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As someone who works analysing housing markets every day it is good to see that housing policy is back on the agenda especially considering that we currently don’t have a Federal Housing Minister.  The lack of a Housing Minister at the Federal level is intriguing when you look at some of the statistics relative to the housing market.
According to CoreLogic RP Data the total value of residential property at the end of May 2015 was $5.9 trillion.  To put this in perspective, gross domestic product (GDP) for Australian was recorded at $1.587 trillion over the 12 months to March 2015. 
The Australian Bureau of Statistics’ housing finance data showed that as at April 2015 there was $1.392 trillion in outstanding mortgage debt to Australian banks, building societies and credit unions.  Meanwhile, the share market garners plenty of attention, as at April 2015 the market capitalisation of listed domestic equities was $1.693 trillion.  Based on this data it would be fair to say that housing is Australia’s largest and arguably most important asset class. 
Even the value of Superannuation clocks in at a much lower $2 trillion, nearly three times smaller than the overall value of housing.
Given the importance of shelter and the runaway growth currently being experienced in Sydney and, to a lesser degree, Melbourne home values, it is no wonder that housing is becoming a politically very sensitive topic.  In particular negative gearing has become a topic of plenty of debate over the past few weeks. 
While the current Government have ruled out changes to negative gearing, both the Labor and Green parties are highlighting potential changes to their policies.
Negative gearing allows owners of investment properties to offset their expenses (losses) against their taxable income and as a result it can reduce their taxable income.  While this most certainly makes investment attractive the suggestion that negative gearing alone drives up the cost of housing is somewhat debatable.
<img class="aligncenter size-full wp-image-4979" src="https://blog.corelogic.com.au/wp-content/uploads/2015/06/Chart-12.jpg" alt="Chart 1" width="500" height="180">
The above chart shows the total value of net rent claimed by individual taxpayers by financial year up to 2012-13.  Net rent is gross rent minus applicable deductions such as rental interest, depreciation and costs such as capital works.  What you will immediately note is that prior to 1999-00 the net profit or loss made from rent was fairly negligible. 
The Federal Government made changes to capital gains tax in September 1999 and this has seemingly helped to make negative gearing much more attractive than it was previously.  In September 1999 the Federal Government made changes which offered investors a 50% discount on capital gains tax when they sold their property if they held their investment for at least 12 months. 
As the first chart shows, since thes 1999-00 financial year net rental losses have spiked.  This would seem to suggest that the 50% discount to capital gains tax has conspired to make negative gearing of residential property a much more attractive investment option.
<img class="aligncenter size-full wp-image-4980" src="https://blog.corelogic.com.au/wp-content/uploads/2015/06/Chart-22.jpg" alt="Chart 2" width="500" height="110">
If we take a look at the most recent financial year’s taxation data available there are some interesting statistics about negative gearing and who is claiming the benefit. In terms of the number of individuals claiming net rent, 68.9% of claimants had a taxable income of less than $80,000. 
While more taxpayers with a taxable income of less than $80,000 claim net rent losses, only 13.1% of all individuals with a taxable income below $80,000. 
On the other hand, more than a quarter (25.8%) of all taxpayers with an income of more than $80,000 claimed net rent.  In terms of the value of these losses, individuals earning less than $80,000 claimed rental losses of $2.781 billion or an average of $2,050 per claimant.  Individuals earning more than $80,000 claimed $2.613 billion in rental losses at an average of $4,276 per claimant. 
More people on incomes below $80,000 claim rental income but that is largely due to the fact that 81% of taxpayers had a taxable income of less than $80,000.  Conversely, a greater proportion of total higher income earners own rental properties and the typical losses claimed from these properties are much larger than those with taxable incomes below $80,000.
<img class="aligncenter size-full wp-image-4981" src="https://blog.corelogic.com.au/wp-content/uploads/2015/06/Chart-32.jpg" alt="Chart 3" width="500" height="182">
In my opinion negative gearing is essentially a way in which the Government outsources social housing to the private sector or at least this should be how it works.  If we take a look at dwelling approvals data you can see that very few new approvals have been granted to the public sector over the past three decades. 
Typically more than 90% of all dwelling approvals over any month are granted to the privates sector with very few being approved and ultimately constructed by the public sector.  Ultimately the private sector takes on the role of construction of homes and it appears private citizens are incentivised to provide rental accommodation via the provision of negative gearing. 
If negative gearing were removed no doubt housing would still be an attractive investment for some who are seeking to be positively geared however, you may find that fewer people are attracted to housing as an investment option because of the absence of the tax deductions which negative gearing provides.
The data shows that a greater number of people on lower taxable incomes claim rental losses than those on higher incomes however, as a proportion of total taxpayers a greater proportion of high income earners claim rental losses and the value of these losses is greater for higher income earners.  The longer term net rental losses chart indicates that negative gearing alone didn’t really result in a high level on net rental losses however, when the capital gains tax discount was halved that seemingly made negative gearing much more attractive and the losses began to add up.
While scrapping negative gearing would likely provide a saving to the Budget bottom line, I believe it is unlikely to result in the substantial improvement in housing affordability that many are hoping for.  Arguably removing the capital gains discount which was introduced after negative gearing is a good first step to addressing the problems and then Government can revisit negative gearing.
The housing market has many moving parts that result in relatively expensive housing prices here in Australia.  While the removal of negative gearing may help improve the Budget bottom line it is unlikely to be the silver bullet which improves housing affordability. 
Zoning restrictions on developable land which drive up the cost of housing, the tax-free nature of the family home, stamp duty, the mass-centralisation of our population and shortage of jobs away from the major capital cities all conspire to make housing less affordable. 
Any discussion about improving housing affordability shouldn’t solely focus on just one of the issues such as negative gearing rather it needs to look at all of the factors which contribute to high housing costs.
Cameron Kusher is RP Data’s senior research analyst. Follow Cameron on Twitter <a href="https://twitter.com/cmkusher" target="_blank">here</a>. 
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CGT 50% discount spiked negative attractiveness as investment option: Cameron Kusher

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Investor activity has surged over recent years and now shows that in March 2015, investors committed to $12.9 billion in housing finance.
By comparison, investment mortgage commitments reached a recent low of $6.3 billion in April 2011.
The recent rise to $12.9 billion has seen the value of commitments rise 105% in less than 4 years.
While state data is seasonally adjusted, these markets tend to be a little more volatile. Nevertheless, it shows $13.5 billion worth of commitments in March 2015.
A state by state breakdown shows that nationally, NSW accounted for 46.0% of all investor mortgage commitments. The value of commitments in NSW was greater than the value of all states and territories combined except for WA. Of particular note is the fact that this data largely reflects what is happening in Sydney which experienced a significant rise in investment lending over the past 3 years.
Across all states the recent low in investment lending has been in either January or February of certain years and we’ve found that this time of year is a seasonally slower period for mortgage lending.
After APRA wrote to Australian banks, credit unions and building societies late last year re-affirming sound residential mortgage policies we have recently started to see many banks change their lending policies.
A large focus of these changes has been around investment mortgages and over the coming months we should eventually see investment lending start to slow.
<a href="/images/2015/06/04/700_Statebreakout.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/06/04/700_Statebreakout.jpg" alt="">
 
<a href="/images/2015/06/04/700_lending.jpg" target="_blank">Click to enlarge</a>
 
 
<img src="/images/2015/06/04/700_lending.jpg" alt="">
NSW – in March 2015, investors committed to $6.2 billion in mortgages, a year-on-year increase of 37.2%. Over the past 3 years the value of investment mortgage commitments has increased by 155%. If you remove refinances, investors accounted for 60.0% of all new lending in NSW in March 2015.
Vic – investors committed to $3.1 billion in mortgages in March, a 17.1% year-on-year rise. Investors accounted for 48.6% of new lending in March and the value of commitments is 70% higher over the past 3 years.
Qld – at $2.2 billion in March, investor lending has risen by 43.1% year-on-year and is 69% higher over the past 3 years. Investors accounted for 47.2% of new lending over the month.
SA – investment lending has increased by 28.3% year-on-year to March 2015 to $508.8 million and has increased by 32% over the past 3 years. Investors accounted for 43.0% of new lending in March 2015.
WA – investors accounted for 39.0% of new mortgage lending over the month with $1.1 billion in commitments. Investor mortgage commitments have increased by 4.5% year-on-year and by 31% over the past 3 years.
Tas – investors currently account for 30.5% of new mortgage lending $with a total of $70.8 million. The value of investment commitments is 21.3% higher over the year and has increased by 41% over the past 3 years.
NT – at $103.5 million in March 2015, investment lending is -1.1% lower over the year. Investment lending has increased by 14% over the past 3 years and investors currently account for 55.3% of all new mortgage lending.
ACT – at $168.3 million in March 2015, investment lending is 2.9% higher over the year. Investment lending has increased by 8% over the past 3 years and investors currently make-up 41.8% of all new mortgage lending.
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Investment lending set to slow: Cameron Kusher

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When considering the current surge in Sydney and Melbourne home values, it is worthwhile revisiting how strong conditions were during the housing boom of 2001 through to 2004.
Although the rate of capital growth in Sydney and to a lesser degree Melbourne is strong it is nowhere near as strong as the rapid home value growth recorded between 2001 and 2004.
At the beginning of 2001 the rate of growth in home values began to accelerate.
The pick-up in value growth began in Sydney and Melbourne and then flowed through to the other capital cities. A major difference between the post-2000 growth phase and the current growth phase is that the post-2000 phase was not preceded by falls in home values.
Another major difference is of course that the growth post-2000 was broad-based whereas the current growth in home values has been narrow, largely focussed on Sydney and Melbourne.
Finally household debt levels were substantially lower in 2001 than they are now, which is likely another major contributor to the stronger increase in home values then compared to now.
The previous growth phase is widely accepted to have commenced at the end of 2000 however, the commencement of the current rises in values has varied across each city.
<h3>Sydney</h3>
Home values began rising from May-12 and have increased by 38.8%, over the same period post-2000 they had risen by 60.2%.
Sydney value growth 2001-04 vs. current growth
<img src="https://www.corelogic.com.au/resources/property-pulse/article-graphs-img/2015-06-01--property-pulse-sydney.jpg">
 
<h3>Melbourne</h3>
Home values began rising from May-12 and have increased by 23.6% compared to 58.0% over the same period post-2000.
Melbourne value growth 2001-04 vs. current growth
<img src="https://www.corelogic.com.au/resources/property-pulse/article-graphs-img/2015-06-01--property-pulse-melbourne.jpg">
 
<h3>Brisbane</h3>
Home values reached a low point in May-12 and have since increased by 10.9%, in comparison home values had increased by 91.5% over the same timeframe post-2000.
Brisbane value growth 2001-04 vs. current growth
<img src="https://www.corelogic.com.au/resources/property-pulse/article-graphs-img/2015-06-01--property-pulse-brisbane.jpg">
 
<h3>Adelaide</h3>
Home values reached a recent low point in Mar-12 and have since increased 7.0%, in the post-2000 growth phase values had increased by 74.6% over the same timeframe.
Adelaide value growth 2001-04 vs. current growth
<img src="https://www.corelogic.com.au/resources/property-pulse/article-graphs-img/2015-06-01--property-pulse-adelaide.jpg">
 
<h3>Perth</h3>
Home values started rising from Oct-11 and have risen by 14.5% to Apr-14, over the same timeframe post-2000 home values had increased by 55.4%.
Perth value growth 2001-04 vs. current growth
<img src="https://www.corelogic.com.au/resources/property-pulse/article-graphs-img/2015-06-01--property-pulse-perth.jpg">
 
<h3>Hobart</h3>
Home values reached a low point in Nov-13 and have increased by 8.9% compared to a 16.7% increase over the same timeframe after 2000.
Hobart value growth 2001-04 vs. current growth
<img src="https://www.corelogic.com.au/resources/property-pulse/article-graphs-img/2015-06-01--property-pulse-hobart.jpg">
 
<h3>Darwin</h3>
Home values hit a low point in Jan-12 and have since risen by 17.3%, over the same timeframe post-2000 home values in the city rose 22.1%.
Darwin value growth 2001-04 vs. current growth
<img src="https://www.corelogic.com.au/resources/property-pulse/article-graphs-img/2015-06-01--property-pulse-darwin.jpg">
 
<h3>Canberra</h3>
Home values have been rising since the end of Jan-12 and have increased by 8.5% compared to 96.3% over the same timeframe post-2000.
Canberra value growth 2001-04 vs. current growth
<img src="https://www.corelogic.com.au/resources/property-pulse/article-graphs-img/2015-06-01--property-pulse-canberra.jpg">
 
The data shows that Sydney and Melbourne are the stand-out cities for capital growth currently. More importantly, the rate of capital growth over recent years across each capital city is significantly lower than over the same timeframe from 2001 onwards. In fact, Hobart and Darwin are the only capital cities in which the post-2000 level of capital growth is even close to the current level of capital growth. 
 
Article by Cameron Kusher, CoreLogic RP Data senior research analyst.
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Is this a house price boom? Comparing the 2015 with 2001 to 2004: Cameron Kusher

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The Australian Prudential Regulation Authority (APRA) released their quarterly Authorised Deposit-taking Institution (ADI) Property Exposures data for March 2015 earlier this week.  The data always provides a valuable insight into current and historic mortgage lending by domestic ADIs and this quarter’s release was no different.  Given the heightened vigilance from APRA around investment lending and overall lending standards as well as recent changes to mortgage policies from many banks, the latest release from APRA may also signal a cyclical peak in investment lending as well as interest-only mortgage lending.
<img class="aligncenter size-full wp-image-4819" src="https://blog.corelogic.com.au/wp-content/uploads/2015/05/Chart-14.jpg" alt="Chart 1" width="500" height="180">
Based on the value of all outstanding mortgages by households to Australian ADIs, there was $852.5 billion outstanding to owner occupiers (65.4% of all housing loans) at the end of March 2015 and $450.2 billion to investors (34.6%).  Over the 12 months to March 2015, the total value of outstanding mortgages to owner occupiers has increased by 7.2% compared to a 12.4% rise in outstanding credit to investors.  This represents a reduction in the annual rate of increase in owner occupier lending over the quarter and the greatest rise in investor lending since September 2010.  Much like other data received more regularly, the chart indicates that there remains significantly more momentum in the investor lending space than that for owner occupiers where growth is more moderate.  With changes to investment lending criteria now being adjusted we are likely to see a slowing of that rate of change over the coming quarters.
<img class="aligncenter size-full wp-image-4820" src="https://blog.corelogic.com.au/wp-content/uploads/2015/05/Chart-23.jpg" alt="Chart 2" width="500" height="182">
At the end of March 2015, a record high 38.6% of loans outstanding had an offset facility, up from 35.4% a year earlier.  Also a record high was the 37.4% of all outstanding mortgages which were interest-only, up from 35.4% a year earlier.  Just 0.2% of all outstanding mortgages were reverse mortgages and 2.3% were low documentation which was down from 3.1% a year earlier and at a record low proportion.  Other non-standard loans accounted for just 0.1% of all outstanding mortgages.  It seems that more and more mortgagees are accessing offset accounts in order to reduce the interest payable on their mortgages and maximise repayments of the principal while interest rates are so low.  The data also indicates that a high proportion of lenders are accessing interest-only mortgages which seem somewhat counterintuitive at a time when interest rates are so low.  Following APRA’s letter to ADIs in late in 2014 they specifically called out interest only lending as a risk and we would expect that over the coming months these types of mortgages will become harder to obtain.
<img class="aligncenter size-full wp-image-4821" src="https://blog.corelogic.com.au/wp-content/uploads/2015/05/Chart-33.jpg" alt="Chart 3" width="500" height="179">
The average balance on all outstanding mortgages at the end of March 2015 was $243,500.  The average balance has increased by 3.6% over the past year, its fastest annual rate of growth since the year to June 2012.  Loans with an offset facility ($290,600) and interest-only mortgages ($315,100) have much higher average outstanding loan balances.  The annual growth in average outstanding loan balances has been slightly more moderate for mortgages with an offset and interest-only mortgages at 3.3% and 3.4% respectively.   The annual rate of growth for mortgages with an offset is the fastest since September 2012 and the rate of growth for interest-only mortgages is at its fastest pace since September 2010.  Encouragingly, the data indicates that outstanding balances are reducing for low documentation and other non-standard loans as they become less common.  Over the past year the average balance has fallen by -2.9% for low-documentation loans and by -6.7% for other non-standard loans.  With mortgage rates low and fewer of these loan types being written it seems those that have these types of loans are continuing to pay down these mortgages at a fairly rapid pace.
<img class="aligncenter size-full wp-image-4822" src="https://blog.corelogic.com.au/wp-content/uploads/2015/05/Chart-43.jpg" alt="Chart 4" width="500" height="181">
Turning the focus to new loans written over the March 2015 quarter, 63.0% of the total value of new lending was to owner occupiers and 37.0% was to investors. The proportion of new lending to investors has fallen from a record high of 37.9% in the June 2014 quarter.  Based on this data it suggests that growth in demand for both owner occupier and investment lending may have peaked.  The annual change in new owner occupier and investment lending was recorded at 9.3% and 15.4% respectively.  The annual change in owner-occupied mortgages is growing at its fastest pace since March 2014 while the annual change in investment lending has been trending lower over the past two quarters.
<img class="aligncenter size-full wp-image-4823" src="https://blog.corelogic.com.au/wp-content/uploads/2015/05/Chart-51.jpg" alt="Chart 5" width="500" height="180">
Over the March 2015 quarter, 0.7% of new loans approved were low-documentation, 42.3% were interest-only, 0.1% was other non-standard loans, 42.2% were third party originated loans and 2.8% were loans approved outside of serviceability.  The 42.3% of new loans which were interest-only was down over the quarter with the proportion at its lowest level since March 2014.  The data also seems to reflect the slowing of growth in investment demand, remember that interest only loans tend to be (but not always) reflective of lending for investment purposes.  The ADIs seem to be increasing the usage of their broker channels with 42.2% of loans originated by third parties.  With 2.8% of new mortgages approved outside of serviceability over the March 2015 quarter, this was down from 2.9% over the previous quarter.
In terms of the annual change in new lending, the value of new low documentation loans approved rose 31.1% year-on-year, interest-only loans rose 19.7%, other non-standard loans fell -24.3%, third party originated loans increased by 14.9% and loans approved outside of serviceability increased 25.2%.  Although low documentation and loans outside of serviceability make up a small overall proportion of lending, the significant increase in lending for these loan types over the year is a potential cause for concern.
<img class="aligncenter size-full wp-image-4824" src="https://blog.corelogic.com.au/wp-content/uploads/2015/05/Chart-61.jpg" alt="Chart 6" width="500" height="183">
Looking at the loan to value ratios (LVR) of loans written over the March 2015 quarter,  25.7% of new loans had an LVR of less than 60%, 41.4% of loans had an LVR of between 60% and 80%, 21.7% had an LVR of between 80% and 90% and 11.1% had an LVR of 90% or more.  The 11.1% of new loans with an LVR of more than 90% is the lowest proportion since December 2010.  The 25.2% of mortgages with an LVR lower than 60% was the highest proportion since June 2013.  This falling proportion of loans above 90% LVR suggests there are proportionally less high-risk mortgages being written.  It should be noted that around a third of all new mortgages written (32.8%) had an LVR of more than 80%.
Looking at the year-on-year change in mortgage lending by LVR bands, mortgages with an LVR above 90% were the only segment to record a fall down -7.8%.  Mortgages with an LVR below 60% were up 18.6% year-on-year, LVRs of 60% to 80% were up 12.4% and LVRs of 80% to 90% rose 13.9%.  The 18.6% rise in mortgages with an LVR of less than 60% was the largest since December 2013, the 12.4% rise in mortgages with an LVR of 60% to 80% was the lowest since March 2013, the 13.9% rise in mortgages with an LVR of 80% to 90% was the lowest since March 2013 and the -7.38% fall in mortgages with an LVR greater than 90% was the largest fall since March 2011.
Given that we have recently seen many banks starting to implement changes in their lending policies, mostly focussed on investors we would anticipate that investor and interest-only lending will likely moderate over the coming quarters.  The decline in higher LVR lending is an encouraging development given a focus on mortgage serviceability at this time of low mortgage rates.  The increase in lending outside of serviceability and low documentation loans over the past year is likely to be an area of scrutiny for APRA over the coming months.
 
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APRA data shows new low doc loans potential cause for concern

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The Australian Bureau of Statistics (ABS) released data mid-May which revealed that 48.7% of state and local government taxation revenue over the 2013-14 financial year came from property related taxes.
The data showed that over the year, state and local governments collected a record $40.485 billion in taxes from property related sources. In comparison, they collected $21.341 billion in taxes from employers, $11.208 billion in taxes from the provision of goods and services and $10.024 billion in taxes on the use of goods and performance of activities.
As this shows, at a state and local government level property taxes are the largest source of revenue. Although property accounted for 48.7% of total tax revenue over the year, it has previously accounted for as much as 50.6% of all revenue in 2003-04.
<img class="aligncenter size-full wp-image-4780" src="https://blog.corelogic.com.au/wp-content/uploads/2015/05/Chart-13.jpg" alt="Chart 1" width="500" height="183">
The total value of property related taxes increased by 12.6% over the most recent financial year. This represents the greatest year-on-year increase in property related tax revenue since it rose 14.3% over the 2009-10 financial year. In comparison, taxes on employer’s payroll and labour force rose by 2.8%, taxes on the provision of goods and services rose 1.2% and taxes on the use of goods and performance of activities rose 3.5%. Overall, state and local government tax revenue increased by 7.2% over the year.
With home values nationally beginning to rise in June 2012, it is clear that state and local governments are a major benefactor of the strong housing market conditions. With higher home values, taxes such as land tax, municipal rates and stamp duty on conveyances all increase. Conversely when housing market conditions shift and value growth slows or values falls the largest source of tax revenue (property) is adversely affected.
<img class="aligncenter size-full wp-image-4781" src="https://blog.corelogic.com.au/wp-content/uploads/2015/05/Chart-22.jpg" alt="Chart 2" width="500" height="513">
Of the $40.485 billion in property related tax revenue collected in 2013-14, 40% came from municipal rates and 36% came from stamp duties on conveyances. Land tax was the only other sizeable contributor to property related tax accounting for 17% of revenue. Over the year the most significant increase in property related taxes came from stamp duty, up by 24.4%. The amount of tax revenue collected from municipal rates increased by 5.3%, and land taxes increased by 2.8%.
Property related tax revenue is only collected by those who own properties. Ultimately every property is owned by someone, some as an owner occupier and some as an investor. The taxes levied against property are typically only payable by the owner of the property. Given this, those who choose to rent rather than own property pay no tax on property. Not to mention the fact that the cost of renting is typically much lower than the cost of owning.
State and local governments have clearly experienced a significant revenue boost via the improvement in the residential housing market over the year. Stamp duty in particular has seen a significant rise. With sales volumes and property values rising there have been more sales to receive stamp duty from and at a higher price which also increases the stamp duty collected.
Of course, the issue with stamp duty is that it is a tax only collected across those properties which sell. From a residential perspective this is just 5% to 7% of the total housing stock over a given year. Stamp duty also acts as a disincentive for home owners to transact property on a more regular basis because it is a tax paid on a new purchase.
<img class="aligncenter size-full wp-image-4782" src="https://blog.corelogic.com.au/wp-content/uploads/2015/05/Chart-32.jpg" alt="Chart 3" width="500" height="182">
Looking more closely at stamp duty over time you can see just how inefficient the tax is, being heavily reliant on the performance of the housing market. The 2013-14 financial year was a bumper one for stamp duty revenue thanks to strong growth in home values and an increase in sales activity. As we’ve seen in the past, these good times won’t last forever and eventually state and local governments will feel the impact of a downturn in tax revenue as the housing market cools.
I have previously argued that the removal of stamp duties would encourage greater mobility of residents and provide less of a barrier to those home owners looking to upgrade or downsize. Of course state and local governments would lose 36% of their property related tax revenue and 17% of their total taxation revenue. 
Replacing stamp duty with a blanket land tax, another tax, would likely be unpopular and you’d have to consider how equitable that would be particularly for those who have recently paid stamp duty (if a blanket land tax regime were to be introduced it would likely be accomanpied by compensation or discounts to those who recently purchased under the stamp duty regime). 
To put a blanket land tax into perspective to cover the $15.976 billion in stamp duty revenue over the 2013-14 financial year, each residential dwelling would have to pay $1,705.60 based on the ABS estimate of 9,366,800 residential dwellings as at June 2014. 
Keep in mind that stamp duty isn’t just payable on residential property transactions and more revenue is available from commercial and industrial properties or the cost per home could be reduced.
<img class="aligncenter size-full wp-image-4783" src="https://blog.corelogic.com.au/wp-content/uploads/2015/05/Chart-42.jpg" alt="Chart 4" width="500" height="149">
Over the year, stamp duty revenue was higher in each state and territory except for the Australian Capital Territory (-1.7%). Across the other states the rise in stamp duty revenues were recorded at: 32.3% in New South Wales, 27.9% in Victoria, 27.3% in Queensland, 2.1% in South Australia, 9.5% in Western Australia, 10.8% in Tasmania and 12.7% in the Northern Territory.  
According to the CoreLogic RP Data Home Value Index, home values rose across each capital city except for Darwin over the year with the largest rises in Sydney, Melbourne and Brisbane. Clearly home value rises across the capital city markets have had a positive effect on stamp duty revenues.
The data highlighted shows that property related taxes are the most important source of revenue for state and local governments, accounting for 48.7% of their total taxation revenue. The issue of course is that these levels of government are looking to constantly grow their revenues. The two main sources of property related revenue are rates and stamp duty. Rates can be grown by encouraging a greater number of ratepayers into a region (create more housing) and stamp duty can only be lifted by changing the rates or encouraging higher prices and/or more sales. 
In certain regions increasing the supply of ratepayers is not possible so it is clear that stamp duty is an extremely important source of revenue.  With capital city home values continuing to rise throughout the 2014-15 financial year, we anticipate that stamp duty will be higher once again. The question is whether governments can continue to rely on property being a one-way bet?
The ACT has already announced a phase out of stamp duty over the next two decades, and there is also discussion around a move away from stamp duty in South Australia.  The major benefit to State governments under a broad land tax arrangement as opposed to stamp duty would be the consistency of revenue flows rather than the lumpy market driven revenue which is evident under the stamp duty system.
Cameron Kusher is CoreLogic RP Data’s senior research analyst. You can read his posts here.
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Property related tax revenue surpasses $40 billion: Cameron Kusher

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The Australian Bureau of Statistics (ABS) released building approvals data for March 2015 yesterday. 
The data showed that over the month there were 19,419 new dwelling approvals which was a record high and 2.8% higher than levels in February. The data highlights that approvals and subsequently new housing construction is continuing to surge across the country.
<img class="aligncenter size-full wp-image-4655" src="https://blog.corelogic.com.au/wp-content/uploads/2015/05/Chart-1.jpg" alt="Chart 1" width="500" height="158">
In March there were more units (9,767) approved for construction than there were houses (9,651). Although this may not sound like a big deal, this has only occurred on two previous occasions. 
House approvals were 0.5% higher over the month and are 1.3% higher year on year. In comparison, unit approvals rose 5.3% over the month and are 57.9% higher year on year. Keep in mind that the number of unit approvals tend to be more volatile than houses however, the surge coupled by the fact that there were more approvals for units than houses shows a growing tendency toward new unit construction.
<img class="aligncenter size-full wp-image-4656" src="https://blog.corelogic.com.au/wp-content/uploads/2015/05/Chart-2.jpg" alt="Chart 2" width="500" height="159">
Over the past 12 months, there have been a record high 210,484 dwellings approved for construction which is 11.2% higher than at the same time last year. Over the period, there have been 114,874 houses approved and 95,608 units. Although house approvals outnumber unit approvals on an annual basis, unit approvals accounted for a record high 45.4% of all dwelling approvals over the past year.
<img class="aligncenter size-full wp-image-4657" src="https://blog.corelogic.com.au/wp-content/uploads/2015/05/Chart-3.jpg" alt="Chart 3" width="500" height="180">
While there is a growing prominence of units approvals, so too is there a growing prominence of these approvals being for high density stock. Over the 12 months to March 2015, a record high 60.5% of all unit approvals were for units in a block of four or more storeys. To put this surge into perspective, 10 years ago just 39.7% of unit approvals were for units in these higher density buildings. You only have to drive through inner city areas of Sydney, Melbourne or Brisbane to see that there is a current shift towards much higher density living and today’s data shows there is plenty more in the pipeline.
<img class="aligncenter size-full wp-image-4658" src="https://blog.corelogic.com.au/wp-content/uploads/2015/05/Chart-4.jpg" alt="Chart 4" width="500" height="158">
The capital city data isn’t seasonally-adjusted so it doesn’t line-up with the national data however, over the month there were 15,349 dwellings approved for construction across the combined capital cities. Like the national figures, this was also a record high number of approvals following a 9.7% monthly increase and a 33.5% year on year increase.
<img class="aligncenter size-full wp-image-4659" src="https://blog.corelogic.com.au/wp-content/uploads/2015/05/Chart-5.jpg" alt="Chart 5" width="500" height="159">
Looking at the split between capital city house and unit approvals there were 6,709 houses and 8,640 units approved for construction over the month. House approvals were 7.5% higher over the month and 9.0% higher year on year. Unit approvals increased by 11.5% over the month and by 61.8% over the year. Although total approvals were at a record high neither houses or units recorded their highest month for approvals.
Across the capital cities, dwelling approvals increased over the month in all capital except for Melbourne and Darwin. year on year approvals are higher in each capital city except for Canberra.
<img class="aligncenter size-full wp-image-4660" src="https://blog.corelogic.com.au/wp-content/uploads/2015/05/Chart-6.jpg" alt="Chart 6" width="500" height="157">
Looking at annual approvals across the capital cities, annual approvals are at a record high in Sydney, Melbourne and Brisbane as well as being just shy of a record high in Perth. Hobart (40.4%), Melbourne (25.5%), Brisbane (25.1%) and Darwin (12.1%) have recorded the greatest increases in approvals over the year. Dwelling approvals have fallen -36.8% in Canberra over the year, while increases in Sydney (4.9%), Adelaide (10.3%) and Perth (11.4%) have been relatively moderate.
<img class="aligncenter size-full wp-image-4661" src="https://blog.corelogic.com.au/wp-content/uploads/2015/05/Chart-7.jpg" alt="Chart 7" width="500" height="156">
Annual house approvals were higher in March 2015 than a year earlier in all cities except for Adelaide (-1.3%) and Canberra (-9.0%). Across the remaining cities the annual increases in house approvals were recorded at: 16.5% in Sydney, 14.6% in Melbourne, 29.6% in Brisbane 6.1% in Perth, 54.0% in Hobart and 6.9% in Darwin. What is noticeable from the above chart is that Melbourne (the 2nd largest city) has approved substantially more houses (22,878) than Sydney (the largest city) (13,776). Similarly, Perth (the 4th largest city) has approved far more houses (19,783) than both Sydney and Brisbane (the 3rd largest city) (10,826).
<img class="aligncenter size-full wp-image-4662" src="https://blog.corelogic.com.au/wp-content/uploads/2015/05/Chart-8.jpg" alt="Chart 8" width="500" height="156">
While annual capital city unit approvals have risen by 15.2% over the year, across the capital cities unit approvals were lower over the year in Sydney (-0.2%), Hobart (-6.9%) and Canberra (-49.9%). Elsewhere the annual increases in unit approvals have been recorded at: 35.2% in Melbourne, 21.7% in Brisbane, 36.5% in Adelaide, 28.4% in Perth and 16.6% in Darwin.
<img class="aligncenter size-full wp-image-4663" src="https://blog.corelogic.com.au/wp-content/uploads/2015/05/Chart-9.jpg" alt="Chart 9" width="500" height="181">
When we look at the annual approvals picture, more than half of all approvals over the year were for units in Sydney (66.2%), Melbourne (56.9%), Brisbane (58.6%), Darwin (56.2%) and Canberra (53.9%). Over the past 12 months, a record high 52.7% of all capital city dwelling approvals were for units. Unit approvals have accounted for more than half of all approvals in Sydney, Darwin and Canberra for many years however, it is a relatively new phenomena in Melbourne and Brisbane. 
In our opinion this raises some concerns given the rapid ramp-up in unit approvals in these two cities. Although lifestyle preferences are changing we have some concerns about an oversupply of units in these markets. Especially when you consider that unit stock is generally favoured by investors and rents are already growing at their slowest pace in a decade. 
Furthermore, capital growth for units is lower than that for houses across four of the five cities in which there have been more unit approvals than house approvals over the past year, the exception is Darwin. Value growth for units over the year has been particularly sluggish in comparison to house value growth in Melbourne and Brisbane.
The data is encouraging; there remains a large volume of new house and unit developments being approved for construction. Much of the new unit stock is high density which by nature means most of it is taking place in inner city areas. 
Although there is a strong pipeline of construction we continue to have concerns of a new unit oversupply in certain areas, particularly in inner city Melbourne and Brisbane. There are some concerns a record-high level of approvals, should they ultimately end up constructed, should alleviate some of the housing shortages and contribute to a slowing of the escalation in home values. What is somewhat worrying is that the Sydney market, where home values are escalating rapidly on the back of low overall housing supply, is not experiencing as significant a ramp-up of approvals as we are experiencing across most other capital cities. 
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Dwelling approvals hit new record highs in March 2015: Cameron Kusher

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Measuring the cost of housing and housing affordability is such an abstract idea because it is not a one size fits all measure and there are so many factors which contribute to affordability or unaffordability.
Most of the common measures have one or a number of glowing weaknesses which I will cover.
<ul>
<li>Interest rates</li>
</ul>
What interest rate do you use when a typical mortgage is 25 to 30 years? Most measures utilise the current mortgage rate and while that may tell you what affordability is like now affordability is important to analyse throughout the life of the mortgage not just as you purchase. With generational low mortgage rates right now, affordability in many areas looks good but if rates were to normalise affordability would look very different.
<ul>
<li>Household income</li>
</ul>
What figure do you use for household income? Much like interest rates household incomes will fluctuate over the 25 to 30 year cycle of a mortgage. Given this, are household income measures appropriate or is it better to assume a single or dual income household? Furthermore, outside of the Census, which is conducted every five years, this data is only published semi-regularly and at a state level. Housing markets and income levels are very different across different regions of the country.
<ul>
<li>International comparisons</li>
</ul>
Is a home in Australia the same as a home anywhere else in the world? In the sense that it provides shelter it is, however, tax regimes, the cost and scarcity of developable land, the provision of infrastructure and the availability of jobs are all other factors that contribute to the cost of housing. Furthermore, most comparisons are not apples with apples. Australian housing markets are dominated by detached houses whereas markets like Tokyo, Singapore, Hong Kong and Manhattan are largely apartment markets while London for example is predominately attached housing types (what we would call terraces or townhouses). The fact that Australian homes are, at least for the large part, detached and the largest in the world will also contribute to a higher cost.
Ryan Fox and Richard Finlay from the RBA wrote an excellent paper back in 2012 which provides an overview of some of the challenges around blending household income data with housing prices which is available <a href="https://www.propertyobserver.com.au/https://www.rba.gov.au/publications/bulletin/2012/dec/2" target="_blank">here</a>.
CoreLogic RP Data don’t regularly publish a measurement of housing affordability, however, a different perspective on housing affordability is to look at the cost of renting relative to the price of a home. Using our data on advertised median rental rates and median selling prices of homes we can determine how many years difference there is between the cost of renting and the cost of a home. This analysis focusses on the relative affordability between the two primary means of shelter; renting or owning a home. This analysis doesn’t factor in interest rates or household incomes and doesn’t compare internationally. What it does do is look at the difference between the two forms of housing residents have, to rent or to purchase.
With rental growth at its lowest level in more than a decade, we would expect that the number of years of rent required to purchase a home will rise over the coming year. As a result we may see more residents choosing not to purchase their own home despite the low mortgage rates available.
<img src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/chart-1.jpg" alt="chart 1" width="500" height="181">
Across the combined capital cities, the annual rent for a house is $25,552, for a unit it is $24,013 and for combined houses and units (dwellings) it is $25,311. In comparison, the median house price is $559,000, the median unit price is $470,000 and the median dwelling price is $530,000.
Based on this data, to buy a house would take 21.9 years of rental payments, to buy a unit requires 19.6 years of rent and a dwelling would take 20.9 years of rental payments. As the chart shows, the differential has been greater at the end of 2007 and there has been little change over recent years. In saying this, in March 1997, the differential was much lower at 10.8 years for houses and 11.7 years for units.
<img src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/chart-2.jpg" alt="chart 2" width="500" height="182">
In Sydney, the cost of a house is equivalent to 24.6 years of rents and the cost of a unit is 21.7 years of rent.
<img src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/chart-3.jpg" alt="chart 3" width="500" height="182">
Across Melbourne the median house price is equivalent to 23.8 years of rent while the cost of a unit equates to 21.3 years of rent.
<img src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/chart-4.jpg" alt="chart 4" width="500" height="181">
A typical Brisbane house costs 20.9 years’ worth of rent while the typical Brisbane unit costs 17.7 years of rent. Note that the 17.7 years is the lowest since July 2004.
<img src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/chart-5.jpg" alt="chart 5" width="500" height="183">
The median house price in Adelaide is equivalent to 22.0 years of rent and the unit price amounts to 20.6 years of rent.
<img src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/chart-6.jpg" alt="chart 6" width="500" height="182">
The median Perth house costs 21.0 years’ worth of rent while the median unit costs 19.1 years’ worth of rent.
<img src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/chart-7.jpg" alt="chart 7" width="500" height="183">
A typical house in Hobart costs the equivalent of 18.9 years of rent while a unit costs 17.0 years of rent.
<img src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/chart-8.jpg" alt="chart 8" width="500" height="183">
A house in Darwin costs 18.4 years’ worth of rent while a unit costs 18.9 years’ worth of rent.
<img src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/chart-9.jpg" alt="chart 9" width="500" height="182">
The median house price in Canberra is equivalent to 22.6 years of rent while the median unit price is 19.7 years of rent.
<img src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/chart-10.jpg" alt="chart 10" width="500" height="232">
It is also interesting to look at the relativity between cities. The way to read this chart is if you use Sydney as an example, rents are on the left and purchase prices are at the top. Given this, if you rent in Sydney and want to purchase in Sydney it costs 22.4 years of rent, whereas if you live in Sydney but want to purchase in Melbourne it is equivalent to just 16.8 years of your Sydney rent.
The table shows that those renting in the more expensive cities would have a much easier time entering into home ownership outside of these cities. On the other hand, if you are thinking about buying in Sydney but are currently renting in another city you could be in for a nasty shock when you go to purchase.
By no means do I think this analysis is a perfect picture of housing affordability however, I do think it is a different way to measure it. It still has the weakness of using medians and of course, very few people purchase the median home and in particular first time buyers should be looking to purchase below the median price. Nevertheless it does show the difference in the cost of renting and housing and potentially provides some food for thought for those looking to enter into home ownership.
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Measuring the relativity of housing costs: Cameron Kusher

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The Australian Bureau of Statistics (ABS) released Consumer Price Index (CPI) data for the March 2015 quarter recently.
The data showed that over the quarter, headline inflation was recorded at 0.2% taking annual inflation to 1.3%. The Reserve Bank’s (RBA) preferred measures of underlying inflation, the trimmed mean and weighted median, were recorded at an annual rate of 2.3% and 2.4% respectively. Headline inflation is well below the RBA’s target range of 2% to 3% however, underlying inflation is towards the bottom of the RBA target range.
From a housing market perspective, it is useful to understand the real change in home values. We all know that the Sydney market is recording strong rates of value growth at the moment while most other capital cities are seeing more moderate growth. When you take the impact of inflation into consideration, growth is generally much more tepid.
<img class="aligncenter size-full wp-image-4534" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-14.jpg" alt="Chart 1" width="500" height="181">
Over the 12 months to March 2015, nominal home values across the combined capital cities increased by 7.4% however, including inflation, real home value increases have been recorded at 6.0%.
Across the individual capital cities, real home value growth over the past year has been below 1.5% in all cities except for Sydney (12.5%) and Melbourne (4.2%).
<img class="aligncenter size-full wp-image-4535" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-25.jpg" alt="Chart 2" width="500" height="498">
When you compare the annual change in real capital city home values to the 10 year real annual change it shows that only Sydney, Melbourne and Brisbane are outperforming the decade average. Elsewhere real home values have increased at a rate which is below the decade average.
<img class="aligncenter size-full wp-image-4536" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-33.jpg" alt="Chart 3" width="500" height="182">
Over the past five years, real combined capital city home values have increased by 1.2% per annum compared to 2.2% per annum over the past decade and 4.3%pa over the past 15 years.
Over the past five years, real home values have increased at a rate of 4.0% per annum in Sydney and by 1.3% per annum in Melbourne. Every other capital city has recorded real value falls over the period with values down -2.3% per annum in Brisbane, -1.3% per annum in Adelaide, -1.0% per annum in Perth, -3.9% per annum in Hobart, -1.6% per annum in Darwin and -1.2% per annum in Canberra.
Even over the past 10 years home values have fallen in real terms in Hobart whilst they have recorded gains elsewhere. Over the longest time frame shown, 15 years, Perth has recorded the strongest annual value increases at 5.5% per annum, followed by: Melbourne (5.0% per annum), Brisbane (4.8% per annum), Hobart (4.7% per annum), Canberra (4.6% per annum), Adelaide (4.5% per annum), Darwin (4.2% per annum) and Sydney (3.5% per annum).
<img class="aligncenter size-full wp-image-4537" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-43.jpg" alt="Chart 4" width="500" height="179">
One of the features of the capital city housing market has been the strength of growth in home values across Sydney and Melbourne since the end of 2008 following value falls during the financial crisis in 2008. From December 2008 to March 2015 nominal home values have increased by 40.2% however, in real terms value growth is much more moderate at 18.2% over the period. Over this period real home values have recorded falls in Brisbane, Adelaide and Hobart while Perth, Darwin and Canberra have each recorded real home value growth of less than 10%. Only Sydney (42.0%) and Melbourne (26.9%) have recorded any significant real increases in home values over the period.
Earlier this week RBA Governor Glenn Stevens noted that there is generally too much attention on the Sydney housing market which ignores the 80% of Australians that don’t live in that city. Looking at the real change in home values really highlights this point; value growth has been comparatively very strong over recent years in Sydney, while most cities have actually recorded real declines in values.
What’s also interesting is that although Sydney is seeing a strong rise in both nominal and real home values currently, over the past 15 years it has been the overall weakest performing capital city housing market.
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Inflation adjusted home value growth changes the narrative: Cameron Kusher

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The last Census showed that across Australia we have ample bedrooms to cater to our population yet the lack of new housing supply over recent years along with increasing demand for homes has resulted in increases in home values. 
Particularly in Sydney and Melbourne the escalation in home values over recent years has been strong while most other capital cities have largely remained on the sidelines.
The 2011 Census showed that at that time there were 21,507,717 residents of the country. The data also showed that there were 7,760,320 private dwellings which were occupied at the time with a further 10.7% unoccupied. Given this, and if we assume that everyone has a dwelling to live in, each occupied dwellings would have an average of 2.77 residents.
<img class="aligncenter size-full wp-image-4530" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Number-of-bedrooms.jpg" alt="Number of bedrooms" width="1349" height="680">
According to the Census data, on average occupied dwellings in Australia have 3.1 bedrooms which is theoretically more than ample bedrooms to house the population. 
The above table which is lifted from the Census shows that there are far more bedrooms than required across the country. In fact, if we exclude those labelled as ‘none’, assume the four bedrooms or more category is just four bedrooms and exclude those where the number of bedrooms aren’t stated there were 22,866,601 bedrooms at the time of the 2011 Census. When you consider that many married couples sleep in the same room there is actually a substantial oversupply of bedrooms nationally.
The problem is we have a housing market and taxation system which largely discourages home owners from moving to more appropriate accommodation as their lifestyle evolves. Furthermore, the high cost of housing makes it difficult for some younger home owners to move into more appropriate accommodation as their family grows.
 First of all, home owners are taxed via stamp duty when they buy a new home, if they also sell they incur agent commissions. Both of these factors act as a disincentive for home owners to move on a more regular basis. 
<img class="aligncenter size-full wp-image-4531" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-24.jpg" alt="Chart 2" width="500" height="180">
The disincentive for home owners to move on a more regular basis is highlighted when we look at the turnover of house and unit stock. On a monthly basis, the record-high number of sales occurred in July 2003 when there were 59,414 sales over the month. In comparison over the past 12 months there has been an average of 40,561 dwelling sales a month which is -32% lower than the peak.
While sales volumes peaked in July 2003, the national population was recorded at 19.7 million persons at the end of June 2003. The latest data to September 2014 shows that the national population was 23.6 million persons which is 3.9 million more persons than there were in June 2003. Despite the fact that the population is substantially larger than it was in 2003 there are now fewer homes selling. 
Housing is one of the most heavily taxed asset classes; the most recent data for the Australian Bureau of Statistics (ABS) showed that over the 2012-13 financial year, $35.931 billion in property related taxes were collected by state and local governments. Looking at the breakdown of this data, property related taxes were collected from the following sources: 17% was land taxes, 40% was municipal rates, 36% was stamp duty on conveyances, 3% was government guarantee borrowing levies and 4% was from other sources. 
Stamp duty in particular is the most contentious of these taxes because it is only collected from homes which are transacted rather than being broadly taxed on all homes. Over a typical year only around 5% to 7% of properties nationally are sold, given this more than a third of all property related revenue is collected based on how many homes are sold in a given year. As I have mentioned previously, in my opinion shifting away from a turnover dependent tax such as stamp duty to a more stable and broad tax such as land tax would seemingly make sense as well as potentially improve labour mobility and encourage residents to shift into more appropriate accommodation.
While investment properties incur capital gains tax, the sale of a home that is owner occupied doesn’t incur any capital gains tax. If the owner occupied home is sold, agent commissions are payable and if a new home is purchased stamp duty would be payable. This is probably one of the major reasons for the excess number of bedrooms across the country, after the children move out of home there is simply no real incentive to downsize. Furthermore, many homes have seen significant value appreciation over the past 25 years so there is substantial equity in these homes which can be withdrawn by the owners.
As owners of owner occupied property enter into retirement, their tax-free home is also currently not included in the pension asset test. Essentially this means that if an owner has held their home for say 25 years they have likely seen a significant rise in the home’s value and can then retire and still receive the pension. Again, if they were to sell and re-purchase they would incur stamp duty so there is little incentive to do so. Most people enter retirement with little or no mortgage so excluding the family home from the pension asset test seems counter-intuitive as it creates an additional cost to the government for people who can afford to sell or take out a reverse mortgage in order to fund their own retirement. On the other hand, there is the argument that some pensioners have very little other than their home to fund their retirement so there would likely need to be some balancing with regard to this policy. You also don’t necessarily want to put pensioners in a position where they have to sell their home to fund their retirement and as a result have to move further away from their support network.
Australia needs to investigate ways to encourage greater household mobility along with encouraging people to shift over time into more appropriate housing. The removal of stamp duty would seem like an easy place to start along with including the family home in the pension asset test for retirees. Stamp duty removal would make it easier for home owners to move into more appropriate and suitable accommodation as their family life cycle changes. Including the family home in the pension asset test may act as a disincentive for retirees to stay in their large tax-free homes and would also reduce the impost on the Government to pay a pension to these retirees, many of whom have the equity in their home to fund their own retirement or could release the equity to fund their retirement by moving to a smaller home.
The data clearly shows that there isn’t an undersupply of bedrooms, it is simply that many of these homes are locked away from the market because there is no incentive to move homes. Incentivising home owners to shift to more appropriate accommodation could go a long way to improving supply-side issues in the housing market.
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Australia has a glut of bedrooms but a dearth of policies: Cameron Kusher

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Earlier this week the Australian Bureau of Statistics (ABS) released building activity data for the December 2014 quarter. 
The data includes quarterly figures for dwelling commencements and dwelling completions. With a record number of dwelling approvals coming through the system, it is important to track this data as it provides insight into how many of these approvals are ultimately being constructed.
Over the past 30 years, approvals and commencements have been highly correlated with the vast majority being approved and commenced in the same quarter. If we look at the relationship between approvals and completions, most houses are completed two quarters after approval while most units are constructed three quarters after being approved. 
<img class="aligncenter size-full wp-image-4516" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-13.jpg" alt="Chart 1" width="500" height="179">
Based on this data over the past 30 years, 96.5% of house approvals have moved to the commencement phase and 96.2% of unit approvals have been commenced. 
Looking at the completion rate for houses based on a two quarter lag, 95.1% of houses which have been approved are ultimately completed. For units the completion rate has been somewhat lower. Using a three quarter lag between approval and completion, 86.9% of units approved for construction have been completed. 
On this logic, detached housing approvals are much more likely to result in a completed product, with a fallout rate of just 5%, while apartment approvals are less likely to ultimately be constructed, with a dropout rate close to 15%.
<img class="aligncenter size-full wp-image-4517" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-23.jpg" alt="Chart 2" width="500" height="179">
The results are much different over the past five years with the correlations not as strong as they have been over the longer term, particularly for apartments. 
The commencement rate for properties approved for construction over the past five years has been stronger than it has been over the past 30 years. Over the past 30 years, 96.5% of houses approved had been commenced in the same quarter compared to 98.1% over the past five years. For units, the commencement of approvals has typically been a quarter later over the past five years however, the likelihood of commencement has increased from 96.2% over the past 30 years compared to 97.8% over the past five years. 
Looking at the completion rate of approvals over the past five years, with a lag of two quarters 96.7% of houses approved for construction have been completed over the past five years. For units, based on a three quarter lag 85.1% of units approved have been completed. Note that the completion rate of houses over the past five years has been stronger than over the past 30, while the unit approval to completion rate has been slightly lower.
One of the possible reasons for the reduced completion rate of units is likely to be the increasing level of high density unit construction. While the data indicates a lag of three quarters from approval to completion the reality is higher density unit construction takes significantly longer to complete often a number of years. 
The data highlights, whether you look at it over the longer or shorter timeframe, that houses which are approved for construction are ultimately more likely to be completed than units. With a record-high number of unit approvals currently there is no guarantee that they will all end up constructed. The long term and short term averages indicate we should expect around 15% of apartment approvals won’t transition to a completed product.
The more timely dwelling approvals data showed an all-time high number of approvals in January and the second strongest month on record in February. The data clearly shows that the pipeline of housing construction is continuing to grow and that commencements will likely remain high for most of 2015 while the heightened level of completions is likely to extend out over the next few years at least.
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The relationship between dwelling approvals, commencements and completions: Cameron Kusher

Malaysian developer <a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> is the latest to jump into St Leonards booming Transport Oriented Development precinct.

The developer, which has previously delivered Sapphire by the Gardens apartment development in Melbourne, identified the Atchison Street site in 2023. It filed a Scoping Report around 12 months ago, and now has revealed the designs for the new&nbsp;40-storey mixed-use tower.

The State Significant Development Application covers <a href="https://next-portal.urban.com.au/projects/14650/summary">20-22 Atchison Street</a>, a 1,374 sqm site positioned between St Leonards Station and the new Crows Nest Metro station.

Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the project would deliver 181 apartments, above a four-storey commercial podium, five basement levels, and new public domain works along Mitchell Street. The apartment mix comprises 35 one-bedroom apartments, 39 one-bedroom-plus-study apartments, 85 two-bedroom apartments, and 22 three-bedroom residences.

The proposal has been lodged as a shop-top housing development under the NSW Government’s TOD planning pathway, which allows increased density around key transport infrastructure. The site sits within the recently rezoned Crows Nest Accelerated TOD Precinct.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b799673d-48e2-46b0-801a-0e33a9330100" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20site.png?VersionId=dPh0UfwfaHpbFL1R7H1cbZNbIW0CHbCC" />

SP Setia acquired the Atchison Street site as part of its continued expansion into the Australian apartment market. In comments made to City &amp; Country (The Edge Malaysia) in 2023, SP Setia President and CEO Datuk Choong Kai Wai described the acquisition as “a strategic move” aligned with the group’s post-pandemic market recovery strategy.

“Our target for this exceptional development is local and overseas buyers, including first-home buyers, downsizers and investors,” Choong said.

The tower has been designed as a slender vertical form rising from a mixed-use podium, with COX Architecture positioning the development as a response to the evolving St Leonards and Crows Nest skyline.

“The purpose of the project is to facilitate the delivery of high-quality housing at a strategically located site and deliver a built tower outcome that is consistent with the desired future character of St Leonards and aligns with the TOD controls,” the design report stated.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b1a85eee-76f7-436c-a6da-73ba827b9b13" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20entry.png?VersionId=dA9jHGPMcm.dDbwk4QfxqWiY5bfh3UVt" />

The podium would incorporate retail uses fronting Atchison Street, commercial tenancies, landscaped communal areas, and pedestrian improvements along Mitchell Street. Vehicle access and loading would be consolidated via Atchison Lane.

Residents would have access to more than 665 sqm of communal indoor and outdoor spaces, while the development proposes 96 parking spaces across five basement levels.

The proposal also includes a commitment for 10 per cent of residential floor space to be allocated toward affordable housing through a monetary contribution.

COX said the tower form responds directly to the emerging high-density character of the precinct while seeking to maximise solar access, cross ventilation, and outlook from apartments.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="2163f85c-f63b-4be3-aafa-f8763976cec5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29_5.png?VersionId=WiAmtIKJ6.ZQ41EtYEQ1fol7AeorKBlL" />

“The building is orientated towards north,” the Apartment Design Guide compliance report noted, adding that the tower’s slim form was driven by the constrained inner-urban site dimensions.

The design also incorporates landscaped setbacks and communal open space at podium level, intended to soften the interface with surrounding streets and improve pedestrian amenity.

The project adds to a growing wave of redevelopment proposals reshaping St Leonards and Crows Nest following the opening of the Sydney Metro City line and the NSW Government’s push for higher-density housing around major transport nodes.

Last week Stockland filed plans just down the road. They want to build a <a href="https://www.apartments.com.au/new-apartments/601-pacific-highway-st-leonards-nsw-2065">52-storey tower on Pacific Highway</a>.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">First look: Stockland plans 52-storey, 538-apartment St Leonards tower&nbsp;</a>

Joel Robinson

First look: SP Setia targets St Leonards skyline with 40-storey TOD tower

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> has revealed plans for a new mixed-use tower at 10 Dangar Street, Wickham, advancing a proposal that would reshape the southern gateway to Newcastle’s city centre with one of the city’s tallest residential buildings.

The State Significant Development proposal, now on exhibition, seeks approval for a <a href="https://www.apartments.com.au/new-apartments/bowline-10-dangar-street-wickham-nsw-2293">43-storey tower</a> immediately adjacent to the Newcastle Interchange. The project would deliver around 200 apartments, including 42 affordable housing dwellings, alongside 99 co-living units, a 171-room hotel, retail space, and new public domain integrated through the site.

The scheme marks a significant escalation of plans previously approved for the site. Urban Property Group took over the prominent 2,904 sqm parcel, where excavation and demolition had already commenced under an earlier consent for a 14-storey mixed-use development.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="58a96dd9-407f-4d20-86b4-94e4bfeef74b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20podium.png?VersionId=LGlf08pdFGAZDzvx_CXC4XakHNZRuEE0" />

Designed by <a href="https://www.apartments.com.au/architects/sjb-architects">SJB</a>, the tower has been conceived as a landmark transit-oriented development anchored to the Newcastle Interchange precinct. The proposal includes 245 build-to-sell apartments across a mix of one, two, and three-bedroom residences, as well as two penthouses. Fifteen apartments and one operational unit are earmarked for NDIS housing. The co-living component would add a further 99 units, while the podium would accommodate retail uses and hotel facilities.

SJB said the site presents “a valuable opportunity to anchor the precinct by setting the standard for design, active ground planes and character at the key southern gateway.”

The architecture responds directly to the site’s position beside major transport infrastructure and within one of Newcastle’s fastest-evolving urban renewal precincts. The tower form sits above a sculpted podium designed to frame new public spaces, including a through-site pedestrian link connecting Station Street to Hannell Street, landscaped plazas, and activated retail edges.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="a7bd6ff0-f7db-4ce8-a6dc-ea56e72c6149" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20lanne.png?VersionId=xzf39VADyhj7zBQY2I9fx9vI62u2tuSb" />

The design report describes the project as part of the broader transition of Wickham into “a vibrant, high-quality mixed-use urban precinct” that leverages proximity to the station, open space, and regional connectivity.

A detailed public art strategy has also been prepared for the development. The strategy positions the project as “a transit-oriented development of state significance at the gateway to Newcastle’s city centre” and outlines a series of integrated artworks responding to Newcastle’s industrial and transport heritage.

Creative Road’s curatorial framework for the project, titled Unveil, draws on “stratified surfaces, carved volumes, and light-filled apertures” while referencing Newcastle’s transformation from an industrial city into a contemporary education and technology hub.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="77a882bb-14b1-4d28-99ff-9438e39508c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20site.png?VersionId=cevgo_vN0eKPK78P8YcEu3mKPLkpFqE7" />

The proposal is being advanced through the NSW Housing Delivery Authority pathway after being declared State Significant Development in June 2025. The accompanying scoping report states the development aims to “maximise the site’s proximity to the Newcastle Interchange by delivering transit-oriented development” while increasing housing supply and affordable housing provision within the Newcastle LGA.

Urban Property Group’s plans align with the long-term strategic vision established under the Wickham Master Plan, which identified the interchange precinct as suitable for substantial uplift in height and density. The current proposal would significantly intensify that vision, positioning the tower among the tallest developments proposed for Newcastle.

The site sits immediately north of the Newcastle Interchange, bounded by Dangar Street, Hannell Street, and Charles Street. It is surrounded by a rapidly growing cluster of residential towers and mixed-use projects that have emerged following the completion of the light rail and transport interchange.

First look: Urban Property Group unveils Newcastle’s latest tower at Wickham interchange

Bottega House has completed settlement of a landmark riverfront site in Macquarie Street, St Lucia, representing its first major Brisbane development.&nbsp;

Positioned on the banks of the Brisbane River, the <a href="https://www.apartments.com.au/new-apartments/180-macquarie-street-st-lucia-qld-4067">premium site at 180 Macquarie Street</a> features uninterrupted river frontage in one of Brisbane’s most tightly held residential precincts.&nbsp;

The proposed development, currently under assessment with Brisbane City Council, has been designed by <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/mim-design">Mim Design</a> and will deliver a boutique collection of premium residences positioned specifically for owner occupiers and downsizers.&nbsp;

The residences are set to redefine luxury apartment living in the area, with a focus on architectural quality, refined finishes, landscape integration and elevated amenities including curated wellness facilities, resort-style pools and recreation spaces rarely seen in the local market.&nbsp;

Exclusive sales for the project will be led by Keenan &amp; Byrne, ahead of an anticipated launch later this year.&nbsp;

Bottega House Managing Director Nick Malloch said the project reflects the group’s ambition to deliver a highly curated residential offering within one of Brisbane’s most tightly held precincts.&nbsp;

“This is an incredibly rare riverfront opportunity and one we have approached with a long-term perspective,” Malloch said.&nbsp;

“Our vision from the outset was to create a boutique collection of residences that feel more like private homes than traditional apartments, with generous proportions, refined finishes and exceptional amenity throughout."

Malloch says there is a&nbsp;lack of premium owner-occupier stock of this quality in the market, particularly for downsizers wanting space, privacy and a true lifestyle offering without compromise.&nbsp;

"Demand is expected to be strong given the scarcity of premium riverfront opportunities of this nature within Brisbane’s inner-west."&nbsp;

Bottega House secures landmark riverfront site in St Lucia 

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The arrival of the first piling rig officially marks the commencement of construction at SIERA’s new beachside apartment development, Exhale, in Northcliffe.

<a href="https://www.apartments.com.au/new-apartments/exhale-surfers-paradise-8-enderley-avenue-surfers-paradise-qld-4217">Exhale</a>, a glass-encased tower featuring 54 large-scale apartments at 8 Enderley Avenue, is SIERA’s third Gold Coast development. It follows the recently completed PIPIS Bilinga beachfront project, which achieved suburb-record prices, and the soon-to-be-completed Chevron Island development, Tapestry.

[smartcode_project:default project_id=112661 project_image_fid=359603]

<a href="https://www.apartments.com.au/developers/siera">SIERA</a> Founder and Managing Director Brent Thompson said the arrival of the piling rig represented a significant milestone for the development, which is scheduled for completion in late 2028.

Over the next month, around 260 piles are expected to be installed as work progresses on the basement structure. The building is anticipated to rise above ground level early next year, before unveiling its sculptural glass curtain wall, developed in collaboration with specialist façade engineers.

“The façade was designed to maximise panoramic coastal views while creating a distinctive architectural identity,” Thompson said.

[smartcode_project:default project_id=112661 project_image_fid=355935]

Designed by BDA Architecture, Exhale will comprise just 54 two- and three-bedroom residences across 26 levels, a level of low-density living rarely delivered in this beachside pocket between Surfers Paradise and Broadbeach.

The project has been conceived as a resident-only building, with no short-stay accommodation permitted. SIERA says the model is intended to appeal to long-term owner-occupiers rather than transient holiday demand.

[smartcode_project:default project_id=112661 project_image_fid=361052]

Residences have been designed with large-format layouts and expansive glazing, with most apartments featuring more than 30 metres of glass frontage to maximise natural light and ocean views.

The amenity offering spans two levels and centres on wellness and lifestyle, including a heated magnesium pool, sauna, yoga and Pilates studio, gymnasium, private dining facilities, cinema lounge, and dedicated surfcraft storage.

[smartcode_project:default project_id=112661 project_image_fid=359607]

More than half of the apartments have already sold. SIERA has also opened a sales gallery for Exhale at its Chevron Island commercial premises, near its Tapestry tower and the site of its second Chevron Island apartment development, which is slated to launch in early 2027.
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[smartcode_project_cta:default project_id=112661]

SIERA kicks off construction at Northcliffe tower Exhale

Local Little Bay residents, along with buyers from premium postcodes across Sydney’s affluent Eastern Suburbs, have dominated purchases in developer-builder Urban Property Group’s first Eastern Suburbs apartment development, <a href="https://www.apartments.com.au/new-apartments/este-little-bay-jennifer-street-little-bay-nsw-2036">ESTE Little Bay</a>.

The $250 million coastal project, one of the first new developments in the area in several years, has proven particularly popular with downsizers, especially those from Coogee and Bondi. One Double Bay downsizer paid $4.7 million for a four-bedroom penthouse, setting a new local apartment price record in the process.

Buyers have been attracted to the combination of coastal tranquillity, premium design and amenity-rich neighbourhood living. The walkable village setting, along with proximity to three of Sydney’s leading golf courses, New South Wales Golf Club, St Michael’s Golf Club and The Coast Golf Club, has also been a key drawcard.

[smartcode_project:default project_id=112343 project_image_fid=352689]

Built across two low-rise buildings designed by <a href="https://www.apartments.com.au/architects/hill-thalis-architecture-urban-projects-pty-ltd">Hill Thalis</a> and set along a lush, landscaped green spine, designed by leading landscape architect <a href="https://www.apartments.com.au/landscape-architect/arcadia-landscape-architecture">Arcadia</a>, ESTE Little Bay offers a collection of one, two, three and four-bedroom residences with interiors by Richards Stanisich.

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> Sales Director, Tom McIvor said the response to ESTE has been "nothing short of extraordinary."

“Buyers have been quick to recognise ESTE as a rare opportunity to invest in a coastal sanctuary that offers both seclusion and connectivity to the heart of Sydney,” McIvor said.

[smartcode_project:default project_id=112343 project_image_fid=352687]

<a href="https://www.apartments.com.au/project-marketer/srm-residential">SRM Residential</a> Senior Director, <a href="https://www.apartments.com.au/project-marketer/srm-residential">Clayton Ross</a> said the local market has responded incredibly well, driven by ESTE’s exceptional location and the rarity it offers.

“We’ve seen strong interest from a variety of buyer groups, all of whom are drawn to the exclusivity and quality of the build and construction by the 4.5-star iCIRT-rated builder / developer, Urban Property Group. There’s truly nothing else like it along Sydney’s coastline.”

[smartcode_project:default project_id=112343 project_image_fid=352690]

The project also includes robust buyer protections, including Resilience Insurance’s Latent Defects Insurance, providing 10 years of structural cover, and an independent iCIRT-rating of the developer.

“The iCIRT-rating adds another layer of confidence,” Ross added. “Buyers see it as a safeguard for their investment and their lifestyle.” A highlight of ESTE’s offering is its exclusive wellness amenities, including a heated rooftop infinity pool and outdoor heated spa, a state-of-the-art Technogym fitness centre, and a sauna.

<a href="https://www.apartments.com.au/new-apartments/este-little-bay-jennifer-street-little-bay-nsw-2036">ESTE Little Bay</a> is topped out and is on track to complete towards the end of 2026, with residents moving in before Christmas.

[smartcode_project_cta:default project_id=112343]

Cameron Kusher

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