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CoreLogic undertook analysis of the recent March 2018 quarter consumer price index (CPI) data which confirmed that in inflation adjusted terms, dwelling values are now lower in most capital cities.
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(Note: consumer price index (CPI), which measures inflation, increased by 0.4% over the March 2018 quarter to be 1.9% higher year-on-year. With the release of this data, it is also possible to look at inflation-adjusted or real changes in dwelling values across the capital cities. When looking at these figures, the inflation adjustment means that value growth is lower).
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The results showed that national dwelling values fell by -1.0% and were -0.7% lower over the past 12 months, however, Hobart was the only capital city where real values increased over the quarter (+3.0%) with Sydney recording the largest quarterly fall (-2.2%).
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Over the past twelve months, only Melbourne (+3.4%), Hobart (+10.9%) and Canberra (+1.0%) have seen dwelling values outpace inflation. The largest decline over the year was recorded in Darwin (-9.3%) followed by Perth (-4.3%) and Sydney (-4.0%).
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Over the past decade, only Sydney (+43.3%) Melbourne (+38.7%) and Hobart (+6.4%) have recorded ‘real’ growth in dwelling values.
<a href="https://www.propertyobserver.com.au/images/2018/4/26/corelogic%20expert%20obs%201.jpg" target="_blank">Click here</a> to enlarge
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These latest figures really highlight just how narrow value growth has been in the national housing market over the past decade. It also highlights that low mortgage rates alone have not been the key driver of value growth - mortgage rates are the same in Sydney as they are in Perth yet the former has recorded real growth of 43.3% while the latter has seen values fall by -25.0%.
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With dwelling values dropping over recent months, all capital cities, except Hobart, now have real values which sit below their previous peak. Nationally, values are -2.0% lower than their June 2017 peak and across the combined capital cities values are a slightly greater -2.5% lower. Let’s take a look at how dwellingvalues have tracked in inflation adjusted terms across each capital city.
<a href="https://www.propertyobserver.com.au/images/2018/4/26/corelogic%20expert%20obs%202.jpg" target="_blank">Click here</a> to enlarge
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Sydney – values are 5.3% lower than their June 2017 peak.
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Melbourne – after peaking in December 2017, values are currently -0.9% lower.
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Brisbane – values peaked back in March 2008 and are currently - 12.5% lower.
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Adelaide – values currently sit -7.4% below their June 2010 peak.
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Perth – the city has seen values fall by -28.5% from their peak in December 2006. dwelling values.”
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Hobart – with values increasing a further 10.9% over the past year, it is the only city where real dwelling values are currently at their peak.
Darwin – real dwelling values peaked in March 2013 and have since fallen by -28.2%.
Canberra – dwelling values are -6.8% lower than their June 2010 peak.
Although the rate of inflation is quite slow and remains below the Reserve Bank’s target range of 2% to 3% annually, value growth is now broadly slower and is expected to remain that way over the coming quarters.
As a result, when looking at inflation-adjusted dwelling values the expectation is that they will continue to fall over the coming quarters which means that as the cost of other items increase and inflation rises, relatively speaking, the cost of housing will reduce. We’ve seen this result occurring in most capital cities for a number of years but is a relatively recent development in Sydney and Melbourne.”
The flow-on effect of value falls remains to be seen, however, it may result in less expenditure elsewhere across the economy, particularly in Sydney and Melbourne which have had strong retail demand over recent years due to the wealth-effect of increasing dwelling values.”
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CAMERON KUSHER is head of research for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
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Hobart the only capital city where real dwelling values sit at their peak

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EXPERT OBSERVATION
After many years of strong increases in dwelling values, the two largest housing markets, Sydney and Melbourne, have begun to see values fall over recent months.  While values are declining in both cities the speed of the declines vary greatly, both compared to one another and compared to other recent downturns in these housing markets.
<img src="https://corelogic.com.au/sites/default/files/styles/media_crop/public/2018-04/2018-04-23-blogim1.png" alt=""> 
Since values peaked back in July 2017, Sydney dwelling values have fallen by -3.9% over the following eight months.  If we look at the three previous downturns highlighted in the above chart, in the 2003-06 downturn values had fallen by -5.8% eight months in and went on to decline by -8.2% over 25 months before values started rising again.  In the 2008-09 downturn, values were -4.9% lower eight months in and went on to fall by -7.0% over 12 months.  The 2010-11 downturn saw values fall from their peak to their trough by -3.7% and after 8 months they had fallen by just -1.0%.
<img src="https://corelogic.com.au/sites/default/files/styles/media_crop/public/2018-04/2018-04-23-blogimg2.png" alt="">
 Dwelling values in Melbourne have not been falling as quickly or for as long as those in Sydney.  After the market peaked in November of last year, values have fallen by -0.7% over the four months to March 2018.  In 2003-04, values fell by a total of -3.0% over nine months and were -1.0% lower after four months of declines.  In 2008-09 values fell for 11 months, they had fallen by -3.9% over the first four months and ended up declining by -9.4%.  In the first four months of the 2010-12 period of value falls values were -2.2% lower before they ultimately fell by -8.4%.  Outside of these recent declines, values recorded a peak to trough fall of -8.3% between 1989 and 1992 with values falling by -2.5% over the first four months of this period.
Two other capital cities, Perth and Darwin, have been recording value falls for some time.  Although their declines are somewhat lengthier and different to recent falls in Sydney and Melbourne, it is valuable to analyse how these declines have evolved.
<img src="https://corelogic.com.au/sites/default/files/styles/media_crop/public/2018-04/2018-04-23-blogimg3.png" alt="">
Perth dwelling values increased in March 2018 however, over the period from June 2014 to February 2018 values fell by -11.0%.  There is no guarantee that these declines are over as yet although the pace of these declines has steadied recently.  It is also interesting to note that during the most recent period of value falls the declines began much more moderately on a month-to-month bases than they did in 2006-07, 2008-09 and 2010-11, with the downturn stretching on much longer than any of these previous downturns.  In 2006-07, values fell by -3.7% in five months, in 2008-09 values were -11.0% lower over 13 months and in 2010-11 values declined by -9.1% over 19 months.
<img src="https://corelogic.com.au/sites/default/files/styles/media_crop/public/2018-04/2018-04-23-blogimg4.png" alt="">
 Darwin has only seen two recent period of market downturn, between October 2010 and September 2011 and from May 2014 to February 2018 (values rose over March 2018).  Again, it should be noted although values have risen over the month it doesn’t necessarily mean the downturn is over.  Over the 11 month downturn in 2010 and 2011, Darwin dwelling values fell by -7.9%.  The more recent downturn saw value declines start slower than those in 2010-11 with the downturn stretching for much longer.  As at February 2017 Darwin dwelling values have fallen by -22.3% from its previous peak in May 2014.
While these charts are interesting to consider they don’t provide any particular guidance as to how deep or elongated the current downturns in Sydney and Melbourne may be.  The weak housing market conditions in Perth and Darwin were largely a symptom of weak economic and demographic conditions, while the current downturns in Sydney and Melbourne are occurring against reasonably strong economic and demographic conditions; the slowdown is primarily being influenced by tighter credit conditions.  
What is interesting is that comparing to Perth and Darwin shows that just because they have started falling slower than other housing market downturns doesn’t necessarily mean they won’t end up as a deeper and longer downturn.  Of course the reverse is true as well but it will be interesting to see how deep and how long these current downturns persist for in Sydney and Melbourne and whether they lead to downturns in other cities and regions too.
CAMERON KUSHER is head of research for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
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Are all property downturns the same?

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EXPERT OBSERVATION
Dwelling values, particularly those in Sydney and Melbourne, have been falling now for a number of months.  The latest ABS housing finance data indicates that the impact of these falls is now seemingly being felt in demand for new mortgages.  
While the value of lending fell over the month for owner occupiers and investors, the slowdown was much more substantial for investors, and the sharp month-on-month fall follows a downwards trend that has been evident across several rounds of macro prudential measures over the past few years.  This isn’t really a surprise given so much of the lending to investors has been focused on Sydney and Melbourne and these cities are seeing values fall and yields at close to historic lows while investors are also incurring higher mortgage rates than owner occupiers, with additional rate premiums they use interest-only mortgages,.
Click here <a href="https://www.propertyobserver.com.au/images/2018/5/11/fig1.jpg" target="_blank">to enlarge.</a> 
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/5/11/fig1.jpg" alt="">
In March 2018 there was $31.9 billion worth of housing finance commitments which was the lowest monthly value of commitments since August 2016.  Housing finance commitments were split between $21.0 billion to owner occupiers and $10.9 billion to investors.  Owner occupier commitments fell by -1.9% over the month to their lowest value since December 2017.  Investor finance commitments were down by -9.0% over the month, falling to their lowest value since January 2016.  The declining trend in investor housing finance commitments had slowed recently, however, the -9.0% monthly fall was the largest decline since September 2015 when they fell -10.4% over the month as lenders tightened in order to remain under the 10% APRA speed limit in annualised terms.
Click here <a href="https://www.propertyobserver.com.au/images/2018/5/11/fig2.jpg" target="_blank">to enlarge. </a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/5/11/fig2.jpg" alt="">
The $21.0 billion worth of finance commitments to owner occupiers was split between: $1.9 billion for construction of dwellings, $1.2 billion for purchase of new dwellings, $6.3 billion for the refinance of established dwellings and $11.6 billion for the purchase of established dwellings.  Each type of owner occupier commitment fell over the month however, year-on-year the value of lending for construction of dwellings was the only owner occupier finance segment that was lower.
Click here <a href="https://www.propertyobserver.com.au/images/2018/5/11/fig3.jpg" target="_blank">to enlarge.</a>
 <img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/5/11/fig3.jpg" alt="">
The $10.9 billion worth of investor housing finance commitments in March 2018 was split between $1.0 billion for construction of new dwellings and $9.9 billion for established dwellings.  The value of lending for new construction was -18.9% lower over the month while the value of commitments for established dwellings was -7.9% lower.  
Click here <a href="https://www.propertyobserver.com.au/images/2018/5/11/fig4.jpg" target="_blank">to enlarge.</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/5/11/fig4.jpg" alt="">
Looking more broadly at finance commitments for new housing vs established housing shows a decline over the month for both.  The chart also shows how the established market, of which there are substantially more properties, dwarfs the new housing market.  Over the month there was $4.1 billion worth of commitments for new housing and $21.5 billion for existing housing (excluding refinances).  Commitments for new housing fell by -1.9% over the month while commitments for existing stock were -6.8% lower. 
A month’s worth of data doesn’t necessarily indicate a trend but it was quite a substantial fall in the value of housing finance commitments in March, particularly for investors.  CoreLogic has believed for some time that investment in housing, particularly in the most expensive markets of Sydney and Melbourne, made little sense given stretched affordability, yield compression and little near-term value growth prospects with values currently declining.  Despite this, lending finance data (which will be updated next Tuesday) has continued to show investor activity which is well above average levels in NSW and Vic.  We would expect that the coming release will show a further weakening of demand in these two states.
Over the coming months it is anticipated that mortgage activity, particularly from the investment sector will remain weak relative to recent years.  With APRA recently announcing they will lift the 10% speed limit on investment credit growth from July 1, it will be important to watch the trend in investment credit flows.  
There have been recent reports that lenders are starting to reduce the interest rate premiums on some interest only loans and investment loans, however any reduction in rates could be offset by stricter serviceability testing on borrower expenses and incomes as well as the prospect for renewed focus from lenders to reduce their exposure to high loan to income ratio loans as well as maintaining their reluctance to take on high loan to valuation ratio loans.  
CAMERON KUSHER is head of research for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
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Is a crunch in investor mortgage demand now starting to bite?

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EXPERT OBSERVATION
In a recent letter to all Australian authorised deposit-taking institutions (ADIs) entitled ‘Embedding Sound Residential Lending Practices,’ APRA indicated that lenders need to limit lending at very high debt to income levels.  
The actual wording of the comment was, APRA expects ADIs to commit to developing internal risk appetite limits on the proportion of new lending at very high debt to income levels (where debt is greater than 6 times a borrower’s income), and policy limits on maximum debt to income levels for individual borrowers.  
This doesn’t suggest that there is any hard limit on loan to income (LTI) ratios above 6 times but it does suggest that there will be less appetite for mortgages which are in excess of 6 times incomes.
Utilising gross household income data that has been modelled by the Australian National University (ANU) Centre for Social Research and Methods we can take a look across the individual capital cities at what the impact of limiting debt to income ratios to six times would be.  
The following charts look at annual gross household incomes with a comparison to median values at the end of 2017.  Incomes are elevated six times for comparison to median prices.  
The high median value relative to incomes implies the typical Sydney household would probably be targeting properties across the lower quartile of values rather than around the middle of the valuation range. 
<img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg1.png" alt="2018-05-25--blogimg1" width="1102" height="480">
 
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Six times the median gross household income in Sydney is calculated at $688,764.  
The median house value in Sydney is $1,058,306 and the median unit value is $774,124.  
What this means is that if a buyer wanted to purchase the median house under this scenario they would need a deposit of $369,542 and for the median unit they’d need a deposit of $85,360. 
<img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg3.png" alt="2018-05-25--blogimg3" width="1102" height="480">
 
<img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg4.png" alt="2018-05-25--blogimg4" width="1102" height="480">
At the end of 2017, Melbourne’s median house value was $832,735 and the median unit value was $574,052.  At the same time, the median gross household income was $1,553/week with six times this annual income was recorded at $605,787.  Based on these figures, at 6 times income, borrowers in Melbourne can still afford the median unit but would need a deposit of $226,948 to be able to borrow below six times their income for the median house.
<img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg5.png" alt="2018-05-25--blogimg5" width="1102" height="480">
  
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Unlike Sydney and Melbourne, households on the median income in Brisbane can still afford to borrow enough for the median valued house or unit.  The borrowing power for someone on the median income is $608,830 which is lower than both the median house ($531,248) and median unit ($383,752) value.   
<img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg7.png" alt="2018-05-25--blogimg7" width="1102" height="480">
 
<img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg8.png" alt="2018-05-25--blogimg8" width="1102" height="480">
The typical household in Adelaide can still afford the median house and unit.  As at December 2017 the median house cost $458,806 and the median unit $331,325.  Based on the median gross household income of $1,277/week someone on this income could borrow up to $498,161.  
<img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg9.png" alt="2018-05-25--blogimg9" width="1102" height="480"><img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg10.png" alt="2018-05-25--blogimg10" width="1102" height="480">
  Based on the median household income for Perth, someone borrowing six times their annual income could borrow $616,088.  Based on this figure, a borrower purchasing the median property would be comfortably below six times their annual income whether they’re purchasing a houses ($484,562) or a unit ($408,488). 
<img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg11.png" alt="2018-05-25--blogimg11" width="1102" height="480"><img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg12.png" alt="2018-05-25--blogimg12" width="1102" height="480">
   A borrower in Hobart on the gross household income ($1,248/week) borrowing six times their annual income could borrow up to $486,823.  The $486,823 figure is lower than the median house ($424,251) and median unit ($335,289) value for Hobart. 
<img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg13.png" alt="2018-05-25--blogimg13" width="1102" height="480"><img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg14.png" alt="2018-05-25--blogimg14" width="1102" height="480">
 Median household incomes in Darwin are quite high at $2,200/week.  Based on a borrower’s ability to borrow six times the household income, the median household could borrow up to $858,063.  Median house value ($469,083) and median unit values ($356,992) are significantly lower than $858,063. 
<img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg15.png" alt="2018-05-25--blogimg15" width="1102" height="480"><img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg16.png" alt="2018-05-25--blogimg16" width="1102" height="480">
  Like Darwin, Canberra also has relatively high median household incomes at $2,170/week.  Someone borrowing six times the annual income would be able to borrow up to $846,358 which is significantly higher than the median house and unit values which are recorded at $669,642 and $431,048. Of course median values don’t tell the whole story, as many properties are valued below as there are above however, it is valuable in providing a guide for what impact limiting high loan to income lending would have.  
In Sydney the median household can’t afford the median house or unit if there was a LTI limit of 6 times and in Melbourne the median household can’t afford the median house.  Were hard limits on LTI to be implemented it would have a much bigger impact on Sydney and Melbourne than any other areas of the country.  Any limit would still have some impact on households outside of Sydney and Melbourne, not to mention those that are purchasing properties additional to their principal place of resident.
Also keep in mind that these figures are only looking at a single scenario.  In most instances a lender will not allow a borrower to borrow 100% of the value of a property and if a borrower has a deposit of less than 20% they will need to pay lenders mortgage insurance (LMI).
So far there is no indication of a hard cap on LTI ratios.  What is clear is that APRA would like to see high LTI lending dialled back and that will have an impact on some borrowers, particularly those purchasing more expensive properties and/or those that have multiple properties.
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What would lending caps of six times your income look like?

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There are many measures of affordability in the marketplace, sadly I believe that many of these measures fail to accurately depict the affordability or otherwise of housing in Australia.  
The main reason being that housing affordability is an extremely complex issue and many factors drive the affordability of housing. In my future posts I am going to investigate some of these factors and tell you what you should really be asking yourself about affordability when purchasing a home.
Can I start by stating that simplistic means of comparing property prices between countries I believe are ineffective. 
Due to different tax regimes, standards of housing and attitudes to property and wealth accumulation there may be perfectly good reasons why a household is prepared to spend more on housing in Australia for example than they are in the United States.  I think common measures such as the median multiple (ratio of household income to property prices) are not necessarily a good way to measure affordability or otherwise, there are a lot more factors at play.
Interest rates
Interest rates are obviously an important component in determining housing affordability.  When interest rates are lower, interest repayments on home loans are lower and as a result ‘affording’ the repayments on a mortgage should be easier.  Of course, as we are seeing at the moment, lower mortgage rates often encourage higher property values. 
So while it’s true that lower interest rates make housing relatively more affordable, if values are rising and sales increase then it can somewhat off-set the affordability benefit of lower mortgage rates.
Furthermore, the typical home loan in Australia is 25 years and the vast majority of home loans are on a variable rate.  As a result, as the Reserve Bank adjusts monetary policy there is virtually an instant effect on household budgets and balance sheets.  For example, at the moment the standard variable mortgage rate sits at 5.95% however, over the past 10 years the variable mortgage rate has averaged 7.27%, over the last 20 years it has averaged 7.45% and over the past 25 years (the typical home loan length) it has averaged 8.47%. Over the past 25 years, standard variable mortgage rates have been as high as 17.0% and as low as 5.75%.
The point is that interest rates can vary greatly over 25 years and over the life of the loan the current interest rate is not a great means of measuring the cost of a mortgage over its lifetime.
Wages / Income
If you are going to take out a mortgage on a home (as most purchasers do) you are going to need an income and you are going to need some savings.  In Australia there are a number of measures of wages/income and it is difficult to know exactly which one is best to use to measure housing affordability.
The National Accounts measure the ‘Real net national disposable income – chain volume’.  This measure does have a number of shortcomings in that it is not an individual measure and that it includes items that one can’t really spend such as superannuation.  Additionally this data is only available from a national standpoint. 
The Australian Bureau of Statistics (ABS) publishes its wage price index each quarter however, it measures wages only and doesn’t measure income captured from other sources.  The Census is undertaken each five years and does report on the median weekly household income however, the shortcoming here is that it is only updated every five years. 
We also have the Household Income Survey from the ABS however it is only undertaken bi-annually and takes a fairly macro view of household incomes
Unfortunately all of these measures have significant shortcomings which need to be considered when looking at any housing affordability measure.
Article continues on next page. Please click below.
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Labour force / unemployment
Paying off a mortgage eats up a significant portion of a family’s wage.  Undoubtedly if home values weren’t so high and mortgages weren’t so large disposable incomes would be much greater.  Although labour force data or unemployment statistics need not necessarily be an input into any housing affordability measure they are a key consideration for someone looking to purchase. 
The threat of unemployment means that despite the fact housing may seem affordable it is less likely someone would purchase. Obviously if you are unemployed it is going to be difficult to purchase a home.
Another factor to consider is although measures of income show that over recent years wages and disposable income have increased, what they don’t take into account is how many more women are working nowadays.  Labour force data shows that in May 2014, 54.1% of the workforce was male and 45.9% was female, 30 years ago 62.3% was male and 37.6% was female.  Today, 35.5% of full-time workers are female compared to 28.9% 30 years ago. 
The point here is that although household incomes have increased, a big proportion of the increase is due to the structural change associated with a greater number of women in the workforce.  
The rising prevalence of dual income households means that whereas 20 to 30 years ago couples could afford mortgage repayments on a single wage, today they largely require dual incomes.
Home values / prices
Most measures of housing affordability look at median prices or median values. 
The important thing to remember here is that a median is just the middle value so there are just as many homes worth more and less than that figure.  In fact the median price looks only at the middle value of properties which have sold over a period.
This obviously has significant shortcomings because what is predominately selling could be at the affordable or expensive end of the market and this could bias the median one way or another.  Remember that typically only 5% to 7% of total housing stock transacts in a given year.
Another important consideration here is that a national median measure doesn’t really tell you very much at a localised level.  In Australia, 66% of residents live in a capital city with around 55% in Sydney, Melbourne, Brisbane or Perth. 
Quite simply many residents don’t have a choice but to live in a capital city so if you are trying to determine affordability in Melbourne, the cost of housing in Mildura is of no valuable comparison whatsoever.
Rental rates
If you don’t own a home or pay-off a mortgage you have to live elsewhere, for the most part non-homeowners rent.  The cost of renting is an important consideration when trying to determine housing affordability.  If rents are increasing but home values are flat or falling purchasing a home may start to look a more attractive prospect. 
Once again the challenge with a measure which compares rents to house price (or mortgage repayments) is that it is not a localised analysis.  For example for the cost of renting in Paddington in Sydney you may actually be able to pay off a mortgage in Guildford but to the renter is the opportunity cost of owning their own home and being further away from the city centre, harbour and the beaches worthwhile? 
Who knows but for anyone looking to purchase these are the sorts of questions they need to be asking themselves.
The other key consideration is that the ongoing costs associated with owning a home as opposed to renting are difficult to determine, but they are much more than renting.  As a renter, the ongoing costs generally include: the rent, the bond, electricity, gas (if applicable), cleaning (if you move rentals) and the cost of moving if/when you move. 
As an owner of a home the costs incurred include: the mortgage, electricity, gas, council rates, stamp duty when you purchase, ongoing maintenance of the property, strata fees (if you own a unit) and agent fees if/when you decide to move.  The ongoing costs associated with owning a home are much greater than the ongoing costs of renting.
Who does housing affordability affect most?
Housing affordability affects everyone.  The high cost of housing acts as a disincentive for people to move to more appropriate locations, discourages people from upsizing and downsizing and discourages movement intra or interstate for employment.  The group most affected by housing affordability however is those who don’t as yet own a home.
Again if we think about many of the measures of affordability used they look at typical or median prices values and compare to interest rates and typical wages.  The problem with this approach is that very few people are actually typical.  As a generalisation, most people that rent are younger, starting out their careers. 
There is a high likelihood that their wage is currently lower than the median (although there is a good chance it will increase as they are promoted or move jobs).  If their wage is below the typical wage then they should not be looking to buy the typical (or median house).
Of course there are plenty of renters that earn above average wages but choose not to purchase as well but when trying to tackle the affordability question I think many of the measures that we look at are far too simplistic, but hamstrung by the quality and granularity of income data. 
Housing affordability is an individual thing and none of the measures really tell the true story about how affordable or unaffordable housing in Australia is.  When determining whether you can afford to buy a home I think the most important things to consider are:
<ol>
<li>What are current mortgage rates and at what higher level would I not be able to repay my mortgage?</li>
<li>How secure is my job and what would happen if I was to lose my job for an extended period?</li>
<li>Over the next few years what is the realistic expectations for my wage, will it rise and by how much?</li>
<li>What impact would it have if I found a partner or lost a partner on my ability to repay the mortgage?</li>
<li>If I plan to have children, children cost a lot what impact would that have on my ability to repay the mortgage?</li>
<li>Compared to my current rent and associated costs, how much more is paying off a mortgage and the other day-to day costs of home ownership really going to be and can I afford this?</li>
<li>What am I willing to sacrifice in order to buy a home; lifestyle, location, overseas travel etc?  What is the opportunity cost of buying a home?</li>
</ol>
I am sure there are many more questions to ask when looking to purchase but I think as a start these questions are essential.  I say that the measures of affordability which are readily available should be taken with a grain of sale. 
It’s more important to ask yourself some tough questions about whether or not you can really afford to be a home owner.  If you have any doubt you really need to consider whether it is worth the risk or not.
For what it’s worth, I think that housing affordability is a significant issue for young Australians, particularly those within our capital city markets.  he major problem is that most Australian’s choose to build wealth through property and 23 years of unabated economic growth has on exacerbated this. 
The challenge now is how can you deliver affordable housing for younger Australians without bringing down the cost of existing housing which politically and economically would be detrimental to the overall health of the Australian economy.
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Forget affordability measures and ask yourself some tough questions

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

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The Australian Bureau of Statistics (ABS) released housing finance data for August 2015 earlier this week.  
The data broadly showed a further pick-up in owner occupier lending and a slowing in investor lending. It is important to reconcile this against numerous reports that many mortgagees have been quick to advise their lenders that their properties which were formerly investment properties are now in fact owner occupied. 
This is due to the fact that most lenders are now charging a premium for investment mortgages.
<a href="/images/2015/10/09/Chart-11.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/10/09/Chart-11.jpg" alt="">
 
The above chart details the components of those borrowing over time. What’s immediately noticeable is that while there has been a recent surge in lending to investors, over recent months there has been a clear fall in lending to this cohort. 
While investment lending is slowing, owner occupier lending is rising however, there has been very little bounce in lending to first home buyers. For the most part the rise in owner occupier lending is being fuelled by an escalation in both refinances and borrowing for new loans to non-first home buyers. Again, it is important to note some of these figure may be being affected by re-classifications of mortgages.
<a href="/images/2015/10/09/Screen%20Shot%202015-10-09%20at%203.59.33%20PM.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/10/09/Screen%20Shot%202015-10-09%20at%203.59.33%20PM.png" alt="" width="785" height="305"> 
In August 2015, owner occupiers committed to $20.8 billion worth of housing finance, a 6.1% rise over the month and a 26.5% year-on-year rise.  Looking at the components of owner occupier lending there was $1.7 billion in lending for construction of dwellings, $1.2 billion in lending for purchase of new dwellings, $6.4 billion in refinances of established dwellings and $11.5 billion for purchase of other established dwellings. 
The 6.1% monthly rise in owner occupier lending was largely fuelled by a 10.4% rise in lending for purchase of established dwellings however, each component rose.  Refinances have typically been the greatest source of growth in owner occupier lending however, they recorded the slowest growth of any segment over the month.  Looking at year-on-year changes, lending for construction of dwellings rose 0.5%, lending for purchase of new dwellings rose 17.6%, refinances of established dwellings rose 26.7% and purchase of established dwellings increased by 32.6%.  
Over the coming months we will be watching closely to see whether the growth in owner occupier lending can be maintained, particularly in the face of falling population growth and no real increase in activity from first home buyers.
<a href="/images/2015/10/09/Chart-31.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/10/09/Chart-31.jpg" alt="">
 
Switching the focus to the investor segment, there was $13.6 billion worth of commitments to investors in August 2015. The value of lending to investors was -0.4% lower over the month but 12.0% higher year-on-year. It was also the first time in 13 months that the value of new lending (excluding refinances) was greater to owner occupiers than it was to investors.
Over the month there was $0.8 billion in lending for construction of dwellings and $12.7 billion in lending for established housing. Over the month, lending for construction of dwellings fell -22.0% while commitments for established housing rose 1.4%. Year-on-year lending for construction of new homes is -2.5% lower and lending for established homes is 13.1% higher.
The data appears to indicate that there is a change occurring in the mortgage lending market. Whereas investors and owner occupier refinances have been the primary drivers of growth lately, it seems as if this is now tilting to owner occupier new loans starting to dominate. Given that investment mortgages generally now have a higher interest rate than owner occupier mortgages, it may be playing a role in the tilt towards owner occupier lending. 
Furthermore, value growth has been strong for more than three years in Sydney and Melbourne and investors may be becoming concerned about the longevity of the boom while growth outside of these cities has been sedate. 
Once you also consider a record high pipeline of residential construction accompanied by a record low rate of rental growth and historical low yields perhaps a growing number of investors are looking towards other forms of investment they perceive as less risky at this stage in cycle. It’s still early days for the slowdown in investment lending but we, along with the RBA and APRA, will be watching closely to see whether the slowing in investment lending and the rise in owner occupier lending persists over the coming months. 
It is also going to be interesting to see what impact this has on overall demand for housing over the coming months in lights of evidence of a bit of a softening in the Sydney housing market.
Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/author/cameron-kusher/" target="_blank">here</a>.
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Owner occupier housing finance commitments take a step up: Cameron Kusher

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Lending finance data for August 2015 was released by the Australian Bureau of Statistics (ABS). 
The latest data paired with the previously released housing finance commitments data shows that lending to investors has slowed sharply over recent months following the regulatory changes from APRA and the subsequent changes to lending policies from most mortgage lenders.
<a href="/images/2015/10/13/Chart-13.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/10/13/Chart-13.jpg" alt="">
The above chart shows the proportion of new lending to investors across each state and territory in August 2015.  Note that when we say new lending we exclude refinances as they are not associated with a new purchase of property.  New South Wales had the greatest proportion of new lending to investors over the month however, we have seen lending to this segment of the market slow across each state and territory.
<a href="/images/2015/10/13/Chart-22.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/10/13/Chart-22.jpg" alt="">
 
Mortgage lending to investors peaked in May 2015 prior to most Australian ADI’s implementing changes to lending policies relating to investment mortgages.  At that time, the proportion of new lending to investors was much higher in each state and territory than it is currently.  In each state and territory there has been a significant decline in the value of new lending to investors between May and August of this year.  Across each state and territory the magnitude of the fall in investor lending has been recorded at: -10.5% in NSW, -14.0% in Vic, -15.2% in Qld, -17.0% in SA, -10.1% in WA, -10.0% in Tas, -35.6% in NT and -23.5% in ACT.
While new lending to investors has fallen away over recent months, there has been a rise in new lending to owner occupiers across some states and territories while others have seen falls across owner occupier lending too.  Between May 2015 and August 2015 the changes in the value of new lending to owner occupiers have been recorded at: +22.1% in NSW, +16.5% in Vic, +4.2% in Qld, +4.1% in SA, -2.4% in WA, -8.3% in Tas, -8.1% in NT and -10.8% in ACT.
As investor lending is slowing in NSW and Vic, lending to owner occupiers is generally picking-up which should help offset some of the slowdown in investment loans.  Elsewhere there has been no significant increase in owner occupier lending, or owner occupier lending has fallen; given this the data release may point to ongoing weaker housing market conditions outside of the two most populous states.
It’s important to note that this data only includes mortgage lending domestically.  What is not clear is to what extent the weakness in investor demand domestically over recent months is being offset by an uptick in demand from overseas.
Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/author/cameron-kusher/" target="_blank">here</a>.
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Sharp dip in investor housing demand since May: Cameron Kusher

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<h1 class="title"> </h1>
The Australian Bureau of Statistics (ABS) released housing finance data for September 2015 earlier this week.
<a href="/images/2015/11/12/Screen%20Shot%202015-11-12%20at%2010.10.17%20AM.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/11/12/Screen%20Shot%202015-11-12%20at%2010.10.17%20AM.png" alt="" width="623" height="488">
 
The broad housing finance trends show that demand from the owner occupier segment of lending is falling while demand from investors fades.  Of course since late December last year we have seen limits come into effect regarding annual investment credit growth as well as, more recently, higher interest rates for all investment borrowers and lower loan to value ratios for many.  
Given these changes it is no real surprise that demand from this market segment is falling; there is less investment borrowing to be had and lower LVRs mean that for many borrowers negative gearing becomes somewhat less attractive. On the other hand, demand from owner occupiers is rising, largely from upgraders and those refinancing while there is little sign that first home buyer demand is rising. 
Much of the recent refinance activity has subsequently translated into eventual housing investment, it will be interesting to see if the current refinance activity is just home owners shopping around for a better mortgage deal or if it will start to flow to investment in other asset classes.
<a href="/images/2015/11/12/Chart-2.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/11/12/Chart-2.jpg" alt="">
 
Looking more closely at owner occupier lending, the seasonally adjusted data shows that there was $21.0 billion worth of commitments in September 2015.  This represented a monthly increase of 3.0% and a year-on-year rise of 23.1%. The $21.0 billion consisted of $1.8 billion in lending for construction of dwellings, $1.3 billion in lending for purchase of new dwellings, $6.7 billion in lending for refinances and $11.2 billion in lending for purchase of established dwellings. 
Each of the four components of owner occupier housing finance commitments have increased over the month with most having increased year-on-year.  Year-on-year, the changes have been recorded at -1.3% for lending for construction of dwellings, +32.1% for lending for purchase of new dwellings, +30.0% for refinances and +23.0% for purchases of established dwellings. 
Clearly owner occupier demand is rising however, the ABS does note that ADIs are currently making changes to lending classifications which are seeing more investor loans classified as loans to owner occupiers. This will be contributing to a proportion of this rise, how big that proportion is we are unsure.
<a href="/images/2015/11/12/Chart-3.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/11/12/Chart-3.jpg" alt="">
 
In September 2015 there was a seasonally adjusted $12.3 billion worth of housing finance commitments to investors, this was the lowest value of investor lending since August 2014.  The monthly value of lending to investors has fallen by -12.8% from its peak of $14.1 billion in April 2015.  The $12.3 billion figure consists of $0.6 billion in lending for new construction which is the lowest level in a year and $11.7 billion in lending for established homes which is the lowest level since August of last year.  Lending for new construction tends to be volatile however, it has fallen by -42.2% from its recent peak of $1.1 billion worth of commitments in December 2014.  The less volatile investment lending for established homes has fallen by -11.0% from its peak of $13.1 billion in April 2015.  Again, recent reclassifications of lending by ADIs will be contributing to some of the recent weakness however, a changing investment lending landscape is undoubtedly the most significant contributor.
The latest housing credit data shows that the annual rate of investor credit growth still remains above 10% (10.4%) so it is reasonable to expect that investor housing finance commitments will continue to fall over the coming months. With the rate of value growth slowing, higher interest rates and lower LVRs for many investors, the attractiveness of purchasing an investment property is also easing. 
While investment lending has been cooling down, owner occupier lending has been rising however, much of the rise is due to upgraders and refinances.  We anticipate that this trend is likely to continue although probably not rising by the same magnitude as we’ve seen over recent months. Furthermore we anticipate that less of the refinance activity is going to flow back into housing in the form of investment purchasing.
 
Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/author/cameron-kusher/" target="_blank">here</a>.
 
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Investor housing demand continues to fall sharply: Cameron Kusher

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The Australian Prudential Regulation Authority (APRA) has released its quarterly Authorised Deposit-taking Institution (ADI) property exposures data for the March 2016 quarter. 
This data is really valuable as it provides additional insight into the mortgage market, including data which is not available from the monthly housing finance statistics.
<a href="/images/2016/06/01/Chart-1-4-580x207.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/06/01/Chart-1-4-580x207.jpg" alt="">
The data initially focuses on outstanding total values and shows that at the end of the March 2016 quarter there was $906.7 billion outstanding to owner occupiers and $501.3 billion to investors.  While total lending continued to rise, up 8.7% year-on-year, it is interesting to see how the tilt away from investment lending has progressed.
Over the past 12 months, total investor lending has increased by just 0.1% with the total value of investor mortgage lending outstanding down -3.2% from its June 2015 quarter peak.  The data also indicates that investor credit growth now sits significantly below the APRA imposed 10% pa speed limit.  This could lead to a rebound in lending to investors over the coming quarters.  Total lending to owner occupiers has continued to increase and is up 14.0% year-on-year.  In terms of the total value of outstanding mortgages, owner occupiers account for 64.4% compared to 35.6% to investors.  The proportion of outstanding mortgages to investors has fallen sharply from its recent peak of 39.0% in June 2015.
<a href="/images/2016/06/01/Chart-2-3-580x211.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/06/01/Chart-2-3-580x211.jpg" alt="">
Although the total value of outstanding mortgages is rising you can see that growth is generally slowing.  Mortgages with offset facilities account for a record-high 43.0% of all outstanding mortgages and the value of these mortgages has increased 20.4% year-on-year.  Interest-only mortgages account for 39.3% of total outstanding mortgages, with the value having increased by 9.6% year-on-year.  Reverse mortgages account for just 0.5% of all outstanding mortgages with the value of outstanding mortgages up 1.4% year-on-year.  Only 2.4% of the value of outstanding mortgages are for low-documentation loans and 0.1% are other non-standard loans.  Year-on-year the value of outstanding low-documentation mortgages is -16.5% lower and other non-standard mortgages are -4.0% lower.  In fact the total value of outstanding low-documentation and other non-standard mortgages is at a record low.
<a href="/images/2016/06/01/Chart-3-3-580x208.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/06/01/Chart-3-3-580x208.jpg" alt="">
The average outstanding mortgage balance was recorded at $251,900 in March 2016, having increased by 4.8% year-on-year.  At the end of March 2016, the average outstanding balances across loan types were: $307,200 for loans with an offset, $334,400 for interest-only, $96,500 for reverse mortgages, $192,200 for low-documentation and $193,400 for other non-standard loans.  All loan types except for low-documentation (-1.1%) and other non-standard (-7.0%) have seen the average balance increase over the past year: offset (6.3%), interest-only (5.0%), reverse mortgages (2.4%).
To date, all data analysed has focused on total balances outstanding, the following data will focus specifically on quarterly new lending.
<a href="/images/2016/06/01/Chart-4-2-580x208.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/06/01/Chart-4-2-580x208.jpg" alt="">
Over the March 2016 quarter there was $81.7 billion in new mortgage lending, which was the lowest quarterly value of new lending since the March 2014 quarter.  This figure comprises of $56.0 billion in lending to owner occupiers and $25.7 billion in lending to investors.  The value of new lending to owner occupiers has increased by 16.1% year-on-year while the value of investor lending is -25.5% lower year-on-year.  The value of new lending to investors is the lowest since the March 2013 quarter and is -37.7% lower from its peak over the June 2015 quarter.  The data indicates that there has been a significant pull-back in new lending to investors over recent quarters.
<a href="/images/2016/06/01/Chart-5-1-580x207.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/06/01/Chart-5-1-580x207.jpg" alt="">
With the value of new mortgage lending falling, the value of most loan types is now also falling.  Over the March 2016 quarter, 0.3% of new lending was for low documentation loans, 34.9% was for interest-only, 0.1% was for other non-standard loans, 46.5% was originated through third part channels and 3.8% of loans were approved outside of serviceability.  The value of new lending for low documentation mortgages was at a record low.  The value of new interest-only lending was the lowest since the March 2013 quarter.  The value of other non-standard lending was the lowest since the same quarter last year as was loans approved outside of serviceability.  The value of new mortgage lending by third parties was the lowest since the September 2014 quarter.
Higher loan to value ratio (LVR) lending is reducing meaning that borrowers are typically using larger deposits.  In fact, the value of new lending for LVRS above 90% in the March 2016 was the lowest since the March 2011 quarter and has fallen by -22.8% over the past year.  Lending for LVRs between 80% and 90% has increased by 2.7% year-on-year however, it has fallen over each of the past four quarters.  In fact, lending for LVRs above 80% represented 22.4% of all new lending in March 2016 which was its lowest proportion on record and well down from the peak in March 2009 where it accounted for 37.6% of all new lending.
The value of lending to investors is falling sharply as assessment criteria is tightened and investors are typically now charged a higher interest rate than owner occupiers.  Interest-only lending which APRA and the Reserve bank have previously sounded warnings about is also starting to fall and is now at its lowest level since March 2013.  Higher LVR lending which is associated with smaller deposits are also trending lower which indicates less risky lending.  The added benefit surrounding lower LVRs is that if a borrower has a deposit of more than 20% of the value of the property they can typically avoid lenders mortgage insurance (LMI).  New lending to loans outside of serviceability, low documentation loans and other non-standard loans has also been falling over recent quarters which is reflective of less risky lending practices being undertaken.  These emerging trends can only be positives for the stability and security of the Australian mortgage lending market.
Based on the data presented, it is apparent that tighter lending policies by lenders is having a noticeable impact on the mortgage market.
Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
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Tighter lending policies see a reduction in investor and riskier lending types: Cameron Kusher

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]

Joel Robinson

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 52-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 52-storey tower, which has just shy of 250 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."

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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."

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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.

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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.

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"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."

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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Elevated amenity anchors daily life at Aeris, Melrose Park

Repeat buyers are one of the strongest measures of confidence in any apartment development.

At <a href="https://www.apartments.com.au/new-apartments/era-newcastle-west-124-126-bull-street-newcastle-west-nsw-2302">ERA</a> in Newcastle West, some purchasers are returning to <a href="https://www.apartments.com.au/developers/gwh">GWH</a> after living at the developer's One Apartments. Their decision to purchase again was driven by the quality of life they found after moving into their first GWH home.

Keith Wilton had spent years living in a house in East Maitland before deciding it was time for a change. Apartment living had always been on his radar, but he was selective about what he wanted.

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"I had some boxes I wanted to tick," he says.

Keith points to the open-plan design, generous outdoor areas and considered inclusions as key reasons One Apartments worked for him.

“One of those things was a nice indoor open plan area, but also I wanted a nice outdoor open area that I could entertain on in summer or Christmases or birthdays,” he says.

He also found value in the smaller details, from integrated appliances to shared resident spaces including the pool, cinema and rooftop areas.

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After comparing several developments, he chose One Apartments because of GWH's longstanding local reputation and his own experience working with the developer on a commercial project more than a decade earlier.

"I knew that they were local, that the quality of the build was going to be up there. I'd looked at other apartment complexes around and close by, and I just knew that here was a better decision location wise."

Today, Keith says the move has completely changed how he experiences Newcastle.

"I enjoy living in this location because it's more of a lifestyle change. That Newcastle city living where you can walk to restaurants and bars and even beaches and parks and even shopping across the road."

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Beyond the location, he says it's the sense of community that has surprised him most.

"Everyone loves living here because they chose to live here, but everyone looks out for each other. It's a real great community feel here."

For Aimee and Lyle Goodman, the journey started almost by chance.

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The couple happened to be having coffee in Newcastle when they noticed the site where One Apartments was about to begin construction.

"We were aware GWH was planning a development," Aimee says. "We made one phone call and things moved pretty quickly after that."

As busy business owners, they initially thought apartment living would simply reduce the maintenance that came with larger homes. Instead, it fundamentally changed how they spent time together.

"We actually catch up more as a family now," Aimee says.

"We've had homes with big yards and lots of space, but everyone ended up in different rooms. Here we'll have dinner together, the kids can play, and we spend far more quality time together."

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Lyle says their confidence came from GWH's reputation within Newcastle's building industry.

"I know people who've worked across different apartment projects, and whenever GWH came up the feedback was always the same. They're rock solid. They're quality."

That confidence only grew throughout the buying process.

"One of the things that really impressed us with GWH was the whole process, was the communication," Lyle says. "It was consistent, it was regular, there was no problem if we had some weird questions, there was no problems in getting answers."

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Aimee says one moment stood out.

"The project actually finished on time. We realised we needed to hurry up and sell our house because everything was happening exactly when they said it would."

The positive experience at One Apartments ultimately gave all three buyers the confidence to purchase again with GWH, this time at ERA.

Their confidence reflects what many buyers are seeking in today's apartment market. Location remains important, but so too does certainty around delivery, quality and long-term liveability.

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ERA builds on those foundations with 280 one, two and three-bedroom apartments across two landmark towers in <a href="https://www.apartments.com.au/developments/newcastle-west-nsw-2302">Newcastle West</a>.&nbsp;

Designed by <a href="https://www.apartments.com.au/architects/fk-australia">Fender Katsalidis</a>, the project will include more than 2,000 square metres of resident amenities, including a resort-style pool, gym, sauna, private cinema and rooftop entertaining spaces overlooking the harbour and coastline.&nbsp;

The development is also within walking distance of the Newcastle Interchange, Honeysuckle, Darby Street, the harbour foreshore, restaurants, retail and the city’s beaches, continuing the walkable lifestyle that existing GWH buyers say has transformed how they live.

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For Keith, the appeal remains straightforward.

"You feel at home even before you've moved into your home."

For Aimee, the change is measured in time.

“I just felt like I had more time,” she says.

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Construction at ERA is now underway, with more than half of the residences already sold and limited two and three-bedroom apartments remaining in the East Tower release. Priced from $980,000 for two-bedroom residences and $1.46 million for three-bedroom residences, buyers can secure an apartment with a 10 per cent deposit, with premium homes offering ocean views from Level 8 and harbour views from Level 10.

ERA is also backed by Resilience Insurance's 10-year Latent Defects Insurance policy, providing protection against structural or waterproofing defects for 10 years after completion. The project is anticipated to be completed in early 2028.

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Cameron Kusher

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