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Mortgage lenders continue to entice borrowers with cheaper fixed-rate products.
The average three-year fixed mortgage rate is now only five basis points higher than the average standard variable rate, according to research by comparison website RateCity.
Lenders cut their fixed-rate products by a further three basis points on average in July 2011.
Across its database of around 100 lenders, RateCity has calculated that the most common fixed term chosen by borrowers is 7.35%, with the average standard variable rate 7.3%.
Some lenders are offering fixed-rate mortgages at rates lower than the benchmark standard variable rate of 7.8%, the average rate of the four major banks.
These include Citibank, which lowered its three-year fixed rate by 33 basis points on July 18 to 6.99%.
ANZ lowered its three-year fixed rate by five basis points to 7.19% on July 16, and a week earlier NAB dropped its three-year fixed rate by 15 basis points to 7.24%.
 
RateCity’s average fixed rate movements since January 2011
<div align="center">
<table border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td width="106">
 
</td>
<td width="106">
1-year fixed
</td>
<td width="106">
2-year fixed
</td>
<td width="106">
3-year fixed
</td>
<td width="106">
4-year fixed
</td>
<td width="106">
5-year fixed
</td>
</tr>
<tr>
<td width="106">
January 1, 2011
</td>
<td width="106">
7.10%
</td>
<td width="106">
7.33%
</td>
<td width="106">
7.43%
</td>
<td width="106">
7.80%
</td>
<td width="106">
7.89%
</td>
</tr>
<tr>
<td width="106">
July 18, 2011
</td>
<td width="106">
7.07%
</td>
<td width="106">
7.22%
</td>
<td width="106">
7.35%
</td>
<td width="106">
7.71%
</td>
<td width="106">
7.81%
</td>
</tr>
<tr>
<td width="106">
Difference
</td>
<td width="106">
- 0.03%
</td>
<td width="106">
- 0.11%
</td>
<td width="106">
- 0.08%
</td>
<td width="106">
- 0.09%
</td>
<td width="106">
- 0.08%
</td>
</tr>
</tbody></table>
</div>
Source: RateCity
The popularity of fixed interest rate home loans hit its highest level in five months in June 2011, reaching 12.3% of all approvals, according to mortgage broker Mortgage Choice.
RateCity CEO Damian Smith says the gap between the average three-year fixed-rate and standard variable rate hasn’t been this tight for at least the past two years.
“Some fixed home loan rates have actually been falling for some time. Average three-year fixed rates dropped during 2010, and we’ve seen them fall by eight basis points this year to a new low of 7.35 percent on average.”
Smith says variable rate customers paying 7.3% should be talking to their lenders about getting a better deal.
“On average over the interest rate cycle, the best strategy for most borrowers is to find the lowest variable rate and make the highest possible monthly repayments. But when fixed rates are this close to variable rates – which happens relatively rarely – there’s good reasons to think about fixing,” he says.
“One option that hedges your bets on the direction of rates is to look at a split loan – for example, fixing 50% and having the other 50% variable.”
However, should Westpac forecasts of a 100-basis-point cut in the cash rate by 2013 prove accurate, many fixed-rate borrowers could be worse off than those with variable rate mortgages in a year and a half’s time.
However, Smith says most commentators are still sticking with the Reserve Bank’s formal view – which is that rates are likely to rise over the next 12 months.
“Borrowers really shouldn’t get too excited at this stage, and should be looking to reduce home loan debt with additional repayments where possible,” he says.</body></html>

lschlesinger-FZcF9M3vE6

Fixed-rate mortgages close in on variable rates

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Hotel room rates in the Perth CBD have risen 9.6% in the first six months of the year and are now almost back to pre-GFC levels, according to a report by research firm STR global.
The Western Australian capital has led a nationwide revival in hotel room revenue increases across all the major capital cities, with rates rising 8.1% in Brisbane, 8.4% in Sydney and a more modest 2.2% in Melbourne.
Bryon Merzeo, business development manager from STR Global Australia and New Zealand, says the corporate business purse driven by the mining sector is leading the revival in the Perth market.
“International growth is not that powerful, but domestic consumer stays on Tuesday, Wednesdays and Thursdays have been incredible,” Merzeo told Property Observer.
Another factor pushing rates up to levels last seen four years ago is a lack of new supply in Perth.
It is also a key reason why Sydney and Brisbane has registered growth comparable to Perth over the period.
“No new hotels have been built in Sydney over this period,” Merzeo says.
In comparison, the more moderate growth in Melbourne reflects new hotel stock coming on to the market in the Melbourne CBD.
Merzeo expects these growth rates to be sustained over the next few years.
Apart from Brisbane, Queensland continued to suffer, with Cairns and Port Douglas revenue per room rates down 6.8% and revenue down 2.4% on the Gold Coast.
Across Australia, hotel occupancy is currently around 75%, with the revenue per room about $125 for May 2011. This is compared with $129 two years earlier.
STR Global bases its growth forecasts on daily data from 750 hotels across Australia.
It does not provide rate increases in dollar terms for each city due to the diversity of hotel stock.
However, official ABS tourist accommodation figures for the three months to March 2011 correspond with the strong growth reported by STR Global for the six month period.
For the first three months of the year, Perth occupancy rates climbed from 70% to 84%, with takings per room per night up $182 to $205.
STR estimates that at least 90,000 hotel rooms will be added each year to the Asia-Pacific region within the next six years. Of these, just 4,000 are estimated to be in Australia.</body></html>

Business travellers driving Perth hotel recovery

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Interest in energy-efficient commercial buildings is growing since the government released the details of its carbon tax scheme on July 10, according to Ray White.
Ray White Commercial office leasing director Anthony Harris says his office has fielded an increase in enquiries about sustainable office buildings since the government launched its energy plan.
"We have definitely seen a higher level of interest from prospective office tenants about building energy ratings," he says.
According to Ray White Commercial's John Skufris, sustainable buildings with high energy ratings are likely to become more attractive to both tenants and prospective owners.
"The increased demand driven by owners and tenants to secure properties with low operating and refurbishment costs may push up rental prices," he says.
Skufris cites the example of 189 Kent Street, a 15-storey commercial building in Sydney's western corridor overlooking Barangaroo, which upgraded its mechanical systems in late 2009.
The annual greenhouse gas reduction achieved was the equivalent of removing 9,500 cars from Australia’s roads.
“It has assisted our client reduce running costs and hold onto existing tenants for further lease terms,” he says. "The increased demand driven by owners and tenants to secure properties with low operating and refurbishment costs may push up rental prices."
The sustainability message is also being pushed by CB Richard Ellis, which on July 6 became the first commercial real estate services firm in Australia to be certified under the Australian government’s carbon-neutral initiative.
CBRE president and CEO for Australia and New Zealand Tom Southern says the company wants to inspire clients to undertake similar activities and will assist them with introducing sustainability initiatives in their own portfolios.
“We seek to establish deep and lasting partnerships with our clients to enhance the efficiency of their buildings, reduce their environmental footprints and operating costs, and ultimately, add value to their business,” he said following the certification.
The proposed carbon tax is mooted to kick on July 1, 2012, and the government’s Commercial Building Disclosure Scheme will begin November 1 this year.
This requires current energy efficiency information to be disclosed to prospective buyers or tenants of office space. "This scheme aims to ensure that credible and meaningful energy efficiency information is given to prospective purchasers and lessees of large commercial office space," Harris says.
A report by the Green Buildings Council of Australia says the proposed $23 per tonne of emissions charge of the nation's top 500 polluters will add to the operational costs of commercial buildings.
Buildings are set to become more expensive to refurbish due to price increases for emissions-intensive products such as glass, steel and cement.
As a result of these costs, Harris expects a greater demand for higher standards of efficiency and greener materials to not only reduce prices but to cut carbon emissions.
According to Low Carbon Australia CEO Meg McDonald, the introduction of energy-efficient technology into existing buildings will cut emissions dramatically.
“The potential for the commercial property sector is significant,” she says.
Low Carbon Australia estimates that buildings are responsible for about 40% of the world's current energy use and about a third of carbon dioxide emissions. This is more than any other sector.
A National Australian Built Environment Rating System rates a building on the basis of its measured operational impacts on the environment, and provides a simple indication of how well a building owner is managing environmental impacts in comparison with other neighbouring buildings.
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Commercial tenants keen on green in response to carbon debate

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The Real Estate Institute of Australia has written to its members urging them to comply with tax rules covering work-related expense tax deductions.
This follows the ATO’s announcement ahead of the end of financial year on June 30, 2011 that it will pay close attention to work-related expense claims made by real estate employees along with members of other professions including carpenters, joiners and apprentices and trainees.
On June 14, tax commissioner Michael D'Ascenzo warned the real estate industry is considered high-risk in terms of wrongfully claimed work-related expenses.
In its July newsletter, REIA policy manager Jock Kreitals writes that real estate agents have been identified as having relatively high amounts of work-related expenses. “Work-related expenses are expenses you incur in performing your job, such as the purchase of equipment or tools, expenses related to your home office and mobile phone. You can claim these expenses in your tax return,” he says.
“However, you cannot claim private expenses, travel to and from work, or an expense that has been reimbursed by your employer.”
Estate agents are also reminded that if they claim more than $300 in expenses they need to keep written records of all their expenses for five years.
However, even if their claims do amount to less than $300, agents still need to be able to tell the ATO – if asked – how they worked out their claim.
Agents should also be wary of the following areas, which the ATO has identified as trouble spots for non-compliance.
<ul>
<li>Not having detail to explain how kilometres were calculated when using the cents-per-kilometre method to claim travel expenses</li>
<li>Not having documentation to show when a car was owned or leased</li>
<li>Using an incorrect code on the tax return when claiming protective clothing</li>
<li>Claiming sunglasses and sunscreen under an incorrect tax return form label</li>
<li>Incorrectly claiming self-education expenses for a course that relates only in general way to your employment</li>
<li>Incorrectly claiming initial certificate/licence when only renewals are deductible</li>
<li>Not being able to substantiate excessive mobile phone claims</li>
<li>Not having diary evidence that reflects work usage of computer/laptop use</li>
<li>Not being able to substantiate the number of hours claimed for use of a home office</li>
<li>Incorrectly claiming meals and drinks for clients</li>
<li>Incorrectly apportioning the cost of newspapers – generally only the real estate section is deductible</li>
</ul>
The ATO provides a work-expenses guide for real estate agents on its website.
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Agents warned about dodgy tax claims

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{yoogallery src=[images/stories/july20stkilda]}
Photos courtesy of Tourism Victoria
The inner-city suburbs of Melbourne contain more investment hotspot opportunities than other inner-city markets, according to Australian Property Investor’s 2011 Top 100 Hot Spot survey.
According to the report, 17 out of the 100 hotspots are within a few kilometres of the Melbourne CBD.
The Bayside or inner-south region of Melbourne has six hotspots, including the fashionable café and nightspot localities of St Kilda and St Kilda East.
WBP residential advisor Sean Thomson says he picked St Kilda because it is a tightly held “popular lifestyle destination”. Metropole director Michael Yardney also nominates St Kilda as a hotspot.
Yardney expects the suburb to perform well because of its popularity with Gen Y owner-occupiers and tenants, particurlarly given its proximity to the CBD.
A lack of supply and strong and increasing demand for properties will continue to drive up prices, according to Yardney.
According to the latest RP Data research, the median house price in St Kilda stands at $860,000 and the unit price at $475,000, with prices rising over 50% over the past five years.
Monique Sasson Wakelin from Wakelin Property advisors picks St Kilda East as a hotpsot, although it does not have the bay views of its neighbour.
What you do get, she says, is close proximity to St Kilda Beach and the shopping and nightlife pleasures of Prahan.
Four inner-north Melbourne suburbs make it onto the API hotspot list, two from Melbourne’s inner northeast and five from southeast Melbourne.
Seven localities in Sydney’s inner southwest and four in Sydney’s inner south have been included on the latest list.
Inner-Sydney hotspots include Ashfield in inner-southwest Sydney, picked by Damian Collins from Momentum Wealth, and Chippendale in inner-south Sydney, chosen by RP Data national research director Tim Lawless. Factors that will drive Chippendale’s growth, according to Lawless, are its affordability and close proximity to the University of Sydney.
The survey lists nine inner-city suburbs in Adelaide and nine inner suburbs in Brisbane.
The hotspots were picked by a panel of 13 experts including researchers Australian Property Monitors and RP Data, international agency Colliers, property experts Terry Ryder, Michael Yardney and Margaret Lomas and property valuers WBP and Herron Todd White.
Thirteen locations in the Hot 100 were chosen by more than one expert: Blacktown, NSW; Coorparoo, QLD, Darlington, NSW; Gladstone, QLD; Newcastle, NSW; Port Noarlunga, SA; Scarborough, SA; Seaford, SA; St Kilda, VIC; Thebarton, SA; Toowoomba, QLD, Torrensville, SA and Townsville, QLD.
 
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Hotspots: Inner-city suburbs like St Kilda make top 100

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Asian pension funds and property fund managers are leading the charge of offshore investors buying up office towers, shopping centres and industrial parks in Australia’s capital cities.
In total, foreign investors have spent $2.25 billion buying up Australian commercial real estate in the first six month of the year.
The offshore investment accounts for 30% of the total value of commercial transactions undertaken in Australia over the first half of 2011, according to CB Richard Ellis.
While the dominant source of funds has been from Asia, CBRE global head of research Kevin Stanley has told the AFR investments have also come from Germany and the US.
“Over the long run average investment by foreign investors represents about 10% to 15% of the market, so the current levels are very high,” he says.
The boom in offshore investment comes as commercial property sales rebounded strongly in the second quarter of 2011.
Recently released CBRE data show investment activity reaching $2.7 billion in the three months to June 2011, a 432% increase over the $638 million turnover achieved in the first quarter of the year.
The most recent transaction involving Asian investors is Singapore’s K-REIT fund finalising its $166 million, 50% stake in Mirvac’s 8 Chifley Office tower currently under construction in the Sydney CBD.
Other recent large offshore transactions include the Canada Pension Plan Investment Board buying 50% of the Northland Shopping Centre in Melbourne for $455 million at the end of June 2011.
The biggest direct property purchase made to date in Australia over the last 24 months has been the estimated $685 million spent by the South Korea National Pension Service in January last year to acquire Aurora Place, the Renzo Piano designed office tower and residential block, on the corner of Macquarie and Bent Streets in the Sydney CBD.
Philip Ling, managing director of LaSalle Asia Pacific, says Australia is a key for the pan-Asian region.
“We have to have a local presence – we have to be on the ground,” he says.
Ling’s comments follow LaSalle Investment Management buying Brisbane-based Trinity Funds, a manager of wholesale unlisted Australian direct property funds, for $19 million in July 2011 following its purchase of the Novotel on Collins Street in Melbourne and accompanying shopping centre for $204 million in March 2011. The acquisition is part of a broader LaSalle plan to control $5 billion of Australian funds over the next five years.
According to Colliers national director Vince Kernahan, buyers from mainland China are emerging with one group close to buying a Sydney tower for about $120 million.
Jones Lang LaSalle chief executive Stephen Coney says Chinese investors are optimistic about the long-term prospects of the Australian economy.
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Asian funds lead offshore commercial buying spree

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Minutes released from the July 5 RBA board meeting indicate that the next set of inflation figures will be the pillar around which the bank will build its monetary policy outlook.
“Members noted that the CPI outcome for the June quarter, to be published later in the month (July 27), would be important in helping to shape views about inflation, and therefore the future path of interest rates,” the minutes read.
“Accordingly, members considered that the current mildly restrictive setting of monetary policy remained appropriate.”
The Australian dollar fell slightly to just under $1.06 following the release of the Reserve Bank note.
The wait-and-see approach adopted by the RBA comes as Westpac dramatically altered its interest rate forecasts for the remainder of the year, with the bank now expecting a rate cut in December. Westpac earlier forecast a rise on Melbourne Cup Day.
ANZ is also factoring a potential rate cut this year and expects no further rate rises in 2011.
JP Morgan Australia economist Helen Kevans told AAP it is forecasting core inflation of 0.7% for the second quarter, which is up 2.5% on a year ago.
While this figure will not set off alarm bells at the RBA, Kevans says it still forecasts core inflation at the upper end of the RBA's target by year end.
For that reason, a further hike in the interest rate is still warranted, she says.
Westpac chief economist Bill Evans, who has forecast a rate cut in December, also noted the importance given to the June quarter CPI outcome in the minutes
“The Reserve Bank Board minutes have emphasised just how important the near term inflation position is for the Board. While it was indicated that the recent data had suggested there was more time available to assess inflationary pressures an even stronger than anticipated emphasis has been given to the June quarter CPI outcome. While we think that this outcome is unlikely to cause a rate hike it appears that the Board will be prepared to move if the number is very high,” he says. The bank is also forecasting underlying inflation of 0.7% for the quarter, which it believes will not be sufficient to generate a hike in August.
In its July 5 minutes the RBA notes that the economy is subject to both overseas and local headwinds, as the housing and mortgage sector continue to struggle.
It notes that housing credit growth had eased further, to its slowest pace in many years, “although housing loan approvals had picked up in April and May” and that that the housing market remained soft, with another small fall in nationwide prices in May.
“Mortgage arrears rates had risen over recent months, although they were still much lower than in most other countries. Arrears rates had increased the most in Western Australia and Queensland, where house prices had been falling after large run-ups in previous years,” the minutes say.
On the global front, Australia’s equity markets have been driven down by global factors centred around Europe while local credit markets continued to be “relatively unaffected by the global uncertainty over the past month”.
“Issuance by Australian banks, both secured and unsecured, had remained solid and pricing had not materially changed,” the RBA says.
Once again, the RBA board takes note that the “multi-speed nature of the Australian economy was clearly evident in recent economic data”. “The resources sector remained strong, as did some service sectors. However, household cautiousness and the high exchange rate were having a dampening effect on a number of other sectors.
“Supply-chain disruptions, due to events in Japan, had also caused a fall in motor vehicle production and sales. Survey measures of overall business conditions and confidence showed significant differences across industries, but overall conditions remained around their long-term averages.”
While the unemployment rate held steady at 4.9% in May and had been around this level for about six months, employment continues to slow overall.
Employment growth is strong in the mining, business services and household but flat or falling in manufacturing and goods distribution.
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July inflation figures will be key to interest rate policy: RBA

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New Westpac bank brand the Bank of Melbourne will offer customers who sign up for multiple products a discount of up to 1% on the standard variable mortgage rate under a tiered scheme.
“We will reward customers for the depth, breadth and quality of their banking relationship with Bank of Melbourne,” says chief executive Scott Tanner.
“For instance, a home loan customer will get a greater discount on their interest rate if they have more products and services with Bank of Melbourne.” Customers who choose to have their transaction accounts, savings, insurance, superannuation and wealth management with Bank of Melbourne will receive a “significant discount on their standard variable interest rate,” Tanner says.
Tanner’s comments are included in a media release, which makes no mention of St George, the brand the bank is replacing in Victoria.
The discounts are part of a plan to try and bring new customers to the bank.
“Because we’re the new bank on the block we’re hungry for business,” Tanner said during a tour of a new bank branch in Richmond.
Currently, St George is offering customers a standard variable rate of 7.8%.
Customers who sign up for St George’s bundled Advantage package (home loan, credit card and transaction account) qualify for a discount of 0.95% on the interest rate.
Details of the pricing structure will be revealed on July 25, when the new bank brand replaces St George bank in Victoria.
In total 41 Bank of Melbourne branches and five corporate banking centres will be in operation.
In addition to the 38 existing Victorian St George branches changing over to the new brand, three new branches will open in Richmond, Forest Hill and Plenty Valley. 
The bank plans to add an additional 85 branches in the next four years, with 14 of the new branches to open in 2011.
Over the next 12 months existing customers of St George in Victoria will be issued with new Bank of Melbourne credit cards, debit cards and cheque books. Mortgage holders will continue to pay off their loans under their existing St George agreements.
Investment involved in launching the Bank of Melbourne, including establishing the infrastructure to support the new bank, is expected to be about $90 million, with $26 million spent to date.
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Bank of Melbourne entices customers with 1% mortgage rate discount

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A greater number of self-managed super funds are inquiring about converting to Australian Prudential Regulation Authority-regulated schemes.
An uptake in small APRA funds, which are schemes with fewer than five members, has been noted by Lawrence Blake, head of retail and technical services at Melbourne brokerage E.L &amp; C Baillieu.
“We are definitely seeing some switching back [to APRA funds],” Blake told the Australian Financial Review.
The decision to appoint a professional trustee is being driven by older SMSF trustees, who in part are concerned about not gaining access to compensation in light of the demise of Trio managed investment scheme.
Under the Trio ASIC compensation arrangement, trustees of SMSFs that are regulated by the ATO are not eligible for compensation, while those that are regulated by APRA are entitled to compensation.
This comes as the number of SMSF trustees has grown to 850,000 people, who account for about one-third of the $1.4 trillion superannuation pool.
According to official ATO figures, SMSFs are directing greater amounts of their funds directly into residential property, which has risen from about $11 billion in aggregate in 2008 to just under $13 billion in 2010.
Commercial property is an even bigger component of SMSF investments, rising from $31 billion to $43 billion over the same period.
Property of all classes (residential and commercial) currently accounts for about 13% of SMSF portfolios.
Increasing interest in APRA-regulated schemes has also been noted by David Storm, general manager of distribution at Australian Executor Trustees, one of the biggest players in the professional trustee market.
Storm says an ageing population of DIY fund trustees have become interested in the alternative set-up, not because of the demise of Trio, but because they no longer want the complexity of dealing with their own funds.
As a consequence of increased inquiry, Storm expects an increase in the number of APRA funds as service providers begin to promote them more heavily.
This follows a period when APRA small funds have fallen from 3,879 to 3,521 over the year to March 2011.
“I think the balance will move back to the small APRA fund world,” Storm says.
Besides the reasons noted by Storm and Blake, more SMSF trustees may consider an APRA-regulated fund in light of trustees being warned to be careful of developers, real estate agents, mortgage brokers and property ''specialists'', ''researchers'' and ''strategists'' spruiking geared property investments.
SMSF investors who don’t structure property investments correctly leave themselves open to penalties of up to $220,000, the SMH reported.</body></html>

DIY super investors look for safer regulation

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Brisbane’s hotels and resorts sector has mounted a strong recovery in the first quarter of 2011, according to the latest ABS tourist accommodation figures.
Since the start of the year, occupancy rates have risen from 60% in January, just after the floods, to reach 77% by the end of March 2011, official figures show.
Guest arrivals have increased from 61,000 recorded in January to 72,500 in March, while over the same period average takings per room per night have gone from $163 to more than $200.
Brisbane’s hotel sector has been boosted by the strong increase in the number of business visitors coming to Australia, according to CB Richard Ellis analyst Craig Godber.
Conversely, the Gold Coast market, which is more heavily reliant on leisure travellers, is heading in the opposite direction.
Since the start of the year, the occupancy rate at Gold Coast resorts and hotels has fallen from a healthy 75% in January 2011 to just over 60% in March 2011.
The Gold Coast occupancy rate for the March quarter of 2010 stood at 73%.
Godber expects Queensland’s leisure-focused markets to remain subdued in the short term, though investors have shown faith in the long-term health of the market, with major transactions totalling $265 million in 2010.
The strong demand for accommodation from Brisbane visitors comes as investor activity and interest picks up this year.
Jones Lang LaSalle has identified Brisbane as a hotel development hotspot, with the market accounting for 18% of rooms under construction across the 10 major markets.
According to its Australian Hotel Development Register for June, there are 362 hotel rooms currently under construction in Brisbane and 521 on the Gold Coast, compared with just over 432 in Sydney.
Hotels under construction include the 4.5-star Mosaic Grand Chifley Hotel on the corner of East, Church and Ann streets in Fortitude Valley due for completion in 2013, which will comprise 48 rooms and is being built by Leighton Holdings at a cost of $150 million.
CBRE Hotels senior director for Queensland Wayne Bunz says the strength of the Brisbane market is spurring strong demand from hotel investors and could push forward major development projects.
Bunz says hotels have recorded strong occupancy rate growth during the first five months of this year, even after the Stamford Hotel reopened its doors, adding 252 rooms back into the market.
“In this environment, attention is focusing on a number of possible additions for the [Brisbane] CBD, including a 400-room hotel on the ex-State Library site on George Street, a 231-room development at 99-103 Mary Street, a 316-room hotel at 40 Elizabeth Street and the conversion of 171 George Street and the office space at The Chifley at Lennons Hotel,” Bunz says.
“Funding, however, remains the biggest impediment to new development, with significant equity levels still required,” he says.
The decline in the Gold Coast market has corresponded with other coastal Queensland hotel markets heading south.
For the March 2011 quarter, occupancies are down to 39% on the Fraser Coast and 42% on the Whitsundays, compared with 49% a year ago.
However, not all coastal areas are struggling to fill their hotel rooms, with Mackay occupancies rising from 54% to 61% over the first three months of the year.
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Brisbane hotel sector recovering as occupancy hits 77%

For the first time in a long time, Australia's inflation story is starting to look more like a landing than a fight.

The latest Consumer Price Index figures from the Australian Bureau of Statistics showed annual inflation eased to four per cent in May, down from 4.2 per cent in April. On the surface, that might not seem like a major move. Inflation remains above the Reserve Bank's target range and some categories continue to record stubborn price growth.

But the significance of this result lies less in where inflation sits today and more in what it means for where interest rates are likely heading next.

The biggest takeaway is that inflation continues to move in the right direction.

Markets had been bracing for another sticky result after a period where progress appeared to stall. Instead, headline inflation came in softer than expected, helped by falling fuel prices and easing transport costs. Annual transport inflation halved from 6.6 per cent in April to 3.3 per cent in May, while automotive fuel prices fell 11.9 per cent during the month following lower oil prices and the impact of reduced fuel excise measures.

While petrol prices don't solve Australia's affordability challenges, they are one of the most visible and immediate costs for consumers. Falling fuel costs feed through the economy quickly, helping ease pressure on household budgets and business operating expenses.

The ABS data also showed headline inflation is now sitting at its lowest annual level in several months, reinforcing the broader trend that price growth is gradually moderating.

That trend is important because it aligns with what many economists and lenders have been saying for the last month.

Prior to this week's inflation data, ANZ, NAB and Commonwealth Bank had all shifted their forecasts, now believing the Reserve Bank had likely reached the peak of the interest rate cycle. Following the May inflation release, ANZ reaffirmed that view.

In its latest economic update, ANZ said it expects quarterly trimmed mean inflation to come in at 3.7 per cent for the June quarter, slightly below the Reserve Bank's forecast of 3.8 per cent. Importantly, the bank said that outcome, when combined with slowing economic activity, "supports our view that the cash rate has peaked".

The Reserve Bank has spent the better part of three years attempting to bring inflation under control through higher interest rates. If Australia's major banks are correct and rates have now peaked, the conversation shifts from how much higher rates could go to when they might begin coming down.

Westpac's caution comes from underlying inflation. The trimmed mean, the measure most closely watched by the Reserve Bank, increased from 3.4 per cent to 3.6 per cent annually. Housing inflation remains elevated at 6.5 per cent, reflecting ongoing increases in rents, electricity costs and new dwelling construction.

Electricity prices remain particularly problematic, rising 21.1 per cent over the past year following the removal of government rebates.

Housing construction costs are also showing signs of renewed pressure. ANZ noted new dwelling costs rose 0.9 per cent in May and are now running at an annualised pace of 8.6 per cent over the past three months. Builders continue to face higher labour, fuel and material costs, a reminder that inflationary pressures have not completely disappeared.

Housing affordability has deteriorated largely because of higher interest rates rather than higher property prices alone. Even modest reductions in mortgage rates would improve borrowing capacity, increase buyer confidence and reduce repayment pressure on existing homeowners.

While August is far from a certainty, the latest inflation result has strengthened the view that the next move in rates is more likely to be down than up. For borrowers, buyers and the development sector, that alone represents a significant shift from the conversation that dominated much of the past two years.

Joel Robinson

The inflation result the property market was waiting for

Commercial property group FiveX is doubling down on its move into the residential space.

The group, founded by Joshua and Marko Berger more than five decades ago, has followed up its plans for a 39-storey tower on North Sydney's Alfred Street with a proposed 61-storey tower in Chatswood.

The new tower at <a href="https://www.apartments.com.au/new-apartments/815-pacific-highway-chatswood-nsw-2067">815 Pacific Highway</a>, which would be one of the tallest proposed in Chatswood in recent years, will comprise 490 apartments, 76 of which will be dedicated affordable housing and managed by Evolve Housing for a minimum of 15 years.

The project will replace the long-standing Panorama Building, originally known as the BMA Tower, a 14-storey office building completed in 1972 and designed by Hungarian-born architect Hugo Stossel. At the time of its completion, the building was the tallest structure in Chatswood and became a local landmark due to its distinctive curved form and external glass lift.

<img alt="FiveX" data-entity-type="file" data-entity-uuid="956bd299-3864-47a0-8ea6-162b5524c5d8" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-24%20at%201.02.03%E2%80%AFPM.png?VersionId=EWx7teUr7RcYrI9mgRytwppwt5AdUDtb" />

fjcstudio is behind the designs. Its Architectural Design Report argues the ageing commercial building no longer reflects Chatswood's role as one of Sydney's key strategic centres and that the site is ideally positioned to support significantly higher residential density.

"The site is located at the heart of Chatswood, within the TOD accelerated rezoning area that supports higher density development around the new Metro station," the report states.

"The site's role within a walkable 400-metre radius catchment is where housing, employment, retail and community uses are encouraged to cluster in support of transit-oriented living."

<img alt="fjc" data-entity-type="file" data-entity-uuid="8d198f5e-cc71-4175-9357-be6ec7207473" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-24%20at%201.18.27%E2%80%AFPM.png?VersionId=5WUFc3IYBPvhQMBUYLCsjJhzdcVeYodE" />

The proposal has undergone two rounds of review by the NSW State Design Review Panel, with the design evolving through an extensive assessment process focused on design excellence, public realm outcomes, residential amenity and the integration of affordable housing.

fjcstudio says the residential component provides a diverse mix of apartment typologies, supporting a broad demographic and contributing to housing supply in a highly accessible location close to major transport, employment and retail infrastructure.

The application follows FiveX's plans for a 39-storey tower at <a href="https://www.apartments.com.au/new-apartments/275-alfred-street-north-north-sydney-nsw-2060">275 Alfred Street</a>, which it <a href="https://www.apartments.com.au/new-apartments/275-alfred-street-north-north-sydney-nsw-2060">submitted through the same NSW Government pathway</a> in December. That's for 184 apartments.

Recent activity in Chatswood includes Hyecorp launching its Archer Street project, Celine, and Develotek securing approval for a 34-storey tower.

First look: FiveX targets Chatswood skyline with 61-storey tower after North Sydney plans

Bridgewell Capital and SLD Development seem to be bullish on the Killara apartment market, filing plans for a second new development next to the Killara Golf Club.

The new plans are for 79 apartments across an amalgamated 4,989 sqm site on Buckingham Road.&nbsp;The project has been designed by BKA Architecture and is being assessed under the NSW Government's Low and Mid-Rise Housing and Infill Affordable Housing reforms. It is just 300 metres from&nbsp;Killara train station.

The majority of the apartments are three-bedrooms (46), with 23 two-bedroom apartments, seven one-beds, and three four-bedroom apartments. 17 of the apartments&nbsp;are proposed as affordable housing, representing 15 per cent of the project's gross floor area, allowing the development to access additional floor space and height incentives available under the NSW Housing SEPP.

There will be 131 resident and visitor car spaces, and more than&nbsp;1,450 sqm of communal open space. Landscaped areas would account for approximately 45 per cent of the site.

<img alt="Killara" data-entity-type="file" data-entity-uuid="75ef5ef7-a53b-4932-a8f1-38f63169eec9" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-06-24%20at%2011.04.00%E2%80%AFAM.png?VersionId=d_lG1A1StDaMQilljy25Fr8SF1BnAmKE" />

The site currently contains three detached dwellings and occupies a prominent position on the eastern side of Buckingham Road, with frontage to an area that has already begun transitioning towards higher-density housing. Existing apartment buildings of up to six storeys surround the site, while the Killara Golf Club forms its southern boundary.

The application has been lodged as a State Significant Development due to the affordable housing component and the scale of the project.

According to the design report, the proposal has been shaped by the area's evolving planning framework, which is encouraging greater housing density around transport infrastructure.

"The site sits along a growth area anticipated to undergo transformation in line with broader trends across New South Wales, driven by the implementation of the Low and Mid-Rise and Transport-Oriented Development State Housing Policies," the report states.

"Being within 800 metres walking distance to Killara Train Station, the project seeks to provide high-quality apartments designed for various family sizes, located in a vibrant landscaped setting."

The Upper North Shore suburb has become one of the most closely watched testing grounds for the NSW Government's housing reforms. A number of developers have moved quickly to consolidate sites around railway stations across suburbs including Killara, Lindfield, Gordon and Roseville, where the new planning settings are creating opportunities for apartment developments that would previously have been difficult to achieve.

The likes of Aqualand, Hyecorp, Holdmark and Vermont Property Group have projects in the region.

Bridgewell has several developments in the pipeline. Last September they submitted plans for <a href="https://www.apartments.com.au/news/nsw/bridgewell-capital-seeks-55-apartment-project-in-killara">55 new apartments</a> at&nbsp;23-25 Lorne Avenue in Killara, just the other side of Regimental Park from their new project. In May they filed for <a href="https://www.apartments.com.au/news/nsw/first-look-bridgewell-plots-120-apartments-and-childcare-centre-in-maroubra-town-centre">120 apartments in Maroubra</a>.

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First look: Bridgewell, SLD Development double down on Killara Golf Club

Sydney developer&nbsp;<a href="https://www.apartments.com.au/developers/central-element">Central Element</a>&nbsp;is doubling down in Drummoyne, lodging plans for a boutique apartment development on St Georges Crescent, only one-kilometre down the road from its first Drummoyne development, Bianca.

The new project at 15A-21 St Georges Crescent,&nbsp;a&nbsp;1,701sqm north-facing site overlooking Iron Cove, will have 45 apartmnts across 10 levels. Eight of the units will be dedicated to affordable housing.

The site sits within walking distance of Drummoyne Village, Birkenhead Point, ferry services and the Bay Run, and offers harbour views towards the Sydney Harbour Bridge and CBD skyline.

Designed by MHN Design Union, the development will deliver a mix of one, two and three-bedroom apartments, alongside resident amenity including a gym, landscaped communal open space and three levels of basement parking.

The project has been lodged under the NSW Government's Low and Mid-Rise Housing reforms, with Drummoyne Village identified as a town centre capable of accommodating additional housing supply.

Central Element acquired the site earlier this year as part of its continued expansion across Sydney's eastern suburbs, lower north shore and inner west.

The developer's current pipeline includes luxury apartment projects Pearl Bondi and a separate development on Lamrock Avenue in Bondi, a residential project in Barry Street, Neutral Bay, and a mixed-use seniors living community in Greenwich.

Central Element Managing Director Nathan Chivas said the project would address a shortage of new owner-occupier housing opportunities in Drummoyne.

"While we're seeing a significant shift across Canada Bay as major infrastructure investment, population growth and planning reform drive a new chapter for the region, in suburbs like Drummoyne there remains a genuine shortage of new boutique luxury housing opportunities for owner occupiers," Chivas said.

"Sites of this nature are increasingly difficult to secure, particularly those that combine a north-facing aspect with direct water outlook. Our St Georges Crescent project responds directly to the market demand, offering a level of exclusivity, outlook and lifestyle in the highly sought after suburb."

The development application has been lodged with the City of Canada Bay Council, with the project expected to launch to market in early 2027.

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Central Element seeks second Drummoyne apartment development

The NSW Government has unveiled plans that could deliver around 1,300 new homes across Nowra and Kiama, continuing its push to unlock housing in well-located regional centres along the South Coast.

The proposals, now on public exhibition, would pave the way for around 830 homes in Nowra and a further 450 homes in Kiama, while also introducing affordable housing requirements and increased building heights in key locations.

The larger of the two proposals is centred on Nowra, where the NSW Government is seeking to rezone land within the Mandalay and Riverfront precincts.

The Mandalay sub-precinct, located close to Shoalhaven Memorial Hospital, Nowra Library and the city's aquatic centre, could accommodate around 530 new homes. Around 30 per cent of housing delivered on Homes NSW-owned land would be dedicated to social and affordable housing, equating to roughly 100 homes. Building heights would increase from the current two-storey limit to between three and six storeys.

A separate rezoning proposal for the Nowra Riverfront Precinct would unlock a further 377 homes while creating stronger connections between the Shoalhaven River and the CBD. The plans include building heights ranging from five to 12 storeys, floor space ratios of up to 2:1 and a requirement for two per cent affordable housing.

Together, the two proposals would deliver more than 900 homes across the broader Nowra area, reinforcing the city's role as one of regional NSW's key growth centres.

The housing push builds on previous infrastructure commitments in the Shoalhaven, including government funding aimed at supporting thousands of future homes in West Nowra through upgrades to water and wastewater infrastructure.

Further north, the NSW Government is also progressing plans for the former Kiama Depot site, a two-hectare parcel near Kiama's town centre.

The rezoning proposal would transform the former industrial site into a residential community capable of delivering up to 450 homes. Buildings would range between six and eight storeys, with at least 10 per cent of homes allocated as affordable housing. The proposal also includes approximately 600 parking spaces and improved walking and cycling connections.

Planning Minister Paul Scully said the proposals are designed to increase housing supply in locations close to jobs, transport and services.

"For too long, families have struggled to find somewhere to live, and activating underutilised sites allows us to deliver the new homes these families need," Scully said.

"The Minns Labor Government is getting on with the job of unlocking well-located sites close to transport, jobs, and town centres and building the homes our communities need.

"These rezonings are about removing barriers to housing delivery and making sure land is put to better use so more people can find a place to call home within the communities they choose."

The latest rezonings form part of the Minns Government's broader strategy to accelerate housing delivery across NSW, particularly in established centres where existing infrastructure can support additional population growth.

Community consultation on the proposals is now underway, with feedback set to inform the final planning controls before the rezonings are determined.

Larry Schlesinger

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