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At the end of 2014, the Australian Prudential Regulation Authority (APRA) wrote to mortgage lenders reinforcing what they saw as sound mortgage lending practices. 
The key points from that letter were that serviceability policy limits should be based on mortgage rates at least 2 percent above the product loan rate with a minimum floor assessment of 7 percent. 
The second point was that APRA was going to impose a speed limit on investment credit growth to lenders of 10 percent per annum. It is important to note investment credit refers to total outstanding mortgages not new lending.
The impact of these policies was likely to be that as interest rates fell, more buyers weren’t encouraged into the market because mortgages were being granted based on the ability to repay a mortgage at 7 percent interest which was well above standard rates at that time.  The other impact was that the 10% cap on investor housing credit growth would slow demand from the investment segment as there was less new lending to go around.
While the serviceability limits mean that new first time buyers are unlikely to come into the market as interest rates fall, it does nothing to discourage current owners from buying investment properties or upgrading homes.  Given that the vast majority of home loans are on a variable rate, interest rate cuts have an almost immediate impact on household budgets. 
While the serviceability limits won’t result in marginal purchasers entering the market, as interest rates have come down it appears that home owners that weren’t previously considering buying an investment property or upgrading have come out of the woodwork and decided to purchase.
<a href="/images/2016/09/21/Chart-1-1-580x176.jpg" target="_blank">Click to enlarge</a>
 <img src="/images/2016/09/21/Chart-1-1-580x176.jpg" alt="">
It is somewhat difficult to gauge exactly how effective the serviceability changes have been, but the 10% cap on investor housing credit led to a significant decline in growth in lending to that market segment.  Shortly following the implementation of the investor lending cap we also saw lenders place an interest rate premium on investment mortgages.  This muddied the waters somewhat because a lot of mortgages which were previously designated as investment mortgages were reclassified as owner occupier mortgages. 
Nevertheless, annual investor housing credit growth peaked at 10.8 percent in May 2015 according to Reserve Bank data and the latest data shows that it has slowed to growth of 4.8% over the year to July 2016.  Investor housing credit growth has slowed dramatically since its recent peak following these curbs and over the past year has increased at its slowest annual pace since November 2009.
<a href="/images/2016/09/21/Chart-2-1-580x210.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/21/Chart-2-1-580x210.jpg" alt="">
Housing finance data which tracks new lending, has showed a bounce in new lending to investors over the three months to July 2016.  Over that period, the monthly value of investment lending has increased by 9.2 percent from $10.8 billion in April 2016 to $11.8 billion in July 2016, new lending to investors is at its highest level since August 2015.  With investor housing credit growth well below 10 percent per annum, it is clear that lenders have scope to now offer more lending to the investment segment and clearly there are investors grabbing that opportunity.  
But why is this the case when you have a record supply of new housing under construction, record low rental yields and a historically weak rental market? We are about to delve into some possible reasons why, for some investors, housing investment still makes sense however, investors looking to purchase residential properties should be aware of the potential risks on the horizon.
Capital growth
<a href="/images/2016/09/21/Chart-3-1-580x211.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/21/Chart-3-1-580x211.jpg" alt="">
Since the current growth phase commenced in June 2012, combined capital city home values have increased by 39.9%.  As the above chart shows, the growth has been very uneven with Sydney and Melbourne leading the way in terms of value growth and rises relatively moderate elsewhere.  After such a long growth phase, the question must be asked as to how much longer the growth can continue for in Sydney and Melbourne, particularly considering the affordably obstacles that are becoming more pronounced and the diminishing yield profile caused by the fact that dwelling values are rising at a much faster pace than rents.
Housing supply
<a href="/images/2016/09/21/Chart-4-1-580x197.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/21/Chart-4-1-580x197.jpg" alt="">
The supply of new housing under construction is at a record-high with an historic high level of units under construction.  The 2011 national Census showed that units were much more likely to be occupied by renters than houses.  At that time, and across homes occupied on Census night, 21.8 percent of houses and 57.8% of units were occupied by renters. 
Of course housing choices are likely to have shifted somewhat since that time but the fact is likely to remain that units are much more likely to end up as rental accommodation than houses are.  As a result a large proportion of these units recently built and under construction will end up as rental accommodation.  In many cities we are also already seeing a significant difference in the rate of growth for houses as opposed to units.
<a href="/images/2016/09/21/Chart-5-1-580x212.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/21/Chart-5-1-580x212.jpg" alt="">
Rental markets are showing the weakest growth conditions on record, in fact, capital city rental rates are -0.5 percent lower over the past year.  In the two cities where the highest level of investment activity is occurring, Sydney and Melbourne, rents are unchanged in Sydney and 2.4 percent higher in Melbourne.  For units specifically, rental rates are 0.7 percent higher over the year across the combined capital cities with rental rates 1.8 percent higher for Sydney units and 1.3 percent higher for Melbourne units.
There is a large supply of housing stock that is going to be added to the market over the coming year(s) in these cities and others.  Most of the supply is in the form of units, which as shown are more likely to be rental properties.  Subsequently it seems as if landlords are set to find it more difficult to keep renters and may have to reduce rents in order to keep their properties tenanted over the coming years.  Higher vacancy rates may be felt by those landlords who own units that are in need of repair or refurbishment as tenants look for higher quality or new rental accommodation that may be more comfortable at a similar rental rate.
Rental returns
<a href="/images/2016/09/21/Chart-6-580x209.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/09/21/Chart-6-580x209.jpg" alt="">
Rental yields are expressed as gross figures so the net returns are likely to be much lower than the headline figure.  The gross rental yield has been forced lower over recent years due to little rental growth (and falls in some areas) coupled with comparatively high levels of home value growth. As a result, at the end of August 2016 the combined capital cities gross rental yield was recorded at an historic low 3.3 percent with figures of 3.0 percent in Sydney and 2.9 percent in Melbourne.  
A couple of things to note about the yield figures; firstly they assume that a property is occupied for 100 percent of the year and secondly they are based off current values, most investors would not borrow 100 percent of the loan value for an investment property.  Given these two points, lower than 100 percent occupancy would reduce the yield however, borrowing less than 100% of the property’s value would increase the yield.
As pointed out earlier, units are much more likely than houses to be used for rental accommodation and there is a record pipeline of unit stock under construction.  Gross rental yields for units specifically are higher than those for houses and recorded at 4.1 percent for combined capital city units, 3.9 percent in Sydney and 4.0% in Melbourne.  Each of these figures are at historic lows and have trended lower over recent years.  Nevertheless, when you factor in a level of equity used to purchase investment properties the returns are still far superior to most other asset classes.
Total returns
Click to enlarge
<img src="/images/2016/09/21/Chart-7-580x208.jpg" alt="">
When you factor in rental returns and capital growth, the total returns from residential property remain attractive.  Over the past year, total gross returns across the combined capital cities have been recorded at 10.7% with each capital city other than Perth and Darwin recording total returns in excess of 7.0% over the past year. Since home values ended their most recent declines in May 2012, combined capital city total returns have been recorded at 62.7% and no capital city has recorded returns of less than 25% over the period
Other asset classes
A major reason why investors remain attracted to residential property is due to the fact that with low interest rates and low economic growth internationally, returns have reduced.  Based on the most recent end of month data, 10 year Australian Government bonds were yielding 1.88 percent, 1 year term deposit rates were 2.65 percent and total returns from the ASX 200 were 9.3 percent.  The safe investment classes of bonds and term deposits are providing extremely low returns.  At the same time total returns from equities have been much stronger however, equities are a more volatile asset class than housing.
While the housing market has provided relatively strong investment returns over recent years and may continue to provide comparatively strong returns over the coming years, there are certainly some headwinds that investors need to be aware of.  Keep in mind too that the purchase cost of a residential property is significantly greater than investing in other asset classes.  The additions to housing supply underway and the weakening rental market should provide a level of caution for investors. 
Given the cost of housing and the looming challenges we would expect that although there is likely to be some further uplift in investment demand it is unlikely to result in growth in investor credit to head back towards the 10%pa speed limit.  Investors will also need to be much more selective around which properties they choose given achieving strong returns are seemingly going to be more difficult to achieve over the coming years given the looming headwinds described within.
Cameron Kusher is research analyst for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
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Investors re-entering the housing market but should do so with caution: Cameron Kusher

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We look at the regions that have had at least 50 settled sales in both 2015 and 2016.
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Each of the council areas that have recorded the greatest total value of sales over the past year have recorded a decline relative to a year ago.
The total value of transactions is an important figure to consider for real estate and mortgage professionals.  Because commission is typically calculated for real estate agents on the value of the sale and for mortgage providers based on the size of the loan, understanding where the value of transactions is greatest is valuable.  The following analysis looks at the value of sales across council areas; keep in mind that the size of the council region will have an impact.  We have only included regions that have had at least 50 settled sales in both 2015 and 2016.
<h3>Council areas with the highest value of sales, 12 months to Aug 2016</h3>
<a href="/images/2016/11/30/2016-11-28--image1.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/30/2016-11-28--image1.jpg" alt="" width="641" height="430">
Brisbane has recorded the greatest total value of sales over the past year at $16.8 billion however, the value is -11.2 percent lower over the year. The first table shows the total value of sales over the past year and the previous year for each of the 20 council areas nationally with the greatest value of sales.  Each of the top 20 regions listed have seen fewer overall sales and a lower total value of sales relative to 2015.
The second table shows the council regions that have seen the greatest increase in the overall value of sales over the past year. Circular Head in Tasmania has seen a 91.6 percent increase in the value of sales over the past year.  Most of the regions listed have seen an increase in sales over the year, the exceptions have been Circular Head and Wakefield. This suggests that the increase in value has been more driven by an increase in values of properties rather than an increase in turnover.
<h3>Council areas with the greatest increase in value of sales, 12 months to Aug 2016</h3>
<a href="/images/2016/11/30/2016-11-28--image2.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/30/2016-11-28--image2.jpg" alt="" width="650" height="460">
The final table highlights the council regions nationally that have recorded the greatest decline in the total value of sales over the past year.  Maranoa in Queensland has recorded then greatest decline in the total value of sales over the year, -48.1% lower.  In each of these regions except for Isaac in Queensland, the number of sales is lower over the year which is clearly contributing to the decline in value of sales.  A number of these regions are also linked to the mining and resources sector where home values have fallen substantially over recent years.  These factors are also contributing to the slide in the overall value of sales.
<h3>Council areas with the greatest decline in value of sales, 12 months to Aug 2016</h3>
<a href="/images/2016/11/30/2016-11-28--image3.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/30/2016-11-28--image3.jpg" alt="">
With the turnover of housing stock reducing across the country and fewer homes available for sale the amount of commission is reducing. One strategy that will help to alleviate this reduction in the commission pool is for industry participants to target those areas where turnover is increasing. Mortgage professionals will need to look more at opportunities in the refinance space, in Sydney and Melbourne in particular, these opportunities should be sufficient given the significant rise in housing equity over recent years. 
Of course, another strategy to protect revenue is to improve market share.  Many businesses tend to tighten the purse strings for marketing and business development, however a contracting market offers up good opportunities to expand market share and increase productivity.
Cameron Kusher is research analyst for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
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Brisbane property sales drop off: CoreLogic's Cameron Kusher

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GUEST OBSERVER
The Australian Bureau of Statistics (ABS) released consumer price index (CPI) data for the September 2016 quarter last month. 
According to the data, headline inflation increased by 0.7 percent over the quarter to be 1.3 percent higher over the year. 
Meanwhile, underlying inflation was recorded at 0.3 percent over the quarter and 1.5 percent higher over the past 12 months. Both headline and underlying inflation have increased at a rate below the RBAs target range of 2 percent to 3 percent. 
This would usually see the RBA cut interest rates to try and lift inflation however, the previous cuts in May and August, which had the same intent, have not successfully lifted inflation. 
What those cuts did manage to do was re-energise growth in housing, particularly in Sydney and Melbourne. 
For this reason there is some speculation as to whether the RBA will risk cutting interest rates again given concerns that a lower cash rate will fail to push the dollar lower and lift inflation but add further heat to an already strong housing market.
With the CPI data released, we can pair it with the CoreLogic home value index data to September 2016, in order to obtain an understanding of real growth in values. 
Although headline value growth is lower than it was a year ago, so too is headline inflation which mean that real value growth, particularly in Sydney and Melbourne remains strong.
<a href="/images/2016/10/31/CoreLogic%201.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/31/CoreLogic%201.jpg" alt="">
The above chart highlights the real and nominal changes in home values across each capital city over the 12 months to September 2016.  In both real and nominal terms values have fallen over the past year in both Perth and Darwin while they have increased across each of the remaining capital cities. 
There’s also been evidence that along with Sydney and Melbourne, where growth has been strong for almost four years now, value growth has also picked up in other cities such as Adelaide, Hobart and Canberra.
<a href="/images/2016/10/31/CoreLogic%202.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/31/CoreLogic%202.jpg" alt="">
If you look at the compound annual change in real home values over the past five, ten and 15 years, the 15 year time-frame in most capital city provides the strongest performance. 
The clear exception is in Sydney where the last five years have resulted in the strongest annual returns.  In contrast, across all other capital cities except for Perth and Hobart the past five years have recorded the weakest annual growth across each of the three time-frame. 
This result really highlights the strength of the Sydney market over the past five years and its relative weakness over the 10 years preceding.
<a href="/images/2016/10/31/CoreLogic%203.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/31/CoreLogic%203.jpg" alt="">
Since the end of 2008 (ie post GFC), growth in home values has significantly skewed towards the Sydney and Melbourne housing markets. 
As highlighted in the above chart, when adjusted for inflation values are lower that they were at the end of 2008 in Brisbane, Adelaide, Perth, Hobart and Darwin. 
Sydney and Melbourne have also seen a substantially greater increase in values relative to Canberra which was the only other capital city to have seen an increase in real home values.
<a href="/images/2016/10/31/CoreLogic%204.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/10/31/CoreLogic%204.jpg" alt="">
Sydney and Melbourne are the only two capital cities in which real home values are now back above their previous peaks. 
After peaking all the way back in the March 2004 quarter, real home values in Sydney are now 35.3 percent higher in Sydney and in Melbourne they are 17.2 percent higher than their September 2010 peak. 
All other capital cities are still recording real home values below their previous peaks.  The magnitude of these declines are recorded at: -10.2% in Brisbane, -5.3 percent in Adelaide, -20.2 percent in Perth, -15.6 percent in Hobart, -23.8 percent in Darwin and -1.0 percent in Canberra. 
In some of these cities, values peaked many years ago, as far back as 2007 in Perth and Hobart and 2008 in Brisbane.
Although interest rates are low and in real terms homes have been becoming more affordable outside of Sydney and Melbourne it still hasn’t proved to be enough to lure substantial demand and subsequent growth across the other capital cities. 
What this highlights is the importance of employment, what sets Sydney and Melbourne apart, outside of more expensive housing prices, is the fact that they both have strong economies which are creating jobs. 
Housing affordability alone is no longer enough to attract an increasing level of housing demand, you need a strong economy and the jobs that go along with those strong economic conditions.
Perth and Darwin in particular are well into a fairly substantial value decline phase which is appears set to continue.  Since their respective market peaks in September 2007 and September 2010, real home values are now -20.2 percent and -23.8 percent lower respectively.
Cameron Kusher is research analyst for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
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Home values now more than 20 percent down in Perth and Darwin

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Although values have been increasing for almost 4.5 years, homes continue to sell quite rapidly with a relatively low level of discounting occurring from vendors.
The vendor discount and time on market metrics are important measures of current market conditions. The vendor discounting metric looks at properties selling for less than their original list price and looks at the percentage difference from initial list price to ultimate sale price. 
The time on market metric shows the average number of days between when a property is first listed and when it ultimately sells. It’s important to note that each of these measures is based on private treaty sales and therefore excludes auctions.
In September 2016, the average days on market across the combined capital cities was recorded at 39 days. At the same time a year earlier the average days on market was a slightly lower 36 days. 
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<h3>Average days on market, combined capital cities</h3>
<a href="/images/2016/11/23/2016-11-17--pp-image1.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/23/2016-11-17--pp-image1.png" alt="">
The second chart highlights the average days on market figure across each of the capital cities for each of the past 8 years in September. Over recent years homes have been selling much quicker in Sydney and Melbourne than they have across the other capital cities. Homes in Hobart and Canberra have seen fairly large falls in days on market over the past year which aligns with accelerating value growth. In Perth and Darwin homes have seen a large rise in the average days on market as selling conditions have become tougher and values have declined.
<h3>Average days on market, individual capital cities as at September </h3>
<a href="/images/2016/11/23/2016-11-17--image2.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/23/2016-11-17--image2.png" alt="">
In September 2016, the typical home which sold at a discount from its original listing price was discounted by -5.7 percent across the combined capital cities. In comparison, at the same time a year earlier the typical level of discounting was recorded at -6.0 percent. The lower level of discounting is reflective of more demand and fewer homes for sale but is also likely to reflect more realistic initial listing prices from vendors.
<h3>Average vendor discount, combined capital cities</h3>
<a href="/images/2016/11/23/2016-11-17--pp-image3.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/23/2016-11-17--pp-image3.png" alt="">
The final chart shows the discounting levels for each capital city in September over each of the past 8 years. Once again Sydney and Melbourne, along with Canberra, have been seeing low levels of discounting by vendors over recent years. In Sydney and Melbourne in particular this is indicative of strong housing demand which has led to many homes selling in excess of their initial list price. Despite only moderate growth in values over recent years Canberra has consistently recorded low levels of discounting. In Perth and Darwin as the housing market has wakened over recent years discounting levels have increased significantly.
<h3>Average vendor discount, individual capital cities as at September</h3>
<a href="/images/2016/11/23/2016-11-17--image4.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/23/2016-11-17--image4.png" alt="">
After combined capital city home values have been increasing for almost four and a half years (mainly in Sydney and Melbourne) the level of discounting and time on market remains extremely low. This is being driven by ongoing strong housing demand coupled with relatively low stock levels.  While these conditions persist it is difficult to see how home values in Sydney and Melbourne in particular, won’t continue to increase.
Cameron Kusher is research analyst for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
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Homes are selling much quicker in Sydney and Melbourne: Cameron Kusher

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Each quarter the Reserve Bank (RBA) publishes household finances data which look at the ratio of household debts and assets to disposable income. The latest data shows households are becoming more indebted at the same time as the value of their assets are increasing.
According to the RBA, the ratio of household debt to disposable income was recorded at 193.7% at the end of June 2017.  The ratio sits at a record high having increased by 2.0% over the quarter and by 3.9% over the year.  Unsurprisingly, most of this debt is housing related; the ratio of housing debt to disposable income is recorded at 136.4% having increased by 1.4% over the quarter and 3.9% over the year.  
The first chart highlights how much household and housing debt has increased over time relative to disposable incomes.  It is also noticeable that since the financial crisis the rate of escalation has slowed.  Further data from the RBA reveals that of the 136.4% ratio of housing debt to disposable income, 103.2% is held by owner occupiers with the remaining 33.2% held by investors.
<img src="https://www.corelogic.com.au/sites/default/files/styles/article_image_570w_/public/2017-10/2017-10-09-ppimage1.png" alt="2017-10-09--ratioofhouseholdandhousingdebttodisposableincome" width="570" height="272">
The second chart details the ratio of household and housing assets to disposable income.  At the end of June 2017 the ratio of household assets to disposable income was recorded at 935.6% and the ratio of housing assets to disposable income was 516.5%, both of which were record highs.  Over the past year household assets and housing assets have increased by 6.6% and 7.8% respectively, well in excess of the increase in household and housing debt. 
<img src="https://www.corelogic.com.au/sites/default/files/styles/article_image_570w_/public/2017-10/2017-10-09-ppimage2.png" alt="2017-10-09--ratioofhouseholdnadhousingassesttodisposableincome" width="570" height="281">
By comparing the ratios of assets and debt the RBA also produces ratios of household and housing debt to assets.  The data reiterates that although debt levels are high, at this stage that debt is well supported by assets which are valued substantially higher.  Over recent years the ratios of household and housing debt to assets has actually been falling.  In June 2017, the ratio of household debt to assets was recorded at 20.7% and the ratio of housing debt to assets sat at 26.4%.  
<img src="https://www.corelogic.com.au/sites/default/files/styles/article_image_570w_/public/2017-10/2017-10-09-ppimage3.png" alt="2017-10-09--ratioofhouseholdandhousingdebttoassets" width="570" height="283">
A big contributor to the declining ratio of debt to assets over recent years has been the ongoing fall in interest rates to their current lows.  The RBA publishes ratios of interest payments to disposable income for household and housing debt.  The fourth chart highlights that households are paying significantly less interest currently than they were when interest rates were much higher.  At the end of June 2017 the ratio of household interest repayments to disposable income was 8.7% and for housing it was 7.1%.  Lower interest rates also mean that where there is a debt, debtors have the ability (if they choose) to maintain previous repayments which in turn means additional debt is repaid as interest rates fall.  
<img src="https://www.corelogic.com.au/sites/default/files/styles/article_image_570w_/public/2017-10/2017-10-09-ppimage4.png" alt="2017-10-09--ratioofhouseholdandhousinginteretrepaymentstodisposableincome" width="570" height="281">
The data highlights that Australian households are heavily indebted, largely due to housing.  While debt levels are high, the value of household and housing assets are, at this stage, considerably greater than the level of debt.  Of course, if household and housing asset values begin to fall in the future, the accompanying debt may not fall at the same rate and that remains the main concern with the ongoing increase in household and housing debt.  Although Australia survived the financial crisis with much less damage than most other countries, it is noticeable how there was a fairly sharp rise in the ratio of household and housing debts to assets over that period.  A more sustained downturn could potentially see a much greater increase in these ratios as asset values fall but the debt against these assets remain.  
Cameron Kusher is head of research for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
To read the original article <a href="https://www.corelogic.com.au/news/household-debts-and-assets-hit-record-highs#.Wd6d5xOCyuV" target="_blank">click here</a>.
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Household debt and assets reach record highs: Cameron Kusher

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According to the latest housing finance data release for March 2017 there was $33.2 billion in finance commitments over the month. 
The monthly value of commitments increased by 0.9 percent to be 5.3 percent higher year-on-year. 
While the value of commitments to investors has slowed over recent months, owner occupier demand lifted slightly in March 2017.
<a href="https://www.propertyobserver.com.au/images/2017/05/24/chart-1-2.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/24/chart-1-2.jpg" alt="">
The data shows that in March 2017, the $33.2 billion in housing finance commitments comprised of $20.2 billion to owner occupiers and $13.0 billion to investors. 
The value of owner occupier commitments increased by 0.9 percent over the month to be at its highest level since June 2016. 
Investor demand also rose over the month, up 0.8 percent however, it remains well below levels from a few months ago. 
Looking at recent monthly data it suggests that demand from owner occupiers has been reasonably steady while the level of demand from investors has eased. 
Keep in mind that this data pre-dates the most recent policy announcement from APRA; over the coming months there are likely to be a number of headwinds for investors in the form of: higher mortgage rates, reduced availability of interest-only lending and changes to depreciation benefits for plant and equipment on investment property for new purchases. 
Given this we would expect that investor demand is likely to fall further over the coming months.
<a href="https://www.propertyobserver.com.au/images/2017/05/24/chart-2-2.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/24/chart-2-2.jpg" alt="">
Owner occupier demand continues to be fueled by purchases of established housing stock while refinance activity continues to fade. 
The $20.2 billion in housing finance commitments to owner occupiers consisted of $1.8 billion for construction of dwellings, $1.1 billion for purchase of new dwellings, $6.1 billion for refinancing of established dwellings and $11.1 billion for purchase of other established dwellings. 
The value of lending for construction and purchase of new dwellings has remained at fairly consistent levels over the past year and a half. 
The value of refinancing has been trending lower since it peaked in December 2015 and it is now at its lowest level since July 2015. 
At the same time, demand for purchases of established dwellings is trending higher and is at its highest level since September 2015.
<a href="https://www.propertyobserver.com.au/images/2017/05/24/chart-3-2.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/24/chart-3-2.jpg" alt="">
Mortgage demand from investors overwhelmingly comes from investors buying established housing rather than new housing. 
The $13.0 billion worth of commitments in March 2017 consisted of $1.1 billion from construction of dwellings and $11.9 billion from established housing. 
The $1.1 billion in commitments for construction was 6.1 percent higher over the month while the $11.9 billion for established housing is 0.3 percent higher over the month. 
The value of lending for investors for established housing is now down -4.6 percent from its most recent peak two months ago and -12.5 percent lower than its historic peak in April 2015.
<a href="https://www.propertyobserver.com.au/images/2017/05/24/chart-4-2.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/24/chart-4-2.jpg" alt="">
Comparing established housing to new housing continues to show that the bulk of housing demand is coming from established housing stock. 
Over the month, 85 percent of mortgage demand (excluding refinances) was for established housing stock ($23.0 billion) with the remaining 15 percent ($4.0 billion) for new housing stock.
The data is pointing to ongoing weaker demand from the investor segment of the market and refinances from owner occupiers slowing while demand from owner occupiers for established housing stock is trending higher. 
With the lending environment continuing to change, particularly for investors, we would expect that demand from investors will continue to wane. 
Higher interest rates, the rationing of the availability of interest-only lending and reduced negative gearing benefits is likely to weigh on investor demand over the coming months.
Cameron Kusher is research analyst for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
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Investor mortgage demand continues to wane: Cameron Kusher

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Data released by the Australian Prudential Regulation Authority (APRA) earlier this week has shown that high loan to value ratio (LVR) lending continues to fall indicating new buyers are in many instances using larger deposits. 
The latest authorised deposit-taking institution (ADI) property exposures data for the March 2017 quarter revealed the ongoing trend as a moderate pull-back in the share of new interest-only mortgage lending however, there will be a lot more work to do for lenders in this space.
<a href="https://www.propertyobserver.com.au/images/2017/05/31/Chart-1.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/31/Chart-1.jpg" alt="">
The data showed that over the March 2017 quarter there was $89.257 billion in mortgage lending from the ADIs which was the lowest quarterly value of lending since the same quarter last year. 
Of course, part of this is seasonal due to the Christmas / New Year slowdown and lending over the quarter was 9.5 percent higher than the corresponding quarter last year. 
Over the quarter 65 percent of lending was to owner occupiers ($58.009 billion) with the remaining 35 percent ($31.248 billion) to investors. 
The value of lending to owner occupiers was 3.9 percent higher year-on-year while investor lending was 21.7 percent higher.
<a href="https://www.propertyobserver.com.au/images/2017/05/31/Chart-2.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/31/Chart-2.jpg" alt="">
There is currently a big focus on interest-only lending with APRA recently announcing policy changes which limit the value of new interest-only lending to less than 30 percent of the flow of total new mortgage lending.
Over the latest quarter, 36.2 percent of the value of total mortgage lending was for interest-only purposes signifying that further rationing of this type of lending is required. 
Although as a proportion of total lending interest-only lending has slowed, the value of this type of lending has increased by 13.8 percent from the same quarter last year. 
Importantly, interest-only lending peaked at 45.6 percent of the value of total new lending over the June 2015 quarter, so as a proportion of total lending it has already fallen substantially but has quite a way further to slow over the coming quarters as lenders work to meet the new 30 percent APRA benchmark by rationing the availability of this type of mortgage.
<a href="https://www.propertyobserver.com.au/images/2017/05/31/Chart-3.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/31/Chart-3.jpg" alt="">
Low documentation ($377 million), non-standard ($142 million) and outside of serviceability loans ($1.461 billion) accounted for a cumulative 2.2 percent of new lending over the quarter. 
Although this was an historic low proportion, it should be noted that in value terms, low documentation (+42.5 percent) and non-standard (+21.6 percent) loans have increased over the year while outside of serviceability mortgages are -59.4 percent lower.
<a href="https://www.propertyobserver.com.au/images/2017/05/31/Chart-4.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/31/Chart-4.jpg" alt="">
Over the quarter, $6.896 billion in new mortgages written had an LVR of greater than 90 percent. 
This represents the lowest value of new mortgage lending for LVRs above 90 percent since March 2011. 
It also indicates that 90 percent + LVR mortgages accounted for just 7.7 percent of all new mortgages over the quarter which was an historic low proportion. 
If you look at new mortgages with an LVR greater than 80 percent, they accounted for 22.0 percent of lending which is also an historic low. 
This indicates that borrowers are using either larger deposits upon entry to the market or using greater equity in their existing properties.
<a href="https://www.propertyobserver.com.au/images/2017/05/31/Chart-5.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/31/Chart-5.jpg" alt="">
According to the data, the average outstanding mortgage balance was recorded at $259,400 at the end of March 2017 which was 0.8 percent higher over the quarter and 3.9 percent higher over the year. 
By loan type, the average outstanding balances were recorded at: $314,100 for loans with an offset facility, $346,100 for interest-only mortgages, $100,100 for reverse mortgages, $193,100 for low-documentation loans and $185,600 for other non-standard loans. 
Other non-standard loans were the only mortgage type to see a fall in outstanding balance over the year, -4.0 percent lower while the average outstanding balance for interest-only mortgages recorded the greatest rise, 4.2% higher.
The reduction in new lending to higher LVR borrowers is encouraging from a risk perspective with borrowers typically utilising larger deposits. 
While the proportion of lending for interest-only purposes has slowed, it has much further to fall over the coming quarters as lenders seek to reign interest-only lending in to less than 30% of the new flow of lending. 
With interest-only lending favoured by investors it may lead to a slowing in demand from this segment. 
Keep in mind that borrowers utilising interest-only mortgages are assessed on their ability to repay a principal and interest loan. 
Given this there is the possibility that the impact on investor demand may be minimal as they choose to just use a principal and interest loan rather than interest-only.
Investors face a broadening range of disincentives in the market, with mortgage rates for investment purposes up more than 25 basis points compared with their low point last year, record low rental yields and overall tighter credit policies from lenders. 
Additionally, there seems to be growing acceptance that the housing market is losing some momentum which is likely to further weigh on investor purchase decisions.
Cameron Kusher is research analyst for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/" target="_blank">here</a>.
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High LVR lending is easing up with a further slowdown expected: Cameron Kusher

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When we think about the housing market we tend to focus on when values rise but in the recent past values have fallen in each capital city; this week we look at the magnitude and duration of these falls in the past.
Throughout the past 20 years it has been much more common for combined capital city dwelling values to have been increasing than falling. 
Although value rises have been more common, it doesn’t mean that the housing market is bulletproof and in some instances values have fallen quite dramatically and rapidly. 
Typically the Reserve Bank (RBA) or the Government have adjusted fiscal and/or monetary policy to support the housing market and arrest the value falls.
Across the combined capital cities, dwelling values have increased by 346.4% over the 20 years to April 2017. 
In the two periods in which values have fallen, capital city dwelling values fell by -6.1% between March and December 2008 and they fell by -7.4% between October 2010 and May 2012.
<a href="https://www.propertyobserver.com.au/images/2017/06/14/Screen%20Shot%202017-06-14%20at%209.53.45%20am.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/06/14/Screen%20Shot%202017-06-14%20at%209.53.45%20am.jpg" alt="">
At an individual capital city level housing markets have cycled quite differently however, the majority of capital cities recorded a decline in dwelling values in both 2008 and from late 2010/early 2011. 
The 2008 decline occurred as the financial crisis hit with values falling however, stimulus measures in the form of aggressive interest rate cuts along with cash handouts and boosts to first home buyer’s grants proved enough to spur demand and turnaround the decline in values.
<a href="https://www.propertyobserver.com.au/images/2017/06/14/Screen%20Shot%202017-06-14%20at%209.53.56%20am.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/06/14/Screen%20Shot%202017-06-14%20at%209.53.56%20am.jpg" alt="">
In 2010 dwelling values fell as the post financial crisis stimulus was being wound out of the market with interest rates increasing and first home buyer incentives being removed. 
These value falls were arrested as the RBA reversed direction and started to cut official interest rates again in late 2011.
Looking at the declines which commenced in 2008, the magnitude of falls was fairly minor considering most advanced economies fell into recession as a result of the financial crisis. 
Hobart and Darwin were relatively unaffected by the declines however, Melbourne (-8.3%), Perth (-6.8%) and Sydney (-6.2%) were more impacted than all other capital cities. 
The period of decline proved quite short and it has become clear that the stimulus measures effectively staved off sharper declines and possibly a national recession.
<a href="https://www.propertyobserver.com.au/images/2017/06/14/Screen%20Shot%202017-06-14%20at%209.54.07%20am.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/06/14/Screen%20Shot%202017-06-14%20at%209.54.07%20am.jpg" alt="">
From 2010 to 2011/12 all capital cities experienced falls in dwelling values as the financial crisis stimulus and low interest rates were wound out of the market. 
Sydney (-5.0%), Adelaide (-6.9%) and Canberra (-4.4%) were the only capital cities in which values didn’t fall by more than 10% over this period. 
The largest falls were recorded in Darwin (-19.7%), Hobart (-14.3%) and Brisbane (-11.7%). 
Over the period of falls, Darwin (-1.2%) averaged the largest average monthly fall along with Hobart (-0.8%), Melbourne (-0.6%) and Perth (-0.6%). 
Across the other capital cities, Sydney, Adelaide and Canberra recorded average declines of -0.3%/month and Brisbane’s declines averaged -0.5%/month.
<a href="https://www.propertyobserver.com.au/images/2017/06/14/Screen%20Shot%202017-06-14%20at%209.54.19%20am.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/06/14/Screen%20Shot%202017-06-14%20at%209.54.19%20am.jpg" alt="">
This analysis serves as a reminder that although capital city dwelling values have largely increased over the past 20 years, they are not immune from potential declines. 
The impetus for these previous declines have been external economic shocks and the stimulus of low interest rates and grants to first home buyers being removed. 
We aren’t currently seeing any economic shocks of the size of the 2008 financial crisis but we are seeing unemployment rate at similar levels to 2008/09 and historically high levels of underemployment. 
The market is also slowly seeing historic low mortgage rates moving higher against a backdrop of record low wages growth and record high household debt. 
Depending on how much mortgage rates are increased (noting that this is not happening due to the RBA) home owners should be aware that it could lead to a slowing or even some potential falls in dwelling values.
Cameron Kusher is head of research for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
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What happens when house prices start falling? Cameron Kusher

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EXPERT OBSERVER
The combined effect of low rental yields and declining dwelling values has resulted in a rapid reduction in overall returns from housing over the past year.
According to the CoreLogic Total Returns Index, over recent year’s value growth has been much stronger than rental returns, showing that the majority of the returns have been achieved via capital gains rather than rental income.
With dwelling values now falling and gross rental yields close to historic lows, the total returns from residential housing are not looking so attractive and a greater share of returns are coming from the yield component.
<img src="https://www.urban.com.au/images/2018/8/13/PP%20CL%201.JPG" alt="">
National dwelling values fell by -1.6% over the 12 months to July 2018, total annual returns have fallen to just 1.9% and are now at their lowest since June 2012.
The fall in total returns has been substantial given that a year earlier total returns were recorded at 14.2%.
Across the combined capital cities, total returns over the 12 months to July 2018 were recorded at 0.8% - the lowest they have been since May 2012.
Total returns across the combined regional markets were recorded at 6.6% over the past year – again, the lowest they have been since June 2013.
<img src="https://www.urban.com.au/images/2018/8/13/PP%20CL%202.JPG" alt=""> 
A year ago, annual total returns were recorded at 14.8% across the combined capital cities and 12.0% across the combined regional markets.
Over the past 12 months, total returns in Sydney have fallen by -2.5%.
This -2.5% fall in returns is the weakest result since February 2009 and represents a substantial slowdown in annual returns from July 2017 when they had increased by 19.0%.
With dwelling values falling -5.4% in Sydney over the past year it highlights that value changes largely dictate total returns in Sydney.
In regional NSW total returns increased by 6.7% over the past year that was the smallest annual increase since February 2013.
Annual returns in regional NSW have slowed from 17.1% a year ago.
<img src="https://www.urban.com.au/images/2018/8/13/PP%20CL%203.JPG" alt="">
Value falls in Melbourne over the past year have seen a substantial reduction in total returns.
Over the past year, Melbourne recorded at 2.4% reduction that was down from 16.6% a year ago and was also the lowest annual return since October 2012.
Total returns in regional Vic have remained much more stable than those in Melbourne.
Over the past 12 months, total returns in regional Vic have been recorded at 9.8% which was only slightly lower than the 10.4% total returns recorded a year ago.
Value growth is only slightly lower than it was a year ago in regional Vic which is a key contributor to fairly steady total returns.
<img src="https://www.urban.com.au/images/2018/8/13/PP%20CL%204.JPG" alt="">
Over the past year, dwelling value growth has slowed across Qld which has contributed to a moderate reduction in total returns.
Over the year, total returns in Brisbane were recorded at 4.8% which was the lowest return since July 2013 and down from 7.5% a year ago.
Regional Qld total returns were slightly stronger than those in Brisbane were at 5.2% however, they too were down from 9.1% a year ago and the 5.2% was the smallest annual return since October 2012.
<img src="https://www.urban.com.au/images/2018/8/13/PP%20CL%205.JPG" alt="">
The rate of dwelling value growth has slowed over the past year in Adelaide and so too have total returns while the rate of value decline in regional SA has slowed, providing a boost to total returns.
Total returns in Adelaide were recorded at 4.9% over the past year compared to a 6.1% return in regional SA.
In Adelaide, returns have fallen from 9.9% a year ago and are the lowest they have been since June 2013.
Total returns in regional SA have increased from 5.2% a year ago and are the highest they have been since January 2017.
<img src="https://www.urban.com.au/images/2018/8/13/PP%20CL%206.JPG" alt="">
Although values have fallen over the past year in both Perth and regional WA, total returns in each region remain positive.
Over the past 12 months, total returns in Perth were recorded at 1.6%, which was an increase from 1.2% a year ago however, annual returns have eased slightly over recent months.
In regional WA, total returns were recorded at 0.6% over the past year compared to 1.8% a year ago.
<img src="https://www.urban.com.au/images/2018/8/13/PP%20CL%207.JPG" alt=""> 
With strong increases in dwelling values over the past year, Hobart has recoded the nation’s highest total returns at 17.1%.
Although 17.1% represents much stronger returns than all other capital cities it is lower than the 19.7% a year ago and also lower than the recent peak of 20.2% in September 2017.
Regional Tas has also generated comparatively high total returns over the past year of 12.0%.
The 12.0% annual returns are down from 14.1%, a year ago which was the recent peak.
<img src="https://www.urban.com.au/images/2018/8/13/PP%20CL%208.JPG" alt="">
 
There is a big discrepancy between total returns in Darwin and regional NT, which is also reflective of the significant differences in value changes over the past year.
Over the past year, total returns in Darwin were recorded a -0.8% which is down from a positive returns of 2.5% a year ago.
Although total returns are falling, the magnitude of the fall has slowed over the past two months.
In regional NT, total returns were recorded at 12.3%, which was a substantial improvement on the 1.4% annual return a year ago.
<img src="https://www.urban.com.au/images/2018/8/13/PP%20CL%209.JPG" alt="">
Over the 12 months to July 2018, total returns for Canberra dwellings were recorded at 7.0%.
The 7.0% annual return was lower than the 12.8% recorded over the previous 12 months.
As the chart below shows, returns have trended lower over the past year but have begun to stabilize over recent months.
<img src="https://www.urban.com.au/images/2018/8/13/PP%20CL%2010.JPG" alt="">
The most recent data shows that there has been a significant fall in investor mortgage demand.
Over recent years most of this demand has been in Sydney and Melbourne, both of which have seen a significant slowdown in total returns over the past year.
Given the decline in returns and an expectation that returns will continue to shrink as values decline further, it is anticipated that investor mortgage demand will also shrink, particularly in Sydney and Melbourne.
Investors could see renewed interest for housing in other regions of the country where total returns remain positive however, however the returns are anticipated to be far inferior to those recorded over recent years in Sydney and Melbourne.
Cameron Kusher is a CoreLogic Research analyst 
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Returns on residential housing continue to fall: Cameron Kusher

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EXPERT OBSERVER
My analysis reveals that over the 2017-18 financial year, annual value growth fell from 10.2% over the previous financial year to a decline of -0.8% this year.
The largest fall in values is occurring for Sydney and Melbourne’s most expensive properties.
This has resulted in the number of sales at, or in excess, of $1 million starting to trend marginally lower across the nation.
<img src="https://www.urban.com.au/images/2018/8/16/CL%20PP%201.JPG" alt="">
As housing market conditions continue to weaken, it is anticipated that there will continue to be fewer sales above the $1 million threshold.
Over the 12 months to June 2018, 16.0% of all houses and 8.8% of all units sold nationally had a price of at least $1 million; the share of house and unit sales at this price point was slightly lower than the previous year when 16.1% of houses and 9.1% of unit sales were at this price point.
The share of $1 million plus sales is also down from the peak of 16.8% for houses in February 2018 and 9.4% for units in October 2017; 24.5% of houses and 10.7% of units were sold for at least $1 million over the 2017-18 financial year.
House sales at this price point were slightly higher than the 24.3% a year ago but down from the recent peak of 25.5% in February 2018.
<img src="https://www.urban.com.au/images/2018/8/16/CL%20PP%202.JPG" alt="">
 
The 10.7% of unit sales for at least $1 million was down from 11.1% a year ago as well as being lower than the 11.5% peak in October 2017.
Across the combined regional markets, 4.7% of all houses sold over the 2017-18 financial year transacted for at least $1 million.
A year earlier, 4.3% of all sales were at that price point however, the share of house sales at or above $1 million has fallen slightly from 4.8% in March 2018.
Four per cent of all units sold over the past year were at least $1 million which was a recordhigh share and up from 3.7% the previous year.
<img src="https://www.urban.com.au/images/2018/8/16/CL%20PP%203.JPG" alt="">
At its peak in March 2018, 50.4% of houses sold over the past year in Sydney transacted for at least $1 million with the figure since falling to 48.8% in June 2018.
The 48.8% share in June 2018 was slightly higher than the 48.6% a year earlier but clearly now trending lower.
Over the 12 months to June 2018, 21.2% of all unit sales were at least $1 million which was both down from a year ago (21.8%) and lower than the October 2017 peak (22.5%).
<img src="https://www.urban.com.au/images/2018/8/16/CL%20PP%20SYdney.JPG" alt="">
Over the 2017-18 financial year, 29.6% of houses and 8.% of units sold in Melbourne sold for at least $1 million.
The share of house sales at this price point was higher than the previous financial year (27.6%) while for units it was slightly lower (8.1%).
The share of sales of at least $1 million in Melbourne peaked in March 2018 for houses at 30.6% and peaked in January 2018 at 8.6% for units.
<img src="https://www.urban.com.au/images/2018/8/16/CL%20PP%205.JPG" alt="">
A historic high of 9.2% of houses and 3.3% of units in Brisbane were sold for at least $1 million over the 12 months to June 2018.
The share of sales of at least $1 million has risen quite considerably over the year from 8.1% for houses and 2.8% for units a year ago.
 
<img src="https://www.urban.com.au/images/2018/8/16/CL%20PP%206.JPG" alt="">
Over the 12 months to June 2017, 5.3% of Adelaide houses and 1.8% of units had been sold for at least $1 million.
12 months later, the share of sales within this price point had increased to new record-highs of 5.9% for houses and 2.0% for units.
<img src="https://www.urban.com.au/images/2018/8/16/CL%20PP%207.JPG" alt="">
Despite ongoing declines in values over recent years the share of sales of properties for at least $1 million in Perth has increased over the year.
In June 2017, 10.9% of houses and 3.8% of units sold for at least $1 million compared to 11.1% and 3.7% respectively in June 2018.
The share of houses sold for at least $1 million peaked in April 2018 at 11.3% while the share of unit sales over $1 million peaked at 5.6% in April 2008.
<img src="https://www.urban.com.au/images/2018/8/16/CL%20PP%208.JPG" alt="">
With Hobart dwelling values having surged over the past year there has been a substantial increase in the share of house sales of at least $1 million.
Over the 12 months to June 2018, 3.7% of all houses sold and 1.2% of all units sold transacted for $1 million or more.
The share of house sales of $1 million or more was a record high and up from 2.6% of all sales a year earlier.
The share of $1 million unit sales increased from 1.0% a year earlier but has eased back from a peak of 1.3% in January 2018.
<img src="https://www.urban.com.au/images/2018/8/16/CL%20PP%209.JPG" alt="">
As Darwin dwelling values have fallen over recent years so too has the share of sales of properties for at least $1 million.
At the peak in February 2015, 5.9% of all house sales were at least $1 million while for units, the peak of 3.1% of all sales occurred in August 2015.
Over the past 12 months, 3.8% of all house sales were at least $1 million which was steady over the year while 0.9% of all unit sales were seven figures over the past year compared to 1.4% a year ago.
<img src="https://www.urban.com.au/images/2018/8/16/CL%20PP%2010.JPG" alt="">
Over the 2017-18 financial year, 14.1% of all house sales and 2.5% of all unit sales in Canberra were at least $1 million.
The 14.1% of house sales for at least $1 million was an historic high while the share of seven figure sales of units peaked in March 2016 at 3.1%.
The share of $1 million house and unit sales both increased over the year from 12.0% and 1.9% respectively.
In closing, with dwelling values declining and much more rapid declines across the most expensive housing stock it is reasonable to expect the share of $1 million sales to trend lower over the coming year.
This will largely be driven by weakening in Sydney and Melbourne. Smaller capital cities are also likely to continue to see the share of $1 million sales climb further too.
<img src="https://www.urban.com.au/images/2018/8/16/CL%20PP%2011.JPG" alt="">
Cameron Kusher is a CoreLogic research analyst 
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Expensive home sales volume in decline, with Hobart going against the capital city trend: Cameron Kusher

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

Joel Robinson

Garden-led design drives buyer demand at Yarraville Green

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

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

The enormity of delivering a true skyscraper in Australia's new development market is often overlooked.

It has taken the best part of a decade since plans for Chevron One were first unveiled, but the 52-storey tower is now complete, with residents collecting their keys and moving into what has become one of the Gold Coast's most recognisable new landmarks.

Rising 127 metres above Chevron Island, Chevron One stands almost twice as high as any other building on the island. Its scale places it alongside the trio of towers at Jewel, arguably the last truly significant addition to the central Gold Coast skyline when they were completed around six years ago.

While there are several developments underway around a similar height to Chevron One, they are more concentrated within clusters of the highest towers in the city. The fact Chevron One sits within a developing precinct, looking back at the other high-rise developments in Surfers Paradise and Broadbeach, makes it a different proposition altogether. It will certainly become a reference point on the Gold Coast skyline.

[smartcode_project:default project_id=6515 project_image_fid=68833]

Developer Bensons Property Group is behind the 52-storey tower, which has just shy of 250 apartments, along with an exhaustive list of resident amenity spread across what is the largest development site ever assembled on Chevron Island.

The tower has been the talk of the town for years, says Ray White Projects Gold Coast agent Caitlin Rosenboom, who is selling the remaining apartments.

"People have been watching Chevron One go up for years," Rosenboom says, adding that many prospective buyers have been surprised by the scale of the views once they step inside.

"It's only when they walk through a completed apartment that they truly understand the position of the building," Rosenboom says.

"The views are jaw-dropping. Whether you're looking east over the ocean, across Surfers Paradise, along the river systems or out to the hinterland, every level offers something different but equally impressive."

[smartcode_project:default project_id=6515 project_image_fid=360215]

One of Chevron One's defining advantages is its location on the eastern side of Chevron Island on Stanhill Drive, a position which protects the views forever.

"There's only one row of houses between Chevron One and the water, and the height restrictions along the river means views from Chevron One can never be built out,"&nbsp;Rosenboom says.

While new apartment developments continue to emerge across the Gold Coast, Rosenboom says opportunities to secure a completed apartment with this level of outlook are becoming increasingly rare.

"The size of the site is something that would be incredibly difficult to replicate today," she says.

"That's allowed Chevron One to deliver the sort of amenity, open space and resident facilities that very few projects can offer. There are not many completed apartment buildings on the Gold Coast right now that can compete with the combination of scale, quality and amenity."

[smartcode_project:default project_id=6515 project_image_fid=68839]

There's around 2,000 sqm of amenity solely for the use of residents of Chevron One. Club One features a uniquely shaped swimming pool that mirrors the footprint of the building itself, set within a extensively landscaped gardens. There's also an indoor pool and spa, a fully equipped gym with a Pilates room, a yoga garden, a bookable private dining area and lounge that can host up to 30 people, and a 24-hour concierge service.

As for the buyers, Rosenboom is fielding enquiry from everywhere: Sydneysiders and Melburnians looking at the new and off-the-plan market following the changes in the Federal Budget, as well as those looking to relocate, through to South East Queenslanders seeking either a permanent home or a weekender bolthole.

"The Gold Coast lifestyle continues to resonate with people relocating from the southern states, and when they see the views and the quality of what's been delivered at Chevron One, it becomes very easy for them to understand the appeal," Rosenboom says.

A diverse mix of one, two and three-bedroom apartments remain available, with each offering "something a little different", be it the orientation and views, configuration, or level, to suit a wide variety of buyers.

The remaining apartments are ready to inspect in person, by appointment.

[smartcode_project_cta:default project_id=6515]

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

A general rule of thumb in new apartment developments is that the penthouses get the rooftop.

It's a formula that's become commonplace across Australia's apartment market. Residents might have access to a pool, gym or barbecue facilities on a dedicated lower level, but the most desirable outdoor spaces are typically reserved for the highest-priced homes at the top of the building.

<a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Property Group</a> has taken the opposite approach.

Rather than dedicating the rooftop to a handful of buyers, the Gold Coast developer has made it the centrepiece of its Flourish collection, creating expansive shared spaces from the best vantage point in the building.

The philosophy has reached its most ambitious expression at <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> in Palm Beach, where two rooftop precincts connected by a skybridge will deliver one of the most extensive lifestyle offerings seen in a residential apartment project on the Gold Coast.

[smartcode_project:default project_id=150017 project_image_fid=374053]

"We're seeing a clear move toward developments that offer more than just an apartment," Sherpa Group founder Christie Leet said.

"People want spaces that support how they actually live, whether that's working from home, staying active, or spending time with family and friends.

"That's where amenity becomes critical. It's not just about what's included, but how those spaces are designed to be used every day."

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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.

[smartcode_project:default project_id=150017 project_image_fid=370962]

While Soleira is the largest project Sherpa has delivered, the rooftop-first philosophy has been evolving for several years.

It began with <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>, the first project released under the Flourish brand. Rather than competing at the ultra-luxury end of the market with oversized half-floor and full-floor residences, Sherpa focused on creating lifestyle-driven apartments supported by resort-style shared spaces.

Amargo introduced more than 800 sqm of rooftop amenity, combining wellness facilities, heated pools, entertaining areas, cabanas, pizza ovens and private dining spaces into what was designed as an extension of residents' homes rather than a facility used only occasionally.

[smartcode_project:default project_id=146527 project_image_fid=366550]

That approach continued with Flourish Oasis, where the same amenity-led philosophy was refined into a more boutique development. Strong demand from Sherpa's growing VIP database saw much of the project sold before it reached the broader market, reinforcing buyer appetite for apartment communities centred around shared lifestyle experiences.

Flourish Amargo is slated for completion mid-way-through next year, with Oasis to be delivered by late 2027. Flourish Soleira is expected to complete in 2030.

[smartcode_project_cta:default project_id=150017]

Sherpa takes amenity to the sky as Flourish Soleira captures booming Palm Beach demand

As apartment living continues to evolve across Sydney's growth corridors, the quality and distribution of shared spaces is increasingly shaping how residents experience home. Rather than functioning as add-ons, amenities are being embedded into the daily rhythm of a building, supporting everything from quiet retreat to social interaction, often within a single vertical community.

At <a href="https://www.apartments.com.au/new-apartments/aeris-melrose-park-nursery-street-melrose-park-nsw-2114">Aeris</a> in Melrose Park, this approach is resolved through a layered amenity offering that unfolds from ground level through to its upper podium. Developed by <a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a> in partnership with Hankyu Hanshin Properties, the project introduces 468 apartments across two towers and a mid-rise building, positioned at the highest point of the broader masterplan.

[smartcode_project:default project_id=426 project_image_fid=359199]

The amenity experience begins at street level, where two courtyards sit within a landscaped setting that connects residents to the wider network of parks and green spaces. These green spaces are not isolated pockets but part of a wider pedestrian network that links Aeris to the surrounding <a href="https://www.apartments.com.au/developments/melrose-park-nsw-2114">Melrose Park</a> precinct, including Central Park, future schools, and the Town Centre opening in July 2026. The result is a transition that moves from public to private without abrupt boundaries, allowing residents to pass through shaded, tree-lined environments before reaching the building itself.

Moving upward, the focus shifts to the level five podium, where the primary communal facilities are concentrated. This space brings together a 16-metre swimming pool, outdoor seating areas, and a communal BBQ zone arranged to take advantage of elevated outlooks. Seating is positioned beneath pergolas, creating pockets of shade that extend the usability of the space throughout the day. The pool edge aligns with views toward the wider district, reinforcing the sense of elevation that defines the project’s positioning.

In the adjacent building, this is complemented by quieter, more contemplative spaces, including an outdoor cinema set within the same level. Positioned to operate primarily in the evening, it introduces a different tempo to the shared environment, shifting from daytime activity to after-hours use without requiring separate zones.

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The podium also accommodates an intimate private resident gym. Located on the lower levels, it gives residents convenient access to fitness facilities without leaving the building.

Above, the elevated podium sky deck extends the amenity offering, providing additional open-air spaces with elevated outlooks across the surrounding landscape. While more restrained in program, this upper level reinforces the project’s vertical progression, from ground-level greenery to elevated outlook, allowing residents to move between distinct spatial conditions within a single address.

This distribution of amenities reflects a deliberate response to how residents use space across the day. Sekisui House Australia Sales and Marketing Director Peter Kalaf points to the role these shared areas play in shaping buyer demand. Aeris has been conceived as more than a collection of apartments, with the podium pool, gym and outdoor cinema forming part of a broader lifestyle offering that extends the home beyond each individual residence.

[smartcode_project:default project_id=426 project_image_fid=360300]

What distinguishes Aeris is not the inclusion of these elements individually, but how they are arranged in relation to one another. Active, social, and passive spaces are layered vertically rather than separated, allowing residents to choose between them without leaving the building or moving far from their apartment. This proximity supports both routine use, such as a morning swim or evening workout, and more occasional gatherings, whether around the BBQ area or within the cinema setting.

The amenity design also sits within a broader framework of connectivity across Melrose Park. The Melrose Park Town Centre, anchored by Coles and Dan Murphys, features a mix of retail, dining, health and lifestyle offerings, bringing everyday convenience closer to residents. By the end of the year, more than five hectares of parks and open space, equivalent to around seven football fields of green space on residents' doorstep, will further enhance the precinct, allowing the internal facilities at Aeris to operate as an extension of the wider neighbourhood rather than a substitute for it.

Construction at Aeris continues to gather momentum, with ground floor slabs expected to be completed in late 2026 before the first sections of the buildings begin to rise above ground.

[smartcode_project_cta:default project_id=426]

Cameron Kusher

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