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EXPERT OBSERVER
Over the past few weeks three of the four major banks in Australia have announced that they are going to be increasing variable mortgage rates. 
While there has been a lot of adjustments to mortgage rates over recent years, the big difference with the latest announcement is that the higher mortgage rates are going to affect owner occupiers. 
Most of the previous mortgage rate changes announced by the major banks have only affected investors and those with interest only mortgages.
Click here <a href="https://www.propertyobserver.com.au/images/2018/9/7/KUSH1.jpg" target="_blank">to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/9/7/KUSH1.jpg" alt="">
Many of the smaller regional banks have pushed mortgage rates for owner occupiers higher over recent months citing higher short-term funding costs. 
Although until now the major banks had resisted making an adjustment to mortgage rates it seems they too have had their hand forced by higher funding costs.  The above chart highlights the cost of short-term funding to banks (the three-month bank bill swap rate) and it clearly shows that the cost of short-term funding has increased.  It currently sits at 2.26% compared to the official cash rate which remains unchanged at 1.5% since August 2016.
Click here <a href="https://www.propertyobserver.com.au/images/2018/9/7/KUSH2.jpg" target="_blank">to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/9/7/KUSH2.jpg" alt="">
Short-term funding costs have certainly risen recently however, it is also interesting to look at the composition of funding to Australia’s banks. Short-term funding is not an insignificant part of the funding profile (slightly more than 20%), although the share of funding from short-term debt has fallen over recent years as domestic deposits have increased. 
There are other ways to handle higher short-term funding costs rather than lifting mortgage rates but that would likely mean cutting dividends which lenders seem reluctant to want to do or reducing deposit interest rates which would likely see a further reduction in the primary funding source: domestic deposits.
From a housing market perspective the timing of the announcement of higher interest rates is an interesting one. 
After many years of strong value growth, Sydney and Melbourne housing is now well embedded in a downturn.  Tighter credit conditions, higher mortgage rates for investors and interest-only borrowers and reduced affordability have already led to the falls of -5.6% from the peak in Sydney and -3.5% from their peak in Melbourne.  This has occurred so far without higher interest rates for owner occupiers paying off principal and interest however, that is about to change.
The timing of the hikes to mortgage rates is also interesting in that it has been announced right at the beginning of the Spring Selling Season.  Although spring, in my mind and according to the data, is somewhat overhyped as a good time to sell, more stock does typically become available for sale over the period and buying activity typically increases. 
The other usual occurrence at the beginning of spring is that lenders offer enticing mortgage rates to the market to jostle for market share.  By contrast this year, major lenders are announcing higher mortgage rates.
Higher mortgage rates have already driven a slowing of demand for investors over the past year.  Although the magnitude of the mortgage rate increases announced is fairly small (around 15 basis points by each lender) it is likely that the higher mortgage rates will impact on housing market sentiment. Furthermore it may end up further exacerbating the declines which are already occurring in Sydney, Melbourne, Perth and Darwin and the slowing of value growth being experienced elsewhere. 
Overall this move seems likely to lead to a continuation of the currently weak housing market conditions over the coming months and may weaken the market further.  From the lenders perspective, clearly they realise that the housing downturn is becoming entrenched (particularly in Perth and Darwin, but more recently in Sydney and Melbourne) and they are doing what they can to maintain profitability in the face of lower mortgage volumes.
CAMERON KUSHER is a property research analyst for CoreLogic
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Higher mortgage rates likely to prolong the housing market weakness: CoreLogic

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EXPERT OBSERVER
Nationally dwelling values as at October 2018 have fallen by - 3.5% from their peak with much larger falls in Sydney, Melbourne, Perth and Darwin.
The reality is that there has been very little improvement in housing affordability; Sydney and Melbourne in particular are a little cheaper, but remain substantially more expensive than other capital cities.
Although house values in Sydney are now -9.3% lower than their peak, the cost of a house in Sydney is still substantially higher than elsewhere at $960,344. In fact, a house in Sydney is now more than double the median value of an Adelaide and Hobart house.
<a href="https://www.propertyobserver.com.au/images/2018/11/22/corelogic%201.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/11/22/corelogic%201.jpg" alt="">
 
Source: CoreLogic
Looking at house values over time is interesting. 
Sydney has consistently been the most expensive capital city housing market however, although at one point, Perth was slightly more expensive (after Perth values surged more than 40% annually at one point in 2006 on the back the resources boom). Relative to other capital cities the Sydney premium is recorded at: 23% for Melbourne, 76% for Brisbane, 105% for Adelaide, 100% for Perth, 101% for Hobart, 88% for Darwin and 44% for Canberra.
<a href="https://www.propertyobserver.com.au/images/2018/11/22/corelogic%202.jpg" target="_blank">Click here</a> to enlarge;
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/11/22/corelogic%202.jpg" alt="">
Source: CoreLogic
Despite recent value falls in Sydney, the value gap has not been at such wide levels as it is currently for most cities since late 2003/early 2004. The one exception is the value differential for Melbourne, which over recent years has been substantially narrower than previously.
Similarly, the Melbourne value gap compared to other capital cities (except Sydney) is the widest it has ever been. Historically, the value of houses in Melbourne have been quite similar to those in Brisbane and Perth however, this is no longer the case.
For units, the story is a similar one. Sydney’s median unit value at ($740,394) remains more expensive than median house values in all other capital cities except for Sydney and Melbourne. Similarly, the median Melbourne unit value ($555,517) remains higher than median house values in all other capital cities except Sydney, Melbourne and Canberra.
<a href="https://www.propertyobserver.com.au/images/2018/11/22/corelogic%203.jpg" target="_blank">Click here</a> to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/11/22/corelogic%203.jpg" alt="">
Source: CoreLogic
Over time, unit values have saw a consistent trend whereby Sydney has been more expensive than the other capital cities. 
The current premium for Sydney compared to other capital cities sits at: 32% for Melbourne, 90% for Brisbane, 123% for Adelaide, 94% for Perth, 95% for Hobart, 134% for Darwin and 67% for Canberra. 
As was the case for houses, the differential has not been as large as it is currently between Sydney and these other capital cities since 2003/2004. Melbourne was exception where the differential has been reducing over recent years.
With house and unit values falling in Sydney and Melbourne, Mr Kusher expects the premiums to reduce further over the coming months and year(s).
<a href="https://www.propertyobserver.com.au/images/2018/11/22/corelogic%204.jpg" target="_blank">Click here </a>to enlarge:
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/11/22/corelogic%204.jpg" alt="">
Source: CoreLogic
While this may be the case, any significant reduction in housing costs back to historic premiums would take a long period of declines or flat housing market conditions. Furthermore, it seems unlikely, given the economic strength and populations of Sydney and Melbourne that the value premium of housing in these two cities will revert to historical levels. 
CAMERON KUSHER is a property research analyst for CoreLogic
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Very little improvement in housing affordability despite dwelling decline

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EXPERT OBSERVER
The ABS data showed that at the end of the March quarter, household net worth was $10.243 trillion.
While a large figure, household wealth has now fallen for two consecutive quarters and is -0.7% lower year-on-year. The $10.243 trillion in net worth is madeup of $12.701 trillion in assets and $2.458 trillion in liabilities. The recent fall in the value of assets at a time in which liabilities have continued to rise has led to the fall in net worth.
The Reserve Bank (RBA) analyses this data to produce a number of valuable ratios, including: debt, assets and interest payments to household disposable income.
These ratios highlight the impact of high levels of debt at a time in which asset values have fallen but the debt has not fallen at the same pace.
We’ve seen the ratio of household debt to disposable income continue to climb over the quarter, reaching a new historic high of 189.7%. The rise in household debt relative to incomes has certainly slowed; however, it continues to edge higher.
The ratio of housing debt to disposable income is recorded at 140.1% and was unchanged over the quarter. While it was unchanged over the quarter, it remains at an historic high level, highlighting that households remain very sensitive to the cost of mortgage debt.
Turning to the ratio of household assets to disposable income, it was recorded at 927.0% in March 2019. The ratio peaked at 961.7% in December 2017 and has trended lower since. The ratio of housing assets to disposable income peaked at 529.6% in December 2017 and as at March 2019; it was recorded at 483.5%.
The reduction in housing values has coincided with the period in which the ratio of household and housing assets has fallen which is no wonder when you consider housing accounts for around half of the value of household assets. 
It's also important to consider is that while the value of assets are falling there has been no reduction in the ratios of debt to income which highlights that asset depreciation has been greater than debt reduction. As a result, the ratio of household debts to assets is at 20.5%, the highest it has been since December 2014 and the ratio of housing debt to assets is at 29.0%, the highest it has been since June 2013.
Despite the lowest interest rates since the 1960s, the ratio of interest payments to disposable income has trended higher years. As at March 2019 the ratio was recorded at 9.1% and although it has been steady for three quarters, interest payments relative to disposable income has trended higher on an annual basis
Furthermore, the ratio of interest payments to disposable income was last this high in September 2013. It is a similar story for the ratio of housing interest payments to disposable income, which is also trending higher, recorded at 7.6%, which is the highest ratio since June 2013.
With interest rates at generational lows there was perhaps, some expectation that households would use the low rates to pay off some debt however that has largely not occurred. With asset values recently falling the data shows that debt pay off has not been as rapid as the declines leading to a reduction in household wealth.
This data is to March 2019 and by the end of June 2019, there were some tentative signs that the declines in dwelling values were starting to level. While this means that there is likely to be a further decline in household wealth over the June quarter, it also suggests there is unlikely to be a meaningful reduction in household debt levels.
As such, household debt levels are likely to remain amongst the highest in the world. At the same time, the value of household assets remain substantially higher than the value of the debt. The cause for concern will be what happens if economic conditions deteriorate materially, leading to weaker labour market conditions and potentially creating some challenges around servicing such high levels of debt as unemployment rises.
Another medium to long-term consideration is a scenario where interest rates eventually start to rise. Households are generally able to service high levels of household debt while interest rates are at record lows, but eventually (probably not for at least several years) interest rates will rise.
If household debt levels remain high relative to incomes under a higher interest rate environment, the result could be weakness in household spending (as households dedicate more of their income towards servicing their debt) and potentially higher levels of financial stress amongst heavily leveraged households.
CAMERON KUSHER is the head of research for the Australian branch of CoreLogic
Kusher regularly posts on the <a href="https://www.corelogic.com.au/news" target="_blank">CoreLogic website</a>.
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Australian Household wealth falling while debt remains: Cameron Kusher

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The Australian Bureau of Statistics (ABS) released housing finance data for March 2014 earlier this week.
The data showed that the number of owner occupier housing finance commitments fell by -0.9% in March.  In value terms, lending to owner occupiers was -1.2% lower over the month and lending to investors was down -0.8%.
<img class="aligncenter size-full wp-image-3222" src="https://blog.rpdata.com/wp-content/uploads/2014/05/Chart-11.jpg" alt="Chart 1" width="500" height="182">
Looking at the break-down of housing finance commitments by value over-time, you can see that on a 12 month average basis, the greatest proportion of lending over the past year has gone to investors (37.7%) followed by: owner occupier subsequent purchasers (non-first home buyers) (36.7%), refinances by owner occupiers (17.6%) and owner occupier first home buyers (7.9%). 
As the above chart shows, investment lending is at its highest level in a number of years and there has previously only ever been one period where investment lending was greater than lending to subsequent purchasers. 
The proportion of lending to first home buyers is at a record low, accounting for an average of 7.9% of the value of finance commitments over the 12 months to March 2014.
<img class="aligncenter size-full wp-image-3223" src="https://blog.rpdata.com/wp-content/uploads/2014/05/Chart-21.jpg" alt="Chart 2" width="500" height="179">
Turning the focus to the monthly data on the number of owner occupier housing finance commitments, as mentioned these were -0.9% lower with refinance commitments down -1.0% and non-refinance commitments falling -0.9%. 
Despite the monthly fall, as the above chart shows, both refinances and non-refinances are trending higher albeit non-refinances in particular remain well below historic average levels.
<img class="aligncenter size-full wp-image-3224" src="https://blog.rpdata.com/wp-content/uploads/2014/05/Chart-31.jpg" alt="Chart 3" width="500" height="182">
Over the month, owner occupier housing finance commitments to first home buyers increased by 12.2% which was the largest monthly rise since May 2012.  Despite the monthly rise, first home buyer commitments remain slightly lower than a year ago (-0.8%). 
As a proportion of total owner occupier finance commitments, first home buyers accounted for 12.6% of commitments in March, up from 12.5% in February but down from 14.1% in March 2013.
<img class="aligncenter size-full wp-image-3225" src="https://blog.rpdata.com/wp-content/uploads/2014/05/Chart-41.jpg" alt="Chart 4" width="500" height="181">
The total value of investment housing finance commitments fell by -0.8% in March 2014 however, it has increased by 27.9% year-on-year.  As mentioned, the proportion of investment commitments has, on average, been higher than owner occupier subsequent purchases over the past year. 
In March, investment finance commitments accounted for 39.1% of total finance commitments.  The level of investment activity remains at a level which is well above average and of a magnitude not recorded since late in 2003.  Although it is hard to bed down any timely and accurate statistics on overseas buyers it is important to note that if foreign buyers are purchasing with funds sourced from abroad, they are not captured in these figures.
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The last time we saw investment activity at these levels we also witnessed a marked slowdown in value growth nationally.
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With the level of investment remaining stubbornly high, it is no wonder that the Reserve Bank continues to repeat its warning that housing in Australia is not a one-way bet.  Obviously low mortgage rates coupled with strong value growth, particularly in Sydney and Melbourne is attracting the attention of investors. 
The potential challenge will be what happens next with investors once value growth slows and mortgage rates rise. 
The last time we saw investment activity at these levels we also witnessed a marked slowdown in value growth nationally. As an example, in Sydney values began falling shortly thereafter and values took five and a half years to return to their previous peaks.  Investors jumping into the market at this time should definitely bear this in mind.
Overall, the monthly read on housing finance data was weak, however, the trend shows that demand for finance is continuing to escalate. In particular, investors and upgraders are really driving the housing market at the moment.
However, the level of activity by owner occupiers purchasing homes (as opposed to refinancing) remains well below average levels.  Obviously the rise in investment lending is to some extent restricting the level of lending to owner occupiers.
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Level of investment remains stubbornly high in housing finance data

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The Australian Prudential Regulation Authority (APRA) released data earlier on residential property exposures by Australian Authorised Deposit-taking Institutions (ADIs). The data was published up to the end of December 2014. The information provides additional insight into the nature of mortgage lending by Australian banks, building societies and credit unions.
<img class="aligncenter size-full wp-image-4309" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-11.jpg" alt="Chart 1" width="500" height="178">
According to APRA’s data, at the end of 2014, there were $1.278 trillion in residential term loans with $839.8 billion in owner occupied loans (65.7%) and $438.9 billion in investor loans (34.3%). Over the 12 months to December 2014, the value of residential term loans to owner occupiers increased by 7.4% compared to a 12.2% rise in loans to investors. Note that in December, APRA raised concerns about annual growth in investor loan books above 10%. Based on this data, many ADIs would be growing that segment of their book above that benchmark.
<img class="aligncenter size-full wp-image-4310" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-21.jpg" alt="Chart 2" width="500" height="180">
Focusing on the characteristics of these loans shows a growing appetite for loans with an offset facility and interest-only loans. Meanwhile, the prominence of low documentation loans and other non-standard loans is reducing. 
Based on the value of lending, loans with an offset facility increased by 18.4% year-on-year to December 2014, interest-only loans were 15.1% higher, reverse mortgages had increased 1.9% while low documentation loans and other non-standard loans had reduced by -18.6% and -20.2% respectively. 
At the end of 2014, a record high 37.5% of outstanding loans had an offset facility and a record high 36.9% were interest-only. Just 0.2% of loans were reverse mortgages, a record low 2.5% were low documentation and just 0.1% were other non-standard loans.
<img class="aligncenter size-full wp-image-4312" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-31.jpg" alt="Chart 3" width="500" height="183">
At the end of December 2014, the Australian Bureau of Statistics (ABS) estimated that there were 9,448,300 households, while APRA reported that there were 5,213,000 mortgages to Australian ADIs. This indicates that 55.2% of Australia’s housing stock was mortgaged to Australian ADIs. The 55.2% figure is the highest on record, noting that records have only been calculated from the September quarter of 2011. 
The ABS also reports the value of residential housing stock at $5.4 trillion and given the $1.258 trillion in outstanding mortgages to Australian ADIs, 23.3% of the value of all housing stock is mortgaged.
<img class="aligncenter size-full wp-image-4313" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-41.jpg" alt="Chart 4" width="500" height="179">
The average value of the outstanding mortgages, according to APRA’s data, was $241,400 at the end of 2014, with the average loan size having increased by 3.4% over the past year.  Loans with offset facilities ($285,900) and interest-only mortgages ($311,300) had much higher average loan sizes which have increased by 2.1% and 2.8% over the past year. 
Reverse mortgages had an average size of $93,100, having increased by 3.8% over the year. Low documentation loans had an average outstanding amount of $204,800 and other non-standard loans had an average of $211,900, outstanding loan sizes have fallen over the year -2.9% and -7.1% respectively.
<img class="aligncenter size-full wp-image-4314" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-51.jpg" alt="Chart 5" width="500" height="179">
Over the December 2014 quarter, there were 93,231 new loans written by Australian ADIs. 
Of these loans, 23,183 (24.9%) had a loan-to-value ratio (LVR) of less than 60%, 38,964 (41.8%) had an LVR of between 60% and 80%, 20,464 (21.9%) had an LVR of 80% to 90% and the remaining 10,620 (11.4%) had an LVR of more than 90%. 
Year-on-year, the number of loans with an LVR of more than 90% have fallen by 6.9%.  Over the same period, loans with an LVR of less than 60% have increased by 10.8%, loans with an LVR of 60% to 80% have increased by 13.1% and loans with an LVR between 80% and 90% have increased by 17.7%.
Given APRA had concerns of the rate of growth in the investment segment of the market, this latest data is likely cause APRA some discomfort.
Not only is this data showing the investment segment growing at a rate much higher than 10% annually, but also interest-only lending which tends to be reflective of investment lending is also increasing substantially. 
On a more positive note, although investment lending is increasing it is encouraging to see the drop in higher LVR lending above 90%, which suggests that ADIs are being somewhat more cautious around higher risk lending especially considering the overall number of loans being written has continued to grow.
We can expect the regulator will be monitoring lending standards with more focus after the release of this data, particularly from the perspective of investment lending and interest only mortages.
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Increasing investor interest-only borrowing likely causing APRA discomfort: Kusher

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The Australian Bureau of Statistics (ABS) released its demographic data for the September 2014 quarter last week. The data showed that over the quarter, Australia’s population was recorded at 23.581 million persons having increased by 1.5% or 354,605 persons over the past year.
<img class="aligncenter size-full wp-image-4440" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-13.jpg" alt="Chart 1" width="500" height="184">
The increase in population over the past year was actually the lowest increase in national population over a year since the 12 months to December 2011. Looking at the components of the national population increase, natural increase (births minus deaths) accounted for a 150,721 person increase in population and net overseas migration contributed to a 203,884 person increase. 
The 150,721 person natural increase was the lowest annual increase since the 12 months to March 2007 while the additional 203,884 persons due to net overseas migration was the lowest since September 2011. As the first chart shows the sharp slowdown in net overseas migration in particular is having a big impact on the overall national rate of population growth.
<img class="aligncenter size-full wp-image-4441" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-22.jpg" alt="Chart 2" width="500" height="190">
Looking at population growth across the states, the annual increase in population was greatest in New South Wales (106,365), Victoria (102,021), Queensland (69,423) and Western Australia (53,691). Annual population growth was much lower over the year in South Australia (14,303), Australian Capital Territory (4,403), Northern Territory 2,765) and Tasmania (1,602). Over the past year, 58.8% of total population growth occurred in NSW and Vic. 
If you add Qld and WA, those four states account for 93.5% of total national population growth. In terms of the rate of annual population growth, it is currently strongest in WA (2.1%), Vic (1.8%), Qld (1.5%) and NSW (1.4%). Elsewhere, the rate of annual population increase was recorded at 0.9% in SA, 0.3% in Tas, 1.1% in NT and 1.2% in ACT.
Although the population of each state is continuing to grow, the rate of growth has slowed across the board.
 In NSW the annual increase in population was the lowest since June 2013, in Vic it was the lowest since March 2013, in Qld it was its lowest since September 2001 and in WA it was at its lowest level since September 2010. 
Across the remaining states and territories the rate of population growth in SA was its lowest since September 2011, in Tas it was its lowest since March 2014, in NT it was higher than the previous quarter but lower over the year and in ACT it was at its lowest level since September 2006.
If we look at the components of population growth at the state level we get even further insight into the trends taking place. 
<img class="aligncenter size-full wp-image-4442" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-32.jpg" alt="Chart 3" width="500" height="182">
Natural increase is basically a function of the overall population size and as a result natural increase is much greater within the largest states. Over the 12 months to September 2014, the natural increase was recorded at 43,069 persons in NSW, 36,794 in Vic, 34,603 in Qld, 6,932 persons in SA, 21,210 persons in WA, 1,503 persons in Tas, 2,882 persons in NT and 3,706 persons in ACT.
<img class="aligncenter size-full wp-image-4443" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-42.jpg" alt="Chart 4" width="500" height="183">
Turning to net overseas migration, overseas migrants are finding NSW and Vic the most attractive states in which to settle. Over the 12 months to September 2014, 62.0% of the net gain from overseas migration was recorded in NSW and Vic. Across the individual states the net overseas migration was greatest in NSW (69,601), Vic (56,772), WA (32,190) and Qld (28,878). Across the remaining states and territories net overseas migration was recorded at: 10,304 in SA, 1,065 in Tas, 3,266 in NT and 1,798 in ACT. NSW and Vic have always attracted the greatest number of overseas migrants however, as the chart shows the gap has widened significantly over recent quarters.
<img class="aligncenter size-full wp-image-4444" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-52.jpg" alt="Chart 5" width="500" height="182">
The profile of interstate migration has also changed significantly over recent years. Qld has historically been the powerhouse in terms of interstate migration however, Vic has now taken that mantle. Over the 12 months to September 2014 only Vic (8,455), Qld (5,942) and WA (291) recorded positive net interstate migration. On the flipside, each of NSW (-6,305), SA (-2,933), Tas (-966), NT (-3,383) and ACT (-1,101) recorded a net loss of residents to the other three states. This data set is published from 1981 onwards and over that time NSW has always recorded a net loss of residents to other states and territories however, the outflow is currently at a record low. In Vic, the inflow eased slightly from a record high over the previous quarter. Across the other states and territories, Qld net interstate migration is hovering around the lowest level on record, WA interstate migration is at its lowest level since September 2003 and the outflow of residents to other states and territories in NT is at a record high.
The data highlights an overall slowing of the rate of population growth which will undoubtedly have an impact on the wider economy. Economic growth is slower than it has typically been over the past 2 decades and is extremely weak on a per capita basis, lower population growth may exacerbate the slowing of economic growth. Dwelling approvals and construction are at record high levels, as we know over the past decade there hasn’t been an ample supply of new housing. The heightened level of construction will go some way to alleviating housing shortages however, it would take a number of years of heightened construction to totally rectify the shortage.
Looking at the data, the rate of population growth has slowed and the fall has been most noticeable across net overseas migration. Those migrants who are coming to Australia are favouring settling in NSW (Sydney) and Vic (Melbourne). This is creating further demand for housing in these cities, so too is the fact that Vic now has the highest net interstate migration of any state and the outflow of residents from NSW is at a record low level. 
Given this, it is easy to see the impact demographics are having on the housing markets and why Sydney and Melbourne are seeing much greater housing demand and housing value growth. Fewer people are leaving those cities, more people are coming from interstate and most coming from overseas are choosing to settle in our two largest cities. On the other hand population growth has slowed significantly in other capital cities, fewer residents are leaving NSW and Vic to settle in these states and territories and they are attracting fewer overseas migrants.
With population growth now showing a consistent slowdown since the end of 2012 and new housing supply showing a consistent increase since late 2011, the gap between housing supply and demand has significantly narrowed. It is reasonable to assume that higher supply levels and lower housing demand will eventually dampen the exuberant housing market conditions that are so evident in Sydney and to a lesser extent in Melbourne. It is important to note that to-date the supply-side response has been nowhere near as strong in Sydney as it has been across most other capital cities.
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The rate of population growth remains strong but continues to slow: Cameron Kusher

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The Australian Bureau of Statistics (ABS) released demographic data for the March 2015 quarter earlier today. The data showed that despite a quarterly bounce in population growth, the rate of growth continues to trend lower.
The national population increased by 1.35% over the 12 months to March 2015 which was the lowest annual rate of growth in nine years. Although growth slowed it should still be noted that Australia’s population increased by 315,952 persons over the past year. Although population growth has slowed it remains well above the long term average of 256,801 per annum.
<a href="/images/2015/09/25/Chart-13.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/09/25/Chart-13.jpg" alt="">
Over the March 2015 quarter, the national population increased by 93,942 persons, substantially higher than what was recorded over the December 2014 quarter when the nationally population recorded an increase of 64,010 persons.  Over the 12 months to March 2015, the national population increased by 315,952 persons which is the lowest annual increase in population since the 12 month period ending June 2011 when the nation recorded population growth of 308,274 persons.
<a href="/images/2015/09/25/Chart-23.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/09/25/Chart-23.jpg" alt="">
At a national level there are two components of population growth, natural increase (births minus deaths) and net overseas migration. Each of these measures recorded a bounce over the past quarter however, both components continue to trend lower on an annual basis. Over the 12 months to March 2015 natural increase was recorded at 142,898 persons and net overseas migration was recorded at 173,054. Natural increase was -9.7% lower over the year while net overseas migration was -16.0% lower, its largest annual fall since March 2011.  
While the decrease in the rate of natural increase implies a sharp rise in deaths or slowdown in births, it is important that the ABS has noted that there are problems with the preliminary natural increase estimates due to a lag in registering births in both NSW and Vic.  We are likely to an upwards correction to this data over the coming quarters which will lift the rate of population growth.
<a href="/images/2015/09/25/Chart-32.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/09/25/Chart-32.jpg" alt="">
Across the states and territories the rate of annual population growth is lower compared to the same time a year ago across the board. Although population growth is slowing, the sharpest slowdown in population growth is being felt in WA and NT. In WA the rate of population growth has slowed to 1.4% over the year to March 2015 from 3.5% two years earlier.  Similarly, annual population growth in the NT was 3.0% two years ago and the latest data shows it at just 0.2% over the past year.
Looking at the components of population growth we will ignore natural increase at this juncture because the ABS have highlighted some issues with the data for NSW and Vic. The two other drivers of population growth at a state and territory level are overseas migration and interstate migration.  NSW and Vic are the major benefactors of net overseas migration to Australia while Vic and Qld are the only benefactors of interstate migration.
<a href="/images/2015/09/25/Chart-4.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/09/25/Chart-4.jpg" alt="">
Over the 12 months to March 2015, net overseas migration to Australia was recorded at 173,054 persons. More than two thirds of net overseas migration flowed to NSW (38.9%) and Vic (31.6%). If you add in Qld (12.1%), the three most populous states accounted for 82.6% of net overseas migration. Although net overseas migration is trending lower, the impact of the end of the mining boom is very clear. In March 2013, annual net overseas migration was recorded at 41,745 persons in Qld, 53,834 persons in WA and 5,173 persons in NT. Over the past year, annual net overseas migration had slowed to 20,857 persons in Qld, 15,383 persons in WA and 1,041 persons in NT.  
Conversely in NSW where mining is a smaller part of the overall economy, net overseas migration has actually increased from 63,661 persons in March 2013 to 67,272 persons in March 2015. Similarly in Vic net overseas migration has been much stronger over the past 2 years, falling slightly from 55,562 persons to 54,745 persons. Of course while most of the overseas migration is coming to NSW and Vic, most of that is flowing into Sydney and Melbourne fuelling more demand for housing and helping to explain why home value growth in those two cities has been so strong.
<a href="/images/2015/09/25/Chart-5.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/09/25/Chart-5.jpg" alt="">
At a national level net interstate migration cancels itself out and does not add to population growth however, at a state level it can greatly impact on population growth. Over the past 12 months, only Vic (9,774 persons) and Qld (6,195 persons) have seen a positive inflow of residents from other states. In fact, net interstate migration into Vic is currently at its strongest level on record. Qld has recorded a slight rebound in net interstate migration however, it continues to hover around its lowest level on record. For the length of this data series (since 1981) NSW has consistently lost residents to other states and that remains the case losing 6,195 residents over the year. 
The outflow of residents from NSW is hovering at around record low levels. WA has typically been a benefactor of interstate migration however, it lost a net -1,269 residents last year; its greatest loss since June 2003. Again we can see the impact of the slowing of the resources sector. In March 2013, net interstate migration was recorded at a higher 9,026 persons in Qld and 9,691 persons in WA. Conversely, net interstate migration at that time was recorded at -15,513 persons in NSW and 3,454 persons in Vic.
The trends in overseas and interstate migration in particular show that the population growth tide has turned away from the mining states and is now firmly focussed on NSW and Vic which have relatively little mining sector exposure. These states are also creating more employment opportunities and are subsequently attracting both people migrating from overseas and interstate. Higher population growth means more demand for housing, which is one of the drivers pushing dwelling values higher in Sydney and Melbourne.
The more up-to-date overseas arrivals and departures data from the ABS indicates that permanent and long-term arrivals into Australia have continued to trend lower since March 2015. This indicates that net overseas migration is expected to continue to trend lower over the coming quarters. It is also likely to result in more of these migrants wanting to move to NSW and Vic due to the fact that these are the states where more jobs are being created.
This is of course despite the fact that the two capital cities in these two states recording home value growth which is well in excess of growth elsewhere.
Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/author/cameron-kusher/" target="_blank">here</a>.
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Population growth slumps to its slowest rate in nine years: Cameron Kusher

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Over the 2014-15 financial year vacant land selling prices have continued to rise across the combined capital cities. Meanwhile, vacant land prices have actually fallen over the year in regional markets.
 
<div>
Data based on settled sales over the 2014-15 financial years shows that vacant land selling prices have increased by 6.0% across the combined capital cities. While capital city land prices are increasing, across the combined regional markets land prices have fallen by -3.4% over the year.
As at June 2015, the median selling price of vacant land was recorded at $258,543 across the combined capital cities and $156,500 across the combined regional markets. Median land prices in regional areas of the country are now -39% lower than those in capital cities, the widest differential since August 1990. Over the 25 years to June 2015, median vacant land prices have increased by 417% (6.8%pa) across the combined capital cities and by 422% (6.8%pa) across the combined regional areas.
</div>
 
<div>
<a href="/images/2015/09/21/2015-09-21--median-vacant-land-prices.png" target="_blank">Click to enlarge</a>
<h3>Median vacant land prices over time</h3>
<img src="/images/2015/09/21/2015-09-21--median-vacant-land-prices.png" alt="">
</div>
While prices have fairly consistently risen, there has been a consistent trend towards smaller lot sizes. Although you pay a lot more for land you get a lot less for your money. Of those vacant land lots sold over the year to June 2015, the median lot size was 452sqm across the combined capital cities and 810sqm across the combined regional markets.
The median lot size has been reasonably stable across the combined capital cities over the past twelve months, whereas it has actually risen by 8.3% over the past year across regional markets. The median lot size for capital city vacant land has seemingly hit a trough having been relatively stable over the past 2 years. Meanwhile lot sizes have trended higher over the past year in regional areas.
<a href="/images/2015/09/21/2015-09-21--pp-median-vacant-lot-sizes.png" target="_blank">Click to enlarge</a>
<h3>Median vacant land lot sizes over time</h3>
<img src="/images/2015/09/21/2015-09-21--pp-median-vacant-lot-sizes.png" alt="">
With higher prices and fairly steady land areas, the rate per square metre of land has continued to rise over the past year across the combined capital cities while it has fallen in regional markets. At the end of June 2015 the rate per square metre was recorded at $557 across the combined capital cities and $170/sqm across the combined regional markets.
Chart 3 shows that the differential in the rate per square metre between capital city and regional residential vacant land is significant. This is a function of the high cost of vacant land in capital cities and the relatively small lot sizes. To put this in perspective, 25 years ago the rate/sqm for capital city vacant land was $66 and the typical lot size was 750sqm. Today capital city land costs $557/sqm and is only 450sqm on average. While a 750sqm lot in a capital city cost $50,000 25 years ago, today it would cost $417,800.
<a href="/images/2015/09/21/2015-09-21--pp-median-rate-per-sqm.png" target="_blank">Click to enlarge</a>
<h3>Median rate per square metre for vacant land over time</h3>
<img src="/images/2015/09/21/2015-09-21--pp-median-rate-per-sqm.png" alt="">
When looking at individual capital cities, vacant land prices are much higher than all other capital cities in Sydney. The cost of vacant land has risen sharply over the past year in Sydney, Melbourne and Perth over the past year. Typical lot sizes have actually risen across most cities over the past year but have generally fallen over the past decade. On a rate per square metre basis, vacant land in Sydney and Perth is much more expensive than all other capital cities. The rate per square metre has generally risen over the past year.
<a href="/images/2015/09/21/2015-09-21--pp-capital-city-vacant-land.png" target="_blank">Click to enlarge</a>
<h3>Capital city vacant land statistics - June 2015*</h3>
<img src="/images/2015/09/21/2015-09-21--pp-capital-city-vacant-land.png" alt="">
Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/author/cameron-kusher/" target="_blank">here</a>.
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Capital city land prices just keep on rising: Cameron Kusher

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Dwelling rental growth is now at its lowest level on record according to the first CoreLogic RP Data Rental Review for 2016. Currently the median rent rate is recorded at $443 across the combined capital cities. 
CoreLogic RP Data has tracked annual rental changes since 1996 and over that time, rental growth conditions have never been weaker. At the same time last year rental rates had increased by 1.7 percent highlighting that the slowdown in rental conditions has been sharp over the year.
A combination of factors is affecting the national rental market. Among these is a higher level or rental stock resulting in greater options for renters, a slowdown in population growth, higher than normal investment activity and stagnant wage growth. 
More rental stock at a time when demand is easing due to slowing population growth, and little wage growth for renters, has resulted in flat rental growth conditions over the past year. 
For renters there is a lot more accommodation options in the market while simultaneously, landlords are now required to respond to a more competitive environment which, in many cases means keeping rents steady or in some areas reducing rents in order to keep a tenant. 
CoreLogic RP Data analysis shows rents across the combined capitals rose by 0.2 percent in January 2016. The only capital cities to see a rise in rents over the month were Sydney, Melbourne, Adelaide, Hobart and Canberra, elsewhere rents dropped. 
Across the individual capital cities, over the past year: 
Rents increased in Sydney (+1.4 percent), Melbourne (+2.1 percent), Hobart (+0.1 percent) and Canberra (+1.8 percent). 
Rental rates have fallen over the past year in Brisbane (-0.7 percent), Adelaide (-0.4 percent), Perth (-8.6 percent) and Darwin (-13.4 percent). 
Across every capital city except Canberra the rate of annual rental growth or decline is currently lower than it was a year ago indicating that the weaker rental market conditions are prevalent across most capital cities. 
Rental Market Update: 
Weekly rents across the combined capital city measure increased 0.2 percent over the month of January however they were unchanged over the past 12 months. 
Currently, combined capital city rental rates are $487/week for houses and $465/week for units. 
It is possible that over the coming months, rental rates could begin to fall on an annual basis due to additional new rental supply entering the market.
 
Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
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Softest conditions on record for capital city rental markets: Cameron Kusher

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The latest ratios of household finances highlight that the ratio of debt to disposable income is at a record high however, the value of household assets is also at a record high level.
With record low interest rates, the ratio of interest payments to disposable income is the lowest it has been since early 2003.
The ratio of household and housing debt to disposable incomes are each at historic highs of 186.3 percent and 133.8 percent respectively with the ratios increasing by 3.4 percent and 4.3 percent over the past year; 
Over the period from 1988 to 2015 standard variable mortgage rates have fallen dramatically and that has surely contributed to household’s preparedness to take on more debt.
<a href="/images/2016/03/31/Screen%20Shot%202016-03-31%20at%201.11.34%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/31/Screen%20Shot%202016-03-31%20at%201.11.34%20PM.png" alt="">
 
Over recent years the ratio of interest payments to disposable income has been falling with the ratios for households and housing now sitting at their lowest levels since 2003. The higher ratio of interest payments currently compare to 1988 when interest rates were substantially higher.
This is reflective of the much higher cost for household assets, particularly the cost of residential housing.
The data shows that although households have significant debt, particularly for housing, the value of the assets they hold is substantial. The ratio of household debt to disposable income is currently 186.3 percent however, the ratio of household assets to disposable income 862.8 percent, the highest it has ever been.
Similarly, the ratio of housing debt to disposable income is 133.8 percent however; the ratio of housing assets to disposable income is 471.3 percent.
What is interesting is that the ratio of household assets to disposable income is still lower than its previous peak in December 2007 at 476.2% percent, however, it is nudging back up towards its previous record high.
The value of household assets is significantly greater than the value of the debt. Based on this data, the ratio of household debt to assets is 21.6 percent and the ratio of housing debt to housing assets is 28.4 percent.
<a href="/images/2016/03/31/Screen%20Shot%202016-03-31%20at%201.16.17%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/03/31/Screen%20Shot%202016-03-31%20at%201.16.17%20PM.png" alt="">
 
Australian households are heavily indebted due largely to residential housing and while high; the value of the assets held is much greater than the debt. It’s important to consider that this is a national view.
Across different regions the ratios are likely to be substantially different. Furthermore, lower interest rates and a fairly strong labour market over recent decades have contributed to a willingness to borrow. Should either of these factors to change it could lead to a dramatic deterioration in the value of these assets while of course the debt would remain.
Importantly, mortgage arrears remain low and the Reserve Bank has reported that the typical mortgage holder is currently more than two years ahead on their mortgage repayments. This coupled with higher rates of household savings provide a potential buffer if unemployment were to rise sharply or interest rates began to increase.
Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
 
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Household and housing debt reach new record highs: CoreLogic RP Data's Cameron Kusher

The new <a href="https://www.apartments.com.au/new-apartments/yarraville-green-42-stephen-street-yarraville-vic-3013">Yarraville Green</a> development in Melbourne's inner west is showing that landscaping can be just as influential as architecture, with buyers responding strongly to the garden-first approach adopted from the outset by developer Excelon Projects and the project's design team.

Excelon appointed Six Degrees Architects and landscape architects SBLA to work collaboratively on the development, with a brief to create "a sustainable, design-led building with a focus on community."

That approach has resonated with buyers. According to Next Chapter Director Tom Hirini, who is leading the sales campaign, the landscaped communal garden has become one of the project's defining features, alongside its boutique scale and European-inspired cluster housing concept.

Local downsizers, right-sizers and established families already living in Yarraville and surrounding suburbs have accounted for the majority of purchasers.

[smartcode_project:default project_id=144913 project_image_fid=297740]

Yarraville Green will comprise 53 homes, including apartments and townhomes, arranged around the shared central garden to maximise connections to the landscaped open space. Parking has been moved underground, allowing the ground plane to be dedicated to greenery, pedestrian movement and communal spaces.

The landscape extends well beyond passive planting. Productive garden beds, a pergola, communal gathering spaces, garden sheds and a pet wash have all been integrated into the masterplan, creating spaces designed to encourage everyday interaction between residents.

[smartcode_project:default project_id=144913 project_image_fid=297741]

The interiors continue Excelon's focus on craftsmanship, incorporating bespoke elements by Melbourne artisans including leadlight detailing by Adadaz, hand-turned timber hardware by Auburn Woodturning and blown-glass lighting by Ruth Allen.

Sustainability has also been embedded throughout the project, with Yarraville Green targeting an average 7-star NatHERS energy rating through passive design principles, rooftop solar servicing common areas and rainwater harvesting for landscape irrigation.

[smartcode_project:default project_id=144913 project_image_fid=297735]

Construction continues to progress at Yarraville Green, with structural works well underway and framing works approaching completion under builder Balmain &amp; Co. The project remains on track for completion in mid-2027.

Apartments at Yarraville Green are currently priced from $625,000, while townhomes start from $1.4 million.

[smartcode_project_cta:default project_id=144913]

Joel Robinson

Garden-led design drives buyer demand at Yarraville Green

National diversified developer Fortis has officially launched Crest &amp; Walker, its latest Brisbane apartment development, with construction now underway on the 20-storey Newstead project.

Award-winning builder BINAH has commenced construction on the Bureau^Proberts-designed building, which will deliver a limited collection of 65 two and three-bedroom apartments on Kyabra Street.

[smartcode_project:default project_id=145922 project_image_fid=373556]

The project marks Fortis' fourth active residential development in Brisbane, following River House, which is nearing completion, alongside projects in New Farm and Hamilton as the national developer continues to expand its South East Queensland pipeline.

Fortis General Manager – Development Queensland Dan Boman said Crest &amp; Walker reflects the developer's long-term commitment to delivering design-led residential projects in Brisbane's established inner-city suburbs.

"We're proud to be strengthening our presence in Brisbane with Crest &amp; Walker, particularly in such a sought-after lifestyle destination as Newstead," Boman said.

"Every Fortis project is shaped by its context, and we approach each one with the respect and care it deserves.

"Our focus is always on creating places that feel connected to their neighbourhood and elevate the everyday experience for residents. Newstead continues to evolve as one of Brisbane's most sought-after urban communities, and Crest &amp; Walker reflects our ambition to contribute meaningfully to that story."

[smartcode_project:default project_id=145922 project_image_fid=373559]

Positioned between Gasworks Plaza and James Street, <a href="https://www.apartments.com.au/new-apartments/crest-walker-newstead-12-kyabra-street-newstead-qld-4006">Crest &amp; Walker</a> has been designed as a boutique residential address offering privacy and generous living spaces within one of Brisbane's most established lifestyle precincts.

The building features a contemporary brick podium softened by integrated landscaping, while the upper levels are characterised by restrained architecture and enduring materiality. Interiors have been designed to maximise natural light, acoustic performance and long-term liveability.

[smartcode_project:default project_id=145922 project_image_fid=373583]

Residences comprise spacious two and three-bedroom floorplans, with two-bedroom apartments priced from $1.55 million and three-bedroom, half-floor residences from $3.95 million.

Residents will have access to a wellness-focused rooftop featuring a swimming pool, sauna, steam room, landscaped dining spaces and outdoor lounge areas overlooking Newstead and the Brisbane CBD.

[smartcode_project:default project_id=145922 project_image_fid=373571]

Sales are being managed by Slaite Projects, with Fortis expecting strong demand from owner-occupiers seeking a high-quality, design-focused apartment in one of Brisbane's most tightly held inner-city suburbs.

Completion of Crest &amp; Walker is slated for late 2028.

[smartcode_project_cta:default project_id=145922]

Fortis expands Brisbane pipeline with launch of Crest & Walker in Newstead

The enormity of delivering a true skyscraper in Australia's new development market is often overlooked.

It has taken the best part of a decade since plans for Chevron One were first unveiled, but the 40-storey tower is now complete, with residents collecting their keys and moving into what has become one of the Gold Coast's most recognisable new landmarks.

Rising 127 metres above Chevron Island, Chevron One stands almost twice as high as any other building on the island. Its scale places it alongside the trio of towers at Jewel, arguably the last truly significant addition to the central Gold Coast skyline when they were completed around six years ago.

While there are several developments underway around a similar height to Chevron One, they are more concentrated within clusters of the highest towers in the city. The fact Chevron One sits within a developing precinct, looking back at the other high-rise developments in Surfers Paradise and Broadbeach, makes it a different proposition altogether. It will certainly become a reference point on the Gold Coast skyline.

[smartcode_project:default project_id=6515 project_image_fid=68833]

Developer Bensons Property Group is behind the 40-storey tower, which has just shy of 230 apartments, along with an exhaustive list of resident amenity spread across what is the largest development site ever assembled on Chevron Island.

The tower has been the talk of the town for years, says Ray White Projects Gold Coast agent Caitlin Rosenboom, who is selling the remaining apartments.

"People have been watching Chevron One go up for years," Rosenboom says, adding that many prospective buyers have been surprised by the scale of the views once they step inside.

"It's only when they walk through a completed apartment that they truly understand the position of the building," Rosenboom says.

"The views are jaw-dropping. Whether you're looking east over the ocean, across Surfers Paradise, along the river systems or out to the hinterland, every level offers something different but equally impressive."

[smartcode_project:default project_id=6515 project_image_fid=360215]

One of Chevron One's defining advantages is its location on the eastern side of Chevron Island on Stanhill Drive, a position which protects the views forever.

"There's only one row of houses between Chevron One and the water, and the height restrictions along the river means views from Chevron One can never be built out,"&nbsp;Rosenboom says.

While new apartment developments continue to emerge across the Gold Coast, Rosenboom says opportunities to secure a completed apartment with this level of outlook are becoming increasingly rare.

"The size of the site is something that would be incredibly difficult to replicate today," she says.

"That's allowed Chevron One to deliver the sort of amenity, open space and resident facilities that very few projects can offer. There are not many completed apartment buildings on the Gold Coast right now that can compete with the combination of scale, quality and amenity."

[smartcode_project:default project_id=6515 project_image_fid=68839]

There's around 2,000 sqm of amenity solely for the use of residents of Chevron One. Club One features a uniquely shaped swimming pool that mirrors the footprint of the building itself, set within a extensively landscaped gardens. There's also an indoor pool and spa, a fully equipped gym with a Pilates room, a yoga garden, a bookable private dining area and lounge that can host up to 30 people, and a 24-hour concierge service.

As for the buyers, Rosenboom is fielding enquiry from everywhere: Sydneysiders and Melburnians looking at the new and off-the-plan market following the changes in the Federal Budget, as well as those looking to relocate, through to South East Queenslanders seeking either a permanent home or a weekender bolthole.

"The Gold Coast lifestyle continues to resonate with people relocating from the southern states, and when they see the views and the quality of what's been delivered at Chevron One, it becomes very easy for them to understand the appeal," Rosenboom says.

A diverse mix of one, two and three-bedroom apartments remain available, with each offering "something a little different", be it the orientation and views, configuration, or level, to suit a wide variety of buyers.

The remaining apartments are ready to inspect in person, by appointment.

[smartcode_project_cta:default project_id=6515]

A decade in the making: Residents to move into Chevron One as construction wraps up

A general rule of thumb in new apartment developments is that the penthouses get the rooftop.

It's a formula that's become commonplace across Australia's apartment market. Residents might have access to a pool, gym or barbecue facilities on a dedicated lower level, but the most desirable outdoor spaces are typically reserved for the highest-priced homes at the top of the building.

<a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Property Group</a> has taken the opposite approach.

Rather than dedicating the rooftop to a handful of buyers, the Gold Coast developer has made it the centrepiece of its Flourish collection, creating expansive shared spaces from the best vantage point in the building.

The philosophy has reached its most ambitious expression at <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> in Palm Beach, where two rooftop precincts connected by a skybridge will deliver one of the most extensive lifestyle offerings seen in a residential apartment project on the Gold Coast.

[smartcode_project:default project_id=150017 project_image_fid=374053]

"We're seeing a clear move toward developments that offer more than just an apartment," Sherpa Group founder Christie Leet said.

"People want spaces that support how they actually live, whether that's working from home, staying active, or spending time with family and friends.

"That's where amenity becomes critical. It's not just about what's included, but how those spaces are designed to be used every day."

[smartcode_project:default project_id=150017 project_image_fid=374052]

The breadth of amenity has already attracted buyers across multiple demographics. Younger first home buyers have been drawn to Soleira's one-bedroom apartments, a product rarely delivered in Palm Beach, while families have responded to practical inclusions such as the shallow children's pool adjoining the main lap pool and the extensive communal recreation areas.

Instead of a single rooftop, Soleira delivers two distinct lifestyle zones.

[smartcode_project:default project_id=150017 project_image_fid=372547]

The southern rooftop has been dedicated to wellness, featuring a gym, yoga and Pilates studio, work-from-home facilities, a wellness centre, spa, and hot and cold plunge pools.

The northern rooftop focuses on recreation and entertaining, incorporating a heated resort-style pool, private dining rooms, pizza ovens, barbecues, a golf simulator, children's recreation areas, and what is expected to be the Gold Coast's first rooftop basketball court, which will also double as a squash court.

[smartcode_project:default project_id=150017 project_image_fid=374054]

Beyond the rooftops, Soleira will introduce 1,500 sqm of curated retail beneath the towers, creating one of Palm Beach's first genuinely mixed-use lifestyle precincts where cafés, restaurants and convenience retail become part of residents' everyday lives.

Sherpa has also retained management rights across the development, allowing it to oversee the long-term operation of the building through a 24-hour concierge model. The developer is also exploring additional revenue streams within the precinct aimed at helping offset ongoing body corporate costs for residents.

[smartcode_project:default project_id=150017 project_image_fid=370962]

While Soleira is the largest project Sherpa has delivered, the rooftop-first philosophy has been evolving for several years.

It began with <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>, the first project released under the Flourish brand. Rather than competing at the ultra-luxury end of the market with oversized half-floor and full-floor residences, Sherpa focused on creating lifestyle-driven apartments supported by resort-style shared spaces.

Amargo introduced more than 800 sqm of rooftop amenity, combining wellness facilities, heated pools, entertaining areas, cabanas, pizza ovens and private dining spaces into what was designed as an extension of residents' homes rather than a facility used only occasionally.

[smartcode_project:default project_id=146527 project_image_fid=366550]

That approach continued with Flourish Oasis, where the same amenity-led philosophy was refined into a more boutique development. Strong demand from Sherpa's growing VIP database saw much of the project sold before it reached the broader market, reinforcing buyer appetite for apartment communities centred around shared lifestyle experiences.

Flourish Amargo is slated for completion mid-way-through next year, with Oasis to be delivered by late 2027. Flourish Soleira is expected to complete in 2030.

[smartcode_project_cta:default project_id=150017]

Sherpa takes amenity to the sky as Flourish Soleira captures booming Palm Beach demand

As apartment living continues to evolve across Sydney's growth corridors, the quality and distribution of shared spaces is increasingly shaping how residents experience home. Rather than functioning as add-ons, amenities are being embedded into the daily rhythm of a building, supporting everything from quiet retreat to social interaction, often within a single vertical community.

At <a href="https://www.apartments.com.au/new-apartments/aeris-melrose-park-nursery-street-melrose-park-nsw-2114">Aeris</a> in Melrose Park, this approach is resolved through a layered amenity offering that unfolds from ground level through to its upper podium. Developed by <a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a> in partnership with Hankyu Hanshin Properties, the project introduces 468 apartments across two towers and a mid-rise building, positioned at the highest point of the broader masterplan.

[smartcode_project:default project_id=426 project_image_fid=359199]

The amenity experience begins at street level, where two courtyards sit within a landscaped setting that connects residents to the wider network of parks and green spaces. These green spaces are not isolated pockets but part of a wider pedestrian network that links Aeris to the surrounding <a href="https://www.apartments.com.au/developments/melrose-park-nsw-2114">Melrose Park</a> precinct, including Central Park, future schools, and the Town Centre opening in July 2026. The result is a transition that moves from public to private without abrupt boundaries, allowing residents to pass through shaded, tree-lined environments before reaching the building itself.

Moving upward, the focus shifts to the level five podium, where the primary communal facilities are concentrated. This space brings together a 16-metre swimming pool, outdoor seating areas, and a communal BBQ zone arranged to take advantage of elevated outlooks. Seating is positioned beneath pergolas, creating pockets of shade that extend the usability of the space throughout the day. The pool edge aligns with views toward the wider district, reinforcing the sense of elevation that defines the project’s positioning.

In the adjacent building, this is complemented by quieter, more contemplative spaces, including an outdoor cinema set within the same level. Positioned to operate primarily in the evening, it introduces a different tempo to the shared environment, shifting from daytime activity to after-hours use without requiring separate zones.

[smartcode_project:default project_id=426 project_image_fid=360299]

The podium also accommodates an intimate private resident gym. Located on the lower levels, it gives residents convenient access to fitness facilities without leaving the building.

Above, the elevated podium sky deck extends the amenity offering, providing additional open-air spaces with elevated outlooks across the surrounding landscape. While more restrained in program, this upper level reinforces the project’s vertical progression, from ground-level greenery to elevated outlook, allowing residents to move between distinct spatial conditions within a single address.

This distribution of amenities reflects a deliberate response to how residents use space across the day. Sekisui House Australia Sales and Marketing Director Peter Kalaf points to the role these shared areas play in shaping buyer demand. Aeris has been conceived as more than a collection of apartments, with the podium pool, gym and outdoor cinema forming part of a broader lifestyle offering that extends the home beyond each individual residence.

[smartcode_project:default project_id=426 project_image_fid=360300]

What distinguishes Aeris is not the inclusion of these elements individually, but how they are arranged in relation to one another. Active, social, and passive spaces are layered vertically rather than separated, allowing residents to choose between them without leaving the building or moving far from their apartment. This proximity supports both routine use, such as a morning swim or evening workout, and more occasional gatherings, whether around the BBQ area or within the cinema setting.

The amenity design also sits within a broader framework of connectivity across Melrose Park. The Melrose Park Town Centre, anchored by Coles and Dan Murphys, features a mix of retail, dining, health and lifestyle offerings, bringing everyday convenience closer to residents. By the end of the year, more than five hectares of parks and open space, equivalent to around seven football fields of green space on residents' doorstep, will further enhance the precinct, allowing the internal facilities at Aeris to operate as an extension of the wider neighbourhood rather than a substitute for it.

Construction at Aeris continues to gather momentum, with ground floor slabs expected to be completed in late 2026 before the first sections of the buildings begin to rise above ground.

[smartcode_project_cta:default project_id=426]

Cameron Kusher

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