Mildura Property Watch Q2 2012

MILDURA AREA MARKET OVERVIEW

The following Property Watch report is the result of an investigation into the
historic and current market trends of the Mildura Local Government Area.
Positioned in the North West corner of Victoria on the banks of the Murray River,
approximately 540 kilometres from Melbourne, and 393 kilometres from Adelaide,
Mildura is heavily reliant on agricultural production, with an emphasis on citrus
fruits and viticulture.
Transaction volumes for houses in the Mildura region have been trending
downwards since 2006. The average number of transactions for a six month
period for the five years to March 2006 was 512, this has fallen to 424 for the five
years to March 2012. The six months to March 2012 saw only 247 houses
transact, this decrease is in line with other markets throughout Victoria for this
period.

Unit sales between March 2002 and September 2010 ranged from 70 to 100
transactions for a six month period. The six months to March 2012 saw only 32
sales recorded, a 61.9% decrease on the average for the period from 2002 to
2010.

Whilst the downturn in the six months to March 2012 has been broadly seen
across Victoria due to economic uncertainty, the duration and extent of the
downturn in the Mildura market suggests other factors are contributing. The
sustained reduction in agricultural production and the flow on to other segments
of the local economy, would seem to be the most likely cause. PRDnationwide
Mildura principal Richard Wyatt notes that buyers have generally responded to
the tighter financing requirements from the banks, and whilst enquiry levels are at
similar levels, recent months have seen buyers better placed and more willing to
make offers and secure properties.

The Mildura LGA house market has the median price for the March 2012 six
months close at $220,000 exactly the same figure as twelve months before. Mr
Wyatt notes that significant downward pressure has been placed on house prices
by the availability of new homes at relatively low cost. The redevelopment of the
Centro complex in Mildura, coupled with the sale of agricultural land on the
nearby fringe for affordable residential land, has seen an attractive offer,
especially to first home buyers, who can buy a three bedroom, two bathroom
home with garage for under $260,000 with the grant reducing this further. This
type of property has placed pressure on the more traditional brick veneer that is
twenty or thirty years old, selling in a similar price bracket. Mr Wyatt expects that
these properties may attract interest from investors with exceptional rental returns
currently available, and the prospect of good capital growth when the competition
from newer properties abates. Mr Wyatt added that homes in the higher price
brackets are selling strongly, as there is less competition at these levels.

The median price for units closed the March 2012 six months down 10.1% on the
previous year at $142,500. It would appear that unit sales and prices have
suffered from the availability of affordable new homes as well, with buyers opting
to take this option instead of a unit. The longer term issues in the Mildura market
can be seen in the ten year growth rates with houses (4.6%) and units (2.2%)
below the growth rates many other regional areas have experienced.

Vacant Land sales have averaged 336 transactions per annum over the previous
five years. The twelve months to March 2012 saw 279 properties transact, a 17%
decrease on the average. The six months to March 2012 saw only 97 properties
transact, suggesting that the new home owner market has been well serviced by
recent development activity such as mentioned above.

The median price for vacant land closed the six months to March 2012 at
$84,200, marginally up on the close of twelve months earlier to record a 1.4%
growth for the year. Prices for vacant land have seen fluctuations since early
2006, but remain at similar levels, the March 2006 six month median was
$85,000. Given the difficulties seen in the agricultural sector, and the conversion
of some of this land for residential use, there seems to be limited prospects for
price growth in the short term.

The price points tables for both houses and vacant land demonstrate the limited
growth in price seen in the period from 2009. In the case of houses, sales over
$200,000 have steadily increased their total share of sales, but the movement is
very gradual. Vacant land has seen sales under $100,000 increase their total
share of sales since 2009 from 77% to 82%.