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The Australian Bureau of Statistics (ABS) recently released housing finance data for December 2014.  
The data showed an end of year surge both in the value and the number of loans.  The surge coincided with the Australian Prudential Regulation Authority (APRA) warning Australian Authorised Deposit-taking Institutions (ADIs) about risky mortgage lending practices during the month.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-1.jpg"><img class="aligncenter size-full wp-image-4253" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-1.jpg" alt="Chart 1" width="500" height="182"></a>
Over the month, the value of housing finance commitments increased by a total of 4.7%, the largest monthly increase since September 2013.  
The large increase was comprised of a 4.1% increase in owner occupier refinanced loans, a 3.6% increase in owner occupier new loans and a 6.0% increase in investor loans.  
The surge in investor loans is noteworthy, but so too is the jump in owner occupier new loans which had been flat for the past 12 months.  
Year on year, owner occupier refinances have increased by 27.0%, owner occupier new loans have increased by 4.9% and investor loans have climbed 18.8% higher.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-2.jpg"><img class="aligncenter size-full wp-image-4254" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-2.jpg" alt="Chart 2" width="500" height="180"></a>
In December 2014, there were $5.8 billion in housing finance commitments for owner occupier refinances, $12.3 billion for owner occupier new loans and $12.6 billion for investor loans.  Both refinances and investor loan commitments were at a record high.  
Based on this data, the proportion of owner occupier new loans accounted for an all-time low 40.1% of housing finance commitments compared to 18.9% of all commitments for owner occupier refinances and a near record high 41.0% of commitments to investors.  
If we strip out refinances, investors accounted for a record high 50.6% of new housing finance commitments in December 2014.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-3.jpg"><img class="aligncenter size-full wp-image-4255" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-3.jpg" alt="Chart 3" width="500" height="182"></a>
Looking specifically at the owner occupier segment of the market, there was $1.9 billion in commitments for construction of dwellings, $1.0 billion in commitments for the purchase of new dwellings, $5.8 billion in refinancing of established dwellings and $9.4 billion in commitments for established dwellings. 
 There has been a surge in finance demand over the year, particularly for newly constructed dwellings and refinances.  
Year on year, the change in owner occupier housing finance commitments has been recorded at: 14.6% for the construction of new dwellings, 1.8% for the purchase of new dwellings, 27.0% for refinances and an increase of 3.5% for purchase of established homes.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-4.jpg"><img class="aligncenter size-full wp-image-4256" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-4.jpg" alt="Chart 4" width="500" height="184"></a>
Focusing on the investment segment, in December 2014 there was $1.0 billion lent for the purposes of both construction of new and $11.5 billion borrowed for investment in established homes.  The year on year changes have been recorded at 59.8% for new construction and 16.1% for established homes.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-5.jpg"><img class="aligncenter size-full wp-image-4257" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-5.jpg" alt="Chart 5" width="500" height="179"></a>
The other important figure released by the ABS is the owner occupier first home buyer commitments. The ABS has recognized that these figures have been under-reported and have revised these figures this month.  Note that these figures still only include first home buyers that are purchasing homes for owner occupation. 
In December 2014, there were 8,213 owner occupier housing finance commitments to first home buyers, representing 14.5% of all owner occupier commitments.  Despite the revisions, the number of commitments is -1.3% lower over the year.  Furthermore, the 14.5% represents the lowest proportion of commitments to first home buyers since June 2004.
The data indicates first home buyers continue to languish whilst those that already own homes and are upgrading, refinancing or purchasing an investment property continue to dominate the market.  What is less clear is how many first time buyers are doing so for investment purposes (the ABS doesn’t provide a further breakdown of investment loans by buyer type as they do for owner occupiers).
As noted earlier, APRA wrote to Australian ADIs in December reiterating what they determine are prudent measures for lending and potential repercussions for those that don’t follow these guidelines. 
Given the results you would have to say it had little effect on borrowers or lenders in December.  It’s also worth noting that along with an 18.8% year on year increase in the value of investor commitments over 2014, the RBA’s housing credit data showed that total investor credit expanded by 10.1% in 2014. 
APRA noted concerns with lenders growing the investment segment of their loan book above 10% annually.  Based on these results you would have to say there remain some concerns for the regulator and it will be interesting to see if or what their next move is. 
What’s not in doubt is that the ball is now firmly in APRA’s court and we are closely watching what happens next.
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Investors surge after APRA warns about investor housing lending in December 2014

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Escalating dwelling values will see fewer opportunities for budget conscious property buyers, especially if their available spend is around $400,000.
January data released in the latest CoreLogic RP Data Home Value Index showed that home values increased by 7.9% in 2014 with the major focus on two of our most expensive capital cities, Sydney and Melbourne.
Auction clearance rates were also high with auction markets tending to reflect conditions across higher priced housing stock.
<img src="/images/2015/02/13/kush-feb-12-one.png" alt="">
Based on 2014 combined capital city sales, properties that sold for between $400,000 to $600,000 accounted for the greatest proportion of both house and unit sales over the year. However, the biggest difference between houses and units is the proportion of sales below $400,000.
Over 2014, 22.2% of all capital city houses sold under $400,000 compared to 35.3% for units. Similarly, only 6.1% of unit sales were over $1 million over the year compared to 16.2% of house sales.
20 years ago, 95.4% of capital city house sales were below $400,000 compared to 3.0% between $400,000 and $600,000, 1.2% between $600,000 and $1 million, and 0.4% over $1 million. Compared with current results where 22.2% of house sales were below $400,000, 33.4% were between $400,000 and $600,000, 28.1% between $600,000 and $1 million and 16.2% were above $1 million.
<img src="/images/2015/02/13/kush-feb-12-four.png" alt="">While not as extreme as the housing result, the results for units were not dissimilar. In 2014, 35.3% of sales were below $400,000, 34.2% were between $400,000 and $600,000, 24.4% were between $600,000 and $1 million, and 6.1% were more than $1 million.
20 years earlier, 95.9% of sales were below $400,000, 2.4% were between $400,000 and $600,000, 1.0% occurred between $600,000 and $1 million and just 0.6% were above $1 million.
<img src="/images/2015/02/13/kush-feb-12-two.png" alt="">
Although the combined capital city data provides an overview of the trends, when you drill down into the individual capital cities you can see some very different trends. 
Looking at the individual capital cities and across the price brackets, there is a divergence in the price point with the most sales over the year.
For houses, the $200,000 to $400,000 price bracket accounted for the greatest number of sales in Adelaide and Hobart while in Sydney it was the $1 million to $2 million bracket and each remaining city recorded the greatest proportion of house sales between $400,000 and $600,000. For units, most sales occurred between $200,000 and $400,000 in Brisbane, Adelaide and Hobart and in each remaining city most sales occurred between $400,000 and $600,000.
<img src="/images/2015/02/13/kush-feb-12-three.png" alt="">
Some of the more interesting results were that Hobart was the only city in which more than 5% of house sales occurred below $200,000 in 2014. In Sydney almost a third of all house sales in 2014 (31.6%) were over $1 million compared to 15.7% in Melbourne, 5.5% in Brisbane and 10.7% in Perth.
The sharp decline in sales below $400,000 over the past 20 years reflects the overall growth in household debt which is attributable to housing. 
It also highlights that a large proportion of Australian’s choose to build their wealth by investing in residential property. Of course, this is a good thing if you own a home but many Australian’s don’t. The sharp rise in home values leading to a decline in more affordable homes available for sale makes it more difficult for those renting to save up necessary deposits to enter in to home ownership.
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Sharp drop in home sales under $400,000: Cameron Kusher 

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The federal government is to shortly release a white paper on taxation reform. 
Plenty of recent inquiries and taxation documents have specifically noted that the taxation treatment of property should be reviewed and if ever there was a good time to look at changes to stamp duty it would be now.
Given where the property market now stands any changes to stamp duty should be implemented sooner rather than later especially given home value growth is slowing and transaction volumes are trending lower.  Of course, state governments are heavily reliant on stamp duty revenue and are therefore reluctant to have it removed although we will discuss how these issues can be overcome.
Stamp duty is a tax which is payable when someone chooses to purchase a home.  Home owners will generally move home because their current home is too big or too small for their needs or because they have changed jobs and need to move elsewhere to be closer to employment.  The impost of stamp duty discourages people from moving to more appropriate accommodation. 
If you don’t yet own your home and are considering purchasing your first home, stamp duty is an additional upfront cost which can make purchasing a home even more difficult.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-12.jpg" rel="wp-prettyPhoto[g4183]"><img class="aligncenter size-full wp-image-4184" src="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-12.jpg" alt="Chart 1" width="500" height="183"></a>
Source: CoreLogic RP Data
The above chart tracks home sales over time and as you can see, after transaction activity peaked in the boom of 2001 to 2004 it has trended much lower ever since. 
Although home values have been increasing over the past two and a half years and sales volumes have increased, the rise has been moderate.  When sales hit a low point in October 2011 there had been 409,582 house and unit sales nationally over the year.  Transaction volumes rose to as high as 490,326 sales over the 12 months to July 2014 which represents an increase of 19.7%. 
The recent peak in sales was -22.9% lower than the all-time peak of 635,661 sales over the 12 months to May 2002.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-22.jpg" rel="wp-prettyPhoto[g4183]"><img class="aligncenter size-full wp-image-4185" src="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-22.jpg" alt="Chart 2" width="500" height="176"></a>
Source: CoreLogic RP Data 
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While increasing home values may make home owners feel wealthier, when you buy your next home stamp duty is calculated based on the purchase price so you have to also pay a higher amount of stamp duty. 
Over the past, two and a half years, home values have increased by a total of 20.7% across the combined capital cities.  Most of that growth has occurred in Sydney and Melbourne however, values have risen across all capital cities. 
What this means is that when people are buying homes the increase in value is also increasing the stamp duty burden for the next purchaser and subsequently providing additional taxation revenue to government.
The impost of stamp duty is also a further barrier to market entry for first home buyers despite some states offering discounts and incentives to first time buyers. 
Furthermore, stamp duty is acting as a disincentive for home owners from moving (eg. upgrading or downsizing) to more suitable or appropriately located housing.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-32.jpg" rel="wp-prettyPhoto[g4183]"><img class="aligncenter size-full wp-image-4186" src="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-32.jpg" alt="Chart 3" width="500" height="182"></a>
Source: CoreLogic RP Data
Data released last year by the Australian Bureau of Statistics (ABS) showed that across the state and territory governments there was almost $36 million in taxation revenue from property (note this is both residential and other property types) over the 2012-13 financial year. 
Stamp duty was the second largest source of tax revenue at $12.841 billion with only municipal rates at $14.192 billion being higher. Over the year, as home values and sales rose, stamp duty revenue increased by 16.9%.  
Home values moved even higher during the 2013/14 financial year and sales rose further so it is reasonable to expect a further significant increase in stamp duty revenue.  
At CoreLogic RP Data we have noted a reduction in sales over recent months and the rate of capital city home value growth is slowing, while this may not be enough to impact stamp duty revenue in 2014/15 it will probably start having an impact by 2015/16 (of course different states will see the impact at different times).  
The point is because stamp duty is a tax collected on the purchase of a home it is collected from a relatively small proportion of the population and is an unreliable source of tax reliant on demand for homes at any given time which can ebb and flow substantially.
Although I am an advocate for stamp duties removal I do realise that state government will need to raise that revenue elsewhere. 
I am also not an advocate for more taxes however, a blanket land tax, paid by all home owners, would seem to make more sense.  It is a way of guaranteeing revenue each year as well as broadening the tax base for this revenue rather than just relying on those purchasing properties. 
Over the 2012-13 financial year $12.841 million was collected in stamp duty, the ABS estimates that as at June 2013 there were 9,226,900 residential dwellings.  Based on this dwelling count, land tax of $1,391.69 annually per residential dwelling would cover the cost of this foregone revenue. 
Keep in mind that stamp duty is collected from any property transaction so revenue would be higher when you include land sales and sales of other property types. 
This would potentially allow for a reduction in the overall land tax rate per household.
By broadening the base of tax collection governments would provide themselves greater surety of revenue as well as assisting the housing market by reducing the costs associated with those who consider it necessary to move home. 
Given the concerns about investor activity in the market and considering they already reap the benefits of negative gearing perhaps a higher rate of land tax for investment properties should also be a consideration for any stamp duty reform.
With home value growth slowing and sales volumes falling, now would seem like the right time to reform stamp duty. 
Although the impact of a slowing market won’t be felt straight away, no doubt that in years to come governments will be left with a revenue hole as the effects of the housing market slowdown hit their tax revenue. 
Providing governments with a higher level of guaranteed revenue would seem like a good idea even if it unfortunately would mean an additional tax for everyone rather than for just those buying property.
Note that the ACT is already going down the track of removing stamp duty.  In last year’s budget the government announced a plan to phase out the tax over the next 20 years with rates gradually increasing to make-up for the revenue shortfall. 
Over the period stamp duty rates continue to fall.  While the phasing out is commendable I still feel that now is the time to remove stamp duty across the board.
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It's time to reform stamp duties: Cameron Kusher

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The November 2014 housing finance data from the Australian Bureau of Statistics (ABS) indicates that demand for mortgages is starting to wane. 
We would expect that this trend will continue over the coming year as APRA crack down on higher risk mortgage lending and focus on curtailing growth to the investment segment of the market.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-11.jpg" rel="wp-prettyPhoto[g4159]"><img class="aligncenter size-full wp-image-4160" src="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-11.jpg" alt="Chart 1" width="500" height="184"></a>
 
Source: CoreLogic RP Data, ABS
In November 2014, the total value of housing finance commitments fell by -1.0%.  The total value of owner occupier housing finance commitments fell by -0.2% with owner occupier refinance commitments 0.1% higher while owner occupier new loan commitments fell by -0.3%. 
The investor segment of the market recorded a sharp fall in lending over the month down -2.2% following rises over the previous six months.  Year-on-year housing finance commitments have increased by 7.3% which is their slowest rate of year-on-year growth since January 2013. 
The year on year increase in the value of housing finance commitments has decelerated from a peak of 26.6% in December 2013.  Owner occupier refinance commitments rose 18.2%, owner occupier new loan commitments fell -1.8% and investment finance commitments rose 13.0%. 
Although lending to the housing investment segment is up 13.0% over the year, this represents the lowest year-on-year growth rate since December 2012.
The first chart above shows the total value of housing finance commitments over time broken down by owner occupier refinances, owner occupier new loans and investors. 
While lending for home refinance and investment purposes have continued to trend higher over the past year there has been clear weakness in the new loans to owner occupiers segment.  Investor commitments fell -2.2% in November and with APRA trying to slow the growth in lending to investors we would expect the investment segment will follow the lead of the owner occupier new loan segment over the coming year with growth continuing to slow.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-21.jpg" rel="wp-prettyPhoto[g4159]"><img class="aligncenter size-full wp-image-4161" src="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-21.jpg" alt="Chart 2" width="500" height="182"></a>
Source: CoreLogic RP Data, ABS
The total value of housing finance commitments in November 2014 was recorded at $29.0 billion.  Over the month there was $11.8 billion in commitments to owner occupier new loans (40.5%), $5.5 billion in owner occupier refinances (19.1%) and $11.7 billion in investment loans (40.4%).
The proportion of lending to investors eased over the month however, if refinances are excluded the proportion of lending to this segment is still extremely high, accounting for 49.9% of lending commitments for housing.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-31.jpg" rel="wp-prettyPhoto[g4159]"><img class="aligncenter size-full wp-image-4162" src="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-31.jpg" alt="Chart 3" width="500" height="183"></a>
Source: CoreLogic RP Data, ABS
The third chart shows the rolling annual change in housing finance commitments (excluding refinances) versus the rolling annual change in combined capital city home values. 
Refinances are excluded because the data is used as a proxy for demand for new borrowings to purchase a home.  As you can see there is a correlation between growth in housing finance commitments slowing and growth in home values slowing. 
Currently we are seeing growth in both housing finance commitments and home values trending lower and we expect that this trend will continue over the coming year.
Demand for mortgages remains strong despite the fact that it has started to ease over recent months.  With APRA writing to Australian banks, building societies and credit unions late last year reinforcing sound residential mortgage practices we would expect a further slowdown in mortgage demand in 2015. 
Consequently we would also anticipate that this will result in a slowdown in the rate of growth in home values as demand eases.  We have already seen demand from the owner occupier market segment slow over the past year.  
With APRA advising Australia’s banking sector that they will be watching closely those that grow their investor mortgage book by materially more than 10% year on year, the investor segment may well follow suit in 2015.
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Demand for mortgages waning - home value growth will not be far behind

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The November 2014 dwelling approvals data has been released and it makes for very positive reading. 
In November there were 18,245 dwelling approvals across the nation, according to the Australian Bureau of Statistics (ABS). The dwelling approvals data is published from July 1983 and from that month until November 2014 there has never been more approvals over a one month period.  Dwelling approvals increased by 7.6% over the month and year-on-year they have increased by 10.1%.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-1.jpg" rel="wp-prettyPhoto[g4146]"><img class="aligncenter size-full wp-image-4147" src="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-1.jpg" alt="Chart 1" width="500" height="181"></a>
Source: CoreLogic, ABS
Looking at the approvals data, the 18,245 monthly approvals were comprised of 9,404 house and 8,841 unit approvals. 
House approvals were actually -0.2% lower over the month while unit approvals increased by 17.2%.  As the chart above shows, unit approvals tend to be much more volatile than house approvals. 
Unit approvals are trending higher once again while house approvals are flat.  Year on year, house approvals have increased by 3.6% compared to a much larger 18.0% increase in unit approvals.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-2.jpg" rel="wp-prettyPhoto[g4146]"><img class="aligncenter size-full wp-image-4148" src="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-2.jpg" alt="Chart 2" width="500" height="181"></a>
Source: CoreLogic, ABS
There is now a substantial pipeline of dwellings approved for construction.  Over the 12 months to November 2014 there were 199,174 new dwellings approved for construction. 
The annual number of dwelling approvals is approaching 200,000 and is also at an all-time high.  Over the past year there were 113,734 houses and 85,439 unit approvals.  House approvals have increased by 15.5% and unit approvals have risen by 11.3%. 
To further highlight the significant number of approvals of late, over the past two years there have been 374,401 new dwellings approved for construction.  If we assume the Census figure of 2.6 persons per household, that is enough housing approvals for 973,443 persons.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-3.jpg" rel="wp-prettyPhoto[g4146]"><img class="aligncenter size-full wp-image-4149" src="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-3.jpg" alt="Chart 3" width="500" height="182"></a>
Source: CoreLogic, ABS
Looking at the relationship between dwelling approvals and population growth we see there has been a significant improvement over the past year or so. 
Population growth is now trending lower while dwelling approvals are at record high levels.  There still remains a significant gap between population growth and dwelling approvals, as has been the case for the past decade, but the gap between housing demand and housing supply is improving. 
Importantly, net overseas migration which creates more housing demand than natural increase is trending much lower.  The population data is only currently published up until June 2014 however, if population growth continues to trend lower (and overseas arrivals and departures data indicates that it will) this bodes well for a better balance between population growth and approvals.  It should also go some way to easing pressure on housing both from a purchase and rental perspective.
The capital cities have also had a record month in November with an all-time high 14,816 dwelling approvals over the month.  Capital city dwelling approvals were 1.4% higher over the month and have increased by 13.4% year-on-year.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-4.jpg" rel="wp-prettyPhoto[g4146]"><img class="aligncenter size-full wp-image-4150" src="https://blog.corelogic.com.au/wp-content/uploads/2015/01/Chart-4.jpg" alt="Chart 4" width="500" height="180"></a>
Source: CoreLogic, ABS
In November there were 6,207 capital city house approvals and 8,609 unit approvals.  Unit approvals reached an all-time high and were 14.9% higher over the month while house approvals fell by -12.8% and were at their lowest level in five months. 
Year on year capital city house approvals have increased by 5.9% compared to a 19.5% rise in unit approvals.  Similar to the national figures, the chart shows that unit approvals across the capital cities tend to be much more volatile than house approvals. 
The other trend to note is that how over recent years the number of unit approvals has regularly outnumbered house approvals.  This reflects the growing appetite for unit product, particularly within inner city areas of the capital cities.
Given some earlier concerns that dwelling approvals were starting to fall, this month’s result is quite encouraging.  Of course, the rebound was driven by the volatile unit market which could just as easily reverse next month. 
Nevertheless, when you see a record number of monthly dwelling approvals and annual approvals are at an all-time high it is a positive result.  Furthermore, with population growth slowing, if approvals can hold at or close to current levels, a better balance between population growth can be achieved.  In-turn this would likely ease some of the value and rental growth pressures in the market. 
Overall it is a very good result and it would be economically beneficial to see approvals remain at these elevated levels over the next 12 months.  Of course, with value growth already slowing across the capital cities and sales volumes trending lower it may start to become more difficult for some of these developers, particularly those of unit product, to achieve sufficient presales to commence construction. 
While the pipeline of approvals is very strong, it will be important to monitor just how many of these approvals ultimately make it to completion.  Particularly given the number of unit approvals is at an unprecedented level.
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Dwelling approvals hit a new record high - growing appetite for units 

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The combined capital city housing markers have seen values increase by 7.0% over the first 11 months of 2014. 
Throughout the whole of 2013, capital city home values increased by 9.8% indicating that the rate of home value growth is likely to be lower this year than last.  On an annualised basis, combined capital city home value growth peaked at 11.5% in April of this year and has slowed to 8.5% over the 12 months to November 2014. 
As we enter 2015 it is our expectation that the housing market will see another year of home value growth, but not likely at the same pace as experienced over the 2014 or 2013 calendar years.  Although this is our base-case scenario, there will still be plenty of potential headwinds to watch out for that may impact on the housing market.
<h3>Unemployment</h3>
The national unemployment rate was recorded at 6.3% in November 2014 which is the highest unemployment rate since September 2002.  The Mid Year Economic and Fiscal Update (MYEFO) was released earlier this week by the federal government.  In the document the government revised up its forecast of the unemployment rate to 6.5% at the end of the current and the next financial year.
It isn’t just the high rate of unemployment which remains a concern.  Over the past year, the majority of new employment has been part-time positions which have increased by 2.5% over the year compared to a 0.7% increase in full-time employment.  The data also showed that in November 2014 the underemployment rate had increased to 8.6% which was its highest on record.  This is reflective of the strong growth in part-time employment, many working part-time would probably like to be working more hours or in full-time employment.
With comparatively high rates of unemployment and growing underemployment it has the potential to impact on housing demand.  If employees become concerned about job security they will be less inclined to commit to purchasing a home.  Furthermore, if employees can work as much as they like and subsequently earn as much as they’d like they may also not be able to purchase a home.
<h3>New APRA steps to reinforce sound residential mortgage lending practices</h3>
Last week APRA (the Australian Prudential Regulation Authority) wrote to all Australian authorised deposit-taking institutions (ADIs).  The letter highlighted further steps that will reinforce sound lending practices. 
Although the note didn’t indicate that any macroprudential tools would be formally implemented, the letter noted that APRA will be increasing supervisory surveillance to reinforce sound lending practices.  This is in response to specific prudential concerns which are detailed below:
<ol>
<li>
Risk profile – higher risk lending such as high loan to income and high loan to valuation ratios, interest-only lending to owner occupiers for lengthy periods and long term lending are of specific concern. APRA is concerned about lenders undertaking larger than normal volumes of lending in these areas. 
</li>
<li>
Investor lending – fast or accelerating credit growth in this space can be a key indicator of growing risk. APRA highlighted that annual investor credit growth that was materially above 10% per annum will be an indicator of increased risk. 
</li>
<li>
Serviceability assessments – APRA is of the view that mortgages should have a serviceability buffer of at least 2% above the loan product rate and with a minimum floor assessment rate of 7%</li>
</ol>
Through these guidelines they have advised the ADIs of the lending environment they expect.  Although there have been no blanket macroprudential tools, the letter is pointed and notes that ADIs that do not adhere to these rules will be under review to stricter lending limits. These guidelines are likely to have an impact on the residential housing market. 
Firstly the very strong growth in investor housing demand over the past two years will likely taper to a more moderate pace.  Secondly, some borrowers who are stretching themselves financially to enter the market may find accessing home loans increasingly difficult due to the new serviceability guidelines.
<h3>Household income growth</h3>
While home values have increased by 8.5% over the 12 months to November 2014, real household incomes have increased by just 0.8%. One wonders how long home value growth can continue to outpace household income growth.  
Over the 10 years to September 2014 nominal home values have increased 52.4% compared to real household income growth of 36.4%.  These two figures are not significantly different and real home value growth has actually been lower than growth in household incomes.  This would seemingly suggest that the current surge in home values, which has started to slow, cannot continue all that much longer without income growth.
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<h3>Consumer sentiment</h3>
According to the Westpac and Melbourne Institute’s monthly measure of consumer sentiment, consumers have been more pessimistic than optimistic for 10 consecutive months.  To put that in perspective, consumers haven’t been this consistently gloomy since the depths of the financial crisis in 2008 and early 2009. 
Further highlighting the consumer gloom the data shows that when respondents were asked about the wisest place for savings 40.3% chose a banks, building societies and credit unions.  This was the highest reading since September 2012. 
Over the past 15 years, an average of 27.5% of respondents have chosen this segment, highlighting the heightened sense of consumer anxiety.  The level of consumer anxiety is more confronting when you consider that those with savings in a financial institution are currently earning virtually no interest with the cash rate sitting at 2.5%.
Consumer sentiment is closely correlated with housing demand.  If consumers are feeling less confident about the overall economic conditions, they are going to be much less likely to make high commitment decisions such as taking out a new mortgage.
<h3>Housing finance commitments</h3>
We have already highlighted that APRA is concerned with the heightened level of investment lending and have provided stricter guidelines for Australian ADIs regarding to this segment of the market.  Housing finance data shows that investors are currently the primary driver of housing demand.
In October 2014, there were $11.7 billion in housing finance commitments to owner occupiers for new loans, $5.4 billion to owner occupiers for refinancing purposes and $12.1 billion to investors. 
Year-on-year, owner occupier new loan commitments are 0.8% higher, owner occupier refinances have risen 18.1% and investment loan commitments are 19.8% higher. Owner occupier new loans and investor loans are a much larger driver than refinances. 
With the new APRA guidelines it looks as if lending to the investor cohort will slow in 2015.  It is unlikely this can simply be replaced by lending to owner occupiers for new loans.  In fact, new lending to owner occupiers has been trending lower since it peaked at $12 billion in lending in November 2013.
If lending to investors slows as owner occupier lending is already doing, it seems that there will be less mortgage demand and subsequently less property transactions.  In turn, this is likely to result in lower levels of capital growth across the housing market.
<h3>Dwelling approvals</h3>
Dwelling approvals have lifted significantly throughout the past two years, providing a significant pipeline of new construction. 
Although dwelling approvals have eased over recent months, over the 12 months to October 2014 there were 197,529 dwelling approvals which is hovering around the highest annual number on record.  On a monthly basis dwelling approvals peaked in January 2014 and although they remain high, they have trended lower.
An important feature of dwelling approvals is that the number of multi-unit dwellings being approved is at near record highs.  There is growing demand for inner city units however, a unit development is typically a riskier development proposition than a detached house and ultimately multi-unit dwelling approvals are less likely to proceed into the construction phase.
If growth in home values slows throughout 2015 along with a slowdown in housing transactions, we may see some of the pipeline of approvals, particularly unit approvals, not actually make it to construction. 
In order to commence construction developers typically require a certain level of pre-sales to begin.  If sales slow, achieving a sufficient level of presales may become more difficult and may potentially jeopardise some of the progress of these projects.
<h3>Recommendations for new foreign investment rules</h3>
The House of Representatives Standing Committee on Economics recently released its findings and recommendations following a review of foreign investment. 
The four key findings of the report were:
<ol>
<li>Recognising there is no accurate or timely data that tracks foreign investment in residential real estate, the Committee recommended the establishment of a national register of land title transfers that records the citizenship and residency status of all purchasers of Australian real estate. 
</li>
<li>Improving the inner workings of the Foreign Investment Review Board (FIRB). 
</li>
<li>Bolstering the compliance and enforcement regime of the foreign investment rules. 
</li>
<li>Recommending an application fee of $1500 for each approval application made to FIRB by non-resident foreign investors in order to fund improved administration and monitoring of the foreign investment rules undertaken by FIRB.</li>
</ol>
The report also recommends the following civil penalties for breaches of the foreign investment framework:
<ul>
<li>Financial penalties to be calculated as a percentage of the property value, rather than restricted to $85,000 as is currently the case; and 
</li>
<li>The regime applies to both foreign investors and any third party who knowingly assists a foreign investor to breach the framework.</li>
</ul>
Although these are just recommendations at this stage, one would hope that the committee’s recommendations do get implemented.  More timely, accurate and reliable data about foreign buyers would certainly seem to be valuable and penalties for those who skirt the rules seems appropriate. 
Importantly, it is unlikely that any of these recommendations would act as a disincentive to foreign investment rather they would result in improved transparency about such investment.
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<h3>Australian dollar</h3>
In Australia we generally like to compare our currency to the US dollar.  After the end of month peak in the exchange rate of $1.08 in February 2012, the exchange rate has now fallen to $0.849 at the end of November.  Importantly, most of the fall has occurred recently, six months earlier the exchange rate was $0.93.
The fall in the trade weighted index (TWI) has not been as large as the fall relative to the US dollar.  The TWI was recorded at 68.2 at the end of November, down from 71.5 six month ago and a peak of 79.2 in February 2012.  Nevertheless the Australian dollar has weakened.
The lower dollar should provide some support for the Australian economy, making our exports more attractive and providing heightened demand for the struggling manufacturing sector.
We suspect that demand from foreign buyers has grown over recent years.  Furthermore, if the Australian dollar continues to depreciate, it is likely that Australian residential property will potentially become even more attractive for overseas buyers as the relative cost improves.
<h3>Interest rates</h3>
Official interest rates were recorded at 2.5% in December 2014, with no meeting of the Reserve Bank’s board in January they will remain at that level until at least February.  The average standard variable mortgage rate is currently 5.95%, discounted variable rates are 5.1% as are three year fixed rates.
The RBA has repeatedly stated that they believe a period of interest rate stability is the most prudent course.  In an interview with the Australian Financial Review last week Glenn Stevens remarked that any change in interest rates would have to help boost confidence while a cut may do the opposite. 
Nevertheless, over recent months there have been a growing number of economists predicting the next movement in rates would be lower as the overall economic performance slows.  The cash rate futures market is now also pricing in a 25 basis point rate cut to interest rates by June next year.
A lower interest rate would seemingly make investment in housing even more attractive as returns on cash savings reduce further.  Of course, if this were to occur it would likely take place in the face of slowing growth in housing demand and limits on just how much Australian ADIs can lend to the investment segment of the market. As the RBA has previously stated, there are limits to what monetary policy can do. 
Given this, a further 25 basis points cut to official interest rates may make little material difference to the residential property market….of course it could also make a substantial difference.
<h3>Conclusion</h3>
At CoreLogic we are of the view that home value growth will continue in 2015, albeit at a more moderate pace than what we have seen in 2014.  As the above analysis shows there are plenty of factors which will impact on the housing market in 2015, not to mention potentially hundreds of other factors which could impact on the direction of the market. 
It will be important to keep track of the broader economic trends and consider how that may impact on your property in 2015.
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The economic factors to watch that may impact the housing market in 2015

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Combined capital city dwelling values fell by -0.3% in November 2014 according to the CoreLogic RP Data Home Value Index. 
Over the month, values increased in four cities and fell across the remaining four.  Values were higher over the month in Sydney, Brisbane, Perth and Hobart and were lower elsewhere.  Over the first 12 months of the year, combined capital city home values have increased by 7.0%.  As a result, it looks as if home value growth in 2014 will be lower than the 9.8% increase in 2013.
Over the three months to November 2014, combined capital city home values rose by 0.8%.  The results over this period show that the growth in the market is quite narrow with only Sydney (3.1%), Brisbane (1.7%) and Perth (0.4%) recording value rises.  Elsewhere, values fell over the three months by -1.6% in Melbourne, -0.5% in Adelaide, -2.5% in Hobart, -2.1% in Darwin and -3.3% in Canberra.
The rate of home value growth over the 12 months to November 2014 has continued to slow.  After the annual rate of home value growth across the combined capitals peaked at 11.5% in April it has slowed to a rate of 8.5% in November.  The 8.5% growth over the year to November is the slowest rate of annual growth since November of last year.  Sydney continues to be the key driver of capital growth with home values up 13.2% over the past year.  Melbourne has been the second strongest performer with values up 8.3% and Brisbane home values are 6.0% higher.  Elsewhere, values have risen by 2.8% in Adelaide, 1.4% in both Perth and Darwin, 5.2% in Hobart and 1.7% in Canberra.  The annual rate of home value growth is now lower than the recent peak across all capital cities other than Hobart.
Houses have recorded a superior rate of value growth compared to units across the combined capital cities over the past year.  Over the 12 months to November, capital city house values are 8.9% higher compared to a 5.9% rise in unit values.  Across each capital city annual value growth for houses has been greater than that for units over the last year.
Combined capital city home values are now 10.8% higher than they were at their previous cyclical peak in October 2014.  Between October 2010 and May 2012, combined capital city home values fell by a total of -7.7%.  From their low point in May 2012, combined capital city home values have increased by 19.6% however, the value increases have been narrowly based. The greatest rises in values over the current growth phase have occurred in Sydney (31.2%), Melbourne (17.6%), Darwin (17.5%) and Perth (15.5%).  Growth across the remaining capital cities has been much more moderate with values rising 10.6% in Brisbane, 7.4% in Adelaide, 5.2% in Hobart and 4.8% in Canberra.  As the data shows, Sydney has been the primary driver of value growth followed by Melbourne, Darwin and Perth albeit their growth has been somewhat lower than Sydney’s.
CoreLogic estimates that over the third quarter of 2014 there were 53,962 capital city houses and 24,124 capital city units sold across the country.  The number of home sales over the most recent three months is -2.8% lower than over the same period in 2013.  House sales are actually 1.0% higher than a year ago while unit sales are -10.3% lower.  Importantly with so many off –the-plan sales taking place final numbers upon settlement of these projects may revise higher.  Within the individual capital cities, sales over the last three months were lower than a year ago in Sydney, Perth and Canberra but still higher elsewhere.
Selling conditions are still quite favourable in the market however, stock levels are starting to rise and there are variations across the cities.  Discounting levels across the combined capital cities sat at 5.5% while the average time on market is at an all-time low of 36 days.  Remember that the stronger markets of Sydney and Melbourne are having a much greater impact on these figures.  The number of new properties listed for sale across the combined capital cities is now 0.4% higher than a year ago.  Total listings are -2.4% lower than they were a year ago however, they are currently at their highest level since the middle of December last year.  With stock on market rising it will be very interesting to see what happens to time on market and discounting levels over the next few months.
Value growth on an annual basis remains much stronger than rental growth however, the more recent weaker capital growth conditions have seen the decline in gross rental yields stall.  Over the past 12 months, combined capital city rental rates have increased by just 1.9%.  House rents have increased by 1.8% and unit rents are 2.3% higher.  Although rental growth is slow, rental rates have risen over the year in all capital cities except Perth, Darwin and Canberra.  With a strong pipeline of dwellings both under construction and due for commencement it seems likely that the rate of rental growth will remain soft for the foreseeable future.  Gross rental yields across the combined capital cities sit at 3.7% for houses and 4.5% for units. At the same time a year ago they were recorded at 4.0% and 4.7% however, yields have been on hold for the past four months for both houses and units.
As always, there is likely to be a continued variance in performances from city to city and region to region. Much of the growth over the past two and a half years has occurred in Sydney and Melbourne and this appears to be continuing with the rise in values only moderate outside of these cities.  Note that the annual rate of value growth in both Sydney and Melbourne has been slowing over recent months.  Subsequent purchasers and investors are the main drivers of the market currently spurred by the low mortgage rate environment. 
From an investor’s perspective the best opportunity to enter the Sydney, Melbourne or Perth markets has likely passed, especially considering the strong value growth over the past year is now moderating and rental yields are low.  The RBA has also flagged that they are concerned with the level of investment lending taking place in both Sydney and Melbourne and APRA has recently announced greater surveillance of mortgage lending, specifically investor and higher risk lending by the banks. 
It will be interesting to see whether investors start to turn their attention away from cities such as Sydney and Melbourne and towards higher yielding markets that are earlier in their value growth phase such as Brisbane and potentially Adelaide where value growth is now becoming more evident and the cost of housing is significantly lower than in Sydney and Melbourne. 
Of course, with APRA announcing that banks need to limit their growth in investment lending to around 10% per annum we would expect this will have a significant impact on investor demand for mortgages over the coming year.  As a result of these changes and slowing home value growth, investors may potentially start looking at other asset classes. 
RP Data anticipates that the rate of capital growth, particularly in Sydney and Melbourne will continue to moderate over the coming year. We believe that home values will continue to increase over the coming year however, the rate of growth will continue to slow and markets such as Perth, Darwin and Canberra look susceptible to value falls over the coming year.
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The best opportunity to enter the Sydney, Melbourne or Perth markets has likely passed: 2015 market outlook

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The Australian Bureau of Statistics (ABS) published housing finance data for October yesterday. 
The data release coincided with the Australian Prudential Regulation Authority (APRA) sending Australian Authorised Deposit-taking Authorities (ADIs) a letter on Tuesday afternoon.  The letter highlighted that APRA was going to increase surveillance on risky lending and have a specific focus in growth in investor lending by ADIs. 
The October housing finance data showed that the proportion of lending to investors had grown to fresh record highs while owner occupier lending is slowing.
The value of housing finance commitments continues to become much more important than the headline number of commitments.  The reason being that the number of commitments only coves owner occupier commitments, excluding investors completely which are the key driver of the current market. 
Furthermore, with APRA now focused on ADIs not growing housing credit to investors too fast, a focus on the value of lending becomes even more important.
<img class="aligncenter size-full wp-image-4104" src="https://blog.corelogic.com.au/wp-content/uploads/2014/12/Chart-12.jpg" alt="Chart 1" width="500" height="180">
The above chart uses raw (not seasonally adjusted) data and uses a 12 month average to smooth the volatility of the data.  The chart shows an ongoing decline in demand from owner occupier first home buyers and more recently a dip in commitments by owner occupiers that already own a home. 
Across the four borrower types listed you can see that investors now account for the greatest proportion of borrowings from ADIs.  With values continuing to rise across capital city markets clearly they are a key driver of this growth.
<img class="aligncenter size-full wp-image-4105" src="https://blog.corelogic.com.au/wp-content/uploads/2014/12/Chart-22.jpg" alt="Chart 2" width="500" height="181">
The second chart shows the monthly value of housing finance commitments across owner occupier new loans (excluding refinances) owner occupier refinances and investment loans. 
Over the month, owner occupier refinance commitments increased by 3.7%, owner occupier new loan commitments fell by -0.1%, while investment commitments rose by 1.0%. 
Year on year, the increases have been recorded at 18.1% for owner occupier refinances, 0.8% for owner occupier new loans and 19.8% for investment loans.  With $5.4 billion in commitments for owner occupier refinance commitments in October, activity in this space continues to trend higher. Investment lending is also trending higher reaching a record high $12.1 billion in October. 
Meanwhile, owner occupier new loan commitments have actually pulled back a little of late.  After monthly commitments sat at a record high $12.0 billion in November 2013, they have pulled back to $11.7 billion in October 2014.
For only the second month on record, the value of investment loans was greater than the value of owner occupier new loans in October 2014.
<img class="aligncenter size-full wp-image-4106" src="https://blog.corelogic.com.au/wp-content/uploads/2014/12/Chart-32.jpg" alt="Chart 3" width="500" height="180">
As a proportion of the value of all housing finance commitments, investors were steady at a record-high 41.4% in October.  Owner occupier new loans accounted for 40.2% (a new all-time low) and owner occupier refinances accounted for 18.5% of lending, its greatest proportion since August 2012. 
If we just look at new lending, excluding refinances, investment lending reached a new all-time high of 50.8% of total lending in October, more than one in every two loans.  The capital city housing market has been rising since hitting a low point in May 2012 and at that time investor housing finance commitments totalled $6.9 billion and 33.9% of all housing finance commitments. 
Clearly there has been a substantial surge in demand from this segment, recorded at $12.1 billion in October 2014 and 41.4% of all borrowings.
<img class="aligncenter size-full wp-image-4107" src="https://blog.corelogic.com.au/wp-content/uploads/2014/12/Chart-42.jpg" alt="Chart 4" width="500" height="181">
The headline result that gets reported on each month is the number of owner occupier loans.  Although it is a very valuable statistic, it should be read with caution because it is missing a significant proportion of the market, those represented by investors. 
As the above chart shows, much like the data on the value of commitments, the number of owner occupier new loan commitments is now trending lower while refinance commitments trend higher at a  moderate pace.  In October, the number of refinance commitments rose 3.6% while new loan commitments fell by -1.4%. 
Year on year, refinances are 7.5% higher while new loan commitments are -4.2% lower.  The number of new loan commitments most recently peaked at 35,568 in November 2013 and has since fallen by -5.5% to 33,597 commitments in October 2014.  There were 18,123 refinance commitments in October 2014, the highest monthly volume since February 2008.
<img class="aligncenter size-full wp-image-4108" src="https://blog.corelogic.com.au/wp-content/uploads/2014/12/Chart-51.jpg" alt="Chart 5" width="500" height="181">
As investor activity has risen, there has been a sharp drop-off in the number of loans to first home buyers.  Although there is no data to support it, there are plenty of anecdotal suggestions that many first home buyers are choosing to purchase investment properties rather than homes for owner occupation.  Unfortunately, the ABS data only captures those homes purchased by first home buyers for owner occupation. 
Owner occupier first home buyer numbers continue to languish at near record low levels.  The proportion of total owner occupier housing finance commitment to first home buyers hit a record low 11.6% in October 2014.  The number of loans actually rose, up 1.2% over the month however, year-on-year first home buyer commitments are -7.8% lower.
The Reserve Bank (RBA) has already highlighted a number of times that they have some concerns with the heightened level of investment activity, particularly in Sydney and Melbourne.  With the proportion of loans to investors hitting a new record high in September it will further re-iterate those concerns. 
This week, APRA wrote to ADIs highlighting some concerns about lending practices and providing a set of guidelines to ensure prudential standards are maintained.  With investor activity continuing to rise in October, it seems the concerns are well found. 
We may see a further increase in the November data next month however, it is likely that growth in the value of investment finance commitments should start to ease thereafter.
<img class="aligncenter size-full wp-image-4109" src="https://blog.corelogic.com.au/wp-content/uploads/2014/12/Chart-61.jpg" alt="Chart 6" width="500" height="182">
Of course, owner occupier lending demand is already slowing and if/when investment lending follows suit, demand for mortgages should ease and we would expect that it will also continue to contribute to a further slowing of home value growth. It will be interesting to see how the slowing of demand plays out from a new housing perspective. 
With the RBA hopeful that a heightened level of housing construction can help assist the economy as it transitions away from resource investment, as value growth slows some of these projects may be in jeopardy. 
Given most developers are private businesses, they generally need growing demand for housing and some increase in home values to allow enough pre-sales for the project to go ahead. 
We are already seeing sales volumes and home values trending lower, so if demand for mortgages softens further we will potentially see a fall in dwelling commencements despite the fact that there is such a strong pipeline of development in place. 
It will be interesting to see how this plays out in 2015.
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No wonder APRA are concerned: Investment lending continues to surge in October

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This week I'm going to take a look at how current housing market conditions compare with the boom in home values between 2001 and early 2004. 
Immediately a point to note is that the current housing market upswing came off the back of dwelling values falling over the previous two years. If we assume that the previous boom period began at the start of 2001, there had actually been no home value falls prior to its commencement, rather the increase in home values had been more moderate at 6.6% over the 2000 calendar year.
<img class="aligncenter size-full wp-image-4089" src="https://blog.corelogic.com.au/wp-content/uploads/2014/12/Chart-11.jpg" alt="Chart 1" width="500" height="186">
The previous boom ran from the beginning of 2001 until October 2004 across the combined capital cities.  Over that 46 month period, home values rose by a total of 68.1% across the combined capital cities. 
This is a monthly rate of value growth over that period of almost 1.5%.The current rise in capital city home values commenced in June 2012 and up until November 2014 values had been trending higher for 30 months.  Over this 30 month period combined capital city home values have increased by 19.6% or a monthly rate of growth of 0.7%. 
Again it is also important to consider that the current growth phase occurred off the back of values having fallen by -7.4% between October 2010 and May 2012.  After 30 months of growth in the 2001 to 2004 growth period, combined capital city home values were 52.1% higher.
The combined capital city growth really only tells part of the story though.  The capital city housing market isn’t homogenous and growth periods begin and end over different lengths of time.  Because Sydney and Melbourne are the largest cities by some way and given our Home Value Index is weighted to reflect that, the capital city results are influenced much more by these two cities than the other capital cities.
Given there were no home value falls prior to the growth between 2001 and 2004, if we assume that the growth phase stared in January 2001 we see that the growth ran for varying lengths of time. 
In fact in most capital cities, home values continued to rise following October 2004 albeit the rate of growth was more moderate than it had previously been. Looking at home value growth across the cities from January 2001 to October 2004 you can see that the rate of growth varied greatly.  It is interesting to note that Sydney and Melbourne’s rate of value growth over that period was much more moderate than in all other capital cities except Darwin. 
Furthermore, the growth in home values commenced much later and ran for longer in most other capital cities.
Taking a look at the level of value growth over the current growth phase there are quite a few points of note.  Firstly growth has been more moderate than what was recorded over the previous growth phase.  Secondly, while Sydney and Melbourne were two of the weaker growth performers previously, they have been the standout performers across the current growth phase. 
Sydney and Melbourne have been the strongest growth performers, value growth has been moderate elsewhere but particularly weak in Adelaide (3.6%), Hobart (0.0%) and Canberra (4.6%).
<img class="aligncenter size-full wp-image-4090" src="https://blog.corelogic.com.au/wp-content/uploads/2014/12/Chart-21.jpg" alt="Chart 2" width="500" height="177">
To look at the results another way and by way of direct comparison, we should look at the rate of value growth per month.  To determine this I have divided total value growth by the number of months and the results make for some interesting reading.  Between January 2001 and October 2004, the rate of monthly growth across the cities was recorded at: 1.3% in Sydney and Melbourne, 2.3% in Brisbane, 2.0% in Adelaide, 1.4% in Perth, 3.0% in Hobart, 0.7% in Darwin and 2.1% in Hobart. 
Looking to the current growth phase, monthly value rises have been recorded at: 1.1% in Sydney, 0.6% in Melbourne, 0.4% in Brisbane and Darwin, 0.1% in Adelaide, 0.5% in Perth, 0.0% in Hobart and 0.2% in Canberra.  Clearly the growth in home values has been more moderate over the most recent growth phase.
<img class="aligncenter size-full wp-image-4091" src="https://blog.corelogic.com.au/wp-content/uploads/2014/12/Chart-31.jpg" alt="Chart 3" width="500" height="179">
While growth has been more moderate, so too have the number of homes selling.  In both growth phases the number of sales has increased however, in the current market the rise in sales has been much more modest than the rise in 2001-04. 
Over the period from January 2001 to October 2014 there was a total of 1,402,217 capital city house and unit sales or a monthly average of 30,481. 
In comparison, over the period from June 2012 to September 2014 there have been 716,908 house and unit sales or a monthly average of 25,604 sales.  Monthly sales volumes over the current growth phase have been -16% lower than they were between 2001 and 2004 despite a high rate of population growth and development of new housing stock.
<img class="aligncenter size-full wp-image-4092" src="https://blog.corelogic.com.au/wp-content/uploads/2014/12/Chart-41.jpg" alt="Chart 4" width="500" height="178">
Across the individual capital cities the number of monthly sales is lower than over the 2001 to 2004 boom period.  In Sydney monthly sales are -14% lower and elsewhere the differentials are recorded at: -8% in Melbourne, -28% in Brisbane, -12% in Adelaide, -16% in Perth, -35% in Hobart, -4% in Darwin and -31% in Canberra.  So not only has value growth been slower in each capital city this time around, so too has transaction activity.
The lower rate of sales can probably be attributed to the low level of first home buyer participation in the market as well as household savings being much higher than what was recorded between 2001 and 2004.
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Looking at some of the broader economic conditions suggest some sizeable differences between the 2001-04 boom and current market conditions.
At the beginning of 2001 standard variable mortgage rates were recorded at 8.05%.  By the end of the year they had fallen to 6.05% which was the low point for the cycle.  By the time home value growth began to fall standard variable mortgage rates had climbed to 7.05%.  Over the current growth phase, standard variable mortgage rates were 6.85% in June 2012 having fallen from 7.05% the previous months. 
From that level they have fallen to 5.95% and have been on hold at that level for the past 16 months.  Given this for the past 16 months standard variable mortgage rates have been lower than they ever were during the 2001 to 2004 boom.
Housing credit advanced by a total of 89.1% over the period from January 2001 to October 2004 at a rate of 1.9% a month.  Over that period, investor credit expanded at a rate of 2.4% a month, outpacing the 1.7% monthly expansion in owner occupier credit.  Over the current growth period, housing credit has expanded by 13.4% at a rate of 0.5% a month.  Over the period, owner occupier credit has risen by 0.4% a month compared to 0.6% a month for investor credit.
The rate of credit growth really does only tell part of the story because much more is lent for housing now than it was back in the previous boom so you would expect the growth rate to be lower now.  It is important to remember that the cost of housing was also lower at that time so the typical mortgage was much lower than it is today. 
Finally, because the data looks at credit outstanding, if repayment of that credit is being made at a faster pace it will also impact on these figures.  Throughout the 2001 to 2004 boom housing credit expanded at a rate of $6.4 billion a month with owner occupier credit up $4.0 billion a month and investor credit rising $2.4 billion a month. 
Over the current growth phase, housing credit is expanding at a rate of $5.7 billion a month with owner occupier credit rising $2.9 billion a month compared to a $2.8 billion monthly increase in investor credit.  This seems to suggest that housing credit is increasing by only a slightly lower amount currently than it was back in the 2001 to 2004 boom. 
As mentioned before, the biggest influence on this is likely to be the cost of housing now as opposed to then especially when you consider how much lower sales transactions are currently.
Looking at the supply of housing, over the 2001 to 2004 period, an additional 654,253 dwellings were approved for construction at a rate of 14,223 per month.  Over the current phase there have been 436,130 dwelling approvals at a rate of 15,039 per month.  In the current phase the pipeline of approvals has grown at a faster rate of course, the national population is higher so this is certainly a positive outcome.
Unfortunately population growth data is only available each quarter.  Each month we do receive overseas arrivals and departures data which correlates strongly with net overseas migration data.  The other component of population growth, natural increase, does not have as big of an impact on housing demand as overseas migration. 
Over the 2001 to 2004 boom period, there were 603,550 net long-term and permanent arrivals to Australia at a rate of 13,121 per month.  Over the current growth phase there have been 880,120 net long-term and permanent arrivals to Australia at a rate of 31,433 per month.  The data shows that net migration to Australia has been much stronger over the current growth phase compared to the previous phase which creates additional housing demand.
Household finance data highlighting selected ratios from the RBA is only available each quarter but is worthwhile to analyse.  Between December 2000 and September 2004, the ratio of housing debt to household disposable income increased from 78.8% to 118.0%.  Subsequently, household debt to household disposable incomes rose from 95.2% to 137.2% and housing assets to household disposable income rose from 333.4% to 448.3%. 
From June 2012 to June 2014, housing debt to disposable income rose from 130.4% to 137.7% and household debt to disposable incomes rose from 145.2% to 151.1%.  Meanwhile, housing assets to disposable income increased from 393.7% to 433.6%.
In summary, the comparison between the 2001 and 2004 growth phase and the current one shows:
<ul>
<li>Growth in home values has been much more moderate over the current phase than in what was recorded over the housing boom of 2001-04 and this is also the case across all capital cities. 
</li>
<li>The 2001 to 2004 growth phase was broad occurring in all capital cities where the current phase is characterised as being quite narrow, focussed mainly on Sydney and Melbourne. Importantly, the growth trend in the previous growth phase started in Melbourne and Sydney before rippling to the other capital cities. 
</li>
<li>Transaction volumes for houses and units have been significantly lower over the current growth phase compared to the previous phase (despite a larger population and higher overseas migration). 
</li>
<li>Standard variable mortgage rates have typically been much lower over the current growth phase than they were in 2001 to 2004 with rates consistently at record lows for the past 16 months. 
</li>
<li>The rate of growth in housing credit has been much more moderate over the current growth phase compared to the 2001-04 boom phase. 
</li>
<li>Although the rate of credit growth is slower now than before, so too is the value of housing credit increases albeit the gap between 2001 and 2004 and the current phase is much narrower. 
</li>
<li>On a monthly basis we are currently approving more dwellings for construction than we were in 2001 to 2004. Keep in mind that we are also approving a lot more units than we were in 2001 to 2004 and unit approvals have proven to be less likely to ultimately be constructed than houses. 
</li>
<li>Net long-term and permanent arrivals have been significantly greater over the current growth phase than they were between 2001 and 2004. 
</li>
<li>The 2001 to 2004 boom period coincided with a significant rise in housing and household leverage along with a jump in housing assets. Whilst each of these factors have also increased over the current growth phase the slope of the increase has been much more moderate.  Furthermore over the current phase the ratio of housing assets to household income has increased by a greater amount than household and housing debt to disposable income while in 2001 to 2004 it increased at a slower pace.</li>
</ul>
Debate around the sustainability of home value growth over the current growth cycle is healthy and warranted, however some lessons can be learnt from how the housing market performed during an even stronger and longer growth phase over the period from 2001 to 2004. 
As interest rates rose, housing market exuberance was gradually quelled.  Values didn’t plummet, but they did retreat in Sydney and growth rates flattened out in most other cities.  Australian households are now more sensitive to the cost of debt, with the ratio of disposable income to household debt at record highs which means the market will probably respond even more swiftly to any perception of interest changes ahead.
Importantly we are already seeing the housing market move through the peak rate of growth.  The CoreLogic RP Data Home Value Index peaked in April this year and the rolling annual rate of capital gain has been drifting lower since that time. 
Transaction numbers have also levelled, as has the average selling time of a home, the rate of vendor discounting and growth in housing credit. 
Our expectations looking forward are that growth rates will continue to drift lower, at least at a macro level due to natural affordability pressures, compressed rental yields and further warnings on speculative investment from the RBA.
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How does the current growth cycle compare to the 2001 to 2004 boom?

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The Australian Bureau of Statistics (ABS) released building approvals data for October 2014 last week.
<img class="aligncenter size-full wp-image-4077" src="https://blog.corelogic.com.au/wp-content/uploads/2014/12/Chart-1.jpg" alt="Chart 1" width="500" height="179">
The headline data showed that there were 17,062 total dwelling approvals in October 2014.  Total dwelling approvals increased by 11.4% over the month and were 2.5% higher year on year. 
Although there was quite a strong rebound in monthly approvals, they remain -3.7% lower than their recent monthly peak of 17,721 approvals in January 2014.
<img class="aligncenter size-full wp-image-4078" src="https://blog.corelogic.com.au/wp-content/uploads/2014/12/Chart-2.jpg" alt="Chart 2" width="500" height="180">
The large increase in dwelling approvals over the month was driven by the much more volatile unit approvals. 
In October, there were 9,478 houses and 7,584 units approved for construction.  House approvals were -0.3% lower over the month while unit approvals were 30.4% higher.  year on year, house approval have increased by 12.2% while unit approvals have fallen by -7.4%. 
As the second chart shows, the six month trend indicates a slowing of dwelling approval numbers.  The slowing trend in approvals is much more apparent for units whereas house approvals appear to have reached a plateau. 
It is also important to remember that a multi-unit development of units is more risky than developing a single house and ultimately less likely to ultimately be constructed.
<img class="aligncenter size-full wp-image-4079" src="https://blog.corelogic.com.au/wp-content/uploads/2014/12/Chart-3.jpg" alt="Chart 3" width="500" height="177">
Looking at dwelling approvals across the combined capital cities, there were 14,635 approvals in October which was an all-time high. 
Capital city dwelling approvals have increased by 18.5% over the month and are 4.5% higher year on year.  You only have to visit any of the major capital cities to see that there has been a significant surge in construction activity of new homes over recent years. 
The approvals data indicates that the dwelling construction pipeline in these regions is continuing to grow.
<img class="aligncenter size-full wp-image-4080" src="https://blog.corelogic.com.au/wp-content/uploads/2014/12/Chart-4.jpg" alt="Chart 4" width="500" height="178">
One factor that sets apart the capital city market from the national market is the much greater prevalence of unit approvals.  In fact, over the past two years there have generally been more capital city units approved each month than houses. 
In October, there were 7,139 capital city houses and 7,496 capital city units approved for construction.  The 7,139 house approvals were the highest number of approvals over any month since November 1999. 
Monthly unit approvals were at their highest level since October 2013.  Over the month, capital city house approvals increased by 6.8% while unit approvals rose 32.4%.  Year on year, house approvals were up 15.7% while unit approvals are -4.3% lower.
<img class="aligncenter size-full wp-image-4081" src="https://blog.corelogic.com.au/wp-content/uploads/2014/12/Chart-5.jpg" alt="Chart 5" width="500" height="178">
Looking at dwelling approvals across the major capital cities, you can see that approvals are higher than they were a year ago in most cities. 
Dwelling approvals were lower in October 2014 than they were in October 13 in Sydney (-1.6%), Darwin (-42.3%) and Canberra (-43.9%).  Across the remaining capitals, the year on year increase in approvals has been recorded at: 5.3% in Melbourne, 5.6% in Brisbane, 16.3% in Adelaide, 23.4% in Perth and 66.1% in Hobart. 
In Melbourne and Perth dwelling approvals currently sit at near record highs.
<img class="aligncenter size-full wp-image-4082" src="https://blog.corelogic.com.au/wp-content/uploads/2014/12/Chart-6.jpg" alt="Chart 6" width="500" height="178">
House approvals are trending higher across each of the major capital cities.  Although the trend is towards more house approvals year on year approvals are now lower in Adelaide (-17.3%) and Darwin (-1.6%). 
Across the remaining cities, the year on year increase in house approvals have been recorded at: 28.3% in Sydney, 23.8% in Melbourne, 28.4% in Brisbane, 4.5% in Perth, 26.3% in Hobart and 3.8% in Canberra.
<img class="aligncenter size-full wp-image-4083" src="https://blog.corelogic.com.au/wp-content/uploads/2014/12/Chart-7.jpg" alt="Chart 7" width="500" height="178">
Across the major capital cities, the above chart shows that nowadays a much greater number (and subsequently proportion) of units are being approved for construction. 
It is interesting to note that unit approvals are trending sharply lower in Sydney lately while elsewhere they continue to trend higher.  Also note that for most of the past six years Melbourne has been approving a greater number of units than Sydney. 
As mentioned earlier, the unit data tends to be much more volatile than the house approvals data and is reflected in the year on year change in approvals to October 2014.  Over the period, the change in approvals across the cities have been recorded at: -15.3% in Sydney, -6.1% in Melbourne, -8.3% in Brisbane, +84.4% in Adelaide, +117.8% in Perth, +520% in Hobart, -52.6% in Darwin and -58.4% in Canberra.
<img class="aligncenter size-full wp-image-4084" src="https://blog.corelogic.com.au/wp-content/uploads/2014/12/Chart-8.jpg" alt="Chart 8" width="500" height="178">
If we look over the past 12 months, half of all capital city dwelling approvals were for houses.  In fact, the result is only really driven down by the fact that in Adelaide, Perth and Hobart so few units relative to houses have been approved.  In each of the remaining capitals more than 50% of approvals have been for units. 
Units have historically been less likely to ultimately reach completion than houses.  Given the high number of unit approvals over the past two years and the fact that home value growth is now slowing, you do wonder just how many of these units that are approved will actually be constructed in the current cycle.
Dwelling approvals remain at a very high level and with the rate of population growth slowing, it is encouraging to see that supply has responded on the back of low interest rates and some rises in buyer demand and home values. As the rate of value growth slows along with sales activity, it will be interesting to see how much of this stock which is approved will commence and ultimately make it to completion. 
Furthermore, we know that much of the unit stock which is now so prevalent in inner city areas is being purchased by investors.  With capital growth slowing and rental growth slow, this may also impact on some of the future construction of these approved units. 
The Reserve Bank has also flagged that they, along with banking regulators, are looking to curb higher risk lending to investors. 
We don’t yet know what these curbs may be but once implemented they may act as a further deterrent to investors and put into jeopardy some of these inner city unit approvals coming to fruition.
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Approvals data shows supply responding to low interest rates and buyer demand

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

Joel Robinson

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

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

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

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

Bottega House secures landmark riverfront site in St Lucia 

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

SIERA kicks off construction at Northcliffe tower Exhale

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

Cameron Kusher

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