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The resource-dependent CBD office markets of Brisbane and Perth are becoming larger and more relevant investment destinations, with their cumulative value surging from 16% to nearly 26% of the national CBD office market in the past decade, according to research by Jones Lang LaSalle (JLL).
Both capital cities have benefited from demand for office space from companies tied to the mining boom, with JLL calculating that in value terms the two CBD markets have risen from $8.7 billion (16%) in 2001 to $29.3 billion in 2012.
At the same time the Sydney CBD market, which is more dependent on demand for office space from financial services, banking and professional services companies, represents less of the $114 billion national pie.
The market value of Sydney has increased from $27.8 billion in 2001 to $48.3 billion in the middle of 2012, but proportionally Sydney’s share of capital stock by value has declined from 51.2% in 2001 to 42.3% in mid-2012.
In keeping with this shift in investment value towards Brisbane and Perth, JLL believes investors should consider weighting their portfolios to reflect the national market.
Click to enlarge
<a href="/images/stories/2012/09/jllsept27.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/2012/09/jllsept27thumb.gif"></a>
John Talbot, managing director of investments and advisory at JLL, says investors have taken note of the increased scale and depth of the Brisbane and Perth markets and are looking to acquire product to help re-weight their portfolios.
The figures are included in a new JLL report authored by Talbot, which finds that nationally office markets have recorded strong capital value growth in the past decade following a steep drop following the early 1990s recession.


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Jones Lang LaSalle says that between 1994 and 2011, the average growth in capital stock by value was 7.8% per annum and assesses the market value of the six CBD office markets (Sydney, Melbourne, Brisbane, Perth, Adelaide and Canberra) at $114.0 billion in mid-2012.
In 1994 the combined value of CBD office markets was $30.6 billion following a 53% fall in capital values between 1989 and 1993 due to the early 1990s recessions.
The report explores the issue of applying the value-weighted asset allocation strategy used in equity markets, where an investor would invest in a portfolio of stocks weighted by the overall market capitalisation, to a commercial property portfolio.
Under this asset allocation strategy, an investor changes his or her individual stock or sector allocations based on movements of individual stocks relative to the overall market capitalisation.
“This strategy is only one of a number of allocation strategies that can be adopted by a fund manager. However, we think there is a case for using a value-weighted asset allocation strategy for commercial property when you consider the performance of the market over time,” says Andrew Ballantyne, head of capital markets research at JLL.
JLL analysis shows that the share of capital stock by value across Australian CBD office markets has historically shown a close relationship, with each state’s share of economic output.
“Therefore, investors should consider their future weighting to the Perth and Brisbane office markets, as projections are that both state’s share of national output will increase by 2021.  WA is expected to account for 15.6% of Australia’s output in 2021 – 1 percentage point higher than in 2011. Meanwhile, Queensland’s share of national output will rise by 2.8 percentage points to 22% in 2021.
“The value-weighted asset allocation strategy can have some limitations in terms of diversification and while we don’t advocated this strategy being following slavishly, it does provide a useful reference point for investors benchmarking the performance of their portfolio against the market,” says  Ballantyne.
However the report does warn that there are limitations to this investment strategy when applied to commercial property investment.
“Commercial property is an illiquid asset class with high transaction costs.
“Furthermore, the lot size of individual assets ensures that the allocation of even very large portfolios can be significantly impacted by acquisitions or disposals.”
Talbot says investors will be reluctant to make changes to their asset allocations to reflect historical performance.
“Whilst pricing looks attractive across CBD office markets, an investor has to assess the underlying drivers of income in each individual asset and the potential for growth. At the same time, divergent economic growth rates across the states will create opportunities and risks investors as they seek their optimal portfolio weighting," says Talbot.
He concludes by saying that the value-weighted asset allocation strategy should not be followed “slavishly”, but provides a “useful reference point for investors benchmarking the performance of their portfolio against the market”.
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lschlesinger-FZcF9M3vE6

Perth and Brisbane CBD office markets surge in investment value as Sydney falls: Jones Lang LaSalle

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There are some signs of a recovery in the Brisbane property market, but it still remains firmly in a downswing , with investors seeking bargains in the unit market as new apartment projects are completed, says WBP Property Group.
WBP places the Brisbane housing and unit market at five o’clock on the property clock.
<img src="/images/stories/2012/09/clock-generic.jpg">
<ul>
<li>At 12 o’clock the market is at its peak (demand exceeds supply)</li>
<li>At 3 o’clock the downswing has set in (an evenly supplied market)</li>
<li>By 6 o’clock it has bottomed out (an oversupplied market).</li>
<li>At 9 o’clock the market is rebounding (supply tightening)</li>
</ul>
“The housing market within Brisbane is considered to be nearing the bottom with no obvious signs of recovery,” says WBP.
The valuation and advisory firm says that while recent changes in state government legislation, in particular stamp duty concessions, have improved sales activity and enquiry, Brisbane market conditions will remain as they are until the end of the year.
“Potential buyers and investors are keeping an eye on the effects of the mining boom, which continues to fuel growth, and also public sector job cuts announced by the Newman state government.


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WBP says future market factors to watch out for include changes in pricing within the commodities sector and cost cutting within the government.
Looking more closely at the unit market, WBP notes that there are a number of new unit developments in Brisbane that are nearing completion and due to settle.
“Many purchasers who have bought off the plan have seen prices come off from original date of contract. Investors still remain wary as to when the bottom will be and are on the lookout for a bargain buy,” says WBP
“This market trend is due to continue till the end of the year and perhaps into 2013.
“The Queensland government has introduced a $15,000 concession for first-home buyers looking to buy a new property.
“The unit market in the sub $400,000 range still continues to be strong amongst professionals looking for lifestyle, inner-city locations,” it says.
In his property clock assessment, Michael Yardney, director of Metropole Property Investment Strategists, said the Brisbane inner-city apartment market was heading into a downswing<a target="_blank" href="https://www.propertyobserver.com.au/residential/brisbane-units-market-heading-into-downswing-on-property-clock-due-to-too-many-off-the-plan-projects-michael-yardney/2012091656604"> </a>due to the large numbers of off-the-plan projects currently being marketed in the Brisbane CBD and surrounding suburbs.
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Brisbane property market stuck in a downswing as investors seek unit bargains: WBP Property Group

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Australian houses prices are booming following recent RBA cash rate cuts, Rismark economist and Australian Financial Review columnist Christopher Joye has noted today.
Click to enlarge
<a href="/images/stories/2012/09/joyesept26.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/2012/09/joyesept26thumb.gif"></a>
<a target="_blank" href="https://twitter.com/cjoye"><img src="/images/stories/2012/09/joyesept26tweet.jpg"></a>
The chart has RP Data tracking house prices to September 26.
It shows that Sydney dwelling prices are up a "stunning" 3.4% since June 1 while Australia-wide dwelling prices have surged 2.7% in the last four months.
"But the biggest winner is Melbourne," says Joye on his Aussie Macro Moments blog. "Melbourne dwelling prices are up an amazing 3.8% since 1 June. And, yes, I am afraid Steve Keen got it wrong again: Aussie house prices have officially risen in 2012!"
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House prices booming after RBA cash rate cuts, says Christopher Joye: Tweet of the day

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The outlook for property markets closely linked to tourism has brightened, with prices set to rise by between 3% and 6% in 2013, according to SQM Research’s Boom and Bust report.
The extent of the recovery is heavily dependent on the Australian dollar and further rate cuts.
The outlook is also brighter for the beleaguered tourism-dependent Gold Coast and Sunshine Coast property markets with both areas “showing signs of bottoming out”.
Under a base case scenario, property prices in holiday locations are expected to rise by between 3% and 6% – a brighter outlook than Canberra (1% to 4% rise), Hobart (2% to 5%) and Melbourne (2% to 5%) and almost on a par with Brisbane (3% to 7%).
This scenario is based on terms of trade falling and then stabilising, the cash rate being cut by 50 basis points and the Australian dollar hovering at parity to the US dollar.
<a target="_blank" href="https://sqmresearch.com.au/">According to SQM</a>, the best case scenario for holiday locations would be a crash in the terms of trade, a 100-basis-point cut in the cash rate and the Australian dollar falling below 90 US cents.
If this were to occur, SQM forecasts holiday location property markets to rise by between 7% and 13% – outperforming all capital city markets.
In line with these healthier outlooks, SQM says its previous pessimistic opinion of Queensland’s Gold Coast and Sunshine Coast has begun to shift somewhat in recent months.
“Emerging from extended periods of oversupply and severe price corrections, these regions are now looked upon less negatively, and potentially the worst could be over for these localities.
“Nevertheless, there are still risks going forward, one of the main risks being that the Australian dollar could appreciate in value compared to the US dollar, which would have serious additional ramifications for the local economy.”
 
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SQM Research managing director Louis Christopher says while he has been “very bearish” on the Gold Coast and Sunshine Coast, there is now evidence of a pick-up, with stock-on-market levels coming down.
In February this year <a target="_blank" href="https://www.propertyobserver.com.au/hotspots/kochie-s-right-stay-away-from-the-gold-and-sunshine-coasts-sqm-director-louis-christopher/2012020153218">Christopher said he agreed with financial analyst and TV presenter David Koch'</a>s dire assessment of the Gold and Sunshine coast markets, pointing out at the time that three of the top four most discounted homes in Australia are in Queensland. Kochie came under fire from local estate agents and media for his gloomy assessment of the Queensland market last year. <a href="https://www.propertyobserver.com.au/hotspots/kochie-s-right-stay-away-from-the-gold-and-sunshine-coasts-sqm-director-louis-christopher/2012020153218" target="_blank">Kochie refused to back down from his assessment</a> that the Sunshine and Gold coasts are “catastrophes” and says investors should not trust the views of local estate agents and journalists.
Click to enlarge
<a href="/images/stories/2012/09/sqmsept26.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/2012/09/sqmsept26thumb.gif"></a>
Christopher says a falling Australian dollar would help these markets as fewer Aussies would take their holidays overseas, while the weaker dollar would attract more international tourists.
Further rate cuts would also help.
Click to enlarge
<a href="/images/stories/2012/09/sqmsept261.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/2012/09/sqmsept261thumb.gif"></a>
But he warns that these holiday markets are not for the "novice investor", who should stick with properties in the suburbs and avoid holiday apartments.
The report also notes that a “gradual rebalancing away from mining and resources back to tourism and manufacturing would be very beneficial over the long term for this country”.
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SQM Research more positive on Gold Coast and Sunshine Coast property markets

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The procession of mortgage lenders cutting fixed rates has continued, with Suncorp Bank reducing its three-year fixed home loan to 5.48% per annum effective today.
The bank now offers the lowest three-year fixed home loan of both the major banks and the regional banks.
Yesterday <a href="/news">St George cut its three-year fixed home loan to 5.49%</a> under its Advantage Package offering. 
<table cellpadding="0" cellspacing="0" border="1"><tbody>
<tr>
<td valign="top" width="242">
 
</td>
<td valign="top" width="242">
 Three-year fixed
</td>
</tr>
<tr>
<td valign="top" width="242">
1. Suncorp Bank
</td>
<td valign="top" width="242">
5.48%
</td>
</tr>
<tr>
<td valign="top" width="242">
2. Bankwest
</td>
<td valign="top" width="242">
5.54%
</td>
</tr>
<tr>
<td valign="top" width="242">
3. BOQ
</td>
<td valign="top" width="242">
5.55%
</td>
</tr>
<tr>
<td valign="top" width="242">
4. St George
</td>
<td valign="top" width="242">
5.49%
</td>
</tr>
<tr>
<td valign="top" width="242">
5. CBA, Westpac and NAB
</td>
<td valign="top" width="242">
5.74%
</td>
</tr>
<tr>
<td valign="top" width="242">
6. ANZ
</td>
<td valign="top" width="242">
5.79%
</td>
</tr>
<tr>
<td valign="top" width="242">
7. Bendigo
</td>
<td valign="top" width="242">
5.94%
</td>
</tr>
</tbody></table>
“The advantage of the Suncorp Bank three-year fixed-rate is that it can be taken as part of a package or as a standalone rate, unlike other offers that only allow discounted rates as part of a package,” says Suncorp Bank’s  Steven Heavey.
“The benefit of a fixed-rate loan is that you know exactly how much you have to repay each fortnight or month and can budget accordingly. This feature can be especially beneficial for first home owners as they adjust to having a mortgage.
“One disadvantage, however, is the loss of flexibility. For example, you generally can’t make additional repayments on fixed loans.
“If you want to hedge your bets, consider partially fixing your loan and keeping the rest at a variable rate,” he says.
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Suncorp Bank cuts three-year fixed-rate home loan to 5.48%

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Home buyer confidence is at highest level since the GFC, with one in two Australians saying now is a good time to buy, according to the latest Genworth Homebuyer Confidence Index.
The half-yearly index rose 2.2 points to reach 98.4 — its highest level since 2007 and 8 points above its low of 2008.
On a state-by-state basis Victorians registered the most improvement in sentiment with its index rising 7.7 points from a low of 92.3 in March 2012, overtaking New South Wales and Queensland. South Australia saw a 3.3 percentage point increase in the index, the second highest among the states.
Western Australia had the smallest increase in confidence but held on to its lead, with surveyed Western Australian borrowers being the least likely to have experienced, or to expect, difficulty meeting repayments.
Tasmanians are the least confident about buying a house with a sharp drop from the March survey.
<img src="/images/stories/2012/09/genworthsept26.gif">
The improvement in the overall index was driven by a marked rise in the number of people who say now is a good time buy versus six months ago and improvements in housing affordability.
Nearly half (49%) of 2,000 adults surveyed (both existing home owners and those looking at getting onto the property ladder) believe now is a good time to buy a home compared with 39% who said it was a good time to buy in the March 2012 survey - a new high since Genworth started compiling the Index in 2007. 
On this measure Queenslanders are the most positive with 54% of respondents agreeing now is a good time to buy.
Genworth CEO Ellie Comerford tells Property Observer the key message to take home from the survey is that consumer sentiment is moving the right direction.
“In the face of economic background, regional pressure points, cash rates it’s good to see the index increase to its second highest level ever.
She says Tasmania is the only state to buck the trend with its high rate of unemployment relative to other states the key reason.
The September survey also recorded a drop in mortgage stress  with the proportion of surveyed mortgage holders who experienced difficulty meeting repayments in the last year falling from 22% in March 2012 to 18%.
The proportion of borrowers expecting difficulty meeting repayments in the coming year fell from 22% to 19% over the same period.
Alan Shields, managing director of research firm RFi, which compiled the report on behalf of Genworth, says on both measures of repayment history and expectations, the results are at levels not seen in 18 months.
Shields says a drop in interest rates appears to be a key reason for the fall in mortgage stress in the September survey.
“Only one in four respondents who say they are experiencing mortgage stress said interest rates were a problem, compared to half of respondents in the last survey,” says Shields.
He says a rate cut next week – as many economists are now tipping - will have a further positive impact on home buyer sentiment.
The report also found that home buying sentiment remains high among first-home buyers with more than half (54%) of surveyed first-home buyers (FHBs) believing it is a good time to buy a home – a figure which has more than doubled in the last two years.
However, first-home buyer confidence fell marginally (0.5%) from March 2012, to 98.5, remaining just ahead of the national average of 98.4.
The index is compiled based on five measures:
<ul>
<li>The proportion of monthly income used to service debts</li>
<li>The maximum loan-to-value ratio (LVR) borrowers are comfortable in borrowing</li>
<li>Their repayment history over the last 12 months</li>
<li>Their repayment expectations for the next 12 months</li>
<li>Whether they consider now a good time to buy a home.</li>
</ul>
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Victorians lead home buyer confidence to highest level since 2007: Genworth report

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Property prices in mining towns could fall 25% in 2013 if Australia's terms of trade plummet or the eurozone collapses, according to worst-case scenario forecasts from SQM Research.
Even under a best-case scenario (terms of trade falling but stabilising, 50 basis point rate cuts, Australian dollar at parity), SQM Research forecasts a very mixed outlook for mining towns, with expectations ranging from a 5% fall in property prices to a 7% rise in prices.
“In the case of mining towns, it very much depends upon the individual mining town's base resource,” says SQM Research managing director Louis Christopher
If a mining town has 100% exposure to iron ore and iron ore prices fall, property prices in that town could “take a beating” he says.
“Others mining towns, such as those exposed to precious metals, will do OK.”
Large falls in property prices in mining towns are predicated <a href="https://www.propertyobserver.com.au/residential/australian-house-prices-could-rise-7-in-2013-if-eurozone-holds-together-sqm-research/2012092556806" target="_blank">under two different scenarios</a>, according to SQM’s 2012 Boom and Bust Report.
The first scenario is based on a crash in the terms of trade (the ratio of value of a country’s exports to the value of its imports), with the Australian dollar remaining high and the cash rate cut by just 0.2<a target="_blank" href="https://www.sqmresearch.com.au/">5</a> percentage points.
“Concerns are being raised about Australia’s resources sector, which at present is witnessing turmoil. All major mining companies are in the process of cancelling mining projects and reducing prices to remain competitive in the global market,” says SQM Research in its report.
“Falling terms of trade along with Australia’s heavy reliance on its resources sector could lead to a considerable dent on the economy’s progress going forward, and this would have a direct impact on housing as well.”
Under such a scenario SQM Research forecasts property prices in mining towns to fall by between 15% and 25%.
The second scenario – property prices in mining towns falling between 5% and 25% – is predicated on an unorganised European default and/or a eurozone break-up.
SQM Research points out that this is would be wild-card scenario “and despite current fears, an unlikely scenario”.
“However, if the event were to occur, it is possible that offshore financing would dry up and the RBA would quickly and aggressively cut rates. While there would be many forces at play, it is probable that the Australian dollar would fall substantially. However, it would only provide muted assistance to most sectors due to a sharp decline in total demand,” says the Boom and Bust report.
To find out what the mining boom will mean for property investors and where the investment hotspots are likely to be, sign up for <a href="/news">Property Observer’s free webinar with hotspotting.com.au’s Terry Ryder on Tuesday, October 2 at 12.30pm</a>
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Mining towns at risk of property prices crashing 25%: SQM Research

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Capital city property prices are forecast to rise by between 4% and 7% in 2013, with Sydney, Darwin and Perth expected to be the strongest performers under favourable economic factors, according to the 2012 SQM Research Boom and Bust Report. 
Double-digit house price growth is in the upper range of forecasts for Perth (12%) and Darwin (14%), with Sydney just under (9%) under a base-case scenario of terms of trade falling but then stabilising; the cash rate falling by 50 basis points; and the Australian dollar hovering at parity against the US dollar.
Even under an unlikely worst-case "wild card" scenario of a break-up of the eurozone, terms of trade crashing, banks rationing credit and the RBA forced to cut rates by 150 basis, the impact on property prices would be small, with SQM Research forecasting a maximum 3% fall in house prices.
The Perth and Adelaide housing markets would suffer the most pain under such a scenario, with <a target="_blank" href="https://www.sqmresearch.com.au/">SQM Research forecasting</a> as much as a 5% fall in Perth dwelling prices, with 4% maximum falls in Brisbane and Melbourne.

<div align="center">
<table cellpadding="0" cellspacing="0" border="0" style="width: 432px;"><tbody>
<tr>
<td valign="top" width="93">
City
</td>
<td valign="top" width="66">
% change from peak to June 2012
</td>
<td valign="top" width="47">
2012 to date
</td>
<td valign="top" width="57">
2012 Forecast
</td>
<td valign="top" width="85">
2013F Scenario 1 (base case)
TOT falls then stabilises
RBA cuts by 50bp
AUD hovers at parity
</td>
<td valign="top" width="85">
2013F
Worst-case scenario
Euro break-up
Banks ration credit
RBA cuts by 150 basis points
</td>
</tr>
<tr>
<td valign="top" width="93">
Perth
</td>
<td valign="top" width="66">
-5.8% (Mar 2010)
</td>
<td valign="top" width="47">
+1.2%
</td>
<td valign="top" width="57">
+1% to +5%
</td>
<td valign="top" width="85">
+6% to +12%
</td>
<td valign="top" width="85">
-5% to -3%
</td>
</tr>
<tr>
<td valign="top" width="93">
Brisbane
</td>
<td valign="top" width="66">
-6.9% (June 2010)
</td>
<td valign="top" width="47">
Steady
</td>
<td valign="top" width="57">
-1% to +3%
</td>
<td valign="top" width="85">
+3% to +7%
</td>
<td valign="top" width="85">
-4% to -1%
</td>
</tr>
<tr>
<td valign="top" width="93">
Darwin
</td>
<td valign="top" width="66">
New High (June 2012)
</td>
<td valign="top" width="47">
+9.7%
</td>
<td valign="top" width="57">
+7% to +13%
</td>
<td valign="top" width="85">
+6% to +14%
</td>
<td valign="top" width="85">
+2% to +5%
</td>
</tr>
<tr>
<td valign="top" width="93">
Melbourne
</td>
<td valign="top" width="66">
-7.5% (June 2010)
</td>
<td valign="top" width="47">
-1.6%
</td>
<td valign="top" width="57">
-3% to +2%
</td>
<td valign="top" width="85">
+2% to +5%
</td>
<td valign="top" width="85">
-4% to 0%
</td>
</tr>
<tr>
<td valign="top" width="93">
Sydney
</td>
<td valign="top" width="66">
-1.5% (June 2010)
</td>
<td valign="top" width="47">
+2.2%
</td>
<td valign="top" width="57">
+3% to +5%
</td>
<td valign="top" width="85">
+5% to +9%
</td>
<td valign="top" width="85">
-1% to +3%
</td>
</tr>
<tr>
<td valign="top" width="93">
Adelaide
</td>
<td valign="top" width="66">
-5.1% (Dec 2010)
</td>
<td valign="top" width="47">
-0.6%
</td>
<td valign="top" width="57">
-3% to +2%
</td>
<td valign="top" width="85">
+2% to +5%
</td>
<td valign="top" width="85">
-5% to -3%
</td>
</tr>
<tr>
<td valign="top" width="93">
Hobart
</td>
<td valign="top" width="66">
-7.2% (Dec 2010)
</td>
<td valign="top" width="47">
-2.4%
</td>
<td valign="top" width="57">
-5% to 0%
</td>
<td valign="top" width="85">
+2% to +5%
</td>
<td valign="top" width="85">
-2% to +2%
</td>
</tr>
<tr>
<td valign="top" width="93">
Canberra
</td>
<td valign="top" width="66">
-2.8% (Dec 2010)
</td>
<td valign="top" width="47">
-1.0%
</td>
<td valign="top" width="57">
-2% to 0%
</td>
<td valign="top" width="85">
+1% to +4%
</td>
<td valign="top" width="85">
-3% to 0%
</td>
</tr>
<tr>
<td valign="top" width="93">
Capital city Average
</td>
<td valign="top" width="66">
-4.7% (June 2010)
</td>
<td valign="top" width="47">
+0.3%
</td>
<td valign="top" width="57">
0% to +3%
</td>
<td valign="top" width="85">
+4% to +7%
</td>
<td valign="top" width="85">
-3% to 0%
</td>
</tr>
</tbody></table>
</div>
 SQM Research managing director Louis Christopher tells Property Observer that Sydney remains the “blue chip of real estate markets”
“It’s a deep and safe market."
However, he says Sydney is very much a two-speed market, with the outer-ring suburbs expected to outperform but no recovery in sight for the prestige market, which could fall further in 2013.
“Sydney is facing an acute housing shortage predominantly in the lower and middle end of the market. In the past, the city benefited from the booming financial sector, however, the GFC has had a direct impact on the sector and ultimately the housing market in the city,” says the Boom and Bust report.
<hr class="system-pagebreak">
Christopher admits that SQM Research missed the “rapid increase” in the Darwin market and only picked it up recently.
“Darwin is better buffeted than other capital cities from a terms-of-trade decline.
"It is more diverse in its resource base and more exposed to the energy sector via a number of gas projects."
He says Perth could do surprisingly well even under a base-case scenario, especially if interest rates continue to fall.
“Perth residents are still sensitive to rate movements.
“Perth went into a downturn in 2007, before the GFC and the reason was interest rate rises.
“We are now getting the interest rate cuts. All Perth needs employment to hold and there will be a fairly strong recovery. The other ingredients is the strong rental market and falling levels of stock-on-market figures," says Christopher.
Melbourne is forecast to mount a more muted recovery, with prices expected to rise between 2% and 5% in 2013.
Christopher says Melbourne house prices will stop falling shortly but expects no major recovery due to the amount of stock on market and new construction of homes continuing.
“This will put a big cap on price growth.
“Later on prices will stop falling, especially with established, separated houses in inner and middle-ring suburbs as opposed to the outer ring, where there is an excess of new land parcels, too many releases in our opinion, which is causing problems," he says.
The outlook for Brisbane is better than Melbourne, but Christopher says it remains a buyers' market.
The report notes that much of the recovery in Brisbane will be dependent on decisions at a state government level.
“No strong recovery for the housing market is expected in the near future. It is also seen that the Queensland government is striving for a budget surplus, which could lead to a slowed economy in the near future. House prices would be directly impacted by any decisions taken by the state government.”
 
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Australian house prices could rise 7% in 2013 if eurozone holds together: SQM Research

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While it has become cheaper for banks to raise wholesale funding from offshore investors, a desire to seek "more stable funding sources" has caused customer deposits to increase to nearly 50% of banks' funding base, according to the RBA’s September Financial Stability Review.
The review says banks' use of offshore long-term debt has been broadly unchanged since 2007, accounting for a quarter of all liabilities, while there has been an increase in the use of deposits "across all types of banks in Australia, although it has been most pronounced for the regional and other smaller Australian-owned banks, which had previously used securitisation more heavily".
<img src="/images/stories/2012/09/rbasept26.gif">
In terms of offshore funding, the RBA notes pressures in wholesale funding markets have eased since late last year, “allowing the large banks to maintain good access to international bond markets during the past six months”.
“The ongoing difficulties in Europe have been contributing to volatile funding conditions for Australian banks, but in recent quarters wholesale funding pressures have eased from the levels of late last year.
“Offshore investors have focused on the relatively strong position of the Australian banks compared with those in some other countries. The banks have therefore been able to take advantage of periods of more favourable market conditions to issue opportunistically,” says the RBA.


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Australian banks have issued around $50 billion of bonds in the past six months, mostly in unsecured form, says the RBA.
“Banks’ bond spreads have narrowed, and are now comparable to levels in mid-2011, prior to the escalation of the euro area debt problems. This has enabled the banks to issue a larger share of their bonds in unsecured form than they did at the beginning of the year when tensions in global funding markets were high.
“Even so, banks have reduced their relative use of wholesale funding further as growth in deposits has continued to outpace growth in credit."
The report also shows that banks have little exposure to the more volatile eurozone with just 1.6% of their assets based in this market, but says they remain exposed to swings in global financial market sentiment associated with the problems in Europe.
However, according to the RBA, Australian banks should be more resilient to such episodes, given the improvements they have made to their funding, liquidity and capital positions over recent years.
“Around half of the banks’ funding now comes from customer deposits, which is a broadly similar share to a number of other comparable countries’ banking systems."
Overall, the RBA says the Australian banking system has remained in a “relatively strong position”.
Following the GFC, the major banks blamed rising offshore funding costs for interest rate increases outside of the RBA cycle.
But recently the focus has shifted to the rising cost and battle among banks for customer deposits.
ANZ has stopped providing commentary on its independent interest rate decisions, but in July ANZ chief executive Australia Philip Chronican noted that competition in the deposit space was benefiting customers but “also continuing to put pressure on margins”.
Chronican also remarked that offshore funding markets had stabilised “somewhat” but added that the bank continued to “monitor events closely”.
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Offshore funding pressures ease but banks now more reliant on customer deposits for mortgage lending: RBA

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The likelihood of selling your Melbourne home at auction is higher on the eastern side of the city than on the west, according to analysis by the Real Estate Institute of Victoria (REIV).
The map (below) shows suburbs in blue where auction clearance rate have been above the Melbourne-wide clearance rate for 2012 and in orange for those that have been below the Melbourne-wide clearance rate for 2012.
<a href="https://www.reiv.com.au/en/Property-Research/Auction-Map.aspx" target="_blank"><img src="/images/stories/2012/09/reivsept26.jpg"></a>
Source: <a href="https://www.reiv.com.au/en/Property-Research/Auction-Map.aspx" target="_blank">REIV</a>
<a href="https://www.reiv.com.au/Home.aspx" target="_blank"></a>Among the poorest-performing auction markets this year are Docklands (32% clearance rate from 25 auctions), Keilor in the north-west of the city (43% clearance rate from 21 auctions) and Maribynong (41% clearance rate from 75 auctions).
Suburbs that are well in the "blue" include Collingwood (81% clearance rate from 58 auctions), Hawthorn (77% clearance rate from 221 auctions) and Kew (67% clearance rate from 130 auctions).
Bucking the eastern suburbs trend, the outlying western suburb of Sunbury has achieved an auction clearance rate of 78% to date from just 23 auctions.
The data includes auctions held up to September 18, 2012, with the <a href="https://www.reiv.com.au/en/Property-Research/Auction-Map.aspx" target="_blank">REIV </a>pointing out that the majority of residential sales in Melbourne are by private sale.
The map shows the clearance rate in suburbs where they have had 20 or more auctions in 2012.
The REIV publishes auctions results on a weekly basis on Saturday nights after 7pm.
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Melbourne’s eastern suburbs having more auction success: REIV

An entity directed by HSN's Rafi Assouline and Rebel Property's Allen Linz has filed plans for an impressive new precinct in Woolloomooloo.

The major mixed-use development would transform a prominent William Street site into a new residential village anchored by affordable housing and a large public park.

The proposal, submitted as a State Significant Development Application, covers 164-172 and 174-194 William Street, a 6,398 sqm site between Forbes Street and Dowling Street on the southern edge of Woolloomooloo.

Designed by fjcstudio in collaboration with Bangawarra, Studio Bright and Tribe Studio Architects, the scheme would deliver 227 apartments across four residential buildings ranging in height up to 18 storeys, alongside retail space, public domain improvements and a new publicly accessible park.

<img alt="Rebel" data-entity-type="file" data-entity-uuid="0eb59b7c-914a-4a5c-b849-3a56749f5e93" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-12%20at%2011.18.51%E2%80%AFAM.png?VersionId=mxM6EEqeoLjrCiTlCzTKTvzpKuh6kSkH" />

It's another design scheme for Rebel, who took <a href="https://www.apartments.com.au/news/nsw/first-look-rebel-property-group-takes-woolloomooloo-precinct-to-nsw-government">concept plans to the NSW Gov late last year</a>.

The latest plans will be a mix of 167 build-to-sell apartments and 60 affordable apartments, with the affordable housing component representing 15 per cent of the project's gross floor area. The apartment mix includes 12 one-bedroom, 53 two-bedroom, 89 three-bedroom apartments and 13 penthouses, while the affordable housing component would comprise 42 one-bedroom and 18 two-bedroom apartments.

<img alt="Rebel" data-entity-type="file" data-entity-uuid="3b3d4553-8a8c-4af5-aa8c-519ffb1e28c6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-12%20at%2011.20.12%E2%80%AFAM.png?VersionId=_Yb6ibN7eDnOtQjCNDK2eviORa4qzgv." />

Rebel Property is seeking to take advantage of the NSW Government's infill affordable housing bonus provisions under the Housing SEPP, which provide additional floor space and height in exchange for the delivery of affordable housing for a minimum of 15 years. The planning pathway allows a 30 per cent increase in floor space ratio and building height where 15 per cent of the development is dedicated to affordable housing.

&nbsp;

At the centre of the development is a 1,356 sqm sunlit public park designed to become a new community gathering space at the gateway to Woolloomooloo. The park would be complemented by a network of pedestrian laneways connecting William Street with the surrounding streets, improving permeability through what is currently a largely impermeable block.

<img alt="Rebel" data-entity-type="file" data-entity-uuid="257af931-a393-4007-8c6d-7219796df58d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-12%20at%2011.20.51%E2%80%AFAM.png?VersionId=KAHy94GrhaReFsWTGDKfy39EDJ8gEEv4" />

The design team says the public domain has been heavily influenced by the site's topography and Aboriginal cultural heritage, drawing on the escarpments, gullies and landscape characteristics that historically defined the area before urbanisation. The landscape design has been developed in partnership with First Nations consultancy Bangawarra.

The project would be delivered across four separate buildings. The William Street East and William Street West buildings, designed by fjcstudio, would contain the majority of the apartments. Melbourne-based Studio Bright has designed the Forbes Street building, while Tribe Studio Architects is responsible for the Dowling Street building.

Rebel had secured approval for the concept plans late last year.

Joel Robinson

First look: HSN, Rebel, advances Woolloomooloo precinct plans

A locally heritage-listed furniture showroom on Water Street is set to become the centrepiece of a new mixed-use residential development as local developer&nbsp;<a href="https://www.apartments.com.au/developers/keylin-group">Keylin</a> seeks approval for <a href="https://www.apartments.com.au/new-apartments/lotus-on-water-street-290-water-street-fortitude-valley-qld-4006">Lotus on Water Street</a>, a 15-storey project on the Fortitude Valley side of Spring Hill.

The proposal spans 290 Water Street and 137-141 Warry Street, combining several properties into a 2,869 sqm site that sits between Fortitude Valley, Spring Hill and the rapidly evolving Victoria Park precinct. Keylin's plans would deliver 132 apartments alongside new retail, hospitality and commercial space, while retaining and repurposing the historic Brunswick Home Furnishers Showroom that fronts Water Street.

Designed by <a href="https://www.apartments.com.au/architects/jackson-teece">Jackson Teece</a>, Lotus on Water Street comprises a 12-storey residential tower rising above a three-storey podium and communal rooftop terrace. The development includes 76 apartments classified as multiple dwellings and a further 56 units proposed as short-term accommodation, designed to be flexibly used as either accommodation or permanent residences. The apartment mix comprises six one-bedroom, 54 two-bedroom and 16 three-bedroom homes.

<img alt="First look: Keylin unveils heritage-led Lotus on Water Street tower in Fortitude Valley" data-entity-type="file" data-entity-uuid="9822bb79-6c49-49c9-95ba-319e8c8d81c3" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/fortitude%20valley%20front.png?VersionId=ioW8zbN4UVebbLetTFuv92t.HkdgfR5e" />

Residents would have access to an extensive rooftop recreation level spanning more than 1,200 sqm of communal open space. Plans include a pool, gym, sauna, infrared sauna, yoga area, library, private dining room, barbecue facilities and landscaped entertainment spaces, making the rooftop the project's largest shared amenity offering.

At street level, the proposal focuses on the adaptive reuse of the heritage buildings along Water Street, where 518 sqm of retail and commercial space is planned across shop, office and food and drink outlet uses. A permeable residential lobby would be positioned between the retained heritage buildings, creating a pedestrian connection between the historic streetscape and the new tower behind.

<img alt="First look: Keylin unveils heritage-led Lotus on Water Street tower in Fortitude Valley" data-entity-type="file" data-entity-uuid="269cf3e0-7d13-48bf-a318-05a00deb5c10" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/fortitude%20valley%20podium.png?VersionId=DLXmTCLsp6GOcLpQ0h.0z7wKCw59EhN_" />

The heritage retention strategy is central to the scheme. The development application notes that the Brunswick Home Furnishers Showroom and adjoining heritage buildings will remain, with only non-significant structures on the site earmarked for removal under a previously issued Heritage Exemption Certificate. Levels one and two of the new podium are recessed behind the heritage façades to maintain their prominence within the streetscape.

Jackson Teece has drawn inspiration from the site's manufacturing history when designing the podium. The planning documents state that the façade incorporates perforated metal screening that references the woven and rattan furniture historically produced on the site. Cascading and climbing plants are integrated throughout the podium to soften the building's presentation and screen parking levels behind. The landscape strategy also informs the project's name, Lotus on Water Street, drawing on the historic Spring Hollow waterholes that once ran through Spring Hill and the blue water lilies associated with Meeanjin, Brisbane's traditional name.

The proposal also incorporates the neighbouring property at 141 Warry Street, currently occupied by a healthcare service. The existing building would remain, with nine dedicated parking spaces allocated within the new development to support its ongoing operation. In total, Lotus on Water Street proposes 117 car spaces, including 110 resident spaces and seven visitor bays, alongside 100 bicycle spaces.

<img alt="First look: Keylin unveils heritage-led Lotus on Water Street tower in Fortitude Valley" data-entity-type="file" data-entity-uuid="70cf07bc-4fd8-4e70-92dd-be8b21c4e4f0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/fortitude%20valley%20site.png?VersionId=txlxrJImM0Sm_vTzHVKh5DDUkyL_CiiA" />

The site sits within the Spring Hill East Precinct of the Spring Hill Neighbourhood Plan and is positioned around 650 metres from both Fortitude Valley Station and Exhibition Station. It is also within walking distance of the King Street precinct, Royal Brisbane and Women's Hospital, Herston Quarter and Victoria Park, which is earmarked to become a major venue precinct ahead of the Brisbane 2032 Olympic and Paralympic Games.

Planning documents describe the location as a key gateway between Spring Hill and Fortitude Valley and highlight the area's increasing importance as new transport infrastructure and Olympic-related investment reshape Brisbane's inner north. The development team argues the project will contribute additional housing supply while activating a section of Water Street that has historically received less investment than other parts of the Valley.

Keylin has become increasingly active across Brisbane and southeast Queensland, assembling sites in strategic inner-city locations. They are currently selling and delivering <a href="https://www.apartments.com.au/new-apartments/oria-spring-hill-447-gregory-terrace-spring-hill-qld-4000">Oria Spring Hill</a>, just over 140 apartments due for completion in 2027.

Keylin plans heritage-led Lotus on Water Street apartment development in Fortitude Valley

Roseville is poised for a wave of new apartment development following the NSW Government's rezoning of land around Roseville Station under its Transport Oriented Development program.

The new planning controls have unlocked significant development potential within walking distance of the station, with a number of sites expected to be amalgamated and redeveloped in the coming years as developers seek to take advantage of the increased density allowances.

One of the more restrained developments in the precinct, and set among the first to be delivered having commenced well before the recent changes, is Hyecorp's Juliet. The boutique apartment project is already well under construction and remains on track to welcome residents by the end of the year, offering a markedly different proposition to many of the larger-scale developments now likely to emerge across the suburb.

[smartcode_project:default project_id=7395 project_image_fid=278194]

<a href="https://www.apartments.com.au/new-apartments/juliet-roseville-64-pacific-highway-roseville-nsw-2069">Juliet</a> will comprise just&nbsp;34 one-, two-, and three-bedroom apartments opposite Roseville Station. For Hyecorp, which has delivered projects across Sydney's Lower North Shore for more than three decades, Roseville presented a rare opportunity to address a growing gap in the market.

"<a href="https://www.apartments.com.au/developments/roseville-nsw-2069">Roseville</a> has long been one of the North Shore's most tightly held and desirable suburbs, offering a unique combination of village charm, established greenery, excellent transport connections, and proximity to some of Sydney's best schools and lifestyle amenities," Hyecorp said.

"We recognised a growing demand from local homeowners seeking to downsize without leaving the community they have built their lives around. The location presented a rare opportunity to create homes that cater specifically to that buyer profile."

[smartcode_project:default project_id=7395 project_image_fid=278196]

The six-level development has been designed by <a href="https://www.apartments.com.au/architects/pbd-architects">PBD Architects</a> as a collection of residences that feel more like homes than apartments. The brief centred generous floorplans, abundant natural light, quality finishes, and strong connections to outdoor space.

PBD Architects drew inspiration from Roseville's established garden suburb character, creating a building that sits comfortably within its surroundings rather than dominating them. The architecture incorporates natural materials, soft forms, layered landscaping, expansive balconies, and generous setbacks to strengthen the connection between residents and the suburb's leafy environment.

"The focus was on designing spacious, house-like residences for discerning owner-occupiers and downsizers who wanted to remain on the North Shore without compromising on comfort, privacy, or design," PBD said.&nbsp;

"Every apartment was to feel considered, timeless, and highly functional."

[smartcode_project:default project_id=7395 project_image_fid=278195]

Inside, residences feature engineered timber flooring, stone kitchen benchtops and splashbacks, integrated Fisher &amp; Paykel appliances, ducted air conditioning, and large outdoor entertaining areas designed to take advantage of district and treetop views.

Residents will also have access to a rooftop barbecue and lounge area, alongside practical amenities including parcel lockers, EV charging capability, bicycle storage, a dog wash bay, and a basement car wash facility.

The majority of purchasers so far have been local owner-occupiers from Roseville, Lindfield, Chatswood, Killara, and the broader Upper North Shore, many of whom are transitioning from larger family homes.

"Buyers are looking for spacious, house-like apartments that allow them to downsize without feeling like they are sacrificing comfort or functionality," Hyecorp noted.

"They value large kitchens, generous living areas, ample storage, quality finishes, secure parking, lift access, and low-maintenance living."

[smartcode_project:default project_id=7395 project_image_fid=278204]

Juliet sits directly opposite Roseville Train Station and within walking distance of Roseville Village, while Chatswood's retail and dining precinct is only minutes away. The development is also surrounded by some of Sydney's most established schools, including Roseville College, Ravenswood, Pymble Ladies' College, and Knox Grammar, as well as nearby parklands and golf courses.

Juliet is currently more than 75 per cent sold ahead of its anticipated completion in late 2026.

[smartcode_project_cta:default project_id=7395]

Juliet to sit quietly amid Roseville apartment boom

Sherpa Property Group has unveiled the third instalment of its Flourish series, securing full approval for the two-tower, $500 million Flourish Soleira development in Palm Beach.

<a href="https://www.apartments.com.au/new-apartments/flourish-soleira-1150-1154-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> will rise from a prominent site in the commercial heart of Palm Beach, the long-time home of Cash Converters and a range of local retailers.

The project will introduce a new retail and dining precinct at ground level, beneath 286 apartments.

[smartcode_project:default project_id=150017 project_image_fid=370959]

“We’re very committed to not only providing affordable residential offerings that are much needed in Palm Beach, but also delivering a vibrant new commercial heart that complements the extraordinary growth of the southern Gold Coast,” Sherpa Property Group founder Christie Leet said.

The development will sit under Sherpa's Flourish brand, which is aimed at providing a pathway into the beachside suburb for locals, first-home buyers and downsizers. In a move designed to assist first-home buyers entering the market, Sherpa has reserved all one and two-bedroom, one-bathroom apartments exclusively for eligible first-home buyers.

[smartcode_project:default project_id=150017 project_image_fid=370964]

“Our vision through Flourish is to create a vibrant retail and lifestyle focal point within the Palm Beach centre zone, delivering thriving communities underpinned by lifestyle-rich locations,” Leet said.

“So far, Flourish has been an incredible success, and we hope to carry this momentum as we progress the next two Flourish projects in Palm Beach.”

[smartcode_project:default project_id=150017 project_image_fid=371430]

Located across 1150-1164 Gold Coast Highway and 3 Sixth Avenue, the development will comprise two towers. The northern tower will deliver 154 apartments, while the southern tower will add a further 132 residences, helping address ongoing demand for new apartments in the tightly held coastal suburb.

Flourish Soleira will also feature the most extensive rooftop amenity offering ever delivered in Palm Beach.

The two towers will be connected by a skybridge, with residents gaining access to a rooftop recreation deck featuring a full-width swimming pool, hot and cold plunge pools, wellness spaces, a gymnasium, private dining facilities, massage treatment rooms, barbecue areas, a basketball court, golf simulator, indoor and outdoor dining spaces, sun lounges and extensive landscaping.

LPS Group is expected to start construction later this year.

Sherpa is already well advanced on construction of its debut Flourish project, Flourish Amargo, located just around the corner from Soleira. Meanwhile, Flourish Oasis, positioned opposite Amargo, recently commenced construction and has nearly sold out its collection of 47 apartments.

[smartcode_project_cta:default project_id=150017]

Sherpa unveils $500m mixed-use Palm Beach precinct, Flourish Soleira

Are mortgage holders set to get a reprieve from the RBA in 2026?

Big Four bank NAB believes so. They are now expecting the next move from the RBA to be a cut, rather than a hike, which they had pencilled in for August. They are unsure of the timing of the cut however, they note in their latest&nbsp;NAB Economics RBA Watch.

NAB Chief Economist, Dr Sally Auld, said recent data suggests the economy has lost momentum and the outlook for rates has shifted, noting that the broader economic backdrop has changed since earlier in the year.

“The next move in the cash rate is likely to be down, but the timing is uncertain," Dr Auld said.

"In February, growth was above trend, the economy was operating above capacity and there was uncertainty over the restrictiveness of rates. None of these conditions exist today,” she outlined.

Dr Auld said recent data pointed to softer momentum across the economy while acknowledging that at the same time, uncertainty remains a key feature of the outlook.

“Both Q1 GDP data and the NAB business survey suggest momentum in the economy has slowed, meaning that growth has likely peaked for the cycle. That said, we are cognisant there is still considerable uncertainty around the outlook, both with respect to activity and inflation.”

Dr Auld said inflation risks and labour market outcomes would be important to watch.

“On the prices side, we are still forecasting above target core inflation through to mid-2027. Margins will compress and weaker labour market outcomes are a risk.”

She said tighter financial conditions are expected to weigh on housing and activity.

“Tighter financial conditions will be reflected in a slowing in house price growth and housing credit growth. In summary, we have greater conviction that the next move in rates is down, but less conviction on the timing.”

Larry Schlesinger

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