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Fewer than 10% of inner-Brisbane apartments are being snapped up by owner-occupiers, with the market the toughest it has been in 25 years, says property developer David Devine.
Devine’s Metro Property Development, which he founded with Ken Woodley in 2010, has been able to build its position of having the top-selling projects in Brisbane by tapping into the investor market, with its Chelsea apartment project in Bowen Hills now completed, five projects under construction and $600 million worth of projects in the pipeline.
“We left Devine three years ago and came out of there with no baggage. We bought all our development sites post-GFC, so there’s nothing hidden in our closet.
“And the banks have backed us to the hilt,” Devine tells Property Observer.
He says a big challenge for other developers is obtaining financing.
Devine says lenders require that 100% of project debt be covered, meaning developers must sell 65% of apartments in a project off the plan to get funding approval.
“Many of the projects that are being marketed off the plan will not achieve the pre-sales requirement demanded by the banks. There is a lot of competition. Very few projects achieve enough sales.”
Metro has just launched its $450 million multi-stage Central Village development in Fortitude Valley, with the <a target="_blank" href="https://www.propertyobserver.com.au/queensland/cambridge-weekend-sales-by-metro-property-in-fortitude-valley/2012111657909">first stage featuring 163 apartments over 18 storeys </a>managing 73 sales in its first few weeks since launching. 
Another project – Broadway on Ann featuring 200 apartments in Fortitude Valley – is due to come to market next year.
Metro had the top two selling projects over the September quarter, selling 54 apartments in The Plaza in South Brisbane and 44 in in Brooklyn on Brookes in Fortitude Valley – a joint venture between Metro and Indian-based developer Pearls Australasia, according to the most recent Place Advisory report.
Devine says Metro’s ability to offer apartments to investors that qualify for the federal government’s national rental affordability scheme (NRAS) and that appeal to investors acquiring property through their self-managed super funds are key reasons for its success to date.
Metro’s first completed project, the Chelsea in Bowen Hills, had a 20% NRAS allocation while its Madison Heights project has more than 50% of its 308 apartments available as NRAS investments.
“People that have misconceptions about NRAS have not understood it. It is a stimulus package by the federal government where all stakeholders are winners,” he says.
Metro has also tapped into the overseas market, primarily in Asia, with 20% of apartments allocated to this market.
“We’ve done that 20-odd years. Overseas buyers are the most secure of all sales,” he says.
Devine also says Metro’s “broad-based marketing strategies” have helped underwrite sales in a difficult market.
Devine says he has engaged with people who have helped successfully market his developments at Devine Limited and over a career spanning nearly three decades, including more than $1 billion worth of inner-city apartments completed.
“A lot of people who have worked with us over the years, we have engage to sell our property interstate and overseas.
In other words, says, marketing director Ken Woodley: “We’re a marketing company that develops property, not developer that markets properties.”
 
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Metro has a 10-point checklist for each of it developments, which include that development is situated in a location where people will want to live, that it is close to services and transport.
Metro also chooses locations that embrace Brisbane’s café society and theatre-lifestyle.
Metro's major projects
<table style="width: 470px;" border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td width="150" valign="bottom">
Project
</td>
<td width="152" valign="bottom">
Location
</td>
<td width="105" valign="bottom">
Yield
</td>
<td width="84" valign="bottom">
End Value
</td>
<td width="123" valign="bottom">
Status
</td>
</tr>
<tr>
<td width="150">
The Chelsea Bowen Hills
</td>
<td width="152">
Hamilton Place, Bowen Hills
</td>
<td width="105">
195 apartments
</td>
<td width="84">
$85 million
</td>
<td width="123">
COMPLETED
</td>
</tr>
<tr>
<td width="150">
Madison Heights
</td>
<td width="152">
Mayne Street, Bowen Hills
</td>
<td width="105">
308 apartments
</td>
<td width="84">
$130 million
</td>
<td width="123">
272 sales completed, under construction
</td>
</tr>
<tr>
<td width="150">
Brooklyn on Brookes
</td>
<td width="152">
Cnr Cnr Brookes &amp; Ann Streets, Fortitude Valley
</td>
<td width="105">
216 apartments
</td>
<td width="84">
$90 million
</td>
<td width="123">
178 sales completed, under construction
</td>
</tr>
<tr>
<td width="150">
Orchard Grove
</td>
<td width="152">
Orchard Rd, Doreen (Melbourne)
</td>
<td width="105">
175-lots
</td>
<td width="84">
$40 million
</td>
<td width="123">
Under construction
</td>
</tr>
<tr>
<td width="150">
Woodlands Edge
</td>
<td width="152">
Wallan (Melbourne)
</td>
<td width="105">
575-lots
</td>
<td width="84">
$200 million
</td>
<td width="123">
Under construction
</td>
</tr>
<tr>
<td width="150">
The Plaza
</td>
<td width="152">
Cnr Russell &amp; Manning Sts, South Brisbane
</td>
<td width="105">
168-apartments
</td>
<td width="84">
$75 million
</td>
<td width="123">
138 sales, under construction
</td>
</tr>
<tr>
<td width="150">
Central Village
</td>
<td width="152">
Cnr Water &amp; Brunswick Sts, Fortitude Valley
</td>
<td width="105">
~1,000 apartments + retail and commercial
</td>
<td width="84">
$450 million
</td>
<td width="123">
Launched November 2012
</td>
</tr>
<tr>
<td width="150">
Broadway on Ann
</td>
<td width="152">
Commercial Rd and 977 Ann Street, Fortitude Valley
</td>
<td width="105">
~200 apartments
</td>
<td width="84">
$105 million
</td>
<td width="123">
Due to be launched 2013
</td>
</tr>
</tbody></table>
According to Ken Woodley, the percentage of local buyers – owner-occupiers and investors – has fallen from around 60% to less than 10%, with the fall-off beginning when the RBA lifted the cash rate by 25 basis points on Melbourne Cup Day 2010 followed by further rate rises which “killed” consumer confidence.
Woodley says another three rate cuts are required to bring variable mortgage rates to around 5.9% to reverse this trend.
“We sold 62% of the 439 apartments in Hamilton Harbour [a Devine Limited project] to local buyers. Now it’s down to 8% or 9% are local buyers.”
Metro currently has $600 million worth of committed projects in the pipeline and is the dominant player in the inner-city market.
But Devine says its aim is not market domination but to deliver an attractive proposition to investors.
He says in current market conditions, Metro can deliver around 600 units a year in Brisbane and a bit more in a booming market.
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lschlesinger-FZcF9M3vE6

NRAS and SMSF investors helping keep inner-Brisbane off-the-plan market afloat: David Devine and Ken Woodley

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Australia’s mutual lending sector – touted as a fifth banking pillar rival of the major banks – appears to have endured a less than productive time over the past 12 months.
The sector earns around three-quarters of its interest income from mortgage lending and has waged a prominent campaign reminding borrowers that mutual lenders act only in the interest of their members and, unlikely the major banks,  are not conflicted when it comes to passing on rate cuts by also having to satisfy shareholder demands for rising profits.
The country’s biggest credit union, CUA, has run an<a href="https://www.youtube.com/watch?v=bjfOv-otGFU&amp;feature=plcp" target="_blank"> advertising campaign </a>urging customers to ditch the major banks with images depicting each of the four banks (NAB, ANZ, CBA and Westpac) as empty suits, with the slogan of the campaign being “Make the big banks invisible”.
In addition, credit unions and building societies compete strongly on low rate mortgage product offerings.
However, the sector does not appear to be gaining any ground on any of the second-tier banks (ING Direct, Bank of Queensland, Macquarie), let alone provide any real competition to the big four, according to the latest APRA figures.
APRA figures for the year to September show that on almost every financial measure, the fortunes of the mutual lending sector have declined: its share of the lending pie has shrunk, returns to shareholders have fallen and profitability has been eroded.
Some of this decline has been structural with total number of credit unions declining from 100 to 92 due to four credit unions converting to banks and three mergers while building society numbers have fallen by one, with the Heritage Building Society converting to a bank.
The effects of these lenders becoming banks and from industry consolidation resulted in credit unions' total housing loans decreased 12.5% to $33.6 billion over the year while building societies' total housing loans decreased 12.7% to $16.2 billion over the year.
These consolidations and ‘defections’ to the banking sector explain to a certain extent the large drop in net profits over the period – though not all of the decline - but also suggest that the industry has lost some of its more profitable operators.
The combined net profits after tax for credit unions fell 21% from $363.6 million in for the year to September 2011 to $286.2 million for the year to September 2012.
Building societies profits slump was even greater, falling 29% from $166 million to $117 million.
Some of this decline can be attributed to Heritage Building Society becoming Heritage Bank and not being included in the results for the sector - Heritage managed a $31 million profit result in its most recent annual report.
Looking at key ratios – return on equity has fallen 0.7% to 0.5% over the course of the year while return on equity has fallen from 8.6% to 6.7%.
Putting this all into perspective, the net profit earned by the banking sector – predominantly the big four banks – for the year to June (September quarter data has not yet been released) was $26 billion with the size of its lending book increasing by 7.5% to $1.33 trillion over the year.
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Latest APRA figures paint sober picture of mutual lending sector 

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Private new residential building activity picked up by 0.9% in the third quarter of 2012, following a run of five quarters of declining activity.
Total residential building activity - including renovations - rose by a more modest 0.6% to $11.2 billion as renovation work done fell by 0.2%
Westpac says the September quarter figures mark a turning point with lower interest rates begin to have an impact. “This is the start of an upswing, although the strength of the cycle remains uncertain,” says Westpac.
CommSec economist Savanth Sebastian says the outlook for the residential sector “looks much brighter”.
“Lower interest rates, strong population growth, healthy employment, and pent up housing demand is starting to see the housing sector shake of the shackles and begin a much needed resurgence, says Sebastian.
However, ANZ was less excited about the improvement in residential building activity, which it said was consistent with the improvement that it has witnessed in residential building approvals – a lead indicator for construction work done.
“Nonetheless, activity within this sector remains subdued and while we are expecting residential construction activity to strengthen further going forward, a number of structural impediments are likely to constrain the prospective upturn."
Private renovation work fell for the fourth consecutive quarter, an indication, says Westpac, "that consumers have been relatively cautious over this time”.
Construction work done in the non-residential construction sector declined by 4.5% quarter-on-quarter.
ANZ says ongoing weakness in non-residential building approvals data suggests that a “cyclical upswing in this sector remains some way off”.
Across all sectors, the volume of construction activity picked up by 1.7% over the September quarter to $51.3 billion to be 6.0% higher than a year ago and in line with market expectations with the mining investment boom once again the major source of growth in construction activity.
Westpac says the main downside surprise from its perspective was a “sharper than anticipated pull-back in public construction”.
The second quarter’s previously reported fall of 0.2% in construction work was revised up to a rise of 0.9%.
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ABS quarterly figures indicate start of residential construction upswing: Westpac

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The residential property market remains challenging, but is also varied with different factors impacting on the performance of different markets, says Bill Conn chairman of developer Becton.
“The residential market has not performed in a uniform way.
“Markets across different geographic regions and price brackets as well as housing stock have each been driven by their own particular fundamentals,” said Conn in his address to the Becton AGM in Sydney today.
Conn also said that accessing funding remained challenging due to constrained capital and credit markets.
“This has particularly affected development funding and funding of the retirement living sector.”
Becton’s two biggest projects are Newleaf in Bonnyrigg and Divercity in Waterloo and Conn said they were both tracking well in terms of sales.
The developer managed to refinance $77.5 million of debt with ANZ and the Oman Investment Fund with Conn thanking its financiers for “working with us to develop a way forward that sees the group stabilise and look to rebuild”.
Becton reported a statutory loss of $17.9 million for the 2012 financial year.
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Varied residential market and raising financing a challenge for developers: Becton chairman

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The liquidator of collapsed building firm Reed Construction has recovered just $6,500 of the more the $1 million it claims it is owed it by the property arm of the Gold Coast Titans rugby league club.
The report prepared Reed Construction liquidator Mark Robinson shows that Reed Construction has lodged a claim for $1,046,000 for money owed on the construction on the Titans' Centre of Excellence at Robina.
Robinson says that under the deed of company arrangement, the Gold Coast Titans property arm is likely to return between 1.86 cents and 17.3 cents for every dollar owed.
The Centre of Excellence was sold to Sydney investor Phil Ward and Gold Coaster Robert Clark in August for an undisclosed sum. Both Clark, the uncle of Titans football manager Scott Clark and Ward were owed $4.8 million by the club through their company Handling Solutions Pty Ltd.
Reed Construction had sought a winding-up order against Gold Coast Titans (Property) Pty Ltd just months before Reed collapsed in July with debts of $182.1?million.
Gold Coast Titans (Property) Pty Ltd was placed in administration in April with creditors voting to return it to the control of management under a deed of company arrangement in mid-May.
It has debts of around $24 million with the Gold Coast Bulletin reporting in May that it had "cash in the bank" totalling $2,193 on May 16 and total assets of $485,000. The liquidators report also details that another rugby league club, Manly Sea Eagles, owes an undisclosed amount to Reed, but says that monies are unlikely to be recovered until at least January 2014.
Reed is also seeking monies for its work done on 470 St Kilda Road, an apartment project called Leopold, designed by architect Fender Katsalidis.
Prior to Robinson’s appointment Reed had successfully won its claim against the developer of the project, but this is currently being appealed in the Victoria Supreme Court.
According to the report, Reed Construction founder Geoff Reed has submitted a proposal to the liquidators to provide $7.4 million to settle an intercompany loan and “all other claims” without any admission of liability in relation to claims that company traded whilst insolvent.
Reed has offered to provide a further $2.4 million for the payment of inter-company loans should Reed Construction be returned to the control of parent company RBG Pty Limited, which owes Reed Construction $114 million.
The proposal is backed by a personal guarantee from Geoff Reed.
In his report Robinson notes a “complex webs of related companies and intercompany loans”.
Nearly 1,500 unsecured creditors are owed $152.6 million – many of them sub-contractors. Robinson says he is currently unable to declare a likely dividend payment for these creditors.
St George Bank is a secured creditor and owed $48.1 million. Former employees are owed $5 million.
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Reed Construction liquidator recovered just $6,500 to date from Gold Coast Titans property arm

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While property values have tread water over the past year, rents have risen by double-digit figures in a number of capital city markets as well as regional areas with ties to the mining industry.
The list of the top 10 best performing rental markets is dominated by markets with ties to the mining boom, which occupy the top six positions.
The top performing rental market is Perth unit rents, which are up 27% for the year to October to a median weekly rent of $470, but not far behind is the WA country unit market, where rents have increased by 25% to $375, some of this likely tied to demand for rental property in mining regions.
Weekly rents for Perth houses are up 20% the year to October to a median of $480.
The big increases in Perth house and unit rents are being driven by a lack of available rental accommodation with residential vacancy figures for October compiled by SQM Research show a Perth vacancy rate of just 0.6%, indicating a market overwhelmingly favouring landlords.
The 10 strongest rental markets
<table cellpadding="0" cellspacing="0" border="1" style="width: 470px;"><tbody>
<tr>
<td width="205" valign="top">
Market
</td>
<td width="205" valign="top">
Median weekly rent
</td>
<td width="205" valign="top">
Year to October 2012 change
</td>
</tr>
<tr>
<td width="205" valign="top">
Perth units
</td>
<td width="205" valign="top">
$470
</td>
<td width="205" valign="top">
27.03%
</td>
</tr>
<tr>
<td width="205" valign="top">
WA country units
</td>
<td width="205" valign="top">
$375
</td>
<td width="205" valign="top">
25%
</td>
</tr>
<tr>
<td width="205" valign="top">
Perth houses
</td>
<td width="205" valign="top">
$480
</td>
<td width="205" valign="top">
20%
</td>
</tr>
<tr>
<td width="205" valign="top">
Darwin units
</td>
<td width="205" valign="top">
$515
</td>
<td width="205" valign="top">
19.77%
</td>
</tr>
<tr>
<td width="205" valign="top">
Northern Territory units
</td>
<td width="205" valign="top">
$495
</td>
<td width="205" valign="top">
19.28%
</td>
</tr>
<tr>
<td width="205" valign="top">
Brisbane houses
</td>
<td width="205" valign="top">
$450
</td>
<td width="205" valign="top">
18.42%
</td>
</tr>
<tr>
<td width="205" valign="top">
Sydney units
</td>
<td width="205" valign="top">
$525
</td>
<td width="205" valign="top">
16.67%
</td>
</tr>
<tr>
<td width="205" valign="top">
Melbourne units
</td>
<td width="205" valign="top">
$415
</td>
<td width="205" valign="top">
15.28%
</td>
</tr>
<tr>
<td width="205" valign="top">
Queensland country units
</td>
<td width="205" valign="top">
$380
</td>
<td width="205" valign="top">
15.15%
</td>
</tr>
<tr>
<td width="205" valign="top">
NSW country units
</td>
<td width="205" valign="top">
$335
</td>
<td width="205" valign="top">
13.56%
</td>
</tr>
</tbody></table>
Source: Residex
The list contains only two detached house markets with the other strongly performing detached housing rental market being Brisbane houses, where weekly rents have risen more than 18%.
Weekly rents for Brisbane unit have risen by only half that of houses (9.72%) which the current surge in new apartment developments in inner Brisbane most likely a factor.
SQM Research figures show the Brisbane vacancy rate easing slightly from 1.5% to 1.6% over October, but still well below the balanced market position of a 3% vacancy rate.
A year ago the Brisbane vacancy rate was 1.8%.
To gain a deeper understanding of the mining town of Gladstone, download Property Observer's free eBook:<a target="_blank" href="http://propertyobserver.com.au/ebooks/free-ebook-gladstone-investment-keys-to-one-of-the-nations-most-talked-about-hotspots"> </a><a target="_blank" href="http://propertyobserver.com.au/ebooks/free-ebook-gladstone-investment-keys-to-one-of-the-nations-most-talked-about-hotspots">Gladstone – Investment keys to one of the nation’s most talked-about hotspots</a>.
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Double-digit rental gains for capital city and mining town landlords: Residex

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Perth detached house values have risen more than 5% over the past three months to October in contrast to an otherwise stagnant national housing market, the latest Residex figures show.

Residex chief executive John Edwards is anticipating a stronger 2013-14, saying increases in both rental and capital growth should be higher "than what has been seen in a number of years".

However, he expects that “the market will again retreat” around 2015.

“Markets like Brisbane, Perth and Darwin are likely to see a continuation of stronger rates of capital growth; however, these areas could see growth that causes corrections of larger magnitudes than other markets in the longer term, as Residex expects the RBA to make further interest rate reductions in an attempt to stimulate non-mining areas of the economy,” says Edwards.

The October figures show that while Perth detached house values registered only a small gain (0.42%) over the month, they are up 7.47% for the year to October to a median value of $500,000.

Sales activity in Perth has also been strong, up nearly 20% for the year with more than 25,000 sales recorded.

National house values have hardly moved over the month (-0.18%), quarter (-0.05%) and year (-0.51%), with the national median detached house value being $429,500, despite a 7.25% rise in the number of sales to 293,000.

The October Residex figures suggest some green shoots of recovery in Sydney, with house values starting to trend up – rising 1.36% for the month, up just over 2% for the quarter, and up 3.14% for the year to October with a median value of $677,500.

Darwin is the only other capital city detached housing market to be in positive territory for the year – up 3% to a median value of $512,000 – though values have come off in the last quarter.

Click to enlarge
<a href="/images/stories/2012/11/residexnov28.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/2012/11/residexnov28thumb.gif"></a>
 
Melbourne house values have been treading water over the past three months, but are still down 3.15% for the year with a median value of $556,500.

Brisbane house values are unchanged for the year at a median value of $432,000, but have risen over the past month (1.1%) and quarter (1.63%) suggesting the market may have bottomed out.

Edwards says Brisbane has been in a relatively long period of correction and "is now clearly indicating that the correction period has passed".
 
<hr class="system-pagebreak">
 
Perth has been the strongest performing unit market over the past year, with values up 13.75% to a median of $431,000, with Darwin (8.77% rise to $420,000) and Sydney (2.96% rise to $500,000) the other capital city unit markets where median values have risen over the year to October.

Nationally, unit values have performed marginally better than houses and are up 2.13% for the year to October with a median value of $403,000.
Click to enlarge
<a href="/images/stories/2012/11/residexnov281.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/2012/11/residexnov281thumb.gif"></a>
Edwards says Perth has been the “standout capital city performer”, adding that it has been “a better year for most Australians as far as the housing market is concerned”.


“Consumer sentiment is improving. The Westpac Melbourne Institute Index of Consumer Sentiment posted a rise of 5.2% from October in November, finally bringing it above the 100 point mark to 104.3.

“At last it seems RBA interest rate reductions may be having an impact. However, I suspect that the reduced negative press about the problems in Europe may also be playing an important role.

“I also have a suspicion that the number could have been even better if the coverage of the potential that the mining boom is coming to an end had not been so prominent in the media,” he added.
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Perth the standout performer while Brisbane bottoms out as house values tread water in October: Residex

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Global serviced office provider Servcorp has expanded its portfolio of leased office space in Australia with new floor leasings in Melbourne, Perth and Parramatta but says the CBD office market remains soft.
Among its latest CBD office floor leasings is a whole floor in the BHP/Brookfield Place skyscraper on Perth’s St Georges Terrace, which along with leasings at 101 Collins Street in Melbourne and a floor in the new Deloitte Eclipse tower in <a href="/news">Parramatta</a>, takes its portfolio of leased office space to 27 floors across Australia and New Zealand.
Servcorp operates 30,000 square metres of leased premium office space, which last year brought in revenue of $54 million.
Serviced office space can be rented from around $260 per week with flexible leases starting from one month.
Servcorp chief operating officer Marcus Moufarrige tells Property Observer that contrary to what might be thought, the serviced office market operates in the same cycle as the overall office market.
“Serviced offices are cyclical, not counter-cyclical. They are a good barometer of what’s happening in the market,” he says.
Moufarrige says Australia got "pretty badly punished from a commercial real estate perspective" and expects a recovery to be about a year off.
"We’ve looked to take advantage by signing some more space in Australia.”
Servcorp targets space in only A-grade and premium office blocks with the emphasis on leasing space in prestigious and recognisable office landmarks.
The new floor in 101 Collins Street – the second floor leased in the building by Servcorp – is located at the Paris end of Collins Street and will be targeted at both emerging and established business organisations, ranging from small businesses to multi-nationals to companies looking for project space or rotating workspace solutions. Other tenants include Macquarie Bank, Cisco and Goldman Sachs.
Globally, it operates in 125 locations in 21 countries, which includes space leased in the Louis Vuitton building on the Champs Elysees in Paris as well as a pre-commitment to lease space in One World Trade Center – Manhattan's Freedom Tower – currently being built on the site of the World Trade Centre.
Servcorp’s biggest market in Australia is Sydney, where it has space in 10 office towers with the remainder distributed between Melbourne, Brisbane and Perth.
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Servcorp builds Australian portfolio with prestige leasings in Melbourne, Perth and Parramatta 

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Property prices are expected to grow by a maximum of 5% over 2013 but could remain flat over the course of the year, according to the findings of the 2013 Deloitte Australian Mortgage Report.
The findings are based on the sentiments of a roundtable discussion of senior executives from the major banks, non-bank lenders, mortgage brokers, mutual lenders and mortgage insurers.
Click to enlarge
<a href="/images/stories/2012/11/deloittenov28.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/2012/11/deloittenov28thumb.gif"></a>
The sentiment from roundtable participants is that consumer confidence is the main reason borrowers are holding back.
In November, the benchmark <a target="_blank" href="https://www.propertyobserver.com.au/trends/consumer-confidence-soars-to-highest-level-since-april-2011-but-december-rate-cut-still-likely-westpac/2012111457828">Westpac-Melbourne Institute consumer confidence index</a> reached its highest level since April 2011, but is still up only 0.9% on a year ago – despite rate cuts totalling 125 basis points over this time frame.
“The sentiment of the roundtable was that despite the combination of interest rate reductions and stronger personal balance sheets, the current flat property prices combined with what was perceived as real systemic issues around consumer confidence, would be likely to keep borrowers sitting on the fence in 2013,” says the Deloitte report.
“However, given that Australia suffers an endemic shortage of housing stock, even in a slower market it is expected that property prices will remain ‘there or thereabouts’ if not achieve a modest level of growth. 
The key trend identified by the roundtable was householders continuing to deleverage their debt as well as investor confidence returning as "disillusionment with equities continues and property yields improve".
Deloitte financial services partner James Hickey says household deleveraging  is currently "mostly ancillary debt – credit cards and personal loans etc. – but it also includes the high end investment property sector.
“As interest rates fall, lenders are seeing borrowers taking the opportunity to reduce their mortgages rather than increase their spending,” he says.
As a consequence of this deleveraging, demand for mortgages is likely to remain at subdued levels, with settlements forecast to grow at around 5% compared with current annualised growth of 4.7%.
While this growth is modest against historical trends, the report notes that unlike other mature international markets like the US and the United Kingdom, “Australia’s mortgage sector has maintained momentum and continues to grow”.
However the days of 10% to 15% annual mortgage growth won’t be returning any time soon, Deloitte says.
The report says lenders will look to retain customers and cross sell them other products rather than “competing aggressively for new customers”.
And due to deposit costs remaining high, there will be further pressure on bank margins making it harder for banks to pass on RBA cash rate reductions in full.
The full list of round-table participants were Mortgage Choice (Michael Russell, chief executive officer), CUA (Tony Taylor, chief financial officer),  HSBC: (Alice del Vecchio, head of mortgages), Deloitte (Louise Denver), Genworth (Paul Caputo, chief risk officer, Pepper Home Loans (Todd Lawler, treasurer), Aussie Group (John McDonald, chief financial officer), AMP Bank: (Robert Slocombe, chief operating officer), Deloitte (Ian Harper, Deloitte Access Economics), Commonwealth Bank: (Clive van Horen, head of mortgages), Westpac Group (Nick Bateup, head of mortgages) and  Firstfolio (David Hancock, chief executive officer).
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Modest growth tipped for mortgage lending in 2013 but investor confidence returning: Deloitte

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Fast-growing 24-hour gym franchise Anytime Fitness says its status as a mini-major and “traffic drawcard” means it can negotiate significant rental incentives of up to 25% for new retail leases.
Anytime Fitness has opened over 200 gyms in Australia since launching locally in 2008 and has added around 100 new franchised premises in the past 12 months, the most recent being on Mount Alexander Road in <a target="_blank" href="/news">Essendon</a>, Melbourne.
It is part of a fast-expanding sector of low-cost 24-hour/seven-day-a-week gyms with premises in malls, retail strips and in bulky goods centres.
While Anytime Fitness does not reveal the commercial terms of its arrangements, based on rents paid in advertised commercial listings, Property Observer estimated franchisees pay net rents of around $300 to $350 per square metre, before factoring in incentives.
Typical space requirements range from 300 square metres to 600 square metres, with a preference for sites 400 square metres or bigger. Sufficient air-conditioning for the space is also a key requirement.
In addition to being in prime and convenient locations, offering great visibility of its signage to passing traffic, the gym group seeks sites close to local supermarkets or other major retailers that are well aligned with the convenience aspect of the model.
Matthew Rodrigues, internal operations manager at Anytime Fitness Australia, tells Property Observer there is “always some room for negotiation with landlords”, but it won’t pay rates outside of market conditions.
He says the gym franchise is classified as a mini-major in most shopping centres, acting as a traffic drawcard and “providing significant and ongoing visitation to the centre”.
“As a result of this, Anytime Fitness requires incentives to allow them to build their membership base and ensure the longevity of the business.
He says incentives include rent free periods, cash contributions or some refurbishment undertaken by the landlord “beyond a warm shell”.
“While they vary across the country, in the most part we are achieving incentives of between 10% and 25% of the initial lease term,” he says.
Rodrigues says that in most instances, once a new territory for a gym is chosen, a territory brief will be sent to the market, announcing Anytime Fitness’ interest in a particular area and its property requirements.
“The territory brief will request property submissions for consideration by the leasing managers.
“Sites will be assessed on their merits, and negotiations will commence on prime or preferred candidates,” he says.
The gym group also has a number of freehold properties within the portfolio and has also partnered with a number of developers on custom-built facilities.
Expansion plans are currently focused on Brisbane, Perth and Melbourne as well as a number of regional centres.
Jetts is another fast-growing gym chain, with more than 150 branches.
Earlier this year established gym group Fitness First put 24 of its 97 Australian gyms up for sale due to debt problems at its UK parent company.
Another gym chain, Virgin Active, has three branches in Sydney and one in the Melbourne CBD, but has not added any new gyms to its network since 2009.
In September, <a href="https://www.propertyobserver.com.au/leisure/ardent-leisure-group-to-buy-fenix-fitness-clubs-for-%24609-million/2012091456576" target="_blank">Ardent Leisure Group agreed to buy Fenix Fitness Clubs for $60.9 million</a> in a move signalling further consolidation in the health and fitness sector.
Anytime Fitness was introduced in Australia in 2008 by brother-and-sister team Justin McDonell and Jacinta McDonell Jiminez.
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Anytime Fitness able to negotiate significant rental incentives as 'mini-major' drawcard  

<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, Castile, 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]

Joel Robinson

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.

How Australia Post Parcel Lockers changed parcel delivery convenience in Australia

Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.

Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;

David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;

“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;

Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;

At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;

Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;

Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;

However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.

Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.

The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" />

Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.

The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.

“We are DA approved now which is very exciting,” Sammut said.

“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”

The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.

The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.

The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”

The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.

“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”

From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.

“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”

The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.

“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.

Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.

&nbsp;

Larry Schlesinger

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