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How the RBA interest rate cut affects your home loan after the 50-basis-point cut

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Today, all eyes will be on the Reserve Bank amid speculation that the cash rate will be eased by at least 25 basis points.
The RBA has often faced pressure from politicians and business leaders to reduce interest rates. But it seems that the objectives of politicians and independent monetary policy-makers are not always in agreement. Is there a way for the RBA to arm itself against meddlesome political rhetoric?
Ben Bernanke, chair of the US Federal Reserve, announced recently that the <a target="_blank" href="https://www.federalreserve.gov/monetarypolicy/fomc.htm">Open Market Committee</a> would publish its views on future interest rates. This move towards greater transparency brings the Federal Reserve into line with other central banks that publish interest rate projections, including New Zealand, Norway, and Sweden. Should the RBA adopt a similar approach?
An advantage of publishing longer-term interest rate projections is that the markets and other government departments have a clearer indication of what the future holds.
These projections are not promises; the planned path of interest rates will evolve in response to monetary conditions. Communication of the uncertainty about the plan would allow the public to gauge the odds that the current monetary strategy will require a rethink in the future.
Unfortunately, there are circumstances in which politicians and the public favour adjusting the monetary strategy to accommodate inflationary pressures, regardless of the inflation target.
The job of the independent central bank is to resist short-termism. Recently, the pressure in Australia has been strong.
“In the current economic environment, should the RBA consider it appropriate to change the cash rate, this could deliver widespread benefits for households and business – noting that a number of sectors of the economy most under strain are arguably more sensitive to interest rates”. Julia Gillard (<a target="_blank" href="https://www.canberratimes.com.au/national/pms-salvo-to-reserve-drop-rates-20120418-1x817">from a speech to a business audience, Perth, April 20, 2012</a>).
“The Reserve Bank has made the wrong call consistently and compounded those wrong calls. For some bizarre reason in this country, it’s like it is religious heresy to criticise the decisions of the RBA”. Paul Howes (talking to ABC Radio, quoted in The Australian, April 11, 2012).
And the chair of industry funds management, Garry Weaven, added further to the pressure. “At the end of the day, no-one is truly independent. If the requirements, both for the government and for the Reserve Bank, is the greatest good of the Australian people and, in particular, the specific requirements in the Reserve Act of full employment, then, you know, on independence of thought, fine, but in the end you must take account of the full picture.” Garry Weaven (<a target="_blank" href="https://www.abc.net.au/am/content/2012/s3479814.htm">talking to ABC News</a>, AM, April 18, 2012).
The RBA would be less vulnerable to political pressure if armed with an interest rate path. Then, to be taken seriously, a critique of policy would require a new path for interest rates, justified on an alternative assessment of monetary conditions. Simple claims of “the wrong call” wouldn’t suffice.
How difficult would it be for the RBA to publish longer-term probabilistic interest rate projections? Other countries, such as Norway, have found this route to be feasible.
Closer to home, the RBA Shadow Board at the Australian National University’s Centre for Applied Macroeconomic Analysis (CAMA) currently provides long-term interest rate projections from individual <a target="_blank" href="https://cama.anu.edu.au/ShadowRBAboard.asp">shadow board members</a>. The CAMA Shadow Board projections for Australia, which are not forecasts of actual RBA Board behaviour, reveal a considerably diversity of views for longer-term interest rates.
Some experts – like some politicians – think that the monetary stance ought to be looser in 12 months. Others are not yet persuaded, seeing rates likely to rise over the next year. The pledge of future fiscal surpluses has not been enough to convince these independent experts that rates will be lower in the longer term. A key advantage of using monetary policy experts on a board is their monetary policy expertise. Monetary policymakers should not be easily swayed by government rhetoric.
Longer-term interest rate projections offer the RBA a feasible route to greater transparency and enhanced operational independence from short-term political interference. An expert-based RBA board would be a further improvement.
Shaun Vahey is a professor at ANU College of Business and Economics at <a target="_blank" href="https://www.anu.edu.au/">Australian National University</a>.
Liz Wakerly is a research fellow at the Centre for Applied Macroeconomic Analysis at <a target="_blank" href="https://www.anu.edu.au/">Australian National University</a>.
This article originally appeared on <a target="_blank" href="https://theconversation.edu.au/">The Conversation.</a>
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An interest rate path would provide greater independence for the RBA

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A 1970s façade turned off potential buyers of a Melbourne townhouse at the weekend, as it was passed in and sold at a price at the lower end of its quoted range.
There's now a tipping website, <a href="https://www.propertytycoon.com.au/" target="_blank" style="font-size: 14px; text-align: left;">www.propertytycoon.com.au</a>, where punters can guess auction five results in Melbourne and Sydney, with no outlay. It's mostly about testing your market knowledge with a small cash prize as a sweetener.
The façade of the 1970s townhouse featured on Property Observer turned buyers off 4/10 Ryeburne Avenue, Hawthorn (pictured below), as it struggled to generate any real competition and was passed in for $881,000. It sold shortly after the auction for $908,000 which was at the lower end of its quoted range.
<img src="/images/stories/ryeburne.jpg">
In Sydney no auction tippers guessed the $2.25 million result at 16 Upper Minimbah, Northbridge (pictured below).
<img src="/images/stories/minimbah.jpg">
The property was quoted at $1.7 million plus, and although the house itself was not in great condition it was the 740 square metres of land and highly desirable location with view of the water that drove demand.
 
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Seventies townhouse façade turns off Melbourne buyers in property auction tipping competition

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2/48 Willis Street, Kingsford, NSW, 2032
<img src="/images/stories/willisst.jpg">
The tenant of this two-bedroom unit is paying $520 per week and is on a lease until November this year. It sold under the hammer on Thursday, April 26 for $500,000, securing its investor buyer an indicative gross rental yield of 5.4%, substantially above the median indicative gross rental yield of 4.6% for Kingsford units, according to RP Data. The gross rental yield does not consider the costs of maintaining the property, including council rates and other fees such as water bills and managing agent fees. 
The property is close to shops, restaurants, cafes, public transport, the University of NSW and beaches, and both bedrooms have built-in wardrobes.
LJ Hooker agent Anthony Rizzo gave pre-auction price hopes in the "early $500,000s". 
<a href="https://calc.washingtonbrown.com.au/wbdcalculator/calculator.aspx?RID=HPCAZOPTTT" target="_blank">Washington Brown</a> estimates the first-year tax depreciation deduction to be $5,500 and over five years to be $16,500.
The median unit price in Kingsford rose by 3.5% in the past year, according to RP Data.
For more about prices and yields in Kingsford, see the RP Data suburb page.
 
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Investor form guide wrap: Gross rental yield of 5.4% in Kingsford

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They are two of Australia’s biggest, yet less understood, companies: the lenders mortgage loss insurers, or “LMIs”: Genworth and QBE LMI. 
Both have estimated market values well in excess of $1 billion. Collectively they insure half a trillion dollars’ worth of Aussie home loans. And the recently deferred IPO of Genworth has suddenly brought the industry into focus. In particular, correspondents overseas have argued that this could be the “canary in the coal mine” for the Aussie housing market. 
But it is an odd time to be getting negative on this admittedly oblique industry. Australian Property Monitors reports today that Australian house prices rose by 0.9% in the first quarter of 2012 following the RBA’s two rate cuts in November and December. Unemployment is sitting at a historically low 5.2% and shows no signs of rising. And with the RBA all but certain to cut its cash rate by 50 basis points, which should deliver a net reduction in borrowing rates of about 75 basis points since November, conditions in the housing and mortgage markets are likely to improve further. Declining interest rates, low unemployment, and steady house prices are surely sanguine conditions for LMIs. 
Genworth Australia’s parent was planning on selling (only) 40% of the local business via an ASX listing in 2012. It was slated to be one of the biggest IPOs of the year. The explanation of the deferral of the IPO was tied to the expectation that there would be a “modest loss” reported by the Australian business in the first quarter of 2012. 
Yet it is not clear whether this decision was motivated by the modest loss, or just as much by the desire of the ailing US parent company to keep repatriating valuable dividends delivered by its Australian jewel. I’d suggest the latter is a very real possibility. 
In 2011 alone, the Australian business paid the parent $166 million in dividends. Since that time, there has been a material increase in premiums earned from the sale of insurance in Australia. 
The Australian business also has enormous excess capital. Standard &amp; Poor’s assesses that Genworth Australia’s total assessed capital before debt funding and reinsurance contracts, which further mitigate risk, is $3.3 billion. This is impressive because APRA’s minimum capital requirement for Genworth Australia is just $1.5 billion. The business’s formal Tier 1 capital is $2.3 billion, or over 1.5 times the minimum APRA wants. As the chart from S&amp;P below shows, Genworth’s capital ratios are substantially better than its main competitor, QBE LMI.
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What is more remarkable is that the Australian business has basically no debt at all. S&amp;P assesses total leverage to equal just 4.1%, with a single Lower Tier 2 loan of $140 million outstanding. 
This contrasts strikingly with the AA- rated major banks, which are heavily leveraged with substantial senior-secured (covered bonds), senior unsecured, subordinated and hybrid debt. The typical leverage ratio for the major banks is 15 to 18 times shareholder equity. Here S&amp;P notes that Genworth’s leverage (or lack thereof) is of “AAA” quality: 
“As of Dec. 31, 2011, GFMI's capitalization metrics continue to be very strong, with an S&amp;P capital model score maintained at 'AA,' and APRA MCR multiple of 1.55x. The company's leverage also remains well within our 'AAA' rating tolerance, with the A$140m 10NC5 subordinated debt issue representing 4.1% of total assessed capital.” 
Following the deferral of the IPO, S&amp;P issued no ratings action. Moody’s, on the other hand, put Genworth Australia’s rating “under review”. 
While S&amp;P assumes when giving the Australian business its “AA-“ rating that (1) the IPO doesn’t occur, (2) any reinsurance provided by the US parent, which is a declining minority of the Australian business’s total reinsurance, has zero value, and (3) that the housing market continues to remain “soft” with, importantly, no further interest rate relief, Moody’s has, relatively speaking, had a more negative view on the major banks, the LMIs, and the Australian housing market more generally. 
Notwithstanding their significance to the national economy, the business models of the two LMIs are not well understood. They are nevertheless quite simple. 
In short, Genworth and QBE LMI insure the risk of default on Aussie home loans. Collectively, they cover about $500 billion. Since there is a total of $1.23 trillion of home loans outstanding, the major banks, in effect, self-insure most of the default risk on the remaining $723 billion. The major banks are, therefore, mortgage loss insurers in addition to being deposit-taking and lending institutions. 
The LMIs do make interesting comparisons to the major banks. Unlike the major banks, they have basically no debt. They face no risk of a run on retail deposits, or the refusal of wholesale funders to refinance their debts. They have no exposures to the riskier corporate, personal, or commercial real estate lending markets (as judged by both default rates and APRA). And they have no non-core businesses that can introduce catastrophic risks (e.g., Asian expansion strategies). 
But what does a worst-case scenario for the LMIs look like? Tapping the parent’s US filings, we can look at Genworth’s total loans insured, the share of “bad” loans, and then compare these to the rest of the Australian home loan market. The next chart summarises the first part of this analysis.
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<a href="/images/stories/genworth1.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/genworth1thumb.gif"></a>
At the end of December 2011, Genworth’s 90-day delinquency rate across its 1.4 million loans was only 0.55%. This represents a fall from 0.59% in the September quarter and 0.56% in the June quarter. Importantly, this delinquency rate is actually below the industry-wide level assessed by the RBA, which was 0.6% at the end of December. 
Genworth’s low delinquency rate is a little surprising given that LMI is assumed to normally only apply to high loan-to-value ratio (LVR) loans of 80% or more. In fact, Genworth also does a lot of portfolio-wide insurance. 
In December 2011, Genworth reported that the weighted-average LVR across its book of 1.4 million loans was 62%. Its geographic distribution of loans is also what you would expect, and in line with the major banks, as the third chart below shows. Only 22% of its loans were originated in Queensland, which is consistent with the state’s share of the overall mortgage market.
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While Genworth’s Australian business has performed consistently well (e.g., during the GFC) and realised a strong increase in new net premium revenue over 2010 and 2011 (see next chart), its “loss ratio”, which reflects claims and provisions relative to premiums earned, had increased slightly over 2011. This is not a total surprise given the RBA’s decision to hike rates in late 2010, and the flat-lining of employment growth thereafter.
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The explanation for the “modest loss” that is expected to be reported in the March quarter reiterates messages Genworth had communicated months earlier to the rating agencies. For example, S&amp;P commented prior to the deferral of the IPO that: 
“GFMI's operating performance has remained steady and in line with our expectations, with Dec. 31, 2011, results showing good year-on-year gross written premium growth of 8.6%. However, this was offset by a loss ratio of 49.5%, up from 43.3% a year earlier due to continued pressure from southeastern Queensland, and certain lenders accelerating the claims process to address aged arrears.” 
What does a realistic worst-case scenario look like? Despite the strong geographic diversification and relatively low LVRs in its portfolio, you could, in such a scenario, boost its delinquency rate seven times to, say, 3%, which is in line with the peak in the UK during the GFC. 
You could then assume that half these loans go bad, which would be about right. So there are full mortgage loss insurance claims on 1.5% of all loans insured. Today the average claim per loan is about $65,000. Let’s hike this to $100,000 per loan. 
Total claims in this scenario would then sum to about $2.2 billion, which is well below Genworth’s current capital of $3.3 billion. Thus without any new funding at all, it could cover this realistic catastrophe. It would, of course, need to raise about $400 million of new capital to meet its minimum APRA requirements. Yet since these claims would be strung out over a period of two to three years, this seems like a straightforward task. 
The LMIs’ business models have risk — but no more than a major bank.
Dr Elvis Jarnecic is a senior lecturer at the <a href="https://sydney.edu.au/" target="_blank">University of Sydney</a>.
 
 
 
 
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Genworth no riskier than major banks despite Queensland exposure

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Construction has begun on the last of 20 “black holes” in Sydney’s Chinatown that were formerly part of Paddy’s Market, as Ausbao’s The Quay development gets under way.
The 270-apartment complex launched on Saturday, and CBRE director Murray Wood told Property Observer nearly 200 sold on the day. He says he expects more to sell today.
<img src="/images/stories/thequay9.jpg">
Of these, about 55% sold to owner-occupiers and many to locals, according to the Australian Financial Review, which reports that any unsold stock will be marketed in Hong Kong after May 7.
The agents report that buyers queued up from seven in the morning, and buying activity was "frenzied" once doors opened at 7.30am. Buyers have a five-day cooling-off period to change their minds.
<img src="/images/stories/thequay8.jpg">
Chinese-backed Ausbao Group bought the site at 61-79 Quay Street in 2009 for $38.38 million, according to RP Data, and has plans for a two-tower, $280 million development.
<img src="/images/stories/thequay1.jpg">
After purchasing the site the developer held a design competition, and Sydney City Council granted WMK Architecture’s winning entry 10% “bonus” floorspace because of its environmental features and ability to re-activate public spaces on the long-dormant site.
<img src="/images/stories/thequay5.jpg">
The site was the poultry section of Paddy’s Market from 1912 until the 1950s (historical photo above), and was a retail warehouse for a time. The building burnt down in 1985, leaving just a portion of the façade, and in the late 1980s and early 1990s recession projects to revitalise the site were abandoned.
It has been a car park in recent years, and is bounded by Quay Street, Thomas Street and Thomas Lane.
<img src="/images/stories/thequay2.jpg">
The Quay development will incorporate the façade of the former warehouse and will include 255 car spaces, three retail levels and copious bike parking along with the residential component. 
Apartments will range in price between $390,000 and over $1.7 million, according to marketing agents CBRE, which notes that the prices are not finalised yet. One-bedroom apartments will range between 36 and 64 square metres internally. Most will come with car spaces and some will include studies.
<img src="/images/stories/thequay3.jpg">
The two-bedroom apartments in The Quay will range from 76 to 88 square metres and will all include at least one car space, and the three-bedroom offerings will range between 104 square metres and 131 square metres internally. All the three-bedroom units will come with two car spaces.
CBRE head of residential project David Milton says the car spaces may be unnecessary for residents’ day-to-day life.
“We’re sure businesspeople and working couples will like the convenience of living in a walk-to-work situation, but if they do need to travel there is light rail and buses virtually outside the front door and Central Railway just across the road,” he says.
“This is certainly one location in Sydney where you can do without a car.”
<img src="/images/stories/thequay4.jpg">
A terrace garden will connect the two towers, and it will also feature an indoor/outdoor gymnasium.
“We introduced elements previously only seen in prestigious hotels, which gives The Quay an unique architectural point of difference over other residential developments,” says WMK managing director Greg Barnett.
“The geometric glass, aluminum and louvre facades embrace strong vertical and horizontal planes, and the subtly different architectural expression of each tower reflects the diversity of the inner city Haymarket precinct. You could say the buildings have different personalities within a common language.”
The interiors have been designed by Smart Design Studio and are set to be both unconventional and striking.
““Our concept is ‘life beautifully packaged’, and we’ve taken inspiration from the world of luxury brands,” says Smart Design Studio founder William Smart. “We’ve foregone the overhead cupboards, white polyurethane joinery and blond timber accents in order to create a special place that is crafted and unique. This concept pursues the idea that things that surround us can create the mood of a space, just like a stage set builds the scene that transports us to another world.”
<img src="/images/stories/thequay6.jpg">
The buildings will include sustainable extras like plantation-grown timber, eco-friendly building services and a gas heated central hot water system.
The development will be directly opposite the University of Technology Sydney’s Haymarket campus, where <a target="_blank" href="/news">Australia’s first Frank Gehry-designed building is due to be built</a>.
<img src="/images/stories/thequay7.jpg">
Construction began on the development a few weeks ago and is due to be completed in mid-2014.
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The Quay development on long-dormant Sydney Chinatown site sells well in first weekend

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<a target="_blank" href="https://www.propertyobserver.com.au/residential/melbourne-housing-market-on-the-wrong-side-of-the-ledger-residex-boss-john-edwards/2012041954363"><img src="/images/stories/70percent.gif"></a>
The<a target="_blank" href="https://www.propertyobserver.com.au/residential/melbourne-housing-market-on-the-wrong-side-of-the-ledger-residex-boss-john-edwards/2012041954363"> amount of overhang of stock in Melbourne</a>, the largest stock overhang of any capital in Australia, according to Residex boss John Edwards. “I’m worried about Victoria,” he says.
 
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<a href="https://www.propertyobserver.com.au/new-south-wales/model-of-1950s-and-60s-margot-mckendry-lists-darling-point-apartment-title-tattle/2012042254385" target="_blank"><img src="/images/stories/3mplus.gif"></a>
The <a href="https://www.propertyobserver.com.au/new-south-wales/model-of-1950s-and-60s-margot-mckendry-lists-darling-point-apartment-title-tattle/2012042254385" target="_blank">price hopes 1950 and '60s model Margot McKendry has for her Darling Point apartment</a>. It has north-westerly views across Elizabeth Bay towards the city and Harbour Bridge. It cost $900,000 when bought in 1986.
 
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<a href="https://www.propertyobserver.com.au/leisure/south-yarras-albany-boutique-hotel-sells-for-about-%2413-million/2012042354391" target="_blank"><img src="/images/stories/13m.gif"></a>
The <a href="https://www.propertyobserver.com.au/leisure/south-yarras-albany-boutique-hotel-sells-for-about-%2413-million/2012042354391" target="_blank">approximate sales price for South Yarra's Albany Hotel</a>, which recently sold. The site had 81 rooms, restaurant and bar, 24 car bays and roof top pool.
 
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<a target="_blank" href="https://www.propertyobserver.com.au/developments/balmain-leagues-club-site-could-become-megasized-rozelle-village-under-pacific-investments-plan/2012042254387"><img src="/images/stories/32.gif"></a>
The number of levels in one of the two towers<a target="_blank" href="https://www.propertyobserver.com.au/developments/balmain-leagues-club-site-could-become-megasized-rozelle-village-under-pacific-investments-plan/2012042254387"> in the proposed ‘Rozelle Village’ development on the Balmain Leagues club site</a>. The other tower is set to be 25 levels.  The revised proposal, which is double the size of the original plan that was rejected in 2010 because it was considered too big, has prompted outrage from local activists.
 
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<a target="_blank" href="https://www.propertyobserver.com.au/leisure/sunland-lists-gold-coasts-palazzo-versace-after-company-profits-slump/2012042354413"><img src="/images/stories/80m.gif"></a>
The price expectations for <a target="_blank" href="https://www.propertyobserver.com.au/leisure/sunland-lists-gold-coasts-palazzo-versace-after-company-profits-slump/2012042354413">Palazzo Versace on the Gold Coast</a>. Sunland recently listed the hotel, just months after acquiring it outright following a swap arrangement with Dubai development partner the Enshaa Group.
 
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<a target="_blank" href="https://www.propertyobserver.com.au/residential/laurie-sutton-the-kingpin-of-sydney-property-as-he-swaps-mosman-for-kalua-in-palm-beach-in-record-setting-sales/2012042354412"><img src="/images/stories/23m.gif"></a>
The approximate price paid by retired car dealer <a target="_blank" href="https://www.propertyobserver.com.au/residential/laurie-sutton-the-kingpin-of-sydney-property-as-he-swaps-mosman-for-kalua-in-palm-beach-in-record-setting-sales/2012042354412">Laurie Sutton for Kalua, the Joye family’s plantation-style Palm Beach trophy home</a>. The Joye family had hoped to secure $25 million for the property.
 
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<img src="/images/stories/8929.gif">
The number of applications the Queensland government has received so far for its $10,000 building boost scheme, which will close April 30. The scheme could end with as much as half of the funding set aside for the scheme unclaimed by new home buyers and builders.
 
 
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The 7 must-know numbers of the week, starting with Melbourne's oversupply of stock, according to Residex boss John Edwards

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44 Timbs Street, Ulladulla, NSW, 2359
<img src="/images/stories/timbsst.jpg">
The tenants of this three-bedroom house are paying $270 per week and are on an expired lease. Raine &amp; Horne listing agent Lyn Chambers says this is at market rent, and the tenants are keen to stay on. The property is close to walking tracks and parks, and the 807-square-metre block includes a garage.
Chambers <a href="https://www.propertyobserver.com.au/https://www.raineandhorne.com.au/properties/209254" target="_blank">is marketing the property </a>with price hopes of $250,000 plus. If it sells for $250,000 that would secure an investor a gross rental yield of 5.6%, significantly above the indicative gross rental yield of 4.4%, according to RP Data. The gross rental yield does not consider the costs of maintaining the property, including council rates and other fees such as water bills and managing agent fees.
<a target="_blank" href="https://calc.washingtonbrown.com.au/wbdcalculator/calculator.aspx?RID=HPCAZOPTTT">Washington Brown</a> estimates the first-year tax depreciation deduction to be $6,000 and over five years to be $18,000.
The median house price in Ulladulla fell by 9.7% in the past year, according to RP Data.
The property will go to auction Saturday, April 28 at 11am.
For more about prices and yields in <a target="_blank" href="/news">Ulladulla, see the RP Data suburb page</a>.
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Friday form guide: Yields of up to 5.6% in Ulladulla

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The amount of rental stock available in each capital city has changed little in the past month, according to SQM Research. 
The vacancy rate has remained fairy static across all eight capitals, with the amount of stock available to rent increasing slightly in Sydney, Adelaide, Canberra and Hobart and decreasing slightly in the other capitals. 
SQM Research director Louis Christopher says Perth's very low vacancy rate is concerning.
"Perth is now an area of major concern, with vacancies now sitting at an incredibly low 0.5%," Christopher says.
"This is consistent with evidence from other researchers reporting rapidly rising rents."
However, Christopher says the Hobart market is also problematic, but for the opposite reason.
“Hobart, on the other hand, is beginning to show signs of the opposite extreme, with vacancies doubling since this time last year and many localities recording vacancy rates above 4%. We are also seeing rising stock levels in this area, which in contrast to other capital cities which seem to suffer from one or the other, reveals that Hobart is being hit with an oversupply issue from both sides.”
 
 
<img src="/images/stories/10738.gif">
The amount of stock available to rent in Melbourne in March 2012, according to SQM Research. This represents a vacancy rate of 2.9% and is up from the 8,763 properties available to rent in March 2011.
 
<hr>
<img src="/images/stories/8198.gif">
The amount of stock available to rent in Sydney in March 2012, according to SQM Research. This represents a vacancy rate of 1.5% and is up from the 6,454 properties available to rent in March 2011.
 
<hr>
<img src="/images/stories/4205.gif">
The amount of stock available to rent in Brisbane in March 2012, according to SQM Research. This represents a vacancy rate of 1.5% and is up from the 4,289 properties available to rent in March 2011.
 
<hr>
<img src="/images/stories/2365.gif">
The amount of stock available to rent in Adelaide in March 2012, according to SQM Research. This represents a vacancy rate of 1.4% and is up from the 1,689 properties available to rent in March 2011.
 
<hr>
<img src="/images/stories/936.gif">
The amount of stock available to rent in Perth in March 2012, according to SQM Research. This represents a vacancy rate of 0.5% and is down from the 1,462 properties available to rent in March 2011.
 
<hr>
<img src="/images/stories/678.gif">
The amount of stock available to rent in Hobart in March 2012, according to SQM Research. This represents a vacancy rate of 2.4% and is up from the 328 properties available to rent in March 2011.
 
<hr>
<img src="/images/stories/346.gif">
The amount of stock available to rent in Canberra in March 2012, according to SQM Research. This represents a vacancy rate of 0.8% and is up from the 257 properties available to rent in March 2011.
<hr>
<img src="/images/stories/142.gif">
The amount of stock available to rent in Darwin in March 2012, according to SQM Research. This represents a vacancy rate of 0.6% and is down from the 470 properties available to rent in March 2011.
 
 
 
 
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How much stock is available to rent in your capital city: A state-by-state analysis: SQM Research

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In Melbourne this weekend the first-home buyer and investor market is proving to be weak but the home buyer market is very strong.
There's now a tipping website, <a style="font-size: 14px; text-align: left;" target="_blank" href="https://www.propertytycoon.com.au/">www.propertytycoon.com.au</a>, where punters can guess auction five results in Melbourne and Sydney, with no outlay. It's mostly about testing your market knowledge with a small cash prize as a sweetener.
<img src="/images/stories/byrneave.jpg">
The one-bedroom apartment at 10/17 Byrne Avenue, Elwood (pictured above), failed to gather any real traction and was passed in on a solitary bid. It sold soon after auction for $450,000.
Unit 11 in the same block sold earlier this year for $510,000, and although this apartment was slightly bigger, it does illustrate a market with patchy demand.
<img src="/images/stories/thompsonst1.jpg">
The property at 57 Thompson Street, Drummoyne (pictured above), failed to get any interest at all. The Drummoyne property was quoted at $1.75 million plusand was withdrawn from sale prior to the auction.
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Melbourne first-home buyer weak, affordability key in Sydney as auction tipping competition properties struggle to get across the line

Sydney developer Hyecorp's roots on the Lower North Shore stretch back three generations, and that deep understanding of the market continues to shape where and how it develops today.

From high-rise towers to boutique apartment projects, the family-run developer has built its reputation by focusing on a part of Sydney it knows intimately. Founded by Michael Abolakian in the early 1990s, Hyecorp is now led by his sons Stephen, Troy and Patrick.

Stephen Abolakian, joint managing director alongside Troy, has spent more than two decades in the business, overseeing development, planning, finance, marketing and sales.

Abolakian says the developer's disciplined focus on where it chooses to operate has been, and continues to be, one of Hyecorp's greatest strengths.

“We know the buyer profile exceptionally well,” Abolakian says.

“The demographics between places like Willoughby, Chatswood, St Leonards and Roseville are very similar. There are nuances between suburbs and projects, but culturally and from a buyer perspective, there’s a strong overlap.”

That buyer has historically been overwhelmingly owner-occupier driven.

Unlike many Sydney apartment developers that have traditionally relied heavily on investor demand, Hyecorp’s projects have typically attracted downsizers, upsizers, rightsizers and family owner-occupiers seeking long-term homes rather than short-term investments.

“Historically, investors have been a much smaller portion of our demand profile,” Abolakian says.

“We design for owner-occupiers. We don’t design for yield, we design for comfort, amenity, family living and long-term usability.”

That philosophy extends well beyond apartment layouts.

From landscaping and communal gardens to shared amenities and circulation spaces, Hyecorp’s developments are designed around how people actually live, something Abolakian believes has become increasingly important in Sydney’s apartment market.

“There was probably a period where having an approved project in market was enough,” he says.

“There wasn’t as much competition and if you built it, buyers would come. That’s no longer the case.”

“There’s more supply in the pipeline now, particularly with TOD precincts and low and mid-rise reforms opening up opportunities across Sydney. Buyers have more choice, so if you get the product wrong, they’ll simply go elsewhere.”

[smartcode_project:default project_id=110379 project_image_fid=311393]

The shift has forced developers to become more sophisticated in how they approach apartment design, particularly as owner-occupier expectations continue to rise.

For Hyecorp, that means thinking beyond who the buyer is today and designing for who they may become in five or 10 years' time.

“People buying now often aren’t moving in for several years,” Abolakian says.

“You might have a young couple buying today, but by the time they move in they may have children, older children, or changing lifestyle needs. You’ve got to think about how families evolve.”

That thinking also shapes Hyecorp’s approach to amenity, which positions wellness at the forefront.

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While resort-style facilities have become increasingly common marketing tools across Sydney apartment developments, Abolakian says the challenge is ensuring amenities are genuinely usable and appropriate for the scale of the project.

“If amenities are done right, they can materially improve the living experience,” he says, adding however that if you&nbsp;overdo it or get it wrong, you can end up with facilities nobody uses that simply create ongoing strata costs.”

That balance is something Hyecorp is aiming to strike with projects like Roseville Avenue, one of the group's upcoming Lower North Shore developments, which Abolakian describes as bringing a resort-style living experience into a metropolitan setting.

“It’s about creating something that feels special without being excessive,” he says.

“Good gardens, quality apartments, thoughtful amenity. Creating that resort feeling in a metro location.”

<img alt="Hyecorp" data-entity-type="file" data-entity-uuid="13c4c0f3-b1b7-44cf-9344-0b3d1d07797a" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-02%20at%2012.14.57%E2%80%AFPM.png?VersionId=9OLWjyj2bYkDV35F78WJnyMSPfc2bJ2z" />

The focus on owner-occupier product comes as Sydney’s apartment market continues to navigate a difficult development environment.&nbsp;For Hyecorp, maintaining an in-house operating model across construction, sales, marketing and development management has become increasingly important in navigating that environment.

“We’ve always believed in keeping a lot of the process in-house,” Abolakian says.

“It creates efficiencies, but it also creates quality control. You can make faster decisions and ensure the end product stays aligned with the original vision.”

Despite the challenges, Abolakian believes demand for quality owner-occupier apartments across Sydney remains strong beneath the surface, particularly across established Lower North Shore suburbs where downsizers continue to seek new housing options close to existing communities.

“There are definitely people waiting,” he says.

“Once some of the broader uncertainty settles, whether that’s the global environment or some of the local economic noise, I think the right projects will perform very strongly.”

Hyecorp currently has three residential developments on the market across Sydney’s Lower North Shore.&nbsp;Audrey, St Leonards, positioned opposite Newlands Park, is nearing completion and preparing to welcome its first residents, with the project now almost sold out.

Hyecorp has also recently launched&nbsp;<a href="https://www.apartments.com.au/new-apartments/celine-chatswood-37-archer-street-chatswood-nsw-2067">Celine Chatswood</a>, an architectural tower, while continuing to deliver&nbsp;<a href="https://www.apartments.com.au/new-apartments/juliet-roseville-64-pacific-highway-roseville-nsw-2069">Juliet Roseville</a>, a more boutique scale of development with just 34 apartments.

Joel Robinson

Why Hyecorp continues to back Sydney's Lower North Shore apartment market

South East Queensland’s apartment market is entering a new phase defined by rising prices, constrained affordability, and mounting pressure on the construction pipeline, according to RPM Group’s latest SEQ Apartments &amp; Townhomes Market Report.

The May 2026 report highlights a widening divide between what buyers can afford and what developers can viably deliver, with detached house prices continuing to push more buyers toward apartments across Brisbane, the Gold Coast, and the Sunshine Coast.

RPM says Brisbane’s median house price has reached around $1.5 million, accelerating the shift toward higher-density housing as buyers are increasingly priced out of the detached market.

[smartcode_project:default project_id=135094 project_image_fid=356540]

Median unit prices rose across all three major SEQ markets in the March quarter. Brisbane City recorded the strongest annual growth, with median unit prices climbing 21 per cent to $862,000, while the Gold Coast reached the highest overall median at $950,000, up 17 per cent year-on-year. The Sunshine Coast followed at $870,000, representing annual growth of nine per cent.

RPM noted the affordability gap between houses and units remains significant, with detached homes commanding premiums of 67 per cent in Brisbane and 68 per cent on the Gold Coast relative to apartments.

The report suggests this price disparity is increasingly consolidating buyer demand within the apartment market, particularly among downsizers and owner-occupiers.

“Demand is real. Supply is moving. But they’re operating on different timelines and the gap between what’s being built and what buyers can afford is the defining tension in this market right now,” RPM Queensland and NSW Managing Directors Peter Neale and Clinton Trezise said in the report.

[smartcode_project:default project_id=150787 project_image_fid=366230]

While approvals and commencements are strengthening, RPM argues the delivery pipeline remains constrained by construction costs, labour shortages, and extended build timelines.

Apartment approvals across Queensland increased 86 per cent over the year to February 2026, reaching 12,682 approvals, the highest level recorded since 2016. Brisbane overtook the Gold Coast as the state’s most active apartment approval market, with nearly 5,000 apartments approved over the past 12 months.

Unit commencements also strengthened considerably, rising 48 per cent year-on-year to 5,453 commencements in the December 2025 quarter, the highest level since 2018.

However, RPM’s research found apartment delivery timeframes have expanded sharply compared to the previous cycle. Projects are now averaging around 30 months from approval to completion, compared to roughly 20 months a decade ago.

[smartcode_project:default project_id=143932 project_image_fid=367515]

The number of units under construction has climbed to approximately 31,530 dwellings, nearing the previous 2016 peak, though projects are remaining in the pipeline for considerably longer.

Construction costs continue to weigh heavily on feasibility. RPM found the average apartment construction cost in Greater Brisbane reached $630,000 per dwelling in 2025, exceeding both Sydney and Melbourne. Coastal Queensland markets, including the Gold Coast and Sunshine Coast, were even higher at an average of $817,418 per apartment due to the prevalence of larger premium product.

The report also points to increasing pressure from Olympic-related infrastructure spending ahead of Brisbane 2032, with labour competition expected to intensify over the next several years.

[smartcode_project:default project_id=150017 project_image_fid=370960]

ANZ Associate Director of Property Daniel Gradwell said the underlying demand drivers across South East Queensland remain strong, supported by interstate migration, downsizers, and population growth.

“The challenge is bringing enough supply to market to meet that demand, and nothing on the horizon makes that straightforward,” Gradwell said.

RPM’s analysis found the affordability challenge is becoming more pronounced in the new apartment market itself, with only three per cent of surveyed new apartments priced below $1 million.

Instead, the market is increasingly concentrated in higher price brackets, with the most common new apartment price band across SEQ sitting between $1.5 million and $1.75 million. Around half of all new apartment stock surveyed is priced below $2 million.

The report suggests developers are not necessarily avoiding lower price points by choice, but because current construction economics make delivering affordable apartments increasingly difficult at scale.

Rental conditions also remain tight across the region. Median rents for one-bedroom apartments rose 12 per cent in Brisbane over the past year to $580 per week, while Gold Coast one-bedroom rents increased nine per cent to $630.

Despite rising rents, RPM noted bond lodgements have generally trended downward over the past five years, indicating more apartments are being absorbed by owner-occupiers rather than retained as investor-held rental stock.

Looking ahead, RPM expects projects targeting the mid-market owner-occupier segment between $1.25 million and $2 million to remain the most viable part of the market, while premium projects in highly constrained coastal or riverfront locations continue to attract demand.

“Construction costs are rewriting the feasibility rulebook across Greater Brisbane, and with little relief in sight, only projects in the right price band, right location, and with presales secured early will make it through,” the report concludes.

SEQ apartment demand outpacing affordable supply as construction timelines stretch: RPM

Camberwell Junction has long been the epicentre of amenity in Melbourne’s Boroondara region.

For nearly a century, it has drawn both locals and visitors, anchored by the Camberwell Sunday Market, which first operated in 1929 and quickly became a fixture of the suburb’s identity. Over time, the Junction evolved into one of Melbourne’s most established retail and lifestyle precincts, now comprising more than 400 stores and over 300 commercial businesses.

Despite that depth of amenity, one thing has remained notably limited: the supply of new apartments.

In a suburb defined by its heritage streetscapes and tightly held residential stock, new development opportunities have been scarce, particularly within the core of the Junction itself. That lack of supply has left a gap in the market for larger, design-led apartments suited to downsizers and owner-occupiers wanting to remain in the area.

Boutique developer Above Zero identified that gap when it secured a prime site on Burke Road, in the heart of Camberwell Junction.

[smartcode_project:default project_id=4896 project_image_fid=368543]

The site has a long planning history. Various proposals have been put forward over more than a decade, many of which were knocked back by the City of Boroondara, with initial applications dating back to 2015. Above Zero acquired the site in 2022 and returned with a revised scheme, refining both the building’s height and its ground-level interface to better align with Council expectations.

That process has culminated in approval for Camberwell House.

The Cera Stribley-designed development will deliver 57 residences on a 1,950 sqm site within the Camberwell Activity Centre, placing it directly within one of Melbourne’s most established retail and transport hubs.

It is expected to be one of the only new apartment developments to launch in the Junction in recent years, reinforcing the rarity of new supply in the precinct. Currently, there are just a handful of projects on the market in Camberwell, underscoring the significance of a development of this scale and positioning.

[smartcode_project:default project_id=4896 project_image_fid=368544]

Camberwell House has been conceived with a clear focus on larger-format apartments. The project will offer a mix of two-, three- and four-bedroom residences, alongside a limited number of penthouses, targeting owner-occupiers seeking scale rather than volume-driven product.

The building’s vertical presence will also set it apart.

Positioned on Burke Road, the development is set to become one of the taller buildings in its immediate context, allowing for elevated outlooks across Melbourne’s CBD skyline and toward the Dandenong Ranges. In a precinct characterised by lower-scale built form, that height provides a point of differentiation, particularly for buyers seeking outlook and natural light.

[smartcode_project:default project_id=4896 project_image_fid=368568]

Architecture has been led by Cera Stribley, with interiors by GOLDEN and landscape design by Florian Wild. The design approach centres on material consistency and restraint, with residences oriented to maximise light, ventilation and connection to outdoor spaces.

Full-height glazing and generous terraces form a key part of that strategy, allowing apartments to extend beyond their internal footprint and engage with the surrounding environment.

Beyond the private residences, a significant component of the project is its amenity offering.

Above Zero has positioned Camberwell House as a “complete living environment”, incorporating a full floor dedicated to resident facilities. At the centre of that is a wellness zone, including a 12.5-metre lap pool, spa, sauna and treatment spaces, alongside a gym and recovery-focused amenities.

This level of amenity is more commonly associated with inner-city developments, rather than established middle-ring suburbs like Camberwell.

[smartcode_project:default project_id=4896 project_image_fid=368588]

Additional shared spaces include a private library lounge, dining and entertaining areas, and an indoor golf simulator. A self-contained guest suite has also been incorporated, allowing residents to accommodate visiting family or friends without impacting their primary living space.

The inclusion of these facilities reflects a broader shift in buyer expectations.

As more downsizers look to transition from larger family homes into apartments, there is increasing demand for developments that offer not just a residence, but a lifestyle. That includes access to wellness, social and entertaining spaces within the building itself, reducing the reliance on external amenity while still maintaining proximity to established precincts.

Camberwell House is positioned to benefit from both.

Its location places it within immediate walking distance of Camberwell Junction’s retail and dining offering, as well as public transport connections, including tram and train services. That combination of internal amenity and external convenience is central to its appeal.

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Jellis Craig Projects Director Stephen Bowtell is handling sales for the project and says Camberwell House offers a rare entry point into one of Melbourne’s most tightly held markets.

“Buyers are recognising that Camberwell House offers something they simply haven’t seen before in Boroondara,”&nbsp;Bowtell&nbsp;says.

“It combines a level of resident amenity and service typically associated with Melbourne’s premium inner-city developments, while being positioned right in the heart of Camberwell Junction.

“The response to the concierge offering has been particularly strong. Buyers appreciate not only the convenience, but also the sense of security and peace of mind that comes from having a dedicated presence in the building every day.

“When you combine that with the wellness facilities, the exceptional arrival experience, and panoramic views across both the CBD skyline and the Dandenong Ranges, it creates a lifestyle proposition that is genuinely unique within the local market.”
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Above Zero launches Camberwell House in undersupplied Camberwell Junction precinct

<a href="https://www.apartments.com.au/developers/consolidated-properties">Consolidated Properties Group</a> (CPG) is approaching the launch of its latest Brisbane riverfront development, <a href="https://www.apartments.com.au/new-apartments/castile-47-skyring-terrace-newstead-qld-4006">Castile</a>, on the dress circle Skyring Terrace in Newstead.

VIP buyers are now being engaged, with a full public sales launch coming later this year.

Positioned as the final opportunity to secure a new absolute riverfront residence on the East bank of Newstead, Teneriffe or New Farm, Castile at 47 Skyring Terrace has been designed by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a> as a timeless addition to the Brisbane skyline.&nbsp;

[smartcode_project:default project_id=150489 project_image_fid=371113]

The name Castile draws on themes of permanence, sophistication and legacy, reflecting a broader vision centred on enduring architecture and timelessness in the rarest of riverfront positions.&nbsp;

CPG Chairman and CEO Don O’Rorke said the project had been envisioned as a future Brisbane icon.&nbsp;

“With 47 metres of direct river frontage and never to be built out views, 47 Skyring Terrace is the definitive address on the Brisbane River,” O’Rorke said.&nbsp;

[smartcode_project:default project_id=150489 project_image_fid=371114]

“Rather than following trend-based apartment design, Castile draws inspiration from Brisbane’s great heritage buildings, reinterpreting classical architecture into a contemporary riverfront landmark designed to stand proudly for the next 100 years,” he said.&nbsp;

The approved development will comprise 227 apartments across a 25-storey tower alongside a boutique six-storey riverfront building of just 12 residences.&nbsp;

Construction is scheduled to commence in September 2026.

[smartcode_project_cta:default project_id=150489]

CPG unveils Castile Newstead ahead of upcoming sales launch

Australia’s online shopping habits have shifted dramatically over the last decade. As eCommerce volumes surged, so too did the frustrations that came with traditional parcel delivery: missed deliveries, long Post Office queues, parcel theft and the challenge of being home during business hours.

Australia Post’s Parcel Lockers emerged as one of the more practical responses to that changing consumer behaviour.

What started as a relatively niche delivery option has evolved into a nationwide network of more than 1,400 self-service Parcel Lockers positioned at train stations, shopping centres, supermarkets and Post Offices across the country. The system allows Australians to send, collect and return parcels 24 hours a day, fundamentally changing how many people interact with deliveries.

The appeal is relatively straightforward: flexibility.

Instead of waiting at home for a delivery driver or rushing to a Post Office before closing time, users can direct eligible parcels to a Parcel Locker location of their choice. Once the parcel arrives, Australia Post sends a notification with a collection code or QR access through the AusPost app, allowing customers to retrieve their package at any time within the collection window.

For apartment residents in particular, the system has become increasingly valuable.

Higher-density living has created logistical challenges around deliveries, especially in buildings without concierge services or secure parcel rooms. Missed deliveries are common, while parcel theft has become an increasing concern as online shopping volumes continue to rise.

Australia Post itself has repeatedly highlighted the growing issue of “porch pirates” during peak shopping periods, encouraging customers to use Parcel Lockers as a safer alternative to unattended home deliveries.

That security aspect is one of the key reasons the Australia Post Parcel Locker network has grown so rapidly.

Parcel Lockers are positioned as secure, monitored collection points that reduce the risk of theft while also improving delivery efficiency for Australia Post. Instead of multiple redelivery attempts, parcels can be consolidated into a single secure destination.

The Parcel Lockers themselves are free to use through a MyPost account and support a range of parcel sizes up to 16 kilograms and dimensions of approximately 35 x 44 x 61 centimetres.

Beyond receiving parcels, the system has increasingly become integrated into the broader eCommerce ecosystem.

Customers can now use Parcel Lockers to return online purchases, while retailers have embraced the model as a way to improve delivery success rates and reduce friction in the shopping process. Australia Post has actively expanded partnerships with major retailers and promoted Parcel Lockers as part of a broader out-of-home strategy.

The timing of that expansion aligns with broader changes in Australian shopping behaviour.

The acceleration of online retail during and after the pandemic placed enormous pressure on delivery infrastructure. Parcel volumes reached record highs, particularly during Black Friday and Christmas periods, with Australia Post delivering more than 100 million parcels during peak festive seasons.

That growth forced logistics providers to rethink the “last mile” of delivery, widely regarded as the most expensive and operationally difficult stage of the process.

Parcel Locker systems have increasingly been viewed as part of the long-term solution.

The concept itself is not unique to Australia. Parcel Locker networks have become common globally, particularly across Europe and Asia, where dense urban environments and apartment living create similar logistical challenges. But Australia’s geography and suburban sprawl made adoption slower initially.

Now, however, the convenience factor is driving mainstream usage.

For commuters, Parcel Lockers near train stations allow parcels to be collected on the way home from work. For apartment dwellers, they remove the uncertainty around access and missed deliveries.

The rise of the AusPost app has also streamlined the experience, centralising notifications, tracking and Parcel Locker access into a single platform. Australia Post has increasingly pushed customers toward app-based delivery management, partly as a way to combat phishing scams and fake delivery notifications, which have become more sophisticated in recent years.

The Parcel Locker model is also beginning to influence property development itself.

Parcel management has become a growing consideration in apartment building design, particularly as online shopping becomes embedded in everyday life. Many new residential developments are now incorporating dedicated parcel rooms or Parcel Locker systems into foyers and communal spaces.

For developers, parcel management is increasingly viewed as part of the broader resident amenity offering, alongside gyms, wellness spaces and communal work areas.

That reflects a wider evolution in how residential buildings are designed.

Apartment buyers are placing greater emphasis on convenience, security and operational functionality, particularly in higher-density urban environments. Parcel delivery, once considered a minor operational detail, has become an increasingly important part of that equation.

Australia Post’s Parcel Locker network sits at the centre of that behavioural shift.

What began as a simple alternative delivery option has evolved into a key piece of infrastructure supporting Australia’s growing eCommerce economy and changing urban lifestyles.

And as online shopping continues to expand, the role of Parcel Lockers is likely to become even more embedded in how Australians live, shop and receive goods.

Cassidy Knowlton

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