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According to the RP Data CoreLogic Home Value Index, combined capital city home values have increased by 10.9% over the 12 months and by 18.7% over the current growth phase. 
With many economic indicators heading in the wrong direction, it seems counter-intuitive that home values would continue to rise as strongly as they are.  The answer to why home values continue to rise can partly be explained by the level of equity sitting in our homes.
The Australian Bureau of Statistics (ABS) estimated that as at June 2014 there were 9,366,800 residential dwellings across the country.  Over the 12 months to June 2014, RP Data estimated that there were 484,000 dwellings sold across the nation.  Based on these figures, just 5.2% of total dwelling stock sold over the past year. 
Equity is difficult to truly calculate as there are no regular statistics available on home equity levels, as you’d imagine the banks hold this data quite tight.  So whilst we can’t determine the reduction in the initial borrowings over time, we can determine how much home values have increased over time which is a key component of how much wealth has been accumulated in a property.
<img class="aligncenter size-full wp-image-3725" src="https://blog.rpdata.com/wp-content/uploads/2014/09/Chart-12.jpg" alt="Chart 1" width="500" height="180">
Over the past two decades, the level of value growth across Australia’s capital cities has been strong.  As deregulation of financial markets has taken place lending for residential housing has ramped up significantly.  Subsequently, the cost of housing has risen and those who own a home or have a mortgage have seen a large rise in their equity.
Since national home values reached a low point in December 2008 after a cumulative -6.1% fall from March to December of 2008, there has been a significant divergence in the level of capital growth across individual capital cities.
<img class="aligncenter size-full wp-image-3726" src="https://blog.rpdata.com/wp-content/uploads/2014/09/Chart-22.jpg" alt="Chart 2" width="500" height="184">
From the end of 2008 to August 2014, total home value increases have been much greater in Sydney and Melbourne than across the other capital cities.  This is by virtue of value rises of 27.2% and 19.5% over the current growth cycle as well as quite strong value rises throughout the 2009 and 2010 growth cycle. 
The impact of this growth in home values means that even those who have only recently purchased in Sydney and Melbourne, say in 2009 or 2010, have already seen a large increase in the value of their home.  As a result, some are using this equity to purchase investment properties, others will use the equity to upgrade into more suitable housing for their needs and of course others will have different or no strategies for the equity.
<img class="aligncenter size-full wp-image-3727" src="https://blog.rpdata.com/wp-content/uploads/2014/09/Chart-32.jpg" alt="Chart 3" width="500" height="185">
Housing finance data from the Australian Bureau of Statistics (ABS) shows that investment lending for new loans (this excludes refinances) has recently hit record levels while first home buyer demand is at an all-time low. 
The two driving segments of the housing market are investors and subsequent buyers (those upgrading or downgrading their principal place of residence). 
But why are they choosing property, why now and why Sydney and Melbourne?
Article continues on the the next page. Please click below.
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Standard variable mortgage rates are currently recorded at 5.95%.
Outside of an eight month period between February 2009 and September 2009, standard variable mortgage rates haven’t been lower than they currently are since the early 1970s. Over recent years, discounted variable mortgage rates have become much more prevalent in the mortgage market. 
Currently, discounted variable mortgage rates are 85 basis points lower (5.1%) than standard mortgage rates.  With the banks competing heavily for mortgage business currently a large proportion of borrowers are able to get that discounted rate or even lower on their home loan.
The low interest rates also have an impact on investment decisions by making certain other asset classes less attractive.  With official interest rates sitting at 2.5% the amount of interest for cash sitting in the bank is very little.  According to data from the Reserve Bank (RBA) in August, a three-year term deposit with $10,000 or more receives just 3.65% interest per annum.  When you consider that inflation is at 3.0%, the real returns from a term deposit are miserly.
The relatively low cost of servicing a mortgage currently and the low returns on risk-free investment is attracting increasing investor activity to the housing market.  The historical performance of an asset should not be used as guidance to the future returns.  Although this is the case and a disclaimer many use when providing investment advice, the historic returns from residential housing have been impressive and difficult to argue with.  
bviously many people believe that these returns will continue into the future.  It is important to note that housing market returns have generally been much more moderate following the financial crisis than they were prior to the crisis. In fact on an annual basis home values have fallen over three of the past seven calendar years (2008, 2011 and 2012).
With returns so low amongst risk-free investments, investors have clearly shifted their focus to slightly riskier asset-classes such as residential housing.  In particular the focus has been centred on our two largest cities, Sydney and Melbourne.
Although housing has proven to be a low-risk investment class over recent times it is not a one-way bet.  Values are rising on the back of increased competition for stock however, with values rising at some point a proportion of the market will no longer be able to afford the homes available for sale.  At some point in the future (who knows when) growth in values will slow and interest rates will increase.
We are also seeing a very strong supply-side response with a record high number of dwelling approvals over the past 12 months.  Additional supply should ease some of the upwards pressure on values.  It has already resulted in a moderation of rental growth, with rental pressures subsiding we may also see more potential buyers choosing to remain in the rental market rather than purchase their own owner-occupied property.
When value growth slows or starts to fall we may see investors shift from housing to other more liquid asset classes.  As interest rates rise, servicing the mortgage becomes more expensive. 
Housing has generally provided solid capital gains over the past two decades and growth conditions across Sydney and Melbourne are currently spectacular. However, the market moves in cycles and the growth being seen in Sydney and Melbourne will eventually transition to less expensive markets that show stronger fundamentals for capital gains.
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Why are home values still rising?

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Based on current house and unit sales estimates, over the 2013/14 financial year 348,670 houses and 135,330 units were sold; house sales increased by 10.4% while unit sales increased by 8.6%. 
House sales were at their highest level since the 2007/08 financial year and unit sales were at their highest since the 2009/10 financial year.
Tasmania and Queensland recorded the greatest increase in sales over the reporting period. While a rise in sales was recorded in other states; Western Australian and the Northern Territory lucked out and recorded a drop in sales for the period.
Sales by individual states:
<ul>
<li>Tasmania – sales up by 21.3% </li>
<li>Queensland -  sales up by 14.8% </li>
<li>New South Wales – sales up by 12.9% </li>
<li>Victoria – sales up by 7.5% </li>
<li>South Australia – sales up by 9.3% </li>
<li>ACT - sales up by 0.3% </li>
<li>Northern Territory – sales down by -0.2% </li>
<li>Western Australia – sales down by -1.3% </li>
</ul>
The capital city change in annual sales volumes tends to reflect the state-wide results; sales volumes were lower over the year in Perth and Darwin and higher across each remaining city.  Sydney sales volumes were up 13.3%, in Melbourne they were 9.0% higher, Brisbane volumes rose by 19.8%, Adelaide volumes rose 9.3%, Perth volumes fell -1.7%, Hobart transactions were up 22.5%, Darwin sales were -1.0% lower and Canberra sales were just 0.2% higher.
 <img src="/images/2014/09/11/kush-sept-11-one.jpg" alt="">
While off the plan unit sales are not counted until such time as they settle and as such a proportion are not included in today’s analysis, given this and considering the significant number of unit developments taking place at the moment, it is reasonable to expect an upwards revision to the unit number over the coming year(s).
Across the combined capital cities, a greater rise in home transactions was experienced over the financial year than at a national level.  This is reflective of the much stronger demand and subsequent capital growth across capital city markets.  
RP Data estimates that 218,429 houses and 100,894 units sold over the year. House sales increased by 11.7% over the financial year and unit sales were 7.2% higher. I expect an upwards revision to the unit sales figures.  
 <img src="/images/2014/09/11/kush-sept-11-two.jpg" alt="">
Capital city house sales were at their highest level since the 2006/07 financial year and unit sales were at their highest level since 2010/11.
The lift in transactions has been accompanied by an increase in values across all capital cities.  Of course the magnitude of the rise in values has varied greatly on a city-by-city basis.  
 <img src="/images/2014/09/11/kush-sept-11-three.jpg" alt="">
Higher transactions are arguably more important for market participants than higher values – more sales means more commission for agents and brokers, more lending for banks and more business for valuers.
The combination of higher home values and greater sales is a boon for state and local governments. Stamp duty, which is levied on property transactions, increases as more transactions occur but also as value rise as stamp duty is typically calculated on a sliding scale.
 <img src="/images/2014/09/11/kush-sept-11-four.jpg" alt="">
Looking to the current financial year, interest rates are expected to remain on hold at least to the end of 2014 but potentially starting to rise during 2015.  
Sydney and Melbourne sales volumes appear to have already peaked however, they may rebound once more during spring. Overall we would expect a reasonably high number of sales this financial year however, final numbers may be slightly lower than in 2013/14. 
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Have Sydney and Melbourne sale volumes peaked?

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The Australian Bureau of Statistics (ABS) released housing finance data for July 2014 earlier this week. 
The headline result was the 0.3% rise in owner occupier housing finance commitments over the month.  In my opinion, a more significant result was the 6.8% monthly rise in investment lending. 
Investment lending had shown signs of slowing over recent months but has come surging back in July.
<img class="aligncenter size-full wp-image-3700" src="https://blog.rpdata.com/wp-content/uploads/2014/09/Chart-11.jpg" alt="Chart 1" width="500" height="182">
Looking at the value of housing finance commitments over the month, the total value increased by 2.7% in July (2.6% excluding refinances).  Owner occupier refinance commitments increased by 3.1%, owner occupier new mortgage commitments fell by -1.3% and investment finance commitments increased by 6.8%. 
Year on year, the total value of finance commitments has increased by 17.4% or 17.2% excluding refinances. The year on year increase in owner occupier refinance commitments was 18.6%, new home loan commitments to owner occupiers were 7.1% higher and lending to investors surged 29.6%. 
In the current climate, subsequent purchasers and investors are occupying the majority of housing finance demand.
<img class="aligncenter size-full wp-image-3701" src="https://blog.rpdata.com/wp-content/uploads/2014/09/Chart-21.jpg" alt="Chart 2" width="500" height="182">
Looking at the same data but focussing on the proportion of total lending reconfirms the high level of lending to investors and subsequent purchasers. 
In July, 41.4% of total mortgage lending was for new loans to owner occupiers, 18.3% was to owner occupiers for refinances and 40.3% was to investors.  The 41.4% of total commitments to owner occupiers (excluding refinances) was the lowest proportion of lending to this cohort on record. 
Conversely, at 40.3% of all mortgage lending, investment lending was at its highest proportion since October 2003 (and second highest ever).  If you remove refinances from the equation 49.3% of lending was to investors which was a record high.
<img class="aligncenter size-full wp-image-3702" src="https://blog.rpdata.com/wp-content/uploads/2014/09/Chart-31.jpg" alt="Chart 3" width="500" height="181">
Data focussing on the number of loans to owner occupiers shows there were 52,251 owner occupier commitments in July.  The number of commitments rose by 0.3% over the month however, it has recorded only a moderate 1.7% rise year on year. Loans for refinancing purposes increased by 2.4% over the month and 6.6% year-on-year compared to a -0.7% fall in non-refinanced loans over the month and a -0.7% fall over the year. 
This data and the data previously detailed suggest that demand from owner occupiers for new loans has slowed with investors and refinances currently driving activity.
<img class="aligncenter size-full wp-image-3703" src="https://blog.rpdata.com/wp-content/uploads/2014/09/Chart-41.jpg" alt="Chart 4" width="500" height="179">
The owner occupiers that commit to finance overwhelmingly commit to finance for the purposes of purchasing an established dwelling. 
In July, there were 25,469 new owner occupier loan s (excluding refinances) for the purchase of established dwellings, 6,157 for construction of new dwellings and 2,871 for the purchase of new dwellings. 
Over the month, established dwelling commitments were down -0.7%, construction of dwellings were -1.3% lower and purchase of new dwellings was 0.5% higher. 
Year on year, commitments for the purchase of established dwellings are -3.6% lower while commitments for construction are 16.4% lower and commitments for purchase of new are -5.1% lower.
<img class="aligncenter size-full wp-image-3704" src="https://blog.rpdata.com/wp-content/uploads/2014/09/Chart-51.jpg" alt="Chart 5" width="500" height="181">
The number of housing finance commitments by first home buyers remains stuck at near record low levels. 
In July, there were 6,717 housing finance commitments to first home buyers, which accounted for 12.2% of total owner occupier commitments over the month. 
The number of first home buyer housing finance commitments is -2.2% lower over the month and -15.7% lower year-on-year.  While the number of commitments by first home buyers is lower over the year, the average loan size has risen by 7.0%. 
First home buyers largely remain on the sideline in the current market as investors and subsequent purchasers capture much of the mortgage demand.
<img class="aligncenter size-full wp-image-3705" src="https://blog.rpdata.com/wp-content/uploads/2014/09/Chart-61.jpg" alt="Chart 6" width="500" height="181">
Based on current mortgage rates, fixed rate loans generally have a lower interest rate than discounted variable loans. 
This is not necessarily unusual however, housing finance data showed that there were just 7,553 owner occupier finance commitments (or 13.7% of all owner occupier finance commitments) on a fixed rate in July.  The number of fixed rate loans has been trending lower after most recently peaking at 17.4% of all mortgage commitments in November 2013.
<img class="aligncenter size-full wp-image-3706" src="https://blog.rpdata.com/wp-content/uploads/2014/09/Chart-7.jpg" alt="Chart 7" width="500" height="264">
The RP Data Mortgage Index (RMI) which measures mortgage activity across RP Data’s proprietary platforms recorded a fall in August.  As this index is closely correlated with owner occupier housing finance commitments, we anticipate a fall in the number of owner occupier commitments next month when the ABS releases August data.
In volume terms, owner occupier loan demand is pretty steady and appears to be at or close to its peak.  Focussing on the value of lending it continues to climb as home values continue to increase. 
After seemingly topping out over recent months, investor commitments recorded a sharp rise in July.  As a proportion, investment lending is at its second highest monthly level ever and highest ever level if you exclude refinances.
The high level of investment lending remains a key area of concern.  With returns on safe asset classes extremely low many investors are purchasing property, mainly in Sydney and Melbourne where capital growth is strong and interest costs on loans are historically low.  As we have mentioned many times, such high rates of capital gain won’t continue forever and our concern remains what will happen if once the growth dissipates and interest rates move higher there may be a high number of these investors looking to exit property. 
We know that historically once value growth slows demand also eases, if these investors look to sell as demand drops a risk develops that value falls could become greater as these investors enter a discounting war in order to sell their homes. 
Obviously this may be good news for those first time buyers which are currently sidelined from the market, however it would be bad news for the two thirds of Australians that own or have a mortgage and have the majority of their wealth stored in their home in the form of equity.
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Investor demand for housing reaches an historic high

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The Australian Bureau of Statistics (ABS) released building approvals data for July 2014 last week. 
The data shows that there continues to be a strong pipeline of residential development in place.
<img class="aligncenter size-full wp-image-3677" src="https://blog.rpdata.com/wp-content/uploads/2014/09/Chart-1.jpg" alt="Chart 1" width="500" height="179">
Focussing on dwelling approvals nationally, there were 9,585 house approvals and 6,733 unit approvals over the month.  The number of dwelling approvals increased by 2.5% over the month with house approvals up 1.5% and unit approvals up 4.0%.  Although dwelling approvals have increased over the month they were -7.8% lower in July than the most recent peak in January 2014 when there were 17,698 dwelling approvals.  Although dwelling approvals increased over the month, they have fallen for eight of the past 12 months.
<img class="aligncenter size-full wp-image-3678" src="https://blog.rpdata.com/wp-content/uploads/2014/09/Chart-2.jpg" alt="Chart 2" width="500" height="178">
Monthly dwelling approvals data tends to be volatile so I also like to look at annualised data to see a trend.  Over the 12 months to July 2014 there were 195,227 dwelling approvals.  This was an all-time high number of annual approvals.  Unit approvals were also at an historic high level over the year while house approvals were well below their record high of 140,832 recorded over the 12 months to April 1989.  Over the 12 months to July 2014, unit approvals accounted for 43.6% of all dwelling approvals, up from 42.1% a year earlier.
<img class="aligncenter size-full wp-image-3679" src="https://blog.rpdata.com/wp-content/uploads/2014/09/Chart-3.jpg" alt="Chart 3" width="500" height="178">
Across the combined capital cities, there were a record high of 145,065 dwellings approved for construction over the 12 months to July 2014.  The number of capital city dwelling approvals has increased by 21.9% over the past year.  Over the year there were, 71,085 approvals for houses and 73,980 unit approvals with house approvals up 20.8% and unit approvals 22.9% higher.
<img class="aligncenter size-full wp-image-3680" src="https://blog.rpdata.com/wp-content/uploads/2014/09/Chart-4.jpg" alt="Chart 4" width="500" height="183">
Across the individual capital cities, Brisbane has recorded the greatest increase in dwelling approvals over the year (44.5%) followed by: Sydney (29.0%), Perth (26.6%) and Adelaide (25.1%).  Dwelling approvals are lower over the year in Darwin (-14.5%) and Canberra (-7.6%) while Melbourne (10.9%) and Hobart (11.7%) have recorded only moderate rises in dwelling approvals. 
Despite certain cities recording significant rises in dwelling approvals, Sydney and Melbourne have accounted for more than 57% of all capital city dwelling approvals over the past year.
<img class="aligncenter size-full wp-image-3681" src="https://blog.rpdata.com/wp-content/uploads/2014/09/Chart-5.jpg" alt="Chart 5" width="500" height="179">
A key driver of the overall increase in dwelling approvals has been the rising prominence of the unit market. 
Over the past year, the increase in unit approvals has been greater than the increase in house approvals in Sydney, Brisbane, Adelaide and Perth.  Although unit approvals have recorded greater increases in these cities, there has been a substantial decline in unit approvals across Hobart and falls in both Darwin and Canberra.
<img class="aligncenter size-full wp-image-3682" src="https://blog.rpdata.com/wp-content/uploads/2014/09/Chart-6.jpg" alt="Chart 6" width="500" height="180">
With more than half of all capital city dwelling approvals for units as opposed to houses, all individual capital cities except for Adelaide (31.1%), Perth (25.0%) and Hobart (9.0%) are seeing a majority of approvals for units.  In Sydney, 68.3% of dwelling approvals were for units over the past year, elsewhere 52.1% were for units in Melbourne, 56.0% in Brisbane, 62.0% in Darwin and 57.6% in Canberra. 
Sydney has consistently approved more units than houses since 1993 and Darwin has consistently approved more units than houses since 2003, while across the other cities it is a relatively new phenomenon.   Melbourne has only been approving more units than houses since mid-2012, in Brisbane it has occurred since mid-2013 and in Canberra since mid-2010.
Of course there is increasing levels of demand for units but particularly in Melbourne and Brisbane the number of units in the pipeline is largely untested.  Unless the introduction of supply is closely managed there is a potential risk of unit oversupply.
With dwelling approvals at historic high levels, dwelling construction will continue to help bolster GDP as engineering construction.  The challenge will be whether dwelling construction is enough to offset the fall in engineering construction and it seems that it probably won’t be. 
Construction work done data for the June quarter showed that residential construction accounted for 25.8% of total work done compared to 57.2% attributable to engineering.  At its absolute peak residential construction accounted for just over half of the value (50.2%) of all work done.  It is likely that residential dwelling construction alone will not be able to offset the fall in mining investment.
Furthermore, it is unlikely that all of these approvals will come to fruition in the short-term. Unless there is ongoing demand a proportion of these new approvals won’t commence as they won’t get the necessary pre-sales to receive construction finance.  In light of this, interest rates are likely to remain low to try and encourage further housing demand.  
As a result, unless the RBA and APRA introduce macro prudential tools it seems unlikely home value appreciation will cease until such time as mortgage rates increase.
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Rise of the unit market behind record dwelling approvals

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Many Australian’s would like to live in the inner city areas of their capital city where the amenities are most abundant, but sadly the cost of housing is generally restrictive.
According to the RP Data Home Value Index results for July 2014, combined capital city home values increased by 10.2% over the 12 month period. The greatest annual increases in values have been recorded in Sydney (14.8%) and Melbourne (11.0%). In all other capital cities the total value growth over the past year has been less than 7%.
A familiar trend we are witnessing across most cities is that demand for housing is particularly strong across the inner city areas of the city. With mortgage rates low, buyers are battling it out to purchase those homes close to the city centre. Of course areas closer to the CBD tend to be much more expensive than those areas further away. Inner city suburbs are also generally better serviced by both essential and desirable amenities such as: schools, medical services, shopping centres, social amenity, roads and public transport infrastructure.
In certain capital cities the cost of housing is restrictive in these areas due to a high level of demand which has pushed housing costs out of the reach of many perspective buyers. Coupled with high demand is inherently low levels of supply; it is much more challenging to release new detached close to the city due to the limited availability of developable land. Of course there remain alternative options such as units however even units in certain cities have restrictive price points.
Looking at those suburbs with the most affordable median value within a 10 kilometre radius of the CBD across the cities we can see a large divergence in results. For example, in Sydney <a href="/news">Wolli Creek</a> has the lowest median house value at $710,303 (not very affordable) and in Melbourne the most affordable suburb is <a href="/news">Bellfield </a>at $533,252. In most other capital cities, except for Darwin the starting point for a house is significantly lower. Of course, in many cities these areas are less desirable than other inner city suburbs however, they remain close to the city and potentially have scope for urban renewal over the coming years.
Turning to the unit markets, home values are typically much more affordable closer to the city centre than they are for houses. Again, this doesn’t mean that they are affordable or practical for everyone. It is also interesting to note that the divergence in results from city-to-city. For example <a href="/news">Kilburn</a> is the fifth most affordable suburb for houses in Adelaide with a median of $349,925. The most affordable suburb for units in Sydney’s inner city is <a href="/news">Eastlakes </a>with a median of $452,776 which is significantly higher than the median house value of Kilburn. Nevertheless, the median value of units is much lower than the median house values across most cities. No wonder we are seeing such a rise in inner city unit construction with so much demand and a lower price point compared to comparable houses.
RP Data anticipates that home values in inner-city areas are likely to continue to increase, particularly as mortgage rates remain at such low levels. As a result more and more potential buyers are likely to be priced out of the inner city housing market. This creates some good opportunities for other areas of the city to see increased demand.
If buyers can’t afford to purchase a home within the inner city, they will most likely look to those locations that tick as many of the inner city boxes, just at a lower price point than the inner city areas. Given this, suburbs with features such as: quality public transport connections, abundant retail and social amenity, quality schools and medical amenity will likely see renewed interest as inner city buyers look to these more affordable alternatives.
<img src="https://image.e.rpdata.com/lib/fe591570776d03757d17/m/7/2014-08-15--most-affordable-inner-suburbs.jpg">
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Australia's most affordable inner city suburbs

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Rising home values across most capital city regions has meant that it’s now becoming even more difficult to find capital city homes under $400,000.
Across the combined capital cities, 28% of homes sold over the 12 months to June 2014 were priced below $400,000. In regional areas, the figure was a much higher at 63.9%. Over the past decade, the property market experienced a substantial reduction in housing under $400,000. 10 years ago, 69.3% of capital city home sales and 86.4% of regional home sales were below $400,000.
Over the three months to June 2014, the combined capital city median house price was $550,000 while the median unit price was $475,000. Given the median is the middle sale price over the period, this indicates that over the three month period, an equal number of homes sold above this figure.
<img src="/images/2014/08/28/kusher-aug-28-one.jpg" alt="">
A rise in capital city home values of 10.1% over the 12 months to June 2014 indicates the difficulty being experienced by price-sensitive purchasers looking to enter the housing market - this is most felt in Sydney and Melbourne where home values have increased by 15.4% and 9.4% respectively over the year to June.  
And while properties in Australia’s regional areas may be more affordable, the downside is a lack of employment.  Recent employment data from Australian Bureau of Statistics (ABS) confirmed that across most states, unemployment is lower in the capital cities than in regional markets. The exceptions are Queensland where the unemployment rate is 6.4% in both Brisbane and regional Queensland, and in SA where Adelaide’s unemployment rate is 6.8% compared to 6.4% in regional SA. Although housing might be much more affordable outside of capital cities, job prospects are not as strong.
If we consider the growth in home values and the selling prices of homes, it indicates a shortening supply of more affordable homes.
Looking at the proportion of capital city homes selling below $400,000 over the 12 months to June 1999, in each city the vast majority of homes sold within that price point.  
Five years on, the June 2004 results show a decline in home sales under $400,000. Despite the decline, Sydney houses were the only city and property type with less than half of all sales occurring under $400,000. According to the RP Data Home Value Index, combined capital city home values increased by a total of 87.9% over the five years to June 2004.
Between June 2004 - 2009, combined capital city home values increased by a total of 27.4%.  Although overall value growth was much more moderate than the previous five years, a sharp decline in sales of homes under $400,000 was recorded by June 2009.  Less than half of all house sales in Sydney, Brisbane, Perth, Darwin and Canberra were below $400,000 over the year. In each city a majority of unit sales were under $400,000.
Over the 12 months to June 2014, Hobart was the only city with a majority of house sales under $400,000.  Within the unit market, a majority of sales in Brisbane, Adelaide and Hobart were below $400,000.  According to the RP Data July Home Value Index results, combined capital city home values increased by a total of 22.1% over the five years to June 2014.
Although home value growth has moderated over each of the past two five year periods, the supply of homes selling at lower price points (i.e. less than $400,000) has also fallen.  
Housing is Australia’s single largest asset class and for most people, it’s where they store the majority of their wealth. For those who don’t own their home, it’s a very different story.
In a rising market where home values are increasing, all this is great news for those that own a home but makes entering the housing market more difficult for those that don’t.
Affordable housing is the way that most first time buyers enter the market.  With the supply of affordable homes within capital cities shortening significantly, the prospects for first home buyers entering the market are also diminishing. Based on these conditions, we’re expecting the typical age of first home buyers to increase and first home buyer purchasing to remain at below average levels.
<img src="/images/2014/08/28/kusher-aug-28-two.jpg" alt="">
<img src="/images/2014/08/28/kusher-aug-28-three.jpg" alt="">
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The rapidly shrinking pool of affordable housing

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The Australian Prudential Regulation Authority (APRA) released their quarterly Authorised Deposit-taking Institution (ADI) Property Exposures data for June 2014 yesterday.
The data always provides a valuable insight into current and historic mortgage lending by ADIs. This quarter’s data showed some very interesting trends.
<img class="aligncenter size-full wp-image-3648" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-11.jpg" alt="Chart 1" width="500" height="181">
Based on the value of all outstanding mortgages by households to Australian ADI’s, there $811.7 billion outstanding to owner occupiers (66.2%) at the end of June 2014 and $413.5 billion to investors (33.8%). Over the 12 months to June 2014, the total value of outstanding mortgages to owner occupiers has increased by 7.5% compared to a 10.9% rise in outstanding credit to investors.
<img class="aligncenter size-full wp-image-3649" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-21.jpg" alt="Chart 2" width="500" height="181">
At the end of June 2014, 36.0% of loans outstanding had an offset facility, up from 34.0% a year earlier. 35.7% of all outstanding mortgages were interest-only which was the highest on record and up from 34.3% a year earlier. 
Just 0.2% of all outstanding mortgages were reverse mortgages and 2.9% were low documentation which was down from 3.9% a year earlier. Other non-standard loans accounted for just 0.1% of all outstanding mortgages.
<img class="aligncenter size-full wp-image-3650" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-31.jpg" alt="Chart 3" width="500" height="180">
The average balance on all outstanding mortgages at the end of June 2014 was $237,200.  The average balance has increased by 3.2% over the past year.  Loans with an offset facility ($282,900) and interest-only mortgages ($299,000) have much higher average outstanding loan balances.  It is interesting to note that the annual growth in average outstanding loan balances has been much more moderate for mortgages with an offset and interest-only mortgages at 1.6% and 1.8% respectively.  Encouragingly, the data also indicates that outstanding balances are reducing for low documentation and other non-standard loans as they become less common.  Over the past year the average balance has fallen by -3.5% for low-documentation loans and by 5.9% for other non-standard loans.
Turning the focus to new loans written over the June quarter, 62.1% of lending was to owner occupiers and a record high 37.9% was to investors.  Compared to the June 2013 quarter, owner occupier lending is up 2.0% and investment lending is 14.4% higher.
<img class="aligncenter size-full wp-image-3651" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-41.jpg" alt="Chart 4" width="500" height="179">
Over the quarter, 0.7% of new loans approved were low-documentation, 43.2% were interest only, 0.2% were other non-standard loans, 43.0% were third party originated loans and 3.7% were loans approved outside of serviceability.  The 43.2% of new loans which were interest only was a record high, interest only loans tend to be (but not always) reflective of lending for investment purposes. 
The ADIs seem to be increasing the usage of their broker channels with the 43.0% of loans originated by third parties the highest proportion since June 2008.  Although only 3.7% of loans were approved outside of serviceability over the June quarter, this was the highest proportion on record. 
This may indicate that there has been some relaxation of lending standards over the quarter, however it is difficult to conclude any firm conclusions.  Nevertheless it is something to keep an eye on over the coming few quarters.
<img class="aligncenter size-full wp-image-3652" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-51.jpg" alt="Chart 5" width="500" height="183">
Looking at the loan to value ratios (LVR) of loans written over the June quarter, 24.0% of new loans had an LVR of less than 60%, 42.2% of loans had an LVR of between 60% and 80%, 21.3% had an LVR of between 80% and 90% and 12.5% had an LVR of 90% or more. The 12.5% of new loans with an LVR of more than 90% is the lowest proportion since June 2011. This suggests there are proportionally less high-risk mortgages being written.
The data has certainly shifted quite significantly over the past quarter and year. There is definitely a significant level of activity by investors and clearly ADIs appear happy to lend to them.  The rise in the proportion of new loans written outside of serviceability is a potential concern. However, it is positive to see that the proportion of loans with an LVR of 90% or more falling.  The high level of interest only lending is also a cause for concern.  Of course interest rates are currently very low but such a high level of interest only lending in light of low interest rates may cause some issues when rates eventually start to rise.
As we have mentioned previously, the high proportion of investment lending is our biggest cause for concern in the current market. The lure of strong capital growth in Sydney and Melbourne is attracting the attention of investors as risk-free investments offer very low returns. 
Of course, that growth in values won’t continue forever and once it slows or values fall our chief concern remains that many investors may look to exit the asset class.  Should this occur, inner city unit markets (where investor activity is most prevalent) could see a more significant drop in values than they otherwise would have as investors exit at a time when demand also falls.  This scenario could have greater repercussions for the overall market, not just the inner city areas.
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The high proportion of investment lending remains our biggest cause for concern

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Australia’s million dollar property club hit new heights this year in what can only be described as an explosion in the number of suburbs nationally with a median value in excess of $1 million over the past year.
Sales data to June 2014 confirmed that there are now 417 suburbs nationally which boast a median value of $1 million or more, up from a healthy 312 for this time in 2013.
While Sydney claimed majority market share to make it to the million dollar club with 22 suburbs ranked in the top performing list out of 25, while Perth had two suburbs and Melbourne had just one.
<img src="/images/2014/08/21/rp-data-aug-21-one.png" alt="">
RP Data’s July combined capital city home values index shows that values increased by 10.2% over the 12 months to July 2014. As a result of robust growth, the cost of housing has increased and subsequently, there was a significant increase in the number of suburbs with a median value of $1 million or more.
As at June 2014, there were 397 suburbs nationally with a median house value of $1 million or more and 20 suburbs for units. The 417 total suburbs with a median value of $1 million or more is the highest number over the past five years.  
The number of suburbs with a million dollar price tag for houses increased by 104 over the past year while for units; the number is up by five. New South Wales in particular recorded the most substantial increases in million dollar suburbs over the past year.  
The number of New South Wales suburbs with a median value of $1 million or more is up 42% over the year.  Across the other states, there’s been a 24% rise in Victoria, 25% rise in Queensland, 44% rise in South Australia, 22% rise in Western Australia, no change in the Northern Territory and a -11% fall in the Australian Capital Territory. Tasmania has zero suburbs with a median value of $1 million or more.  
The large rise in the number of suburbs with a median value of $1 million or more in New South Wales is reflective of the strong home value growth in the Sydney over the past year.  
Over the 12 months to July 2014, Sydney home values have increased by 14.8%. Proportionately, Sydney suburbs comprise 61% of all $million plus suburbs nationally followed by Melbourne at 14% and Perth at 12%.
Of most significance from today’s million dollar findings, is the rise in the number of suburbs with a median value of more than $2 million. Last year 37 suburbs had a median value of $2 million or more while in June of this year, the number of suburbs had increased to 42.
Clearly, low mortgage rates are creating a surge in market activity. This encourages people to look to upgrading to bigger homes and in more ideal locations. We’re seeing a large slice of this activity taking place within the higher-end of the housing market and as a result, propelling home values higher and into the million dollar realm.
Looking at the suburbs with the highest national median value, Sydney’s <a href="/news">Point Piper</a> remains as the nation’s most expensive housing market.  As at June 2014, houses in Point Piper had a median value of almost $5.7 million. <a href="/news">Woolwich </a>in Sydney was not far behind with a median value of $5.5 million.
Of the 25 suburbs with the highest median value, all suburbs listed were for houses rather than units.  Twenty two of the 25 suburbs listed were in Sydney with one in Melbourne and two in Perth.  
<img src="/images/2014/08/21/rp-data-aug-21-two.png" alt="">
The results show that higher values, particularly in Sydney is becoming more prevalent.  With mortgage rates low and tipped to remain low we would expect that in 12 months’ time we will have even more suburbs with a median value of $1 million or more.  Although we anticipate the rate of value growth is likely to slow over the coming year, we do expect further increases.
A rise in suburbs with a million dollar plus price tag is great for those who own a home in these areas. For those that don’t, it highlights that these buyers have fewer housing options and continue to be pushed further away from the city centre where most of these homes in excess of $1 million are located. 
Photo courtesy of Wikimedia Commons.
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Australia's top 25 most expensive suburbs: RP Data

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The total value of housing finance commitments increased by 1.0% in June 2014. 
The total value of housing finance commitment is 15.6% higher year-on-year.  Meanwhile the number of housing finance commitments to owner occupiers has increased by 0.2% over the month and has increased by just 2.4% over the 2013/14 financial year.
<img class="aligncenter size-full wp-image-3581" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-1.jpg" alt="Chart 1" width="500" height="179">
The total value of housing finance commitments continues to trend higher however; the strength of the investment segment has waned over recent months. 
Over the month the owner occupier segment fuelled the increase with refinances up 1.6% and non-refinances up 1.9% while investment lending fell by -0.3%.It was the first time investment lending has fallen over consecutive months since December 2012. 
Year on year, the value of housing finance commitments is 15.6% higher with owner occupier refinances up 14.8%, owner occupier non-refinances up 9.4% and investment loans rising 23.8%.
<img class="aligncenter size-full wp-image-3582" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-2.jpg" alt="Chart 2" width="500" height="181">
As a proportion of total lending, the level of lending for investment purposes remains inflated on an historic basis although it has eased slightly. 
Owner occupier non-refinance commitments accounted for 43.4% of total lending in June compared to 18.1% to owner occupiers for refinances and 38.5% for investors. 
Although investment lending has eased it continues to hover at around its highest levels since late 2003. Remember 2003 was the final days of the housing boom in both Sydney and Melbourne which commenced in 2001.
<img class="aligncenter size-full wp-image-3583" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-3.jpg" alt="Chart 3" width="500" height="181">
The number of housing finance commitments to owner occupiers increased by 0.2% over the month and was 2.4% higher year on year. 
The year-on-year increase is the slowest rate of increase since February 2013.  This indicates that although demand for housing demand has increased, the rate of growth in this demand is slowing. 
Looking at the more detailed components, refinance commitments are -0.7% lower over the month and 5.1% higher year on year.  Non-refinance commitments have increased by 0.6% over the month and are 1.2% higher year-on-year.
<img class="aligncenter size-full wp-image-3584" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-4.jpg" alt="Chart 4" width="500" height="182">
The number of owner occupier housing finance commitments can be further broken down in to the type of commitments the finance is for.  The three categories we analyse here are: construction of dwellings, purchase of new dwellings and purchase of established dwellings (excluding refinances). 
Over the month, construction of dwellings rose by 1.1%, purchase of new dwellings was 4.6% higher and purchase of established dwellings edged just 0.1% higher. 
Year on year, the market strength has been associated with construction of new dwellings (+17.0%) rather than purchase of new dwellings (-2.1%) and purchase of established dwellings (-1.7%).  In fact the number of owner occupier finance commitments for construction of new homes is at its highest level since February 2010.
Keep in mind that in June 2014, 17.9% of these non-refinance commitments were for construction of dwellings, 8.2% were for purchase of new dwellings and 73.9% were for purchase of established dwellings.
<img class="aligncenter size-full wp-image-3585" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-5.jpg" alt="Chart 5" width="500" height="179">
The number of owner occupier housing finance commitments for first home buyers fell by -3.6% in June 2014 and are -6.2% lower year-on-year.
First home buyers continue to play little role in the market, accounting for just 13.2% of total owner occupier housing finance commitments in June. 
Interestingly the average loan size for first home buyers is increasing.  As home values rise they need to borrow a greater amount, this is highlighted by the 7.1% year-on-year rise which is the largest since December 2009.
<img class="aligncenter size-full wp-image-3586" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Fianl-chart.jpg" alt="Fianl chart" width="500" height="272">
RP Data’s Mortgage Index (RMI) which provides a lead indicator to the number of owner occupier housing finance commitments indicates that there is likely to be a lift in July.  Activity levels were 6.7% higher in July 2014 compared to June suggesting a likely rise in housing finance commitments over the coming month.
The data shows that while demand for housing finance is holding, we are potentially seeing a slowdown in demand from the investment segment.  Meanwhile demand for owner occupiers is steady, albeit the rate of growth is slowing with the strongest increases arising for those constructing their own home. 
Spring will be the real test for the market from here, investment activity remains elevated, auction volumes and results have been strong throughout winter and we wait to see if this momentum continues for the remainder of the year.  Particularly given that although values are continuing to increase, they are doing so at a more moderate pace than they were throughout late 2013 and early 2014.
Although mortgage demand has picked-up over the past two years, it is important to note that the number of finance commitments remain well below 2009 and much lower than activity levels prior to the financial crisis.
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Housing finance data reveals possible slowdown in investment demand

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The Australian Bureau of Statistics (ABS) released building approvals data for June 2014 last week.
National dwelling approvals fell by 5.0% over the month with house approvals falling by -2.6% and unit approvals down -8.4%.  Despite the fall in approvals over the month, a significant number of dwelling approvals remain in the pipeline.  Note that dwelling approvals have now fallen over four of the past five months.
<img class="aligncenter size-full wp-image-3549" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-14.jpg" alt="Chart 1" width="500" height="182">
Year on year, dwelling approvals are 16.0% higher in June 2014 than in June 2013. 
House approvals have increased by 12.2% year-on-year while unit approvals have surged by a greater 22.0%. The greater rise in unit approvals compared with house approvals reflects changing lifestyle patterns and greater acceptance of higher density living.  However, a recent analysis we have undertaken indicates units are less likely to be ultimately completed than houses. 
Although the pipeline is strong, it is reasonable to expect that not all of these units will ultimately be constructed.
<img class="aligncenter size-full wp-image-3550" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-24.jpg" alt="Chart 2" width="500" height="179">
The month to month dwelling approvals data is quite volatile, given this it is worthwhile looking at the annual number of approvals. 
Over the 12 months to June 2014 there were 108,598 house approvals and 85,067 unit approvals.  With a total of 193,667 dwelling approvals over the year there has been a 20.7% increase in approvals year on year. 
Total annual dwelling approvals are now at their highest level since October 1994.
<img class="aligncenter size-full wp-image-3551" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-35.jpg" alt="Chart 3" width="500" height="180">
Focussing on dwelling approvals, across the combined capital city housing markets there were 144,278 approvals over the 2013/14 financial year.  This was an increase of 25.5% over the year and the highest number of annual approvals on record. 
Both Sydney and Perth have also recorded their highest ever number of dwelling approvals over the past year. Over the year there were 69,973 houses approved for construction (+21.3% over the year) and 74,305 unit approvals (+29.8%).
Most individual capital cities have recorded an increase in dwelling approvals over the year with the largest increases recorded in Brisbane (47.1%), Sydney (30.6%), Adelaide (30.4%) and Perth (27.6%).  Darwin was the only city where approvals were lower over the year, down -3.7%. 
Comparatively the annual increase in dwelling approvals has been much lower in Hobart (12.9%), Melbourne (13.9%) and Canberra (22.6%).  Sydney and Melbourne alone have accounted for almost 58% of all capital city dwelling approvals over the year.
<img class="aligncenter size-full wp-image-3552" src="https://blog.rpdata.com/wp-content/uploads/2014/07/Chart-43.jpg" alt="Chart 4" width="500" height="180">
As noted earlier, there have been more unit approvals across the combined capital cities than house approvals. 
Over recent years around 98% of house approvals have ended up as completions compared to only 86% of unit approvals.  While units are increasing in popularity there is much less certainty about their ultimate construction than there is for houses. 
Across the cities Sydney had 68.8% of approvals for units and in the remaining cities the figures were: Melbourne (52.9%), Brisbane (56.0%), Adelaide (32.3%), Perth (23.8%), Hobart (11.2%), Darwin (58.7%) and Canberra (61.9%).
Despite the monthly fall, the pipeline of dwellings approved for construction is significant.  It is important to note that over the past five months, dwelling approvals have fallen on four occasions.  This may indicate that the sector has moved through the peak levels of dwelling approvals. 
The strong pipeline of unit approvals, particularly in capital cities, also carries a risk as units are less likely to be ultimately constructed than houses.
Nevertheless, the Reserve Bank stated that with low interest rates they didn’t just want to see higher house prices but also a construction response.  This certainly seems to be how the current conditions are playing out and with population growth recently starting to slow we may start to see an improvement in the alignment between home construction and population growth.
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Unit approvals surge, but uncertainty remains over their construction

Iwan Sunito's vision for a landmark mixed-use precinct in Sydney's Inner West has taken a major step forward, with approval granted for the $1.9 billion Five Dock development first unveiled earlier this year.

The approved scheme by <a href="https://www.apartments.com.au/developers/one-global-capital">One Global Capital</a> will deliver an 80,500 sqm mixed-use precinct comprising 840 apartments, integrated hotel accommodation, commercial and retail space, alongside publicly accessible open space designed to create a new destination for the growing suburb.

"This is a significant milestone for One Global Capital and for the future of housing delivery in Sydney," Sunito said.

"The Housing Delivery Authority was established to identify major housing projects capable of delivering meaningful supply more efficiently, and we are delighted that Spencer Street has been recognised as one of those projects.”

He said the declaration reflected the rapid progress achieved since acquiring control of the site.

"In less than seven months we have progressed from taking control of the site to securing entry into one of the NSW Government's most important planning pathways. It reflects the experience of our team, the strength of our consultant group led by Urbis, and our long-term commitment to delivering transformational projects that contribute to Sydney's future."

When the project was revealed earlier this year, Sunito described the opportunity as one of the strongest development sites he had worked on.

"I probably hadn't appreciated the uniqueness of the site until more recently when putting together the concept plans," Sunito said.

"The proximity to the water, and the golf course opposite, is unlike any other part of Parramatta Road. We have a unique position and view corridors over the water that makes this one of the best sites I've worked on."

The development has evolved since its initial announcement, with the approved plans increasing the residential component from the originally proposed 750 apartments to 840 homes while retaining the project's focus on creating an integrated neighbourhood rather than a standalone residential development.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/a-city-within-a-city-iwan-sunito-flags-1-5-billion-mixed-use-precinct-in-five-dock">"A city within a city": Iwan Sunito flags $1.5 billion mixed-use precinct in Five Dock</a>

The precinct will combine apartments with hotel accommodation, commercial workplaces, retail offerings and public spaces, creating a mixed-use environment intended to serve both residents and the broader Five Dock community. The proposal also continues the collaboration between One Global Capital and internationally recognised architect <a href="https://www.apartments.com.au/architects/koichi-takada-architects">Koichi Takada</a>, whose previous work with Sunito includes Infinity, Arc and Skye North Sydney.

Takada previously said the design was driven by a philosophy of integrating nature into the built environment.

"The concept for this development is born from our design approach to naturalising architecture," Takada said.

"The public realm benefits from biophilic design that integrates generous landscaping, and the development is optimised for natural daylight, airflow and water views to foster wellbeing, sustainability and spaces that foster community interaction."

Sunito has consistently described the project as a "city within a city", with a strong emphasis on creating a destination that extends beyond housing.

"We want to create a development that's not only to be seen, but to be experienced by the whole local community," he said.

The approval comes as Five Dock continues its transformation ahead of the opening of the Sydney Metro West line, with the new Five Dock station set to significantly improve connections between the Inner West, Parramatta and the Sydney CBD.&nbsp;

The precinct will also benefit from its proximity to the Parramatta Road corridor, nearby waterfront parklands and established retail and dining offerings that have made Five Dock one of Sydney's most tightly held Inner West suburbs.

Joel Robinson

Iwan Sunito secures approval for $1.9 billion Five Dock mixed-use precinct

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

Garden-led design drives buyer demand at Yarraville Green

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

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

The enormity of delivering a true skyscraper in Australia's new development market is often overlooked.

It has taken the best part of a decade since plans for Chevron One were first unveiled, but the 41-storey tower is now complete, with residents collecting their keys and moving into what has become one of the Gold Coast's most recognisable new landmarks.

Rising 127 metres above Chevron Island, Chevron One stands almost twice as high as any other building on the island. Its scale places it alongside the trio of towers at Jewel, arguably the last truly significant addition to the central Gold Coast skyline when they were completed around six years ago.

While there are several developments underway around a similar height to Chevron One, they are more concentrated within clusters of the highest towers in the city. The fact Chevron One sits within a developing precinct, looking back at the other high-rise developments in Surfers Paradise and Broadbeach, makes it a different proposition altogether. It will certainly become a reference point on the Gold Coast skyline.

[smartcode_project:default project_id=6515 project_image_fid=68833]

Developer Bensons Property Group is behind the 41-storey tower, which has 229 apartments, along with an exhaustive list of resident amenity spread across what is the largest development site ever assembled on Chevron Island.

The tower has been the talk of the town for years, says Ray White Projects Gold Coast agent Caitlin Rosenboom, who is selling the remaining apartments.

"People have been watching Chevron One go up for years," Rosenboom says, adding that many prospective buyers have been surprised by the scale of the views once they step inside.

"It's only when they walk through a completed apartment that they truly understand the position of the building," Rosenboom says.

"The views are jaw-dropping. Whether you're looking east over the ocean, across Surfers Paradise, along the river systems or out to the hinterland, every level offers something different but equally impressive."

[smartcode_project:default project_id=6515 project_image_fid=360215]

One of Chevron One's defining advantages is its location on the eastern side of Chevron Island on Stanhill Drive, a position which protects the views forever.

"There's only one row of houses between Chevron One and the water, and the height restrictions along the river means views from Chevron One can never be built out,"&nbsp;Rosenboom says.

While new apartment developments continue to emerge across the Gold Coast, Rosenboom says opportunities to secure a completed apartment with this level of outlook are becoming increasingly rare.

"The size of the site is something that would be incredibly difficult to replicate today," she says.

"That's allowed Chevron One to deliver the sort of amenity, open space and resident facilities that very few projects can offer. There are not many completed apartment buildings on the Gold Coast right now that can compete with the combination of scale, quality and amenity."

[smartcode_project:default project_id=6515 project_image_fid=68839]

There's around 2,000 sqm of amenity solely for the use of residents of Chevron One. Club One features a uniquely shaped swimming pool that mirrors the footprint of the building itself, set within a extensively landscaped gardens. There's also an indoor pool and spa, a fully equipped gym with a Pilates room, a yoga garden, a bookable private dining area and lounge that can host up to 30 people, and a 24-hour concierge service.

As for the buyers, Rosenboom is fielding enquiry from everywhere: Sydneysiders and Melburnians looking at the new and off-the-plan market following the changes in the Federal Budget, as well as those looking to relocate, through to South East Queenslanders seeking either a permanent home or a weekender bolthole.

"The Gold Coast lifestyle continues to resonate with people relocating from the southern states, and when they see the views and the quality of what's been delivered at Chevron One, it becomes very easy for them to understand the appeal," Rosenboom says.

A diverse mix of one, two and three-bedroom apartments remain available, with each offering "something a little different", be it the orientation and views, configuration, or level, to suit a wide variety of buyers.

The remaining apartments are ready to inspect in person, by appointment.

[smartcode_project_cta:default project_id=6515]

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

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

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