History
Pakenham shares its history with Berwick, with first settlers moving in in 1830 and development as country towns beginning in the 1850s. The region flourished as a farming centre and quickly became known as an ideal environment for growing fruit. By early 1910, more than 3,000 acres were planted with fruit, and delivery of produce to Melbourne was swift with the opening of the railway system. However, the economic depression of the early 1930s ended the good times that had been enjoyed by the orchard industry in Australia.

Nowadays the area is part of a fast growing residential area, under the control of the South-Eastern Growth Area Plan and Ministerial Directions, prepared in 1999.

Location and Environment

The area is home to both a range of big city amenities, schools, shopping centres and golf club, while maintaining the quiet and pace of the area’s agricultural foundation. Over the recent past, Pakenham has emerged as a home of new masterplanned residential communities, and it is not surprising that the area has been recognized as a pivotal link in Melbourne’s south eastern growth corridor.

The Greater South East

The South East region of Melbourne is, in effect, a self-contained city of more than 1 million people. This area contains more people than Adelaide and adds a city the size of Bendigo to its population each year.

Economic activity within Pakenham and the Cardinia Shire acts as a magnet, with one third of workers in the area coming to the area for work each day (based on 2001 Census results). The area is the home of the operations of a number of national and international companies such as Nestle, Smiths Crisps and Delfin. The influx of new residents has brought with it strong demand for trades and labour, with house building and associated industries also playing a large role in the local economy.

Commensurate with this, the 2001 Census estimated the Pakenham unemployment rate at 5.5%. By comparison, at this time the Melbourne Statistical Division was expressing an unemployment rate of 6.6%.

Population Growth
The Pakenham area has emerged over the last five years as one of the hot spots of new development in Victoria and even nationally. From a modest population base five years ago, population growth in Cardinia Shire has gained momentum. Population growth has gathered sufficient pace over the recent past to vault the area into the top ten fastest growing areas in Australia between 2003-04.

A flood of new residents to Pakenham has been the driver of this growth, with the population increasing by an average of nearly 14% per annum over the last two years. 90% of the population growth in the Cardinia Shire is within Pakenham. The population of Pakenham is primarily composed of couples in their 20’s and 30’s and their young and adolescent children. Together, these two groups account for about 60% of the Pakenham population.

At 27% of the population the size of the under 14 years age group overshadows the greater Melbourne average of 20% and points to the area’s position as a preferred base for young families. By other measures, such as the medians for housing costs and household incomes, the area is consistent with the profile of broader Melbourne.

Land and Housing Development

The Pakenham market consist of approximately 8 major housing estates, collectively representing about 7,000 allotments. Uptake in these estates has been swift. As demonstration, since 2002, the Cardinia Shire approved approximately 1,100 new dwellings per annum (as we have seen Pakenham dominates new development in the Shire).

It is suggested that about 4,900 lots remain for development in current estates. This contrasts with the expected long term growth rate of population of some 6% per annum over the next 20 years, with more rapid growth (in the order of 9- 10%) expected through in the more immediate term.

New House Price Growth
Growth in the price of ‘new’ homes in Pakenham has mirrored growth in the population, with the rate of price growth anecdotally increasing. Between the financial years 2000/01 and 2004/05, the market has seen new homes increase by an average of 10% per annum to $245,000.

In the face of enduing demand for new homes in the area, stock on the market currently reflects a still higher average of $320,000 boosted by a significant proportion of homes priced over $350,000 in the Pakenham Lakes development.

Rental Market
Typical new housing stock on the rental market is achieving rents in the order of $235 -$240 per week, with rents of $250 also common. Based on the 2005-05 median value $245,000, new homes in the area would be expected to return in the order of 4.5% - 5.0%(gross return) in rental income alone. New homes in the market are limited (survey shows there are only about 10 homes available in the area), and enjoy a price premium of about 20% over the established rental market median.

The most recent increases in new homes have probably not yet been reflected within the rental market. Given the limited new stock on the market and the market’s willingness to meet the rental premium of new homes, there is every reason to expect such price increases to be reflected in future rents.

Development and Infrastructure Initiatives
Given the area’s demonstrated importance not only within the south-eastern region of Melbourne, but to the city as a whole, the area figures within the 2003- 2030 Regional Economic Strategy for the area. A joint initiative of 11 councils, the Melbourne Development Board, a range of Federal Government Departments and national utility providers to oversee and co-ordinate the ongoing development of this vital area. Closer to home, Pakenham is also benefiting form a range of projects within the local council area such as the establishment of community amenities such as aquatic, community and cultural centres.

Market Prospects
While still an emerging market, Pakenham is maturing quickly, with masterplanned communities quickly becoming established and planning in place to manage further growth in the area. Strong demographic and economic fundamentals should see this growth continue into the medium term.

Population & Demographics
Population (June 2004):
Pakenham – 25,076
Cardinia (S) – 54,500
Melbourne (SD) – 3,600,080

Population Growth (since June 2000):
Pakenham - 7,748 (9.7%pa)
Cardinia (S) - 8,666 (4.4% pa)
Melbourne (SD): 133,233 (0.9% pa)

Forecast Population Growth
Pakenham - 7,748 (9.7%pa)
Cardinia (S) - 8,666 (4.4% pa)
Melbourne (SD): 133,233 (0.9% pa)

Population Base:
Mid 20s to early 40s and early teen and younger children. Market Position:
Growth hub of an emerging economic region in Melbourne’s south east. Dynamic population growth, ongoing development opportunities, strong employment base.

Price Growth
New house average (2000 – 01): $149,500
New house average (2004-05): $245,000
Average price growth per annum
(new house 00/01-04/05): 13%
Current new house asking price: $295,000
Rents and Returns
Current new house asking rent: $230-$250 per week
Current new house return: 4.5% - 5.0% (gross return)

Market Supply
Estimated to be about 4,900 lots of land held in projects with life spans to 2013-2014.
Rates of uptake
About 1,100 new dwellings approved per year between 2002- 2004
Market Future supply
Long term reserves of about 12,000 lots

Growth Management Initiatives:
Melbourne's South East Regional Economic Strategy 2003-2030 to:
- Assess and manage the land requirements of commercial and residential stakeholders
- Establish an investment structure for funding infrastructure