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Housing affordability improved by 0.5 percentage points in the first three months of the year with the proportion of income required to meet loan repayments decreasing to 29.9%.
It was the seventh successive quarterly improvement in housing affordability as measured by the Real Estate Institute of Australia (REIA) in partnership with Adelaide Bank.
A year ago, the proportion of income required to meet loan repayments decreasing to 32.7%.
Housing affordability woes peaked at a ratio of family income to average loan repayments of close to 40% in March 2007 just before the start of the Global Financial Crisis when the cash rate hit 7.25%.
<img src="/images/stories/2013/may23abelesauction/REIA_affordabiulity.jpg" width="470" height="290" alt="REIA_affordabiulity">
Source: REIA
Despite the continued incremental improvements in affordability over the past two years, first-home buyers as a proportion of the owner-occupier market dwindled to their lowest level since the June quarter of 2004.
First home buyers made up 14.5% of the owner-occupier market compared with 16.5% in the December quarter 2012, according to REIA figures.
“Affordability has been improving slightly now for seven consecutive quarters, with the proportion of income required at its lowest since the December quarter 2009 and compared to the same time last year, all states and territories saw improvements,” notes REIA president Peter Bushby.
"Investors are returning to the housing market with investment housing representing 36% of total lending in March 2013. Unfortunately this confidence is not shared by first home buyers with numbers plummeting since the First Home Buyer Boost was abolished," he says.
 
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 Click to enlarge
<a href="/images/stories/2013/06/affordabilityjune5one.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/2013/06/affordabilityjune5onethumb.gif"></a>
Source: REIA
The REIA blames the decision by state and territory governments in NSW, Queensland, South Australia, Tasmania and <a href="https://www.propertyobserver.com.au/residential/act-lifts-first-home-owner-grant-to-%2412500-but-for-new-homes-only-from-september-1-fhog-fhb/2013060361890" target="_blank">most recently the ACT</a> to axe the $7,000 first home owner grant for the purchase of existing homes for FHB numbers falling sharply.
“The impact of the decisions by the state Governments is clear in the plummeting number of first home buyers. Despite cuts in the official interest rate by the RBA to levels not seen for decades,the proportion of first home buyers decreased to 14.5% in March 2013," said Bushby in a statement earlier this month.
Renting become slightly less affordable in the March quarter - declining from 23.9% of median weekly family income required to meet weekly rent for a three bedroom house to 24.4% - but is still more affordable than a year ago (24.7%).
The largest improvement in housing affordability was recorded in the ACT where the proportion of income needed to meet loan repayments dropped by 1.4 percentage points to 17.3% driven by weekly incomes rising by $10 to $2,992 while average monthly loan repayments fell by $161 to $2,249.
The second biggest improvement in affordability occurred in NSW with ratio of household income to monthly mortgage repayments improved from 36% to 34.5% - a year ago it was 37.8%.
However NSW, with its high median house prices, remains the least affordable state followed by South Australia (an improvement from 31.4% to 30.6%), Victoria (an improvement from 30.6% to 30.2% and Queensland (an improvement from 28.1% to 27.9%).
Western Australia (up from 22% to 22.6%) and Tasmania (up from 25.2% to 25.6%) where the only two state or territory markets where housing affordability worsened over the quarter.
REIA March quarter figures show the number of loans to first-home buyers in NSW fell 40.6% to 2,647.
“When compared to the figure recorded a year ago, that’s a 5 7.0% drop. This is the largest annual decline in the number of first home buyers’ commitments across the country,” says Bushby.
In Queensland, the number of loans to first-home buyers decreased 43.2% to 2,557 and this is the largest quarterly decline across the nation. When compared to the figure recorded last year, it’s a 49.2% drop.
“The proportion of first-home buyers in the number of owner-occupied housing finance commitments is now at 14.2% and remains persistently low compared to the long-run average proportion of 20.1%,” says Bushby.
Victoria recorded a drop in the number of loans to first home buyers over the quarter, down 15.4%  to 6,053 while South Australia recorded the nation’s only increase, up by 1.8%.
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ACT and NSW lead “slight” improvement in housing affordability in March quarter but FHBs stay away: REIA report

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The RBA is likely to leave the cash rate on hold in July but economists are pencilling in a likely 25 basis point rate cut in August provided there is a benign second quarter inflation reading on July 24 and no sign of a significant pick-up in non-mining sectors of the economy. 
Westpac chief economist Bill Evans believes the end game for the RBA in the current easing cycle remains a 2% cash rate with the most likely timing being a 25 basis point rate cut in August followed by another one in the final quarter the year and one in the first quarter of 2013. 
“The Reserve Bank has retained an easing bias, but it is not an urgent one, says Evans, the first major bank economist to correctly tip the RBA to begin its easing cycle in November 2011.
“The path of easing from here will depend on developments in demand; the financial markets (the Australian dollar, as it jointly impacts demand and inflation) and the inflation story itself,” writes Evans in a note following yesterday’s RBA decision. 
Evans says a key piece of information the RBA will assess is the second quarter ABS inflation figure, which will be released on July 24 - between the July 2 and August 6 monetary policy meetings. 
“We have a more downbeat view on global growth next year and our domestic forecasts are also lower than the Bank's. 
“As such we already see a strong case for further monetary policy easing. 
“However, the tone of yesterday's statement implies that the RBA Board is looking for further evidence before acting again, which points to rates being kept on hold in July. 
“However, it is likely to signal at that meeting that the forthcoming inflation print could provide scope for it to support demand further within the context of its target [inflation band of between 2% and 3%],” he says. 
AMP Capital chief economist Shane Oliver, one of just a few economists who expected a cash rate cut yesterday, said the key message from yesterday’s accompanying statement from Glenn Stevens was that interest rates were appropriate for the "time being", but “importantly it also signalled that it retains a bias to cut interest rates again if needed”. 
“Our view remains that the RBA will have to act again on its easing bias,” says Oliver. 
“While the Australian dollar has fallen over the last month at around $US0.97 it hasn't really fallen enough to provide a big stimulus to the economy (it’s just at the low end of the range it’s been in for two years). 
“While the economy has shown tentative signs of responding to lower interest rates, its now crunch time for the Australian economy with peaking mining investment leading to a heightened sense of urgency that other parts of the economy start to pick up more vigorously,” Oliver says. 
“Ultimately this will occur, but its likely to require a lower Australian dollar and a further decline in interest rates to ensure the adjustment back to a more balanced economy is not too painful. 
“As a result we continue to see further interest rates cuts from the RBA, with the next move likely in the next month or so, although the RBA may decide to wait until the August meeting after which it will get a look at the June quarter inflation figures,” he says. 
CommSec chief economist Craig James highlights that the accompanying statement by Glenn Stevens was probably the smallest on record at 348 words. 
“Basically the Reserve Bank believes it has cut rates low enough to boost economic growth,” James says. 
“But if the economy continues to lag and inflation stays low, the Reserve Bank has vowed to cut rates further. 
James highlights the performance of the Australian dollar as one of the key uncertainties in the minds of the RBA. 
“While the Aussie dollar has fallen over the past month, we are still in the dark about the Reserve Bank’s 'comfort level', given the myriad of factors such as commodity prices, the trade accounts, our AAA credit rating and interest rate settings,” he says. 
He also says the RBA will look at the cash rate in relation to variable mortgage rates and how close they are to “normal”. 
“Currently the variable housing rates of major banks are around 6.20%, below the long-term average or “normal” rate of 7.20% but still modestly above the 41-year low of 5.75% recorded in April-May 2009,” says James. 
“Certainly there is more activity in the housing market at present, but the response has been more by investors rather than owner-occupiers. 
“Not only do analysts need to consider the environment, but also the different reaction funds of demographic groups, from Generation Y to baby boomers,” he says. 
James returned to the wording of the May monetary policy decision statement where the RBA said that only “some” of the scope to ease policy had been used, keeping some in reserve. 
“The Reserve Bank has kept the easing bias firmly in place. So we continue to pencil in the risk of another rate cut in August after the inflation data released in late July,” he says.
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RBA retains easing bias and will act on it with August cash rate cut: economists

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Local business owners are snapping up industrial properties below $1 million in Melbourne's bayside suburbs, with recent sales activity and a dwindling amount of space suggesting that investors and developers take a look at the market.
A stock shortage appears to be looming with just 11 properties offering space in excess of 1,000 square metres currently available, according to Colliers International industrial property agent Jamie Stuart.
Of the last five properties he has sold, four have been purchased by owner-occupiers from within the local area. 
“The bayside area is quite a localised owner-occupier market,” Stuart says.
“Businesses within the bayside region of Breaside, Mordialloc, Cheltenham, Moorabbin and the surrounds are bucking the trend and expanding due to increasing confidence in the market and the ability to attract and retain a solid work force in this area.”
Recent sales  include a 1,000 square metre office/warehouse at 1 Endeavour Way in Braeside bought by neighbouring business The Wrapping Paper Company Pty Ltd for $1,105,000; while a 750 square metre from  former engineering facility at 65 Shearson Crescent in Mentone was snapped up for $780,000 by a purchaser who already had premises in the same street. 
Other sales included:
<ul>
<li>A 208-square-metre modern boutique office/warehouse at 9/34 Christensen Street in Cheltenham was purchased by an owner-occupier from Middle Park for $330,000; </li>
<li>A 405-square-metre office with storage at 52 Parkhurst Drive in Knoxfield purchased by a photography company for $465,000; and</li>
<li>A 1,018-square-metre older style office/ warehouse at 15-17 Bond Street in Mordialloc purchased by a neighbour who was looking to expand operations, for $900,000 
</li>
</ul>
“From strong auction results in the last few months, we have buyers who missed out still waiting for opportunities to arise and fulfill their requirement,” he says. 
“We are seeing a real shift of enquiry from leasing to purchase, due to the affordability of cash and a long term desire to own within this dynamic and localised market place.”
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Melbourne bayside warehouses below $1 million are in demand

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The premises of Browns Bakery on Church Street in Brighton have sold to a local investor for a record $3.2 million at auction following a battle between seven bidders.
The final price for the 46a Church Street property represented a yield of just 2.6% with around 150 people in attendance at the on site auction.
It is believed this is the highest amount paid for a single-fronted property in the street, and may be the lowest sale yield achieved this year for a retail shop in Melbourne’s major shopping strips.
The property was offered for sale for the first time in over half a century, under instructions from executors, sold on behalf of the Ireland family who had owned it for around 50 years.
In October last year, the historic Lygon Street premises of <a target="_blank" href="https://www.propertyobserver.com.au/retail/lygon-street-premises-of-donatis-fine-meats-slices-records-with-emotion-driven-%24289-million-auction-sale/2012103057521">Donati’s Fine Meats in Carlton sold for $2.89 million at auction</a>, with a private investor paying nearly $1.4 million above pre-auction expectations for the trophy inner-Melbourne retail asset on a yield of around 2.3%.
The previous highest price paid on the retail strip was 93 Church Street, the premises of Rock Shop Clothing, which sold Mark Talbot for $2.99 million in September 2010 and included a separate first floor apartment.
Fitzroy's agent Mark Talbot handled the marketing campaigns of both properties.
The building stands on a 154 square metre site with total building area area of 179 square metres.
The property is leased to Browns Bakery on a three year deal with a further three-year term, currently returning $86,357 plus outgoings and GST.
Talbot says several shops of a comparable size within the immediate vicinity were currently returning rents circa $120,000 per annum plus outgoings and GST,which helped underpin the value of the offering.
“The recent sale confirms Church Street, Brighton as arguably the best, if not the best, retail strip in Melbourne,” says Talbot.
“To achieve a sale price reflecting a yield of only 2.6% shows that investors are willing to acquire prime property, even if the rent is below market rent.
“Earlier this year we saw the deli that adjoins the iconic Pantry sell for $2.9 million,returning $115,000 per annum, but to achieve $3.2 million for a shop only returning $86,000 demonstrates our ability to achieve a maximum sale result for our client.”
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Investor pays record $3.2 million for Brighton Street bakery premises on 2.6% yield

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Law firms continue to play a major role in taking up prime Sydney CBD office space with law firm DLA Piper signing a lease agreement covering 6,000 square metres of office at Charter Hall's 1 Martin Place office tower.
DLA Piper will occupy five floors in the high-rise tower on a 10-year lease term in one of the largest office leasing deals in the Sydney CBD signed this year.
The 24-level A-grade office building is jointly owned by the No.1 Martin Place Trust and Charter Hall.
Martin Place will serve as the Sydney headquarters for the law firm, which will move in mid-2014.
It currently leases level 38 at 201 Elizabeth Street.
The law firm merged with Phillips Fox in January 2011 to create the largest Australian-based law firm.
Charter Hall joint managing director David Harrison says there has been "significant leasing activity in the Martin Place precinct over the past 18 months as tenants refocus on the considerable benefits of operating out of high quality buildings, located in the heart of the CBD, surrounded by customers and clients".
The lease comes as the most recent Knight Frank Asia-Pacific Law Firm Review found that international law firms are reacting to market opportunities and changing regulatory environments to expand their presence in the Asia Pacific region.
According to the report in the past Sydney law firms "generally clustered around the courts and legal precinct".
"However following legislative changes and a consequent change of focus towards more corporate or commercial law, more firms have moved closer to their clients in the “Core” and into quality Grade-A/Premium grade office buildings.
"The increasing competitive pressure from international firms has manifested in a flight to quality, with the legal sector proving to be the most active sector of the market by transaction volume," says Knight Frank.
Recent law firm lease deals include Corrs Chambers Westgarth leasing 8,000 square metres at 8 Chifley Square from the third quarter of 2013 and law firm Ashurst leasing 14,000 square metres at 5 Martin Place.
<img height="167" width="470" src="/images/stories/2013/law_firms.jpg" alt="law_firms">
<div>Source: Knight Frank</div>
<div></div>
DLA Piper was represented by Michael Kearins, director of Cushman &amp; Wakefield’s occupier services business.
The leasing of No.1 Martin Place is being managed by CBRE’s James Patterson and Jenine Cranston in tandem with Greg Fisher and Mark Semple of DTZ.
“We are in a competitive leasing market at the moment with tenants focussing on high quality," says Patterson.
In the past 18 months, tenant commitments for the Martin Place precinct have exceeded 60,000 square metres of space.
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DLA Piper signs 6,000 square metre Sydney CBD lease amid surge in law firm activity

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The McDonald's premises in Preston had the highest number of enquiries of all 21 NSW properties auctioned by Burgess Rawson last month, with attractive tax depreciation allowances a key factor driving investor interest.
The <a target="_blank" href="https://www.commercialrealestate.com.au/property/2010402539/for-sale/nsw/prestons/retail">two-year old premises are leased</a> to McDonald’s Australia for 20 years with 18 years still to run.
The premises (pictured below) were advertised as being "built in 2011 with attractive depreciation allowances".
{yoogallery src=[images/stories/2013/05/may15mcdonalds]}
They featured the latest McDonald's design as well as a drive-thru facility.
Burgess Rawson director Dean Venturato highlighted the fact that the premises were only two years old and that such assets “hardly ever come up”.
He told Property Observer investors would have taken the tax depreciation benefits into account when bidding for the property.
<a target="_blank" href="https://www.propertyobserver.com.au/retail/mcdonalds-australia-beats-private-investors-to-buy-its-own-preston-fast-food-premises/2013051561366">McDonald’s Australia was the winning bidder</a> buying back its own premises and fending off competition from private investors.
It paid $6.45 million for the premises on a 2,621 square metre site reflecting a yield of 5.65% on net income of $365,000 plus GST.
Two other NSW properties that sold as part of the same portfolio auction highlighted their tax depreciation allowances.
A First Choice Liquor outlet in Erina on the Central Coast sold for $4.5 million on a yield of 7.67%. It previously sold for $3.575 million in March 2007.
Leased by First Choice Liquor until 2017 with renewal option to 2037, it features a “modern building with depreciation allowances” on a 2,934 square metre site.
Childcare premises in West Hoxton, leased for 10 years to the Montessori Childcare group with a further 10 year renewal option sold for $1.63 million on a yield of 6.35%.
The free-standing building premises, built in 2008 offered "excellent tax depreciation" allowances were bought by Montessori Childcare.
Under Australian tax law, if you own commercial real estate or commercial property that is rented or used for income-producing purposes you are entitled to claim the depreciation of that property against your taxable income, explains quantity surveyor Washington Brown on its website.
“There are two types of depreciation allowances available: depreciation on Plant and Equipment, and depreciation on Capital Allowances.
“In order to maximise the tax savings on your investment property you'll need a professionally prepared tax depreciation report or tax depreciation schedule, the firm says.
According to <a href="https://www.propertyobserver.com.au/commercial/what-depreciation-commercial-property-investors-can-claim/2012041054202">Property Observer commercial property writer Chris Lang</a>, tax depreciation claims, can significantly enhance the overall return on your investment.
He says investors should seek professional advice to ensure they are claiming their full entitlement — and thereby, leave nothing on the table.
Lang says another vital step investors to need to consider when they acquire a commercial property is knowing how to correctly structure of the contract of sale in order to maximise your depreciation claim for commercial property.
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Burgers, fries and tax depreciation benefits drive sale of McDonald’s premises

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The RBA needs to drastically cut interest rates to weaken the Australian dollar and help non-mining sectors of the economy recover, says economist and property bear Steve Keen. 
He also says more efforts need to be made to reduce debt levels in Australia and other countries, warning the global financial crisis never ended and would continue - on and off- for the next 20 years.
Keen says the RBA should have cut the cash rate yesterday at its June meeting as part of a process of reducing the cash rate by 150 basis points over the coming year. 
This would leave Australia with a cash rate of 1.25% more in line with monetary policy settings of its first-world counterparts like the US (0.25%) UK (0.5%) and Canada (1%). 
“We've run a high interest rate policy when the rest of the OECD has been at zero for four years,” Keen tells Property Observer. 
“That I believe is the main reason our dollar has stayed so high, crucifying manufacturing in the process. 
“I'm saying the RBA should surrender to the other central banks and run the same level,” he says.
Keen, contends that the “GFC has never ended”. 
“It was caused by excessive private debt globally, and ours has remained high (though lower than the US). 
However, he points out that the US has reduced its national debt by a sixth relative to GDP in the last four years while Australian household debt to income <a target="_blank" href="https://www.rba.gov.au/chart-pack/household-sector">remains elevated at around 150% compared with around 50% in the early 1990s. </a>
“This crisis will roll on-again, off-again for two decades, unless we directly reduce private debt by write offs and the like, and there's no sign of that being considered by governments,” he says. 
Keen made these comments from Venice while currently on a global lecture tour. 
He will next fly to Boston to present a specialist seminar on money at Harvard Law School.
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RBA needs to cut cash rate to 1.25% as GFC still lingers: Steve Keen

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The cash rate remains unchanged at 2.75% following today's RBA monetary policy board meeting.
This was in line with the expectations of most economists with 24 out of 25 economists polled by Bloomberg last week tipping no change in June.
<a href="/news">AMP Capital Investors chief economist Shane Oliver </a>was the only economist to forecast a rate cut out of the 25 polled, though he said it would be "another close call".
Separately to the Bloomberg poll, property bear Steve Keen said the RBA should have cut the cash rate today.
Commenting on today’s decision, RP Data research director Tim Lawless says, the recent fall in housing values over both April and May isn’t likely to have played a large role in the RBA’s decision.
<a href="/news">Dwelling values fell 1.2% in May</a> and 0.5% in April to be up 1.1% over the first five months of the year, according to RP Data-Rismark.
“In fact, the RBA was probably heartened that the strong value growth recorded over the first quarter of the year has now slowed to a more sustainable pace," says Lawless.
“Dwelling values remain 1.1% higher since the start of 2013 and are 2.9% higher over the year.
“Looking specifically at the housing market, most other indicators continue to paint a reasonably strong picture of the market.
“Auction clearance rates remain around the 70% (higher in Sydney), the number of advertised properties has fallen markedly since the start of the year, homes are selling in a fewer number of days and vendors are discounting their prices by less.  Importantly there has also been a consistent rise in buyer activity suggesting that buyer demand is continuing to improve thanks to the lower interest rate environment and the fact that the housing market is back in recovery mode,” he says.
LJ Hooker deputy chair L Janusz Hooker says the decision to keep rates on hold today "is a sign of a stronger economic forecast". 
"Better than expected capital investment outlook, a weaker Australian dollar and increase in building approvals has put further cuts on hold for the current time," he says.
"The Australian residential property market is clearly in recovery in many metropolitan areas such as Sydney, Perth and Melbourne which in time will buoy the broader market nationwide."
Alex Parsons, CEO of financial comparison website RateCity.com.au says last month’s rate cut by the Reserve Bank spurred most lenders to follow, by passing on the full 0.25 percentage points.
“We haven’t seen this many lenders follow the cash rate cut in full over the previous six rate cuts. For example, the last three rate cuts in December, October and June 2012, the majority of lenders passed on 0.20 of the Reserve Bank’s 0.25 percentage points.
“In May 2012, when the Reserve Bank dropped the cash rate by 0.50 percentage points, most lenders cut their variable rates by about 0.30 percentage points. This shows that pressure for funding has eased compared to last year and lenders can afford to pass on the full rate cuts to their variable home loan customers,” he says.
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RBA leaves cash rate on hold at 2.75%

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The predominating view among the self-appointed ‘shadow RBA board’ was for the RBA to leave the cash rate on hold today.
However, the latest survey of shadow board members cash rate forecasts reveals considerable uncertainty about where interest rates may be heading over the next six to 12 months.
Unlike other economist surveys, the shadow board – comprising the views of industry and academic economists under the banner of the Centre for Applied Macroeconomic Analysis at Australian National University (ANU) and released on <a target="_blank" href="https://theconversation.com/au">The Conversation</a> – does not provide actual forecasts.
Instead members attach weightings to various interest rate settings.
The latest survey find the likelihood of interest falling over the next six months slightly higher than them rising with almost equal weighting attached to cash rates of 2.5% and 2.75%, with smaller weightings to 3% and 2.25%
Over the 12 month forecast, a cash rate of 2.5% receives the highest weighting, but with also strong leanings towards cash rates of 2.25%, 2.75%, 3% and 3.25%.
“Overall, compared to previous months, there has been a small shift in favour of lower interest rates at the six-month and 12-month horizon, reflecting concerns about muted consumption, weaker global demand, falling commodity prices and tighter fiscal policy following a likely change of government later this year,” writes Timo Henckel, research fellow at the Centre for Applied Macroeconomic Analysis at Australian National University (ANU).
Shadow board member Saul Eslake, chief economist at Bank of America Merrill Lynch Australia, says the decline in the exchange rate since the last Board meeting “reduces the pressure on the RBA to implement a second successive rate cut, while the data flow over the past month hasn’t presented any compelling rationale for a further rate cut”.
“The currency may not fall a lot further, while the economy is likely to remain sluggish and the incoming government will probably seek to tighten fiscal policy more than is currently planned,” he adds.
Shadow board member Mark Crosby, associate professor at Melbourne Business School argues similarly that “recent weakness in the Australian dollar would suggest a pause in rate cuts”.
“International data signals are mixed and market reactions complicating policy making.
“Weakness in US GDP interpreted as reducing the likelihood of an earlier end to quantitative easing (QE) and thus strengthening asset markets being a case in point. One would suggest that in some QE countries asset price bubbles are becoming a serious issue – though the Fed has of course ignored these dangers in the past,” he says.
The shadow board comprises nine members:
<ul>
<li>Shaun Vahey, Professor, RSE, ANU. (non-voting chair)</li>
<li>Paul Bloxham, Chief Economist (Australia &amp; New Zealand), HSBC Bank Australia Ltd</li>
<li>Mark Crosby, Dean of the Global MBA Program, Acting Dean of the Global BBA Program, and Professor of Economics, S P Jain Center of Management in Singapore</li>
<li>Mardi Dungey, Professor, University of Tasmania, CFAP University of Cambridge, CAMA</li>
<li>Saul Eslake, Chief Economist, Bank of America Merrill Lynch Australia</li>
<li>Bob Gregory, Professor Emeritus, RSE, ANU, Professorial Fellow, Centre for Strategic Economic Studies, Victoria University, Adjunct Professor, School of Economics &amp; Finance, Queensland University of Technology</li>
<li>Warwick McKibbin, Professor, RSE, ANU, CAMA</li>
<li>James Morley, Professor, University of New South Wales, CAMA</li>
<li>Jeffrey Sheen, Professor &amp; Head, Department of Economics, Macquarie University,Editor, The Economic Record, CAMA</li>
<li>Mark Thirlwell, Director, International Economy Program, Lowy Institute for International Policy</li>
</ul>
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No cut in the cash rate today amid cloudy outlook: shadow RBA board

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A continued fall in the Australian dollar could discourage Asian developers from buying up development sites and undertaking new apartment projects, property consultants MacroPlan Dimasi have warned.
The argument is counter-intuitive to the traditional notion that a weaker Australian dollar makes it cheaper for foreign investors to buy Australian real estate.
However, according to MacroPlan chief economist Jason Anderson there could be a hiatus in purchases from Asian developers if there is a “gradual deprecation” of the dollar because they will face the prospect of owning an asset that is declining in US dollar value terms.
“This outcome would lead to delays in project commencements and lead to a leg down in apartment building,” writes Anderson in MacroPlan’s latest e-newsletter, reports The Australian Financial Review.
However, he also acknowledged that a weak dollar would benefit Asian investors who have bought Australian apartments off-the-plan and are yet to settle their purchases, reducing the risk of defaults.
The Australian dollar peaked at $1.11 against the greenback in July 2011 and remained mainly above parity until the recent fall in early May sparked by the cash rate falling to a 53-year-low of 2.75%.
It fell to below 96 cents this week but is currently trading up at around 97.5 cents ahead of today's cash rate announcement.
Property consultants Charter Keck Cramer estimate that offshore developers will account for around 39% (4,700 apartments) of new apartments being developed in Melbourne’s central City region over the next three years.
This compares with offshore developers accounting for just 8% of new apartments between 2000 and 2012.
Asian developers have been spurred into developing new apartment projects in Australia on the back of surges in Asian students coming to Australia combined with more restrictive lending practices in their home countries and low Australian interest rates.
<a target="_blank" href="/news">Recent research by Jones Lang LaSalle</a> suggested the Australian dollar is less of a factor than some believe in encouraging offshore investors to buy Australia’s commercial property.
Jones Lang LaSalle found that funds poured into Australian commercial real estate when the Australian dollar was well above parity against the US dollar in 2012, rather than discourage investors.
This suggests that the opposite could happen if the Australian dollar falls – or perhaps that the Australian currency is less of a factor in commercial real estate as it may be in residential investment.
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Falling Australian dollar could discourage Asian apartment developers: MacroPlan Dimasi

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

Joel Robinson

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

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

Sammut secures approval for debut Brisbane apartment development in Toowong

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

Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.

The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.

It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.

With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.

“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.

“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" />

GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.

“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”

Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.

“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" />

&nbsp;

One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.

Green praised local policy settings.

“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”

One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.

“The way we will be able to achieve economies of scale is through size,” Green added.

One Living enters Sydney's new apartment market with Northern Beaches site acquisition

It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.

Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.

Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be

"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.

"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."

[smartcode_project:default project_id=134646 project_image_fid=6109]

The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.

The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.

Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.

[smartcode_project:default project_id=134646 project_image_fid=6110]

Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.

The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.

[smartcode_project:default project_id=134646 project_image_fid=6116]

While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.

WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.

With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.

[smartcode_project_cta:default project_id=134646]

Larry Schlesinger

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