth in 2011/12 % ann 2010/11: 1.25% (3.0%); 2011/12: 5.0% (4.25%) % ann 10 10 GSP GSP, ex floods State demand Qld Gov‟t fcasts 8 8 6 6 4 4 2 2 0 0 Sources: ABS, Qld Gov't, Westpac Economics -2 -2 1991/92 1995/96 1999/00 2003/04 2007/08 2011/12 21
  • 22. CAPEX plans by industry % chg, yr avg % chg, yr avg 80 Sources: ABS, Westpac Economics 80 mining History in real terms, 60 60 manufacturing Expectations in nominal services 40 40 total 20 20 0 0 5th est. 1st est. financial years -20 -20 2007 2008 2009 2010 2011f 2012f 22
  • 23. Mining investment boom ... Coming to Qld Business investment : share of GSP % of GSP % of GSP 35 35 Sources: ABS, Westpac Economics 30 30 SA Qld WA 25 25 NSW Vic Tas 20 20 15 15 10 10 5 5 0 0 Dec-89 Dec-97 Dec-05 Dec-89 Dec-97 Dec-05 23
  • 24. Firms: hiring ... under investing % ann % ann 6 Sources: ABS; Westpac Economics * smoothed 30 Jobs (lhs) Equipment * (rhs) 25 4 20 15 2 10 5 0 0 Consumer recession -5 -2 Asian crisis in NSW & Vic -10 AUD “collapse” Deleveraging -15 -4 -20 Dec-80 Dec-85 Dec-90 Dec-95 Dec-00 Dec-05 Dec-10 24
  • 25. Household savings ratio-cyclical high % income % income 25 25 20 post 2006 avg doubled 20 equates to ~$122bn 15 15 10 10 5 5 0 0 Sources: ABS, Factset, Westpac Economics -5 -5 Sep-59 Sep-69 Sep-79 Sep-89 Sep-99 Sep-09 25
  • 26. Funding costs / deposit rates bid up bps bps 250 Sources: RBA, Westpac Economics 250 200 200 150 spread: 1yr term deposit vs 90 day bank bills 150 100 100 50 50 0 0 -50 -50 -100 -100 -150 -150 -200 -200 -250 -250 Oct-90 Oct-95 Oct-00 Oct-05 Oct-10 26
  • 27. Essential: rising costs an added drag % water (1%) electricity (2%) fuel (5%) % 25 25 nominal spend 20 real 20 15 prices 15 10 10 5 5 0 0 -5 -5 *ann avg %ch figures in brackets -10 show %total spend -10 Sources: ABS, Westpac -15 -15 Mar-97 Mar-07 Mar-02 Mar-97 Mar-07 27
  • 28. Australia’s emissions profile National Greenhouse Gas Inventory 2006; Mt CO2-e 300 300 Source: Department of Climate Change 250 250 200 200 150 150 100 100 50 50 0 0 Stationary Transport Fugitive Waste & Agriculture energy emissions industrial processess 28
  • 29. Consumer sentiment and job security index index 130 80 120 100 110 120 100 140 90 160 80 consumer sentiment index (lhs) 180 Sources: Westpac-Melbourne Institute unemployment expectations (rhs) 70 200 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 29
  • 30. Consumer sentiment: family finances index index 130 130 120 120 110 110 100 100 90 90 80 consumer sentiment index 80 consumer sentiment - family finances Sources: Westpac-Melbourne Institute 70 70 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 30
  • 31. Household financial ratios % debt to income (lhs) debt to assets (rhs) % 180 35 total 160 housing 30 140 own-occ housing 25 120 100 20 80 15 60 10 40 20 *all figures are to 2010Q3 5 Sources: RBA, Westpac 0 0 Mar-77 Mar-87 Mar-97 Mar-07 Mar-77 Mar-87 Mar-97 Mar-07 31
  • 32. House price growth: all dwellings % % 70 70 60 Bris Melb Adel Syd Perth 60 50 *six-monthly growth 50 rates, annualised 40 40 30 30 20 20 10 10 0 0 -10 Sources: RP Data-Rismark, -10 Residex, Westpac -20 -20 Oct-03 Oct-05 Oct-07 Oct-09 Oct-03 Oct-05 Oct-07 Oct-09 32
  • 33. House price growth stalls % ann % ann 45 45 Brisbane 35 capital cities avg. 35 25 *six-monthly growth rates, annualised 25 15 15 5 5 -5 -5 Sources: ABS; Westpac Economics -15 -15 Mar-90 Mar-94 Mar-98 Mar-02 Mar-06 Mar-10 33
  • 34. Price-income ratios: various measures times times 10 10 house price to state median income June 2008 9 house price to capital city median income 9 8 all dwelling price to capital city median income 8 unit price to capital city median income 7 units Source: APM, RP Data-Residex, ABS, Westpac 7 %total 6 stock: 6 22% 38% 28% 24% 5 21% 5 4 4 3 3 2 2 1 1 0 0 Sydney Melbourne Brisbane Adelaide Perth 34
  • 35. Housing affordability vs long run trend % % 70 70 65 Sydney 65 60 Melbourne 60 55 Brisbane 55 Perth 50 50 45 45 40 40 deteriorate 35 35 30 30 25 improve Sources: REIA, ABS, RBA, Westpac 25 20 20 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10 35
  • 36. ‘Time to buy a dwelling’ by state index index 180 180 *smoothed NSW Vic Qld WA 160 160 140 140 120 120 100 100 80 80 60 60 Source: Melbourne Institute, Westpac Economics 40 40 Mar-08 Mar-09 Mar-10 Mar-11 Mar-08 Mar-09 Mar-10 Mar-11 36
  • 37. Population vs dwelling stock thousands thousands 500 500 population 450 Source: ABS, Westpac 450 dwelling completions 400 400 dwelling stock* 350 annual average change 350 300 * net of demolitions – implied by Census 300 data to 2006; Westpac estimates thereafter 250 250 200 200 150 150 100 100 50 50 0 0 1950s 1960s 1970s 1980s 1990s 2000s last 3 years 37
  • 38. Population vs dwelling stock: Qld thousands thousands 140 140 population Source: ABS, Westpac 120 dwelling completions 120 dwelling stock* 100 100 annual average change * net of demolitions – implied by Census data 80 to 2006; Westpac estimates thereafter 80 60 60 40 40 20 20 0 0 1950s 1960s 1970s 1980s 1990s 2000s last 3 years 38
  • 39. Population growth: sharp slowdown % ann % ann 3.5 3.5 3.0 Qld (lhs) Aust (rhs) 3.0 2.5 2.5 2.0 2.0 1.5 1.5 1.0 1.0 Sources: ABS, Westpac Economics 0.5 0.5 Jun-82 Jun-90 Jun-98 Jun-06 39
  • 40. Population growth in perspective ann% ann% 3.5 3.5 population 3.0 contribution from net migration 3.0 2.5 contribution from natural increase 2.5 2.0 2.0 1.5 1.5 1.0 1.0 0.5 0.5 0.0 0.0 Sources: ABS, Westpac Economics -0.5 -0.5 1926 1936 1946 1956 1966 1976 1986 1996 2006 40
  • 41. Migrant inflows vs student visas thousands thousands 600 600 student visas granted migrant arrivals 67k 500 *financial years 500 drop 400 400 300 50k 300 Source: ABS, Dept of Immigration and drop Citizenship, Westpac Economics 200 200 100 100 0 0 2003 2004 2005 2006 2007 2008 2009 2010 41
  • 42. Australian bank funding sources % % 50 50 Sources: RBA, APRA, ABS, Westpac. 40 40 Domestic deposits Short term debt Long term debt 30 30 20 20 10 10 Jun-02 Jun-04 Jun-06 Jun-08 Jun-10 42
  • 43. Major Banks’ Bond Issuance $bn AUD equivalent $bn 60 60 Onshore* Offshore* Maturities Net issuance Source: RBA 40 40 20 20 0 0 -20 -20 * Latest quarter issuance to date -40 -40 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 43
  • 44. Westpac business lending by sector 6.1 4.6 Property 9 Agriculture Accom, Restaurant 7.2 27.9 Manufacturing 6.2 Retail Wholesale trade 7.6 Transport Other 31.4 Sources: Westpac. 44
  • 45. Total dwelling approvals – Victoria rules! index index 200 200 Vic (36%) WA (13%) 180 180 Qld (17%) NSW (19%) 160 smoothed, Sep 2005 = 100 160 figures in brackets show %total 140 140 120 120 100 100 80 80 60 Sources: ABS, Westpac 60 40 40 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 45
  • 46. Unit approvals- Victoria overheated? index index 500 500 450 Vic (36%) WA (5%) 450 400 Qld (13%) NSW (20%) 400 smoothed, Jan 2006 = 100 350 figures in brackets show %total 350 300 300 250 250 200 200 150 150 100 100 50 Sources: ABS, Westpac 50 0 0 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 46
  • 47. QLD mortgage arrears well above national % % 2.5 2.5 Source: Westpac Economics 2.0 2.0 1.5 1.5 1.0 1.0 0.5 Average REDS 0.5 SPIN 0.0 0.0 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 47
  • 48. Foreign bank claims on Australia $USbn $USbn 125 500 Japanese (lhs) 100 European (rhs) 400 75 300 50 200 25 100 Sources: BIS, Westpac. 0 0 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 48
  • 49. Mortgage assets: structural shifts index 400 Banks 350 Securitisation vehicles 300 250 200 150 100 Sources: APRA, ABS, Westpac. 50 Mar-02 Mar-04 Mar-06 Mar-08 Mar-10 49
  • 50. Lending finance- steady recovery $bn $bn 90 20 construction only (lhs) 80 investor housing - individuals (rhs) 70 15 60 *smoothed, annualised 50 10 40 30 5 20 10 Sources: ABS, Westpac Economics 0 0 Jan-85 Jan-90 Jan-95 Jan-00 Jan-05 Jan-10 50
  • 51. Non res showing no recovery AUDbn/mth AUDbn/mth 3.0 3.0 units (surpassed prev peak, now 11% lower) 2.5 non res (still 41% below pre-crisis peak)* 2.5 Private dwelling approvals, 2.0 trend, nominal 2.0 * excluding education 1.5 1.5 1.0 1.0 0.5 0.5 Sources: ABS, Westpac Economics 0.0 0.0 Apr-87 Apr-91 Apr-95 Apr-99 Apr-03 Apr-07 Apr-11 51
  • 52. Brisbane office market – also a constraint ... as supply continues ‟000 sqr meters % 250 20 Westpac Property Net absorption Net supply forecasts to 2012 200 Vacancy rate 16 Vacancy rate 150 11.3% 2009 12 13.0% 2011 100 8 50 4 0 0 Sources: PCA, Westpac Property -50 -4 1990 1994 1998 2002 2006 2010 52
  • 53. Key points Disclaimer • 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
  • 54. Key points Disclaimer • 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
  • 55. Key points Disclaimer • 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
  • 56. Disclaimer Disclaimer 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 economics@westpac.com.au 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.