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Detached houses have now superseded units as the best performers across the capital city property markets. Up until recently unit values were showing a much stronger performance.
Across Australia’s combined capital cities over the 12 months to October, houses grew in value by 8.2% as opposed to units at 5.9%.
There’s a commonly held view that house values appreciate at a more rapid pace than unit values due to the underlying land value however, this has not necessarily been the case throughout most of the past five years.
<img src="/images/stories/2013/11/28/kusher-nov-28-one.gif" width="470" height="228" alt="kusher-nov-28-one">
These results show that capital city values over the past five years to November 2013 increased at an average annual rate of 3.7% compared to growth of 4.0% per annum across the unit market. If we look at the two previous five-year periods we see that growth in house values outstripped unit values.
Between October 1998 and October 2003, house values rose by 15.0% each year compared to unit value growth of 11.1%. Between October 2003 and October 2008 house values increased at an average annual rate of 4.9% compared to 3.6% for units.
<img src="/images/stories/2013/11/28/kusher-nov-28-two.gif" width="470" height="233" alt="kusher-nov-28-two">
Strong growth in house values over the preceding two five-year periods highlights a time when houses were typically favoured over units. However, with current mortgage rates extremely low, buyers are potentially stretching themselves financially in order to purchase a detached house rather than a unit.
It will be interesting to see if the higher level of growth reverts to units in Sydney and Melbourne over the coming year as selling prices rise and affordability becomes more challenging for detached housing.
Once we see start to see a rise in interest rates, we may also see the dynamics shift.
<img src="/images/stories/2013/11/28/kusher-nov-28-three.gif" width="470" height="228" alt="kusher-nov-28-three">
Based on these results, one of the reasons why value growth has been more closely aligned between houses and units over the past five years comes down to affordability factors.
The median selling price for a unit has consistently been between 10 and 15% lower than that of a house since early 2006.
Although this may not sound significant, the current difference is 14.8% which equates to $80,000 across the combined capital cities which is much more than a year’s average wage.
Dwelling approvals data shows that over recent years, there has been a sharp escalation in the proportion of approvals for higher density product as opposed to houses. I expect this trend to continue, largely due to the lower prices of units and increasing demand for people to live in inner city areas which are close existing transport infrastructure.
<img src="/images/stories/2013/11/28/kusher-nov-28-four.gif" width="470" height="217" alt="kusher-nov-28-four">
Based on dwelling approval data over the 12 months to September 2013, 42.4% of all dwelling approvals were for units as opposed to houses. Although houses account for the majority of dwelling approvals, the proportion of unit approvals has increased from:
• 38.9% in 2012
• 33.2% in 2007
• 34.2% in 2003
• 29.6% in 1993.
Dwelling approvals data over the past 12 months across the capital cities shows that higher density living in our major capital cities will be a central feature into the future. More than 50% of all approvals in Sydney, Melbourne, Brisbane, Darwin and Canberra were for units as opposed to houses over the 12 months to September 2013.
Although many people have aspirations of owning a house as opposed to a unit, in reality it’s becoming more and more difficult. Added to this is that  affordable housing tends to be quite a distance from CBD area. As a result we are seeing a rising prevalence of higher density construction in our major capital cities, particularly within inner city areas.
Current market conditions may lead to stronger demand from both investors and tenants and subsequent stronger levels of value growth for units as opposed to houses over the coming years.
 
<hr>
 Cameron Kusher is senior research analyst at <a target="_blank" rel="nofollow" href="https://www.myrp.com.au/">RP Data</a>.
 
 
 
 
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Detached houses overtake units as the best performers in capital city markets

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The current value growth phase across Australia’s combined capital cities is nowhere near as strong as other growth phases over recent times.  Although home values are rising, they are doing so at a much more moderate pace than during previous growth phases. 
Home values are higher now than they have been in the past however, a different market characteristic now is that investors represent a much greater portion of the market. This could potentially heighten the risks associated with a downturn in the current growth phase.<img class="aligncenter size-full wp-image-2766" alt="chart 1" src="https://blog.rpdata.com/wp-content/uploads/2013/12/chart-1.jpg" width="470" height="168" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
19 months ago, the combined capital city housing market reached a low point following a -7.7% fall in home values.  Since that time, capital city home values have recorded total value growth 10.3% to November 2013.  In comparison, over the 19 months from the beginning of 2001 home values rose by 31.3%.  From the start of 2007, home values were 13.7% higher 19 months later from the beginning of 2009 home values were 19.8% higher 19 months later.  So as you can see, home value growth in this phase has been much more moderate, however, home values are also higher.
Interestingly, values were still growing after 19 months in 2001/02 however, values had begun to fall by this point in 2007/08 and 2009/10.  In 2007/08 the market was beginning to plunge into the financial crisis and aggressive interest rate cuts were not yet enough to stimulate higher demand and subsequent higher home values.  In 2009/10 low interest rates and the First Home Owners Grant Boost (FHOGB) stimulated the growth in the housing market however, once the stimulus was removed and interest rates started to rise we saw the rate of value growth fall and eventually turn negative.
In the current growth phase we have not as yet seen interest rates rise and there has been no other external stimulus such as the FHOGB, and values are still rising after 19 months.  A feature of the market in this growth phase compared to the previous three growth phases highlighted is that a greater proportion of demand is being made up by investors; of course investors were a part of the market in the previous growth phases however, owner occupiers held greater prominence than they do currently.
So is this market being fuelled purely on investment speculation?
Not quite. Currently, there is a comparatively higher proportion of investment activity in the market when compared to the previous growth phases.  Over the 19 months from January 2001, investors accounted for a month-to-month average of 32.2% of the value of total housing finance commitments. 
From January 2007 investors accounted for a month-to-month average of 34.8% of all housing finance commitments and from January 2009 they accounted for a month-to-month average of 32.7%.  From May 2012 to September 2013 (latest data available) investors have accounted for a month-to-month average of 35.9% of all housing finance commitments.  The level of investor activity throughout the current growth phase is not abnormally high but it is certainly elevated compared to the previous three growth phases analysed. 
Across this growth phase investment levels are not abnormally high they are escalating.  In September 2013, investment finance commitments made up 37.3% of all housing finance commitments which were the highest proportion since May 2004 (37.5%).
<img class="aligncenter size-full wp-image-2767" alt="chart 2" src="https://blog.rpdata.com/wp-content/uploads/2013/12/chart-2.jpg" width="470" height="166" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
As I see it there are two potential pitfall of the current heightened level of investment in this market growth phase.
Firstly, data suggests that investment activity is highest within New South Wales, Northern Territory and the Australian Capital Territory.  Anecdotal evidence suggests that offshore investment activity is particularly strong in Victoria. 
If we assume that the state-wide data is a proxy for the capital city markets, we gain some valuable insight into the characteristics of investors.  In Sydney, home values have already risen by 15.9% from their May 2012 low. In Melbourne home values are now 8.6% higher than their low in May 2012.  Darwin values are 15.9% higher than their low in January 2012, while in Canberra, values have increased by just 3.1% from their January 2012 low.  Values are still trending higher in Sydney and Melbourne. In Darwin value growth has moderated while in Canberra values are falling. 
My point is that if investors are chasing capital growth, in all likelihood and based on timing, they have already missed the best opportunity.  If investors are focused on rental return, yields have trended lower across each of these cities over the past year.
<img class="aligncenter size-full wp-image-2768" alt="chart 3" src="https://blog.rpdata.com/wp-content/uploads/2013/12/chart-3.jpg" width="470" height="166" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
Secondly, a potential future weakness for the market is that some investors may not necessarily be ‘committed’ to the asset class.  Meaning that if value growth was to slow or start to fall are these investors invested in residential property for the long haul, or will they choose to exit the asset class just as quickly as they have entered? 
My opinion is that if they aren’t committed then there is potential risk associated in the future where a significant supply of investment grade units may come to market when investors may be looking to exit poor performing assets.
One final risk of course is a rise in the unemployment rate.  Official government forecasts are calling for unemployment rates to peak at 6.25% by the middle of next year.  To date, the unemployment rate has been trending higher at a fairly moderate pace and was recorded at 5.7% in October.  If this rate was to rise to 6.25%, it would be the highest unemployment rate since September 2002 (higher than any time during the financial crisis). 
If we were to see investors look to exit their investment properties such as they did in 2008 in line with an escalation in mortgage arrears, we could see weakening home values much like what occurred in 2008.  
<img class="aligncenter size-full wp-image-2769" alt="Chart 4" src="https://blog.rpdata.com/wp-content/uploads/2013/12/Chart-4.jpg" width="470" height="168" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
Overall there are always risks associated with the housing market, or any market for that fact.  We have no doubt that the Australian Prudential Regulation Authority (APRA) are regularly analysing these risks and liaising with the banking community to ensure these potential risks don’t turn into a reality for the market.

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Cameron Kusher is senior research analyst at <a target="_blank" rel="nofollow" href="https://www.myrp.com.au/">RP Data</a>.
 
 
 
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What lies beneath: Investor driven growth cycle heightens underlying risks

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The Australian Bureau of Statistics (ABS) released national population projections earlier this week.  The data looks at the projected growth in the national population from 2012 through to 2101 and the data provides a fascinating insight into the potential future of Australia over the coming years and decades.
The projections look at three different scenarios which can be read about <a href="https://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/3222.0Main%20Features52012%20(base)%20to%202101?opendocument&amp;tabname=Summary&amp;prodno=3222.0&amp;issue=2012%20(base)%20to%202101&amp;num=&amp;view=" target="_blank">here</a>.  For the purposes of this post we are utilising ‘Series B’ or the medium level projections.  Based on this series, Australia’s population was estimated to be 22,721,995 persons in 2012, by 2101 the population is projected to be 136% higher at 53,564,333 persons.  Under this scenario we would see the national population from 2012 having doubled by 2071.  Keep in mind Australia was first settled by Europeans in 1788 so it took 224 years to get to the 2012 population and it projected to double in just 59 years.
Projections are also provided at a state and capital city level from 2012 through to 2061, at which time the national population is projected to be 41,513,375.
<img width="470" height="234" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;" src="https://blog.rpdata.com/wp-content/uploads/2013/11/state-by-state.jpg" alt="state by state" class="aligncenter size-full wp-image-2741">
The above table details the estimated population as at June 2012 and the percentage of the national population across each state and compares it to the same projected data for 2061 as well as showing the average annual growth rate over the period.  At a state level, the proportion of the national population is projected to fall in New South Wales, South Australia, Tasmania and Northern Territory.  The proportion is projected to remain static in Victoria and rise across Queensland, Western Australia and the Australian Capital Territory.  Western Australia (2.0%), Queensland (1.5%) and the Australian Capital Territory (1.4%) are projected to record the greatest average annual rate of population growth while Tasmania (0.2%), South Australia (0.7%) and New South Wales (0.9%) are projected to record the lowest growth rate.
Of course these are just population projections and are no way set in stone however, it does seem inevitable that the population of the country will expand substantially (even based on the low series of assumptions) over time.  The big question remains where and how will we house all of these additional citizens? Based on the data provided in the release it seems that a significant majority of the population will continue to live within our capital cities.
<img width="470" height="205" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;" src="https://blog.rpdata.com/wp-content/uploads/2013/11/cap-city-by-cap-city-580x253.jpg" alt="cap city by cap city" class="aligncenter size-large wp-image-2742">
The above table details the estimated population as at June 2012 and the percentage of each state’s population across each capital city and compares it to the same projected data for 2061 as well as showing the average annual growth rate over the period.
There are quite a few interesting points to take from these long-term projections.  Firstly, by 2061 Sydney will no longer be the nation’s most populous city and Brisbane will no longer be the nation’s third most populous city.  Melbourne will overtake Sydney as the most populous city in 2053 and Perth will overtake Brisbane as the third most populous city in 2028.
The proportion of Australian’s living within a capital city is already quite high at 66.1% however, this is projected to increase to 73.4% by 2061.  Think about that, out of a projected population of 41.5 million, almost three out of every four Australians will live in a capital city.  If we focus on the four most populous capital cities, 57.3% of Australians currently live in Sydney, Melbourne, Brisbane or Perth.  Based on the population projections, by 2061 65.8% of the total national population will live in Sydney, Melbourne, Brisbane and Perth.
Should this scenario actually come to fruition it will create significant challenges for each of these cities.  Obviously housing is a challenge which immediately comes to mind, how and where these people can be housed and what it would mean for property values.  Over time the capital city areas do expand however, for a city such as Sydney that is surrounded by water and national parks the scope to expand is quite limited. No wonder the inner city areas are undergoing such rapid densification.
Elsewhere you can continue to grow the urban sprawl but there must be a consideration around how people travel around the city and commute to their jobs.  Transport infrastructure is typically already insufficient, without appropriate investment levels how much worse would it be by 2061?  Of course, for some, purchasing a home in a capital city is already out of reach; how do governments ensure that a greater number and proportion of capital city residents doesn’t just lead to further escalation of property values?
Of course these figures are in no way set in stone however, it does appear that the country’s population will continue to grow which will pose myriad challenges.  In my opinion the greatest concern is the projection of a greater centralisation of the population to our capital cities and more pointedly the four most populous cities. 
As mentioned, in each of these cities there are already affordability barriers for certain home buyer cohorts and investment in transport infrastructure has not been sufficient.  In my opinion we should be looking to a decentralisation of the population rather than encouraging more and more people to the capital city.  Not only do regional markets tend to have lower house values, in many instances they offer a superior lifestyle than that which is available within our major capital cities. 
The biggest challenge of course is employment in regional areas however, with the advent of high speed internet and major infrastructure projects such as the National Broadband Network (NBN) we will hopefully see the nature of work change with more telecommuting taking place and less focus on physically being located within an office. 
Alternatively, many businesses do not necessarily need to be located within a major capital city.  Perhaps governments could incentivise major businesses to locate their headquarters or major offices outside of Sydney, Melbourne, Brisbane or Perth.

<hr>
Cameron Kusher is senior research analyst at <a target="_blank" rel="nofollow" href="https://www.myrp.com.au/">RP Data</a>.
 
 
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How will Australia cope with the housing demands of a doubled population?

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In the capital cities, two out of every three properties sold were for less than $600,000 (68.8%), while in the non-capital markets, nine out of every ten properties sold transacted for below that price point.
As values increase, I expect to see a natural bracket creep in prices.
<img src="/images/stories/2013/11/21/kusher-nov-21-one.gif" width="470" height="235" alt="kusher-nov-21-one">
We are also seeing an increase in buyer demand at the more expensive end of the market, likely driven higher by profits being made in the share market as well as more upgraders choosing now as a time to step up a notch on the property ladder.
While across the combined capital cities where most home sales over the past year occurred at a price point below $600,000 (68.8%), at the same time in 2012, 72.1% of all sales occurred at a price below $600,000. Over the past 12 months, just 5.0% of capital city properties sold for less than $200,000 compared to 4.0% in 2012.
<img src="/images/stories/2013/11/21/kusher-nov-21-two.gif" width="470" height="232" alt="kusher-nov-21-two">
Property sales across the remaining price brackets:
– $200,000 to $400,000 (29.9% currently vs. 33.6% last year)
– $400,000 to $600,000 (33.9% vs. 34.5%)
– $600,000 to $800,000 (15.8% vs. 14.2%)
– $800,000 to $1 million (6.9% vs. 6.1%)
– $1 million to $2 million (7.1% vs. 6.2%)
– Greater than $2 million (1.5% vs. 1.4%).
There was a significant decline in the proportion of homes selling at more affordable price points where over the 12 months to August 1995, 95.4% of all capital city home sales were below $400,000.
Across the major capital cities the proportion of sales ranged from 90.5% of all sales in Sydney to 98.5% of all sales in Adelaide. There was a significant decline in the proportion of these sales across each major capital city where it was most significant in Sydney with just 25.1% of all sales below $400,000.
<img src="/images/stories/2013/11/21/kusher-nov-21-three.gif" width="470" height="233" alt="kusher-nov-21-three">
In Melbourne, the figure was 36.2% followed by: Brisbane (43.7%), Adelaide (62.8%) and Perth (27.1%). In the four largest capital cities, the majority of property sales over the past year have been at a price point above $400,000.
Over the 12 months to August 1995 just 0.5% of all capital city home sales were at a price above $1 million compared to 8.6% over the most recent 12 months. As a comparison, back in August 1995, the figures for the proportion of sales in excess of $1 million across the major capitals were:
– Sydney 1.3%
– Melbourne 0.3%
– Brisbane 0.2%
– Adelaide 0.4%
– Perth 0.1%
Over the most recent 12 months, sales in excess of $1 million accounted for 14.3% of all sales in Sydney, 8.3% in Melbourne, 3.6% in Brisbane, 2.3% in Adelaide and 7.6% in Perth. The proportion of sales in excess of $1 million was at a record high across Sydney over the past year but below the peak elsewhere.
The data highlights the challenge of purchasing relatively lower priced housing within major capital cities given that the majority of sales are occurring at prices above $400,000 across most capital cities.
<img src="/images/stories/2013/11/21/kusher-nov-21-foru.gif" width="470" height="235" alt="kusher-nov-21-foru">
Clearly, buyers with a limited budget who are looking to purchase in the capital cities may need to change their search criteria and investigate more affordable markets outside of capital cities. The downside to this is that the challenge in many regional areas can be finding local employment or commuting back to the capital cities for work.
Nevertheless, for some buyers regional markets may be their only realistic option for which to enter into home ownership given the cost of housing in most capital cities.

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Cameron Kusher is senior research analyst at <a href="https://www.myrp.com.au/" rel="nofollow" target="_blank">RP Data</a>.
 
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Buying affordable housing in capital cities is getting harder and harder

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Data released by the Australian Bureau of Statistics earlier this week showed that the average size of Australian homes has started to trend lower over recent years. However, there are some surprising results at an individual state level.
Sydney is the most expensive capital city in the country and the New South Wales results act as a good proxy for that city. Despite the fact that Sydney is the most expensive city, the average size of a new house in New South Wales over last financial year was 266.20 square metres; the largest average floor area of any state.
<img class="aligncenter size-large wp-image-2699" alt="avg floor area of new houses" src="https://blog.rpdata.com/wp-content/uploads/2013/11/avg-floor-area-of-new-houses-507x580.jpg" width="350" height="401" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
Despite the fact that New South Wales residential property is typically more expensive than other states, they continue to build the largest new homes. Across the other states, the average floor area of new homes were recorded at: 243.0 square metres in Victoria, 239.6 square metres in Queensland, 203.90 square metres in South Australia, 234.5 square metres in Western Australia and 200.30 square metres in Tasmania. 
The average floor area in New South Wales is much greater than all other states while the floor area in Victoria, Queensland and Western Australia are quite similar.  Typical new home sizes in South Australia and Tasmania are significantly lower than those across the other states.
<img class="aligncenter size-full wp-image-2700" alt="land table" src="https://blog.rpdata.com/wp-content/uploads/2013/11/land-table.jpg" width="470" height="354" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
You can’t build a house unless you have a vacant block of land to construct the home on.  The median land prices across the states as at June 2013 were recorded at: $204,000 in New South Wales, $189,000 in Victoria, $190,000 in Queensland, $150,000 in South Australia, $229,100 in Western Australia and $100,000 across Tasmania. 
This data highlights that the cost of vacant land in South Australia and Tasmania is significantly lower than that across the other states.  Not only are South Australian and Tasmanian new houses much smaller than those across the other states, the cost of purchasing the vacant land is also significantly lower.
Another component to consider is the typical size of the vacant land and how that impacts both the size and type of home that can be built but also the cost of purchasing the land.  Across the states, the median land sizes are recorded at: 700 square metres in New South Wales, 570 square metres in Victoria, 696 square metres in Queensland, 496 square metres in South Australia, 480 square metres in Western Australia and 933 square metres in Tasmania.
Outside of Tasmania, lot sizes in New South Wales are the greatest of all states.  Tasmania which has comparatively cheap land has a much larger typical lot size whereas; South Australia has a comparatively small lot size.
<img class="aligncenter size-full wp-image-2701" alt="income table" src="https://blog.rpdata.com/wp-content/uploads/2013/11/income-table.jpg" width="470" height="333" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
Of course there are other factors outside of just the cost and size of land which determines the size of homes.  Specifically it is important to consider incomes, according to data released in the 2011 Census, median household incomes in South Australia and Tasmania are much lower than those across the other states.  This obviously has an impact on the price at which residents can purchase homes.
<img class="aligncenter size-full wp-image-2702" alt="people per dwelling" src="https://blog.rpdata.com/wp-content/uploads/2013/11/people-per-dwelling.jpg" width="470" height="279" style="margin: 0px auto 15px; padding: 3px; border: 1px solid #e6e6e6; outline-width: 0px; background-color: rgba(255, 255, 255, 0.701961); max-width: 100%; text-align: center; height: auto; display: block; vertical-align: bottom;">
If we also look at the average number of people per household along with the average number of bedrooms per dwelling we see that there is an excess supply of bed rooms.  In all states we have a greater number of bedrooms than we do persons per household, keeping in mind that most couples will share a bed.  Given this, we don’t actually need as much space as we have in most homes. 
Certainly some younger families will buy larger homes than they need to cater for their growing needs but the broader trends show we have an excess supply of units.  Builders, developers and price sensitive purchases probably need to consider foregoing an extra bedroom in order to reduce the cost of houses.
Overall, it seems somewhat counter-intuitive that the states where housing is most expensive they continue to build much larger new houses while the more affordable states build smaller homes.  Smaller homes and potentially smaller lot sizes would help to improve the affordability of homes in the more expensive states. 
From a potential buyers perspective they probably need to reassess just how much space they need when they are considering their purchase.  Of course, a reduction in the cost of land which could be aided by quicker development approvals, greater supply of land and reduced development fees and charges would also help reduce the cost of housing.
 
<hr>
 Cameron Kusher is senior research analyst at <a target="_blank" rel="nofollow" href="https://www.myrp.com.au/">RP Data</a>.
 
 
 
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Land costs are high, but that's not stopping the construction of McMansions

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A summary of properties currently listed for sale around the country indicates that there are a higher number of properties now on the market than at any other period across 2013.
The heightened volume of stock on the market could provide future challenges, should the amount of advertised properties continue to grow.
At an individual capital city level, new house listings are growing with an increase of 3.1% from last year. For units, the number of new listings is 6.8% higher than a year ago.
<img width="470" height="234" src="/images/stories/2013/11/08/kusher-nov-8-chart-one.gif" alt="kusher-nov-8-chart-one">
By looking at total listings available for sale, the results show that there is clearly a deficiency for houses when compared to last year with listings -15.6% lower compared to units which recorded a 3.5% rise.
Across individual capital cities, new house listings are lower than a year ago in Adelaide and Hobart and new unit listings are lower in Brisbane, Adelaide and Darwin. Total listings for houses are also lower than they were a year ago in all cities except Perth and Darwin and total listings for units are lower than a year ago in Sydney and Brisbane, but higher elsewhere.
Stepping outside of these broad trends, the sharp rises in properties available for sale in both Perth and Darwin is worth noting. However, something to keep in mind is that in late 2012 and early 2013 both cities enjoyed their strongest capital growth conditions. The latest RP Data Rismark results to October show that both cities recorded recent falls in home values.
<img width="470" height="243" src="/images/stories/2013/11/08/kusher-nov-8-chart-two.gif" alt="kusher-nov-8-chart-two">
Number of houses listed for sale:
• Sydney (15,535) is lower than house listings in both Melbourne (21,492) and Brisbane (15,566)
• Melbourne also has a higher total number of units available for sale (12,135) than those in Sydney (9,013).
• RP Data listings results highlight that the total supply of stock available for sale is lower than at the same time last year.
Cconsidering that sales volumes are around 20% higher than at the same time last year it’s no wonder that we are seeing upwards pressure on home values.
Lately we’ve seen listings start to climb and it will be interesting to see how this unfolds and whether they remain elevated into 2014, or, if we see moderation such as that recorded at the start of 2013.
The charts address the number of unique new and total residential properties listed for sale at a national level where over recent months it can be seen that there has been a trend towards a higher number of new and total property listings.
<img width="470" height="248" src="/images/stories/2013/11/08/kusher-nov-8-chart-three.gif" alt="kusher-nov-8-chart-three">
Currently there are 49,920 new properties listed for sale and 267,114 total properties listed.
• New property listings are at their highest level since the week ending 9 December 2012 and total listings are at their highest level since the week ending 23 December 2012.
• Although both new and total listings are currently at heightened levels, new listings are only 0.5% higher than at the same time last year while total listings are -10.2% lower than a year ago. Over the past four weeks, there were 30,997 new capital city properties listed for sale and 117,426 total property listings.
• 62.1% of all new listings were in the capital cities compared to just 44% of total listings. This is reflective of the stronger overall housing market conditions within capital cities and the subsequent fact that homes are selling quicker in these regions. Compared to the same time last year, new property listings are 3.5% higher and they are at their highest level since the final week of November last year.
• The number of properties available for sale is higher than it has been throughout 2013. The heightened volume of stock on the market could provide future challenges, should the amount of advertised properties continue to grow.


<hr>
 Cameron Kusher is senior research analyst at <a href="https://www.myrp.com.au/" rel="nofollow" target="_blank">RP Data</a>.
 
 
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More homes on the market than at any point this year

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For those of us that live and work in the inner city areas of our capital cities, we think that public transport infrastructure is a must across the city.  The reason being that it is essential for those of us in suburbia to be able to travel to and from the city in an efficient and timely manner, notwithstanding the fact that so many of us still drive.  But I question whether or not public transport is actually that important.
According to data from the end of June 2013 from the Property Council of Australia, the total floor space across the CBD office markets is 17,263,536 square metres.  If we were to assume that the typical office has a workspace ratio of say 20 square meters for every one worker, this would mean that if these offices were fully occupied they would house 863,177 workers.  If we include the nearby fringe areas, which I have defined as: Brisbane Fringe, North Sydney, St Kilda Road, Southbank, West Perth, Crows Nest/St Leonards, Adelaide Fringe and East Melbourne, there is an additional, 4,396,603 square metres of office space.  Again assuming a 1:20 ratio these offices if fully occupied would house 219,830 workers.  Between the CBD and fringe office space, if we assume one worker for every 20square metres of floor area, there is enough space for 1,083,007 office workers nationally.
At the moment, office vacancy rates are quite high across the country, sitting at 10.1% across the CBDs and 10.2% across these fringe office markets.  Based on these figures and our ratio assumptions there are 775,945 workers within our CBD markets and 197,484 workers within the fringe areas.
Of course not everybody that works in the CBD or fringe areas works in offices there will be a mixture of retail, services, industry etc that also offer employment in these areas which would also increase the overall working population in these areas.
If we look at the labour force data from June 2013 we see that at a national level, there were 8,138,418 persons employed full-time and 3,519,841 persons employed part-time for a total of 11,658,258.  Of course the nature of part-time employment is such that jobs are at times shared so given this I will assume that half of the part-time positions are travelled to each day (reflective of job sharing) resulting in my total employment figure of 9,898,338 persons.
Based on this 9,898,338 persons figure and the current occupied CBD and fringe office space, these inner city area offices are providing employment for just 9.8% of the nation’s workforce.  Now of course most of those people that live outside of the respective capital cities are not going to travel to the closest CBD for employment (yes there are some exceptions) so it is beneficial to analyse the proportion of the capital city workforce that travels to the inner city area for employment.
Demographic data to June 2012 showed that 15,015,290 persons lived within a capital city which equated to 66.1% of the nation’s population.  Now we know that unemployment tends to be slightly higher outside of capital cities however, if we assume simplistically that 66.1% of the 9,898,338 persons are employed within a capital city that provides a capital city employment figure of 6,542,801 persons.  Based on this figure, 14.9% of all capital city jobs are situated in a CBD or fringe office markets.  As I mentioned, there are other forms of employment in these area other than just that within an office.  Given this, let’s assume that a further 5% of the total capital city employment is located within either the CBD or the fringe areas taking the figure to 20%, leaving four out of every five employed persons not being employed in the inner city area and therefore not having to travel centrally each day.
Of course there are those that need to travel centrally that aren’t workers that would rely on public transport, this includes: students, shoppers, tourists and those who require government services that are located within these areas.  We would estimate that overall, this proportion of population is quite small.  Outside of this, although users of public transport may not necessarily be travelling all the way into the inner city areas of the capital cities, they do utilise it to travel to other working and retail nodes along the transport system.  Despite this, a majority of the population is unlikely to be relying on public transport to reach their destination each day with even fewer using it to tavel to the inner city areas for employment.
The implications of this is quite significant, although the roads and public transport are undoubtedly congested, a large proportion of the population are simply not commuting centrally on a day-to-day basis.  It also means that public transport is only benefitting a small proportion of the overall community.
From a future development perspective this also has some repercussions.  It is clear that in our larger capital cities there is a significant focus on densification of the inner city areas and those along transport spines.  Although this is the case, demand for these higher density inner city properties is likely to be strongest amongst those who actually work centrally.  In fact, it is probably fair to say that for those who do not work centrally that higher density housing in the inner city areas would likely be highly undesirable.
The push for higher density in the inner city means that you can squeeze more residents into a smaller area.  From government’s perspective it also means that you can rely on existing infrastructure which tends to be most abundant in inner city areas rather than having to provide new infrastructure such as that which is required when development takes place on the outskirts of the city.
Nevertheless, it certainly appears that public transport infrastructure such as rail lines and busways connecting suburbia to the inner city areas only benefits a small overall proportion of the population.  Of course, of the estimated 20% of people that travel to central areas of the capital city, you only have to look at the roads of a morning to see that for many the preferred way to commute continues to be via the private car.
The other aspects of public transport to consider are the cost and the coverage.  The overall cost of public transport is expensive and acts as a deterrent for many to use on a more regular basis.  I live in Brisbane and to travel just one zone costs $4.80 if you don’t have a go card.  The trip to the city from my house is only two zones which is $5.60 by paper ticket and $3.95 if I use a go card .  I live relatively close to the city centre however, if I lived four zones away and purchased a paper ticket the cost is $7.50, if you have a go card the cost reduces to $5.13.
In my opinion, those costs are extremely excessive.  Yes it is probably slightly cheaper than the cost of running and maintaining a car on a week-to-week basis however, the differential is likely to be minimal.
My overall conclusion is that public transport is not as important as many of us believe it to be, particularly for those of us that believe we all need to have public transport to commute to work in the inner city.  This analysis shows that the majority of the working population actually don’t work in the central areas which tend to be the areas best serviced by public transport.
The main reasons that public transport it is not as important are due to: public transport being over-priced, services are generally irregular and unreliable and the services do not effectively cater to the overall needs of the wider community with the main focus of the service to transport people from the suburbs to the central areas of the city.  If the system was expanded, run on a more regular basis and made more affordable, I am sure that it would be more widely used, especially if it was more cost effective and efficient than using a private vehicle.  Sadly, at this stage it is generally a long way from delivering these benefits.
 
<hr>
 Cameron Kusher is senior research analyst at <a href="https://www.myrp.com.au/" rel="nofollow" target="_blank">RP Data</a>.
 
 
 
 
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Is public transportation infrastructure really that important?

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After analysing the latest CPI data released by the Australian Bureau of Statistics (ABS) and how inflation affects property capital, the results can be significantly different.
Across all capital cities values remain lower than at their previous peaks. At a combined capital city level, inflation adjusted values are now -6.5% lower than their previous peaks compared to being 0.7% higher if unadjusted.
According to the RP Data-Rismark Home Value Index, capital city home values were 0.7% higher than their previous highs in September however, when you adjust for inflation, RP Data’s capital city index remains -6.5% lower than the previous peak.
<img src="/images/stories/2013/10/31/kusher-oct-31-one.gif" width="470" height="234" alt="kusher-oct-31-one">
The RP Data-Rismark results show that cities such as Sydney and Canberra are higher than their previous peaks in non-adjusted terms, whereas they remain -3.3% and -6.6% lower when adjusted for inflation. This fact highlights exactly why the impact of inflation on home values is important and often overlooked.
<img src="/images/stories/2013/10/31/kusher-oct-31-two.gif" width="470" height="234" alt="kusher-oct-31-two">
Over recent years, the housing market has been characterised by higher levels of volatility and subsequently lower levels of home value growth. Conversely, inflation has continued to occur at a time when home value growth in most cities has failed to maintain pace. As a result, the cost of most other goods and services in the economy has risen at a faster pace than home values.
At a combined capital city level, inflation adjusted values peaked at the end of the September 2010 quarter, which is at a similar time to the non-adjusted figures. The major difference was that inflation-adjusted figures saw a turnaround in value growth over the past couple of quarters whereas the non-adjusted figures have been increasing since June 2012. 
<img src="/images/stories/2013/10/31/kusher-oct-31-three.gif" width="470" height="235" alt="kusher-oct-31-three">
The quarter in which inflation adjusted values peaked across each capital city, the quarter in which they reached a recent trough, the peak to trough value falls and the increase in values from the respective market troughs. Most confronting figure is how long it has been since there has been any ‘real’ value growth in some of these cities.
Sydney values peaked all the way back in the first quarter of 2004, Brisbane values peaked in the first quarter of 2008, Perth values peaked in the third quarter of 2007 and Hobart values peaked in the final quarter of 2007. In Melbourne, Adelaide, Darwin and Canberra the value peaks have been much more recent.
<img src="/images/stories/2013/10/31/kusher-oct-31-four.gif" width="470" height="237" alt="kusher-oct-31-four">
In addition, the ABS data also highlights that the costs associated with most goods and services has increased at a faster rate than the increase in home values over recent years. Housing is relatively more affordable especially considering how low mortgage rates are currently.
It is no surprise that home values have grown off the back of low interest rates although, it has been mainly contained to Sydney, Melbourne and Perth. Over the coming months, it will be interesting to see if value growth in these cities can be maintained as we foresee some potential affordability constraints entering these markets given the rapid rate of value growth. Conversely, it will be interesting to see whether some of the markets that have seen larger value corrections such as Brisbane, Adelaide and Hobart start to see an improvement in value growth conditions.

<hr>
Cameron Kusher is senior research analyst at <a target="_blank" rel="nofollow" href="https://www.myrp.com.au/">RP Data</a>.
 
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How does adjusting for inflation affect property prices?

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Recent national dwelling approvals data by the Australian Bureau of Statistics shows that with interest rates at their lowest levels in 53 years, dwelling construction approvals are now higher than their long-term average levels.

This latest news will please the RBA where Governor Glenn Stevens recently stated that with interest rates at extremely low levels, dwelling construction is starting to fill the void.
The RBA was keen to see an increase in dwelling construction, not just higher home prices. Governor Stevens also commented that the RBA was hopeful that dwelling construction could pick up some of the economic void as mining investment went past its peak. The good news for the RBA is that what they desired is exactly what is coming to fruition.
<img alt="kusher-oct-25-one" height="213" width="470" src="/images/stories/2013/10/25/kusher-oct-25-one.gif">
Lower interest rates and incentives to ‘buy new’ are fuelling a higher number of dwelling approvals, which ultimately leads to construction which in turn provides a substantial multiplier effect for the domestic economy.
Based on the ABS results, the best response to the lower interest rate environment in terms of dwelling approvals was seen within New South Wales, Queensland, South Australia and Western Australia.
While approvals in Victoria trended lower, the number of approvals across the state was significantly higher in previous times than those in other states and has recently recorded a significant decline.
<img alt="kusher-oct-25-two" height="237" width="470" src="/images/stories/2013/10/25/kusher-oct-25-two.gif">
This result is not necessarily a bad thing given the fact that the housing supply deficiency is lower in Victoria and there have been looming concerns about excessive levels of construction within inner Melbourne and across the outer fringe of the Melbourne metro area.
Across the states there have been early signs of a revival in dwelling approvals. The annual number of dwelling approvals as at August 2013 was 22.6% higher in New South Wales, -3.0% lower in Victoria, 12.2% higher in Queensland, 9.6% higher in South Australia and 31.8% higher in Western Australia.
With month-to-month dwelling approvals data so volatile, it’s important to look at the trend where based on today’s accompanying charts, it can be seen that approvals are beginning to trend higher.
Based on a rolling 12 months average figure, there were 13,589 approvals in August 2013 which was 11.7% higher than in August 2012. The August 2013 approvals figure of 12,163 was the most recent low.
<img alt="kusher-oct-25-three" height="234" width="470" src="/images/stories/2013/10/25/kusher-oct-25-three.gif">
The RP Data-Rismark September Home Value Index confirmed that capital city home values have increased by 8.7% from their recent low. Given this and based on percentages, the rebound in approvals was stronger than the lift in home values.
A lift in dwelling approvals is more important than a lift in home values. It would be fair to say a higher rate of dwelling approvals is much more beneficial to the Australian economy than a lift in home values. Unfortunately without the additional demand created through higher home values and sales it is less likely that developers would take on the risk of building more homes.
The rolling 12 months average dwelling approvals figure shows that approvals are now 1.9% above their 20 year average. The issue here is that for most of the past 20 years, the supply of new dwellings has been insufficient. This result is probably not actually a good benchmark; no doubt the RBA would like to see approvals continue to climb further from this point.
<img alt="kusher-oct-25-four" height="238" width="470" src="/images/stories/2013/10/25/kusher-oct-25-four.gif">
The ABS dwelling approvals data is the sharp rise in the proportion of approvals for medium and high density housing. He found that over the past 12 months, 41.6% of all approvals were for units where just five years ago, only 33.2% of all approvals were for medium and high density properties.
The shift towards a higher proportion of unit approvals is a change that may be difficult to accept for potential home owners but will no doubt be an ongoing feature of the market over coming years.
As long as governments continue to show a reluctance to expand urban footprints, particularly within our major capital cities coupled with population increases in these areas, there will subsequently be additional demand for housing.
It is clear that instead of supplying a greater number of detached homes there is a general preference, particularly in some of our larger cities, for densification of inner city areas. This is not necessarily a bad thing, especially considering that this development of inner city areas will reduce the requirement for new infrastructure.
 
<hr>
 Cameron Kusher is senior research analyst at <a href="https://www.myrp.com.au/" rel="nofollow" target="_blank">RP Data</a>.
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Low interest rates push construction approvals higher than long-term average: Cameron Kusher

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While whole of year data on premium housing markets by RP Data indicates a lull in activity at the top end at the beginning of this new growth phase in the property cycle, an analysis of activity across the most recent quarter suggests that conditions may be lifting.
Premium housing markets have generally recorded a larger correction in values than other price segments with the recovery rate to-date below par. However, recent results show that premium housing markets are once again beginning to outperform the broader housing market.
<img src="/images/stories/2013/10/18/kusher-oct-18-one.gif" width="470" height="238" alt="kusher-oct-18-one">
The September 2013 RP Data-Rismark Stratified Hedonic home value results showed that across the most expensive 25% of suburbs, capital city home values increased by 4.5% over the 12 months As a comparison, the most affordable 25% of suburbs recorded annual value growth of 6.2%, while the middle 50% of suburbs saw values rise by 6.4%.
While the results indicated that capital growth across the premium suburbs fell behind when compared to other market sectors over the past 12 month measure, recent quarterly figures provides evidence that the tide may be turning for Australia’s more expensive housing markets.
The premium market, comprising of the most expensive 25% of capital city suburbs, recorded quarterly value growth of 4.1% compared to 3.6% across the middle 50% of suburbs and 2.8% growth across the most affordable suburbs.
Previous growth and correction phase data shows us that the premium housing market is usually the slowest to respond during the early phase of the growth cycle and it appears that this has once again been the case – we have also seen the largest correction occurring in home values over the past few years within the premium housing market.
<img src="/images/stories/2013/10/18/kusher-oct-18-two.gif" width="470" height="208" alt="kusher-oct-18-two">
Several factors contribute to driving demand for premium housing. Higher priced sector of the market has seen the largest correction in values coupled with low mortgage rates where now, these homes become somewhat more attainable for purchasers.
A positive shift in equity markets which is evident in the 19.0% increase in the S&amp;P/ASX 200 index over the past year has boosted household wealth coupled with a rise in consumer confidence.
Finally, we have seen early indicators of an improvement in business conditions with survey-based results and retail trade showing tentative signs of improving in recent times.
<img src="/images/stories/2013/10/18/kusher-oct-18-three.gif" width="470" height="199" alt="kusher-oct-18-three">
A further look in the dynamics of the market shows that between house and unit value growth within capital city premium suburbs, the annual growth in house values is noticeably stronger than unit values.
Premium house values have increased by 4.8% and unit values by 2.3% over the past twelve months. This makes the rate of growth over the year across both premium housing types the weakest for capital growth across the broad price segments.
Over the most recent three months, premium house values are 4.2% higher and unit values are 2.9% higher. The quarterly value growth for premium houses is greater than both the affordable (2.6%) and middle (3.6%) markets whereas premium unit values have underperformed both the affordable (3.9%) and middle markets (3.4%).
<img src="/images/stories/2013/10/18/kusher-oct-18-four.gif" width="470" height="198" alt="kusher-oct-18-four">
Based on our findings, the premium market is experiencing increasing levels of value growth however, it is largely contained to detached houses rather than units.
Across the individual capital cities, the annual rate of value growth across the premium suburbs has been weakest across all major capital cities and product types except for Melbourne houses where the value growth has been stronger than growth for the most affordable suburbs.
Over the past quarter, growth in house values has been stronger than the other sectors for houses in Melbourne and Perth and equal strongest in Sydney.
In Brisbane in Adelaide, house value growth over the quarter has been weakest within the premium suburbs. For units, growth has generally continued to be weakest across the premium sector. The exceptions were seen in Perth where value growth was strongest, and in Brisbane where value growth was stronger than that across the most affordable sector of the market.
Overall, after a lacklustre performance in the more affordable sectors of the housing market, the premium sector is starting to see a stronger growth performance.
While picking up pace, the growth across premium suburbs has largely been limited to detached houses and is very much evident within the Sydney, Melbourne and Perth where the growth cycle has been stronger than other cities
Recent high levels of auction clearance rates, particularly in Sydney and Melbourne have certainly pushed the premium housing market along.
While picking up pace, the growth across premium suburbs has largely been limited to detached houses and is very much evident within the Sydney, Melbourne and Perth where the growth cycle has been stronger than other cities.
Recent high levels of auction clearance rates, particularly in Sydney and Melbourne have certainly pushed the premium housing market along. Of course auctions are only a small overall proportion of the market however, higher priced and unique properties which are typically taken to auction are more a reflection of the performance of the premium housing sector.

<hr>
Cameron Kusher is senior research analyst at <a target="_blank" rel="nofollow" href="https://www.myrp.com.au/">RP Data</a>.
 
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Premium housing market outpacing other segments: Cameron Kusher

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

Joel Robinson

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

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

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

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

Bottega House secures landmark riverfront site in St Lucia 

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The arrival of the first piling rig officially marks the commencement of construction at SIERA’s new beachside apartment development, Exhale, in Northcliffe.

<a href="https://www.apartments.com.au/new-apartments/exhale-surfers-paradise-8-enderley-avenue-surfers-paradise-qld-4217">Exhale</a>, a glass-encased tower featuring 54 large-scale apartments at 8 Enderley Avenue, is SIERA’s third Gold Coast development. It follows the recently completed PIPIS Bilinga beachfront project, which achieved suburb-record prices, and the soon-to-be-completed Chevron Island development, Tapestry.

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<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.

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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.

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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.

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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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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.

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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.

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<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.”

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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.

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Cameron Kusher

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