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The Australian Bureau of Statistics (ABS) released housing finance data for February 2015 earlier today.
The results suggested to me that perhaps, after many warnings, the exuberance from the investor segment of the market is starting to slow. Keep in mind that investor borrowing remains at near record highs however, there have been signs that the growth has slowed recently.
<img class="aligncenter size-full wp-image-4495" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-12.jpg" alt="Chart 1" width="500" height="183">
In February, there was $30.4 billion worth of housing finance commitments which was -1.0% lower over the month. $18.3 billion was committed to by owner occupiers compared to $12.1 billion to investors.
Over the month, the value of owner occupier housing finance commitments increased by 0.5% while the value of investment commitments was -3.4% lower, the largest monthly fall since January 2012. Year on year, the value of owner occupier housing finance commitments has increased by 8.7% compared to a 9.9% increase in investment lending.
<img class="aligncenter size-full wp-image-4496" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-22.jpg" alt="Chart 2" width="500" height="187">
Taking a closer look at the owner occupier commitments shows that virtually all of the growth is coming from the refinance segment. As previously mentioned, owner occupier housing finance commitments increased by 0.5% in February with construction of new -0.2%, purchase of new +5.7%, refinances +4.5% and purchases of established stock -2.3%.
Year on year, construction of new is +1.1%, purchase of new is +7.5%, refinances are +28.4% and purchase of established stock is +0.1%. This data indicates that refinances are the driving force behind the increase in housing finance commitments by owner occupiers.
It suggests that many home owners are shopping around for a better mortgage deal, which should come as no surprise considering the low mortgage rates that are available and the heightened level of competition across Australia’s lenders. It may also be indicative of many home owners refinancing their mortgage with the intention of purchasing an investment property or using their equity to invest in some other asset class.
<img class="aligncenter size-full wp-image-4497" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-32.jpg" alt="Chart 3" width="500" height="187">
Turning to the investment segment of the market, which recorded its largest monthly fall in commitments since January 2012 in February 2015 with a fall of -3.4%.Although I try not to read too much into one month’s data, the value of investment housing finance commitments has now fallen in three out of the past four months. 
Breaking the results down further shows that investor commitments for construction of new stock was -15.8% lower over the month while established home commitments fell -2.5%.
Year on year investor commitments for construction were -37.9% lower while commitments for established stock rose by +15.2%. The chart below shows that the investors overwhelmingly favour borrowing for established stock as opposed to new stock. Keep in mind that there is significantly more established stock to choose from than new stock.
<img class="aligncenter size-full wp-image-4498" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-42.jpg" alt="Chart 4" width="500" height="184">
The owner occupier and investor data paired shows some interesting trends. Over the month, owner occupiers committed to $2.8 billion in new housing stock while investors committed to $0.7 billion in new housing stock. This indicates that new stock made up just $3.5 billion in new commitments or 11.4% of total commitments or 14.3% of total new commitments (excluding refinances).
Whether it is the investment or the owner occupier segment, a relatively small proportion of borrowing is directed towards new construction.
Year on year the value of owner occupier commitments for new housing is +3.3% higher while the lumpy investment series is -8.7% lower. On the other hand the owner occupier segment of lending for established stock was +0.1% higher Year on year while investor commitments for established stock were +15.2% higher.
This data seems to indicate that much of the new unit stock being built across the major capital cities is not being purchased by local investors. Local investors generally have a preference for existing stock rather than newly constructed stock. A proportion of this new construction is being purchased by owner occupiers but the data suggests implies a lot of the newly developed unit stock is being purchased by offshore investors.
This month’s data makes for interesting reading and while it is still early days it seems like growth in the local investor segment of the market may be cooling (we have though this to be the case previously and the market surged once again!). Additionally, the heightened level of refinances may lead to more investor activity over the coming months.
We know that APRA are monitoring lending standards closely and they, along with the RBA, are carefully watching the investment segment of the market.
No doubt the regulators will be happy to see that growth in the investor lending segment is slowing and will be hopeful that overall credit growth to investors falls back within the APRA guidelines of 10% per annum (based on February data, investor credit growth was at 10.1% growth over the past year).
Housing credit data also indicates that the rate of growth in investor demand has slowed over recent months which may indicate that the warnings from the RBA and new benchmarks from APRA are starting to be heeded.
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Is lending to investors finally starting to slow? Cameron Kusher

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Regional population growth data was recently released by the Australian Bureau of Statistics (ABS) for the year to June 2014.
By combining this data over time with dwelling approvals over time we can derive localised information to approximate the extent of oversupply and undersupply in the capital city housing markets.
The combined capital cities recorded an increase in population over the 12 months to June 2014 of 288,994 persons, down from an increase of 308,206 persons the previous year. While the population increased by 288,994 persons, there were a record-high 145,268 dwelling approvals over the year. The population increase was -6.2% lower over the year while the number of dwelling approvals was 25.6% higher. Based purely on a ratio of population growth to dwelling approvals there was one dwelling approved for construction for every 1.99 residents added to the capital cities. This represents a significant improvement on the ratio of one dwelling approval for every 2.66 new residents over the previous year.
The 2011 Census reported that across the nation, households had an average of 2.6 persons. Based on this figure, we have approved significantly more homes than required based on population growth over the past year. Unfortunately, measuring housing demand is not quite so simple. We must also consider how much of the new demand is from overseas migration compared to natural increase as well as factors such as demolitions and holiday home demand.
I haven’t found any literature on housing demand from overseas migration compared to natural increase however; I think it is a reasonable assumption that overseas migration creates a more immediate addition to housing demand than natural increase. There has been a noticeable slump in net overseas migration to Australia over the past year. Although it is a little bit old now, the former Deputy Governor of the Reserve Bank (RBA) gave a speech entitled ‘Housing and the Economy’ to the National Housing Conference in November 2009. Two of the most interesting and relevant points to housing demand from the speech were:
<ul>
<li>A higher proportion of the new dwellings built are simply replacing existing homes that have been demolished. The RBA estimated that between 2001 and 2006, around 15% of new dwellings built replaced those that had been demolished; 10 to 15 years earlier that figure was less than 10%. </li>
<li>A significant proportion of dwelling investment appears to have gone into holiday homes or second homes. Census data (2006 Census) shows that the number of dwellings built has exceeded the increase in the number of households by a large margin. As a result, the ratio of the number of dwellings to the number of households has been rising over time; as at 2006, there were 8% more dwellings in Australia than there were households. Presumably, most of this surplus reflects holiday homes and second homes.</li>
</ul>
Based on these two points from the former Deputy Governor’s speech, in order to cater to dwelling replacements and secondary homes we should construct 23% more dwelling than the previous simplistic analysis of measuring the rate of population growth compared to approvals. There are a few points and assumptions to keep in mind here:
<ol>
<li>This analysis is based on approvals not completions and approvals won’t necessarily become a completion; based on our calculations completion rates are historically 98% for houses and 85% for units. </li>
<li>The heightened level of inner-city unit development in most instances would see fewer homes demolished to make way for this new construction. </li>
<li>Holiday and second homes ae generally more likely to be located outside of the capital city than within. </li>
<li>Anecdotally activity from foreign buyers is increasing, a proportion of these homes sit unoccupied and don’t even enter into the rental market. So while the supply of housing has increased if the property sits vacant it is more reflective of secondary homes.</li>
</ol>
Given these qualifications, the point about holiday and second homes is likely to be less relevant here, but in the absence of more up-to-date data we will still allow for the 15% of homes which have been demolished when looking at the approvals data.
The 2011 Census reported that on average, Sydney, Brisbane and Darwin had 2.7 persons per household, Melbourne, Perth and the ACT had 2.6 persons per household and Adelaide and Hobart had 2.4 persons per household. Returning to the original findings, over the year to June 2014 the capital city population increased by 288,994 persons and 145,268 dwellings were approved for construction.
If we adjust these figures based on the average household sizes as at the 2011 Census, based on population growth the capital cities required 109,825 new homes. If we further adjust for the assumption that the country needs to approve 15% more homes to replace demolitions, the capital cities required 126,298 new homes last year. Given this, 18,970 more homes were approved for construction than were required over the year compared to a deficiency of 19,076 homes the previous year.
<img class="aligncenter size-full wp-image-4473" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-11.jpg" alt="Chart 1" width="500" height="181">
The above chart shows that new dwelling approvals were typically sufficient for the rate of population growth throughout the 1990s however, since the beginning of the 2000s population growth has boomed while new approvals have largely been unresponsive. Dwelling approvals are now climbing on the back of rising home values and increasing demand for homes. Keep in mind, the heightened level of dwelling construction will have to persist for a number of years to make up for the cumulative effect of the insufficient supply response over the past decade or so.
Over the past year, each capital city had more homes approved for construction than was required based on population growth. While dwelling construction is a positive outcome for the economy, it is important to note that an approval doesn’t necessarily translate into a completion. Furthermore, there is a time lag between approval and completion; these homes are required right now, not in a year or twos time (or longer in some unit developments).
The following charts track the annual population growth and annual number of swelling approvals across each of the capital cities.
<img class="aligncenter size-full wp-image-4474" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-21.jpg" alt="Chart 2" width="500" height="180">
<img class="aligncenter size-full wp-image-4475" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-31.jpg" alt="Chart 3" width="500" height="179">
<img class="aligncenter size-full wp-image-4476" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-41.jpg" alt="Chart 4" width="500" height="178">
<img class="aligncenter size-full wp-image-4477" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-51.jpg" alt="Chart 5" width="500" height="179">
<img class="aligncenter size-full wp-image-4478" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-61.jpg" alt="Chart 6" width="500" height="179">
<img class="aligncenter size-full wp-image-4479" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-7.jpg" alt="Chart 7" width="500" height="180">
<img class="aligncenter size-full wp-image-4480" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-8.jpg" alt="Chart 8" width="500" height="181">
<img class="aligncenter size-full wp-image-4481" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-9.jpg" alt="Chart 9" width="500" height="179">
The above charts show that the disconnect between new dwelling approvals and population growth since the beginning of the 2000s has been largest across the four most populous capital cities. These four cities are also home to a majority of the national population and have also been recording the greatest increase in residents over that period.
A further important consideration for housing supply and demand is the type of new product that is being built. While the city-wide analysis can be useful it should be remembered that new housing is typically either new detached houses on the outskirts of the city or medium to high density product within the inner city areas. We are seeing over time a shift from greenfield and brownfield detached housing development to inner city infill and higher density development across most capital cities. In fact, over the past year more than half of all capital city dwelling approvals have been for units as opposed to houses.
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The analysis shows that within the four largest capital cities there has been a deficiency of dwellings approved for construction over recent years compared to the rate of population growth.
Over the past 24 months or so there has been a surge in dwelling approvals, at the same time the rate of population growth has slowed. The RBA has spoken many times about looking to extend this period of heightened construction activity for a number of years. Not only would this have a multiplier effect throughout the economy but it would also help to improve the undersupply of housing which currently exists.
<img class="aligncenter size-full wp-image-4482" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-10.jpg" alt="Chart 10" width="500" height="182">
In 1991, 29.9% of all dwelling approvals across the combined capital cities were for units showing an overwhelming majority of approvals were for houses. Over the most recent year, 51.6% of capital city dwelling approvals were units. In 2013 (50.1%) and 2014 (51.6%) it was the first time that there were a greater number of capital city unit approvals than house approvals. The above chart shows that since 2010 when 38.1% of all approvals were for units, there has been a strong trend towards a smaller proportion of house approvals.
<img class="aligncenter size-full wp-image-4483" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-111.jpg" alt="Chart 11" width="500" height="180">
Over the past 12 months, each of Sydney, Melbourne, Brisbane, Darwin and Canberra have approved more units than houses. Sydney, Darwin and Canberra have approved a majority of units for more than a decade however, in Melbourne and Brisbane the rising prominence of unit approvals is a relatively new phenomena. Adelaide, Perth and Hobart have each recorded a significantly lower proportion of unit approvals, in fact as a proportion, Perth and Hobart had fewer unit approvals last year than they had 20 years ago.
Data from the 2011 Census showed that across the separate house category, the most prevalent number of bedrooms is three bedrooms (49.6%) and four bedrooms (32.4%). When you combine the Census data for semi-detached and units, the most prominent number of bedrooms in two bedrooms (50.1%) and three bedrooms (28.6%). To look at it another way, 88.8% of detached houses have three bedrooms or more compared to 66.9% of units having two bedrooms or fewer. The point being that more units are being approved (and constructed) however, they typically have fewer bedrooms and are likely to have a smaller average household size than a detached house would. Given this, it is likely that as more units are constructed, we will actually need more housing than we would have if houses had been exclusively built because of the potential smaller household size. The challenge of course is that while the pipeline of approvals is very strong, there are more unit approvals than houses and ultimately these units are less likely to be built than houses.
The other feature we are seeing in the market is the rise and rise (and rise) of the investor segment. In fact the value of loans to investors has been greater than new loans to owner occupiers over each of the past six months and that has never happened before. A lot of the new unit construction taking place is to cater to demand from the investment segment of the market. The important thing to note is that while investment style detached houses are fairly similar to houses for owner occupiers, the same is not necessarily the case for units. The type of unit that someone is willing to live in while they are renting is often quite different to what they would be willing to live in as an owner occupier. This is largely in relation to internal floor area, kitchen size and design and balcony size. With investment purchases surging, a large proportion of the new unit development is targeted at that market while units for owner occupation are not as prevalent.
Of course developers build what product is going to sell. The potential cause for concern is that many of these investors exit the housing market when the returns aren’t as strong as they currently are. What could then happen is a lot of investment stock hits the market at a time of falling demand coupled with a product offering which is not what the market wants.
Despite this potential cause for concern, it is very encouraging to see an improving relationship between housing demand and housing supply. With population growth looking likely to slow further it would be encouraging, particularly from a housing affordability perspective if the heightened level of approvals persisted. More importantly of course will be that we see these approvals ultimately constructed, particularly in our largest capital cities where housing deficiency has been greatest.
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Booming building approvals and slowing population growth are reducing housing undersupply: Cameron Kusher

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Yesterday the Australian Bureau of Statistics (ABS) released building approvals data for February 2015. 
After a record high monthly number of dwelling approvals in January 2015 approval numbers could not quite be matched in February although they remain at near-record highs.
<img class="aligncenter size-full wp-image-4464" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-1.jpg" alt="Chart 1" width="500" height="159">
Over the month there were 18,768 dwelling approvals, down from 19,397 in January. Although approvals fell by -3.2% over the month, the number of approvals in February was still the second highest monthly figure on record. The number of approvals has increased by 14.3% over the past twelve months highlighting that there is a clear boom in approvals which sit at highs never before seen. 
Given that housing supply has been insufficient for the past decade this is a welcome development, especially considering the strong multiplier effect of higher rates of construction on the Australian economy. Over the past 12 months there have been a record high 205,929 dwellings approved for construction.
<img class="aligncenter size-full wp-image-4465" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-2.jpg" alt="Chart 2" width="500" height="158">
Looking at a breakdown between houses and units, the data shows that over the month there were 9,613 houses and 9,155 units approved for construction. House approvals were 0.2% higher over the month while the more lumpy unit approvals recorded a -6.6% monthly fall. 
Year-on-year, house approvals are unchanged while unit approvals have increased by 34.5%. With such a higher rate of growth in new apartment approvals, is clear that the new unit segment of the market is booming at the moment. Over the 12 months to February 2015 there were 114,747 house approvals and 91,183 unit approvals. 
While house approvals were a long way from their record high annual approvals of 140,832, unit approvals currently sit at an all-time high.
<img class="aligncenter size-full wp-image-4466" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-3.jpg" alt="Chart 3" width="500" height="159">
Looking at the capital city data it becomes further evident that new unit construction is booming, particularly across the east coast capital cities, despite a sharp rise in house approvals in February. Over the month, capital city house approvals increased by 26.6% and capital city unit approvals rose by 11.5%. 
The year-on-year figures show the trend towards unit approvals with house approvals increasing by 3.5% compared to a 43.0% jump in unit approvals.
<img class="aligncenter size-full wp-image-4467" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-4.jpg" alt="Chart 4" width="500" height="159">
Over the 12 months to February 2015 there were a record-high 153,303 capital city dwelling approvals. Dwelling approvals have increased by 13.0% over the year. Over the past year there were a record high number of dwelling approvals in Sydney (39,802), Melbourne (51,037) and Brisbane (23,303).
 Approvals were below their record highs but still hefty in Adelaide (8,990), Perth (26,942), Hobart (981), Darwin (1,820) and Canberra (3,428). Note that despite Sydney being our most populous city and arguably having the greatest under-supply of housing and increases in home values, the number of approvals was much lower compared with Melbourne.
<img class="aligncenter size-full wp-image-4468" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-5.jpg" alt="Chart 5" width="500" height="159">
Focussing on the detached housing market there were 75,597 capital city house approvals over the year to February 2015 which is 14.6% higher than the previous year. Across the individual cities, there were 13,503 approvals in Sydney, 22,530 approvals in Melbourne, 10,671 in Brisbane, 5,755 in Adelaide, 19,891 in Perth, 887 in Hobart, 795 in Darwin and 1,565 in Canberra. Note that Melbourne house approvals were almost double that in Sydney and Perth was also significantly higher. Over the year, the change in house approvals has been recorded at: 17.5% in Sydney, 15.5% in Melbourne, 31.4% in Brisbane, 4.0% in Adelaide, 8.8% in Perth, 50.1% in Hobart, 5.4% in Darwin and -5.1% in Canberra.
<img class="aligncenter size-full wp-image-4469" src="https://blog.corelogic.com.au/wp-content/uploads/2015/04/Chart-6.jpg" alt="Chart 6" width="500" height="159">
Across the unit market there were 80,706 capital city approvals over the past year accounting for 51.6% of all capital city dwelling approvals and a record-high annual number. Unit approvals in Melbourne (28,507) and Brisbane (12,632) were at historic high levels over the year while Sydney and Perth were also close to a record high with 26,299 and 7,051 unit approvals respectively.
Elsewhere there were 3,235 unit approvals in Adelaide, 94 in Hobart, 1,025 in Darwin and 1,863 in Canberra. Unit approvals were higher over the year in Sydney (1.7%), Melbourne (27.4%), Brisbane (12.3%), Adelaide (25.8%), Perth (21.7%) and Darwin (4.9%) but fell in Hobart (-47.8%) and Canberra (-45.2%).
Unit approvals accounted for more than half of all approvals in Sydney (66.1%), Melbourne (55.9%), Brisbane (54.2%), Darwin (56.3%) and Canberra (54.3%). Sydney, Darwin and Canberra have approved more units than houses for many years however, in Melbourne and Brisbane this is a relatively new phenomena. 
With unit approvals at all-time highs in both Melbourne and Brisbane we have some concerns around exactly who is going to buy all this stock. Of course demand for inner city units is growing however supply can quickly turn to a glut if there is too much development. 
Rental growth is already slow in both cities and given units tend to be favoured by investors there are some concerns about a potential glut of this stock in Melbourne and Brisbane. It should be noted that just because a dwelling is approved doesn’t necessarily mean it will be constructed and there are generally many more hurdles in order to deliver high-rise units. 
Record high unit approvals with record low interest rates are likely to create some risks, most notably a risk of oversupply of inner city units in Melbourne and Brisbane where the level of new construction is unprecedented. 
Further down the track as interest rates rise and capital growth slows there are some concerns that the heightened level of investor activity in the Sydney and Melbourne unit markets may result in value falls if and when these investors exit to asset classes enjoying a superior performance. Particularly considering that rental returns for Sydney and Melbourne units are at near record lows and rental growth is moderate. 
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Dwelling approvals dip (but only slightly) in February: Cameron 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 Reserve Bank (RBA) released its bi-annual Financial Stability Review (FSR) yesterday. The document provides a guide as to the RBA’s thoughts on the overall economy and potential risks.
As you’d expect, the residential housing market features heavily in their assessment of financial stability and I will delve into some of the key take-outs for the housing market from the document.
<ul>
<li>Housing loan performance</li>
</ul>
The report details that the share of non-performing banks housing loans (ie those housing loans which are at least 90 days in arrears on their repayments) was extremely low, recorded at around 0.6% in December 2014 which is down from a peak of 0.9% in 2011.
The lack of repayment distress across Australian bank mortgage portfolios is being supported by low interest rates which make servicing the mortgage debt easier. The document also states that rising housing prices also make it easier for those home owners in arrears to sell rather than remain in arrears should they run into financial difficulty.
It is important to note that while as a general the statement about rising house prices making it easier to sell is true, the housing market performance varies greatly region-to-region.
Although selling a home in Sydney and Melbourne is relatively easy currently thanks to strong value growth and high levels of demand, housing market conditions in Perth, Hobart or Canberra are more challenging and it would probably be more difficult to sell a home in these markets.
<ul>
<li>Competition in the mortgage market</li>
</ul>
According to the Report competition has remained rigorous over the past six months. There is plenty of competition amongst lenders and as a result they are offering attractive fixed rates and significant discounts of up to 100 basis points off their advertised variable rates. The RBA has also noted targeted special rates as an example of short-term rate specials for those refinancing with lower loan to value ratios (LVRs).
Banks have also increased commissions being paid to their brokers. As a result, refinancing activity has increased and around 40% to 50% of new housing loans are sourced from brokers. The RBA does raise some concerns that the rising prevalence of the broker channel potentially creates risks, specifically that misaligned broker incentives could create higher levels of lending outside of their risk tolerance.
While Australian Prudential Regulation Authority (APRA) wrote to Authorised Deposit-taking Institutions (ADIs) highlighting its guidelines for sound residential mortgage lending late last year, the high level of competition across the banking sector may create issues, particularly in the investor space. Given APRA has indicated that growth in investor housing credit should not be materially above 10% per annum, the significant competition in the market means that those who can’t source an investor loan from one ADI may still have plenty of other ADIs to choose from.
<ul>
<li>Lending criteria</li>
</ul>
The RBA is reporting that serviceability and deposit criteria have been relatively unchanged over the past six months. They acknowledge that some banks have recently applied stricter criteria for some inner-city unit markets and regional towns linked to the resources sector. Despite the lending criteria being largely unchanged, the RBA acknowledge that low mortgage rates and the strength in demand from the investment segment have increased the macroeconomic risks from the housing market.
Once again they have acknowledged that investors may amplify housing price cycles and increase the potential for falls in the future. They also note that the rising share of interest-only loans may also increase risks because there is a period over which the principal is not repaid leaving the household with more debt than they would have if they repaid both the principal and interest on the mortgage.
It should be noted that while interest rates are low everywhere and investor activity has increased in most states, the sharp rise in investor participation is most prevalent in Sydney and Melbourne. These two cities have seen the strongest growth in home values over recent years, along with the most significant compression of rental yields which has resulted in these cities exhibiting the lowest rental yields across the capital city housing markets.
The risks of investors amplifying the market are greatest within these two cities, particularly given the strong value growth coupled with very low rental yields and high investor concentrations.
<ul>
<li>Investor lending</li>
</ul>
The FSR notes that investor housing credit has increased at an annualised rate of 10.5% over the past six months however, it is too early to expect a slowdown in investment lending just yet in response to APRA’s guidelines. The reason being that the pipeline of pre-approvals was already in place before APRA wrote to ADIs in December highlighting a guideline of a cap of 10% annual growth in lending to investors.
The RBA notes that investors have contributed to fuelling the rapid growth in home values in Sydney however, the growth has been more moderate outside of Sydney. The FSR states that periods of value growth also increase expectations for further price rises, creating even more demand.
A future fall in housing prices would reduce wealth and dampen spending for the broader household sector, particularly for those households with significant housing debt, not just for the investors who contributed to the upswing.
The RBA has also raised potential concerns that the surge in lending from the investment segment could lead to excessive new housing construction and a potential future glut in certain areas. While the RBA points out there is little risk of this currently at a national levels, there are some areas of local vulnerability, namely inner-city units in Melbourne and Brisbane.
While the RBA has covered off on the risks surrounding heightened levels of investment lending quite well there are a few additional points that need to be made. While investor activity is strongest in Sydney and Melbourne, these two cities already have the lowest gross rental yields. This feeds in to the comment about amplifying the market but is important to understand; investors are chasing capital growth and having little regard for the returns.
Secondly, while there are concerns about too much new housing supply in inner-city Melbourne and Brisbane rental growth is already at its lowest level in more than a decade. Although inner-city Melbourne and Brisbane are areas for concern, there is no mention of the fact that rental rates are already falling in Perth, Darwin and Canberra. Furthermore, while both rents and the rate of population growth are falling in Perth there is simultaneously a record high number of dwelling approvals currently.
<ul>
<li>Mortgage characteristics</li>
</ul>
Although low interest rates and the high level of competition in the mortgage market could create risks, the RBA sees little evidence that lending standards have deteriorated. The share of loan approvals above 90% LVR continued to reduce over 2014. The RBA reports that this shift was led by those lenders that previously reported a higher than average share of these types of loans. The profile of new lending indicates that households remain well placed to service their loans.
The area that the RBA points out as a concern is the increase in interest-only lending. The rising level of interest-only lending to investors is consistent with tax deductibility of investors’ mortgage interest payments which act as a disincentive to pay down the principal.
The banks have suggested that the rise in owner occupier interest-only mortgages has been driven by the borrowers seeking greater flexibility in managing their repayments rather than affordability pressures. Reportedly some of this demand is from owner occupiers who plan to switch their property into a rental property in the future.
The RBA also notes that many of these owner occupiers are building sizeable buffers in their offset and redraw facilities. It should also be noted that in principle, interest-only loans should not increase borrowing capacity because consumer protection regulations imply that lenders should assess a borrower’s ability to service principal and interest payments following the expiry of the interest-only period.
Australian Securities and Investments Commission (ASIC) is currently assessing compliance with this obligation through its review of interest-only lending. Despite these considerations, interest-only loans – especially for owner-occupiers – pose greater risk to the financial system because they enable borrowers to pay down the principal more slowly than a conventional mortgage.
<ul>
<li>Conclusion</li>
</ul>
The RBA have spelled out a number of key areas of risk surrounding the residential mortgage market. It is clear that the RBA along with the APRA and ASIC are closely monitoring the overall market conditions and are on the lookout for risks and an easing of lending standards.
While each organisation has stated publicly their concerns and what they are going to do to allay those concerns, it seems unlikely that any significant changes to policies due to these risks for individual ADIs would be communicated publicly.
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The RBA raises concerns over residential housing market: Cameron Kusher

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Over the second half of 2014 capital city home sales fell, with the decline in-line with a softening in growth in home values. Interest rate cuts in 2015 may result in a rebound in sales activity this year.
Based on CoreLogic RP Data’s estimates of residential sales transactions to December 2014, there were 471,932 dwelling sales nationally. Despite the growing trend to more units being constructed, house sales still account for the overwhelming majority of sales. 
Over the year there were 339,902 house sales (72% of all sales) and 132,030 unit sales. Based on these figures, house sales were 0.2% higher over the year unit sales were -6.4% lower. Keep in mind that although we attempt to estimate for off the plan unit sales, they are likely to be revised higher as they settle. The settlement period for off the plan unit sales can take more than 12 months as the project is constructed. Off the plan sales ultimately get recognised at their contract date upon settlement.
 
Rolling annual dwelling sales, Nationally
<img src="/images/2015/03/23/rp-mar-23-one.jpg" alt=""> 
 
If we take a look at the capital city housing markets we see similar trends. Over the 12 months to December 2014, there were 218,479 house sales and 99,707 unit sales.
Compared to annual sales in 2013, combined capital city house sales were 2.8% higher while units were -7.0% lower resulting in a -0.5% overall fall in capital city sales.While at a national level house sales accounted for 72% of all sales, across the capital cities they accounted for a lower 68.7%. Again, we may see the number of unit sales revise higher as off the plan settlements take place.
 
Rolling annual dwelling sales, Combined capitals
 
<img src="/images/2015/03/23/rp-mar-23-two.jpg" alt="">
The trend both at a national and combined capital city level was that the number of sales fell away over the second half of 2014. The same trend was noted in terms of home value growth. After the annual rate of capital city home value growth peaked at 11.5% in April 2014, the rate of growth slowed to 7.9% annual growth by the end of 2014. Value growth has re-inflated over the first two months of 2015 and the recent interest rate cut may also contribute to faster growth, this is also likely to result in a rebound in sales transactions.
Across the individual capital cities, the number of house sales was higher in 2014 than in 2013 across most cities. The exceptions were the markets where value growth has slowed most markedly in 2014; Perth (-9.4%), Darwin (-4.8%) and Canberra (-2.7%).
Elsewhere, house sales have increased by 3.4% in Sydney, 5.1% in Melbourne, 8.9% in Brisbane, 6.9% in Adelaide and 8.0% in Hobart. Although house sales were generally higher in 2014 than in 2013, most cities have seen an easing in transactions over the second half of 2014 with Melbourne and Hobart the only cities where sales volumes have continued to trend higher.
 
Rolling annual house sales, major capitals
 <img src="/images/2015/03/23/rp-mar-23-three.jpg" alt="">
Turning to the unit market where across the combined capital cities the number of sales has actually fallen over the past year. Across the individual cities, only Melbourne (1.0%), Adelaide (5.7%) and Darwin (24.2%) recorded an increase in transactions over the year. Elsewhere, unit sales fell -13.8% in Sydney, -2.6% in Brisbane, -16.1% in Perth, -1.0% in Hobart and -14.5% in Canberra. 
 
Rolling annual unit sales, major capitals
 <img src="/images/2015/03/23/rp-mar-23-four.jpg" alt="">
It is also interesting to look at the proportion of house sales across each city. It shows that units are much more prevalent across the east coast capital cities as well as Darwin and Canberra. Over the year, the proportion of total sales that were houses across the capitals were recorded at: 60.8% in Sydney, 68.9% in Melbourne, 70.3% in Brisbane, 75.9% in Adelaide, 82.6% in Perth, 77.1% in Hobart, 62.1% in Darwin and 59.9% in Canberra.
The sales volume data also reveals that despite ongoing strong rates of population growth and buoyant housing market conditions over recent years, the number of dwelling sales has not risen by a commensurate amount, with the number of sales well below what was recorded over previous growth periods. 
Across the individual capital cities, the peak in annual sales were recorded at: April 2002 in Sydney (136,925), December 2007 in Melbourne (105,264), September 2003 in Brisbane (74,941), January 2008 in Adelaide, May 2006 in Perth (56,850), October 2003 in Hobart (7,425), July 2006 in Darwin (4,469) and June 1992 in Canberra (13,655).
Across all cities, the number of home sales over the past year has been significantly lower than these peaks. This suggests that for one reason or another, despite a higher population, a smaller proportion of people are buying and selling homes.
The high entry and exit costs of homes in Australia are likely the major reason, the two biggest costs are stamp duty and agent commissions both of which are higher as home values increase as they are levied off the purchase (stamp duty) and sales (commission) prices. Other factors might include less participation from first home buyers and the high rate of savings where more households are focussing on debt reduction.
 
Annual house and unit sales, year to December 2014
 
<img src="/images/2015/03/23/rp-mar-23-five.jpg" alt="">
Sales volumes eased over the second half of 2014 in-line with a slowing of home value growth. With mortgage rates moving lower in February 2015 and expected to reduce further during 2015, there may also be a rebound in sales activity. Despite a potential rebound, transaction volumes are likely to remain below historic peaks.
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Will lower mortgage rates reinvigorate the taper in dwelling turnover? Cameron Kusher

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The Australian Bureau of Statistics (ABS) released housing finance data for January 2015 this week. 
This data represents the first full month of lending-based results after APRA’s recommendation to Australian Authorised Deposit-taking Institutes (ADI’s) reinforcing sound residential mortgage lending benchmarks. <img class="aligncenter size-full wp-image-4377" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-11.jpg" alt="Chart 1" width="500" height="186"> Over the month the total value of housing finance commitments fell by -0.6% across both the owner occupier and investor segments of the market. The value of housing finance commitments has increased by 12.8% year on year. 
Taking a look at the breakdown between the owner occupier and investor segment of the market, it is clear that most of the strength is coming from investors. The value of owner occupier housing finance commitments fell by -1.0% over the month and investor lending recorded a fall of -0.1%. 
Despite the monthly fall in lending, the value of housing finance commitments was 7.1% higher year on year to owner occupiers and 22.1% higher to investors. <img class="aligncenter size-full wp-image-4378" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-21.jpg" alt="Chart 2" width="500" height="182"> The proportion of total lending to investors reached an all-time high in January 2015. Over the month, 41.4% of the value of all housing finance commitments was to investors. 
In comparison, a record low 39.1% of the value of housing lending was to owner occupiers for new loan purposes and 19.5% was to owner occupiers for refinances. If we look solely at the value of new lending (excluding refinances) investor lending hit a record high 51.4% of all new lending in January 2015. <img class="aligncenter size-full wp-image-4379" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-31.jpg" alt="Chart 3" width="500" height="180"> Focussing on the owner occupier segment of lending, $17.7 billion was lent in January down from $17.9 billion in December. Across the segment: $1.8 billion was lent for construction of new homes, $0.9 billion for the purchase of new homes, a record high $5.9 billion for refinances and $9.1 billion for purchase of established homes.
 Month on month, housing finance commitments for owner occupiers fell by -2.6% for construction of new homes, -5.4% for the purchase of new homes, +1.8% for refinances and -2.0% for purchases of established dwellings. year on year, the strength in the owner occupier segment has largely been from refinances which have increased by 28.5%. Across the other segments, construction of new homes were up +1.5%, purchase of new homes are -7.2% and purchase of established homes are -0.9%.
The data indicates that much of the activity across the owner occupier segment of the market is coming from refinances as home owners shop around for a better deal or prepare to withdraw some of their equity which would feed into the strength of the investment segment. <img class="aligncenter size-full wp-image-4380" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-41.jpg" alt="Chart 4" width="500" height="183"> Turning to the investment lending segment, $12.5 billion was lent in January which was slightly lower than investment lending in December. Over the month there was $0.8 billion in commitments for construction of new dwelling and $11.7 billion for commitments to existing homes showing that investor lending is largely going to existing homes with lending to that segment almost 14 times greater than lending for new construction. Over the month, investor commitments for new construction fell -18.8% compared to a 1.6% increase in lending for purchases of existing homes.
year on year, the value of commitments for construction of new dwellings is 85.1% higher while investor lending for established homes has increased by 19.1%. The data shows that despite lending to investors is surging, a relatively small amount of this lending is contributing to new housing stock being constructed. <img class="aligncenter size-full wp-image-4381" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-51.jpg" alt="Chart 5" width="500" height="181"> Turning to the first home buyer segment of the market, the number of owner occupier first home buyer commitments fell sharply in January. It should be noted that this data series is not seasonally adjusted. Over the month there were 5,961 commitments which was -26.4% lower over the month and -14.4% lower year on year. As a proportion of all owner occupier housing finance commitments, investors accounted for 14.2% of commitments in January. 
Based on this data, the level of first home buyer participation in the market remains extremely low, however a weakness of the ABS data set is that it doesn’t identify first home buyers that are purchasing as investors. Anecdotally, it appears that many first time buyers are choosing to purchase an investment property rather than a principal place of residence. <img class="aligncenter size-full wp-image-4382" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Mortgage-Index.jpg" alt="Mortgage Index" width="500" height="181"> The CoreLogic RP Data Mortgage Index measures activity across CoreLogic RP Data’s mortgage platforms each week. The activity is highly correlated with housing finance data and as the above chart shows, activity has surged over recent weeks. Based on this data, it suggests that despite the Christmas / New Year slowdown there has been no sustained slowdown in mortgage demand. Given this we would expect a rebound in housing finance commitment over the coming months.
Following the letter from APRA to Australian ADI’s in December we have seen a slight easing in housing finance commitments however, it is too early to suggest the two are related. Investor activity remains very strong and for the first time on record we have seen six consecutive months in which lending to investors is greater than lending to owner occupiers for new loans. Investors are largely purchasing existing homes which does little to contribute to new housing, although the value of commitments to investors for new construction has risen sharply over the past year. The owner occupier segment is largely being driven by refinance activity as borrowers shop around for better deals on their mortgage and prepare to re-invest some of their equity.
Over the coming months it will be important to monitor if the new guidelines from APRA and the ramping up of their surveillance of mortgage lending has much of an effect on demand. We would suspect that the high level of competition in the mortgage market is likely to result in minimal change across the board. While some individual lenders may have to tinker with their lending policies, borrowers have many other banks to choose from if one borrower cannot provide the type of product they are looking for.
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Housing finance eases but lending to investors soars to an all-time high: Cameron Kusher

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Earlier this week, the Australian Bureau of Statistics released building approvals data for January 2015.
 The data showed that over the month, dwelling approvals surged to an all-time high while the annual number of approvals is also at a record high. <img class="aligncenter size-full wp-image-4347" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-1.jpg" alt="Chart 1" width="500" height="180"> Across the nation, the seasonally adjusted data showed that in January 2015, there were 19,282 dwelling approvals. This was a record high number of monthly approvals, 4.9% higher than the previous peak of 18,389 approvals two months earlier. 
The number of dwelling approvals increased by 7.9% over the month and approvals are 9.1% higher year on year. On an annualised basis, we are also seeing a record high with 203,182 approvals, up 0.8% over the month and 10.8% year on year. This represents a strong pipeline of new dwellings to be constructed. <img class="aligncenter size-full wp-image-4349" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-2.jpg" alt="Chart 2" width="500" height="181"> Looking more closely at the national figures, it shows that the surge in approvals over the month was entirely due to unit approvals as opposed to house approvals. We also saw a rare occurrence whereby there were more units approved for construction than houses.
 The above chart highlights monthly approvals with the thicker lines showing the six month average number of approvals. Over the month there were 9,588 house approvals and 9,694 unit approvals. The monthly number of house approvals has been fairly flat for the past 11 months while unit approvals tend to be much more volatile but trending higher. 
In January 2015, house approvals fell -0.4% while unit approvals increased by 17.5%. Year on year to January 2015, house approvals have fallen by -2.9% while unit approvals were 24.3% higher. <img class="aligncenter size-full wp-image-4350" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-3.jpg" alt="Chart 3" width="500" height="178"> Turning the focus to the capital cities it is firstly important to note that unlike the national data the figures are not seasonally adjusted. 
In January 2014 there were 11,926 capital city dwelling approvals which was -14.1% lower over the month but 8.6% higher year on year. Over the past 12 months, there has been a record high 153,323 dwelling approvals across the combined capital cities. <img class="aligncenter size-full wp-image-4351" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-4.jpg" alt="Chart 4" width="500" height="180"> Once again looking at houses as opposed to units, the data shows that the unit market is the key driver of new housing approvals. 
In January 2015 there were 4,986 capital city house approvals and 6,940 unit approvals. Approvals for both houses (-11.2%) and units (-16.0%) were lower over the month which can largely be attributed to seasonal effect of a weaker January. 
The unit series tends to be more volatile however, house approvals were at their lowest level since December 2013 over the month. 
The chart also shows that unit approvals have generally been outnumbering house approvals since the middle of 2012 (despite some volatility month-to-month). Year-on-year, capital city house approvals are -5.9% lower while unit approvals are 22.1% higher. <img class="aligncenter size-full wp-image-4352" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-5.jpg" alt="Chart 5" width="500" height="181"> Looking at the individual capital cities and utilising annual data to smooth out some of the volatility, it is clear that there has been a surge in approvals over the past few years across the major regions of Australia. 
First looking at house approvals, over the 12 months to January there were 13,337 approvals in Sydney, 22,198 in Melbourne, 10,574 in Brisbane, 5,879 in Adelaide, 20,001 in Perth, 886 in Hobart, 789 in Darwin and 1,621 in Canberra. 
Year on year, the number of house approvals have changed by 18.1% in Sydney, 16.2% in Melbourne, 34.2% in Brisbane, 8.2% in Adelaide, 12.1% in Perth, 59.1% in Hobart, 7.5% in Darwin and -1.0% in Canberra. 
Probably the most interesting point to note from the data is that both Melbourne and Perth approved more houses than Sydney, despite Sydney’s larger overall population. <img class="aligncenter size-full wp-image-4353" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-6.jpg" alt="Chart 6" width="500" height="182"> Turning the focus to the unit market, over the past year the number approvals across the cities have been recorded at: 25,440 in Sydney, 26,712 in Melbourne, 12,012 in Brisbane, 3,241 in Adelaide, 7,432 in Perth, 95 in Hobart, 1,016 in Darwin and 2,090 in Canberra. Only Adelaide, Perth and Hobart have approved more houses than units over the year. 
The annual change in unit approvals across the cities are recorded at: 0.7% in Sydney, 22.8% in Melbourne, 7.6% in Brisbane, 17.8% in Adelaide, 38.0% in Perth, -48.4% in Hobart, -15.4% in Darwin and -38.9% in Canberra.
The supply-side response has generally been quite positive over recent years however, in Sydney, where the dwelling deficiency is greatest, has experienced a much smaller increase in new supply than across other cities. The Perth, Darwin and Canberra housing markets have weakened noticeably over the past year with value growth slowing and rental rates falling. 
New dwelling approvals have eased in Darwin and Canberra however, Perth continues to approve a increasingly larger number of dwellings for construction despite the softening housing market conditions in this city. 
Approvals have surged by a greater amount for units as opposed to houses over the past several years. If we look at how this is now playing out we find some interesting trends:
<ul>
<li>Investors tend to target unit stock rather than detached houses (in particular units in the inner city) and this is where a large amount of unit stock already exists and a high proportion of the new stock is being delivered. </li>
<li>In Melbourne and Brisbane, where the rise in prominence of unit approvals has been greatest over recent years, unit values have recorded an annual increase of 2.8% and 0.5% compared to 8.0% and 6.5% for houses. </li>
<li>Turning to the rental markets, capital city house rents have increased by 1.6% over the past year which is lower than the 2.3% increase in unit rents however, in Melbourne and Brisbane annual growth in rents has been lower for units than houses.</li>
</ul>
The annual rental growth figures for units are 2.2% in Melbourne and 0.5% in Brisbane compared to 2.5% and 2.0% respectively for houses. Keeping in mind that many of these recent unit approvals will take time to be built, it could be the case that value and rental growth for Melbourne and Brisbane units will be minimal due to the higher supply levels coming on line. This may also have an impact for the wider market as the overall composition of unit stock increases it may result in lower overall value growth.
Other cities should be cautious of higher housing stock levels, particularly within the inner city apartment markets. With population growth slowing, particularly from overseas, and a surge in new construction, without careful management an under-supply of dwellings can quite quickly turn to a glut in particular areas if too many new homes are approved.
 Brisbane at least appears to have slowed its rate of approvals growth recently however, it is potentially concerning that Melbourne has seen no such easing of the throttle.
More dwellings are required nationally however, developers and those approving these new homes need to carefully monitor just how many new homes are required at one point in time. 
The RBA has pointed out that they want to extend this period of increased construction for as long as possible. Extending this heightened period of construction will help support jobs, particularly as high rise construction takes much longer than house construction, and will help reduce the housing deficiency. But we must be cautious to ensure that we aren’t just creating oversupplies in inner city areas while maintaining deficiencies in other areas of our cities where cheap and affordable housing options are required.
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We must be careful new dwellings don't create inner city oversupplies: Cameron Kusher

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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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In late January, I attended the Inman Real Estate Connect Conference in New York.  The conference is targeted at real estate professionals and provides insight into the latest news and trends within the market. 
This week’s I'll share some of the new technology, websites and applications as well as some of the ways US agents are now using social media to communicate with clients.  Most of the websites and applications are US-centric but here I will highlight those which are also relevant to the Australian market.
Social Media
In the US, social media is big for real estate agents and brokers.  Although LinkedIn, Facebook, Youtube and Twitter may immediately spring to mind, real estate professionals are now starting to effectively create leads from Instagram and Pintrest. 
In fact, in the US, agents receive more referral traffic from Pintrest than they do from Google Plus, Linkedin and Youtube combined.  Real estate professionals are effectively using Pintrest by creating pinboards of design ideas and solutions that they like and local area information. 
This can include but is not limited to:
<ul>
<li>Smart home design</li>
<li>Storage solutions</li>
<li>Room designs</li>
<li>Local area landmarks (shops, cafes, bars etc)</li>
<li>Local restaurants</li>
</ul>
Furthermore, US agents are pinning the listings information of homes they have, and have had, available for sale so they can show customers on their inspections. 
Instagram is being used in a similar way whereby agents create a unique hashtags (e.g. #ckusherlistings) and upload photos of all their current and previous listings to have these immediately searchable to show clients.
Websites
<a href="https://buzzsumo.com/" target="_blank">Buzzsumo.com</a>
Buzzsumo is a website that that allows you to analyse how well your social media content is being used.  It shows the total number of shares of your content and then breaks it down by the different social media platforms. 
Social media in real estate certainly isn’t as big in Australia as it is in the US, but this is a good website that allows you to see where both you and your competitors are getting the eyeballs and ultimately the shares.
<a href="https://www.fancyhands.com/" target="_blank">Fancyhands.com</a>
Fancyhands is a US based business which offers a virtual personal assistance service.  As per the website they can do all those tasks that you don’t have the time nor the desire to do, this may include:
<ul>
<li>Managing your appointment schedule</li>
<li>Organising travel</li>
<li>Administrative tasks such as data entry</li>
<li>Reservations</li>
<li>Booking travel</li>
</ul>
<a href="https://www.floored.com" target="_blank">Floored</a>
Floored create 3D videos of properties so potential buyers can walk through a property before they physically see the property.  The models are optimised so you can watch them through an internet browser of through a mobile phone or tablet.  The technology can also be used to create 3D real estate models for homes which aren’t even built as yet.  You can also include furniture to get an even clearer idea of how things will fit in the space.
<a href="https://www.oculus.com" target="_blank">Oculus</a>
Oculus is a virtual reality headset which is being backed by Facebook.  For the real estate industry it can be utilised by allowing customers to literally walk through the home without having to physically do open-for-inspection.
<a href="https://www.homekeepr.com" target="_blank">Homekeepr</a>
Homekeepr is a home maintenance app that can be used by both real estate professionals and anyone that owns a home.  The app asks 10 questions about the characteristics of your home, it then creates a list of maintenance tasks that are required for the home and sets reminders as to when you should do these tasks. 
The application provides a description of what the task is and why it should be done.  It then recommends local service providers to undertake these tasks.  The agent’s app offers customers the opportunity to download the app and it is customised to the clients’ home(s).  The list of local service providers for each task can be customised by the agent. 
When the task is due to be completed they receive both a notification on the app and an email from you as their agent reminding them that the task needs to be completed.  The agent can even put their own recommendations outside of those specifically for the home such as local restaurants, shops, schools and much more.
</body></html>

How US real estate agents are using social media and new technology to win customers: 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 41-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 41-storey tower, which has 229 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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