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Today we have run with three charts - Australian dwelling completions, commencements and approvals. The point of this is to illustrate that the current rate cuts are not going to be a job creator for the Australian housing construction industry anytime soon. Naturally it may help other parts of the economy. But not housing construction. To be clear the process of building a property starts at the approval stage. Once approved, building construction commencements normally occur between 6 to 18 months after approvals. And then finally, completions normally occur 18 months to 3 years after approvals.
 
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Dwelling completions are only peaking now and so there are a whole bunch of projects that are on the verge of completion. Normally once a project is completed, workers move onto the next project. But as we can see on the commencements chart, there are now less commencements than completions. And so there is less work available, meaning more job losses are coming. To make matters worse, building approvals are still tracking south and are considerably lower than commencements. This means even more housing construction job losses are on the way over the course of 2020 and likely, 2021. This will happen despite the interest rate cuts, tax cuts and easier lending standards. As the building approvals illustrate, there has been no response as yet in the form of higher demand for new housing. The real jobs creation phase, where there are labourers and contractors on the ground, naturally happens at the commencements phase and gets slowly wound down as the building gets closer to completion. So with the fall off in building approvals, housing construction is going to be a detraction to GDP for many months to come. This must be quite the concern for the RBA and for the Federal Government for that matter. As you may have guessed, housing construction is not an insignificant proportion of total employment. The RBA places it at just under 6%. The last time this occurred was back in 2011 to 2013. However the country still had the mining boom as a major job creator at that time. For now, mining investment seems to have bottomed out and will moderately pick up over the next 12 to 24 months, therefore taking some of the slack. But no one is expecting a massive uplift in mining. There is of course infrastructure and that may help to an extent. Apparently for FY20 some $13 billion dollars has been estimated to be spent on Infrastructure which should at least keep climbing through to 2023. By comparison, there was some $42 billion dollars’ worth of dwellings approved over the 12 months to September 2019. Infrastructure better help with the offset. And perhaps with mining added, it will. The RBA is forecasting the unemployment rate to fall to 5% by 2021. But no-one really knows for sure. Let’s hope they are right. Otherwise Australian unemployment is going to keep rising in 2020 and that won’t be good for anyone.
LOUIS CHRISTOPHER is the CEO of SQM Research.
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Current rate cuts aren't going to be a job creator for housing construction: SQM's Louis Christopher

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EXPERT OBSERVER
Figures released today by SQM Research reveal national residential property listings increased in August by 2.9%, to 325,693 from 316,391 in July 2019.
Compared to 12 months ago, listings were down by 2.1%.
All states experienced an increase in property sales listings over the month, with Melbourne experiencing the highest increase at 6.7% followed by Sydney with a 5.0% increase.
Perth recorded the lowest increase of 1.7% over the month.
Year-on-year Sydney’s listings declined by 15.3%.
Melbourne also declined but by a smaller margin of 1.9%.
Perth and Darwin’s year-on-year listings also saw declines of 4.6% and 3.6% respectively.
All other states recorded increases on their year-on-year listings.
Hobart’s increase was 10.8%, the highest increase in the nation, followed by Canberra with an increase of 10.0%.
August’s counts in part reflect the annual seasonal rise in listings that occur as we enter into the spring period.
It also may represent some return of confidence by vendors especially in the Melbourne and Sydney property markets.
Agents will be pleased to hear the new listings also rose during the month, however, older listings remained fairly stable.
Asking Prices
Capital City asking prices increased marginally by 1.0% for houses but decreased 1.0% for units, over the month to 3 September 2019. Unit asking prices are now $560,500 and houses $928,800.
Compared to a year ago, the capital city asking prices posted declines of 1.5% for houses and declines of 2.3% for units.
Over the month, Melbourne’s house and unit asking prices both increased by 0.1% and 0.4% respectively. Hobart also increased its house and unit prices by 0.5% and 4.2% respectively.
Sydney’s asking prices has increased by 1.7% for houses but declined 1.2% for units. Other states to post asking price increases was Brisbane with a 0.5% for houses but 0.4% decline for units; Perth recorded a 0.6% increase for houses but a 0.8% decline for units. Canberra also managed an increase of 1.6% for houses but a 0.3% decline for units, whilst Adelaide asking prices was stable for houses but declined 0.4% for units.
LOUIS CHRISTOPHER is the CEO of SQM Research.
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National residential listings increased in August: SQM's Louis Christopher

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EXPERT OBSERVATION
SQM Research calculate national residential listings increased by 4.0% in May 2019 to 345,516 from 332,236 in April 2019.
A year-on-year comparison shows listings up by 6.2%.
All states experienced an increase in property sales listings over the month, with Hobart experiencing the highest increase at 7.1%, followed by Adelaide at 6.4% and Canberra 5.6%.  
Perth recorded the lowest increase at 3.9% with Darwin not far behind at 4.0%.
Darwin was the only state to record a year-on-year decline of 1.5%.
The modest monthly increases does not compare to the huge year-on-year increases of 25.0% in Canberra, 21.1% in Melbourne and 15.5% in Hobart.
Year-on-year Sydney managed a 0.7% increase in listings whilst Perth increased from 1.9% to 3.9%.
<a href="https://www.propertyobserver.com.au/images/2019/6/4/sqm%201.png" target="_blank">Click here</a> to enlarge: 
<img src="https://www.urban.com.au/images/2019/6/4/sqm%201.png" alt="">
Source: SQM Research
We were expecting a rise in listings for the month of May given the low numbers recorded in April which was affected by the Federal Election.
May’s counts suggest listings remained elevated for most capital cities, suggesting the month remained largely a buyers’ market.
This view is confirmed by the simultaneous fall in asking prices over the same month.
Asking Prices
Capital City house asking prices decreased marginally by 0.6% and 0.2% for units, for the month to 28 May 2019. 
Unit asking prices are now $558,700 and houses $903,700. Compared to a year ago, the capital city asking prices posted larger declines of 7.4% for houses and 3.7% for units.
Adelaide was the only capital city to record increases over the month in both houses and units at 0.2% and 0.4%respectively.
Sydney continues its decline in house prices with a 0.8% decrease and 0.5% for units over the month.
A house in Sydney is now $1,219,700 and a unit is $683,000. Sydney’s 12 month decline is now 10.5% for houses and 6.0% for units.
Melbourne’s house and unit prices also continued to decline over the month at 0.5% and 0.6% respectively.
Darwin, Hobart and Brisbane’s house prices increased marginally over the month at 1.3%, 0.4% and 0.2% respectively.
However, unit prices declined in Darwin by 1.5%, by 1.0% in Hobart and 0.2% in Brisbane over the month.
<a href="https://www.propertyobserver.com.au/images/2019/6/4/sqm%202.png" target="_blank">Click here</a> to enlarge:
<img src="https://www.urban.com.au/images/2019/6/4/sqm%202.png" alt="">
Louis Christopher is the <a href="http://sqmresearch.com.au/about-us.php" target="_blank">managing director at SQM Research.</a>
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National property listings increased in May: SQM's Louis Christopher

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 Just a quick update on a few thoughts and stats on the market as we start the new property year off this weekend.   Firstly, Sydney and Melbourne valuation points have improved with the price declines but both markets remain heavily overvalued on our favoured measurement, which is house prices to nominal GDP. Both markets could do with another year of price drops. If we were to have it (and we think there will be more price declines), then valuations would at least return to closer longer term trends for Sydney. Melbourne still needs to correct some more. <img src="https://gallery.mailchimp.com/9badbd870addb4af72206c2eb/images/94248197-92c6-4585-87be-a0f3318f26a7.png" data-imagetype="External">
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 Of course, there is a massive difference between where prices ‘should’ be and where they may actually go. All I do know is when housing prices do eventually bottom in this cycle (very unlikely to be this year), the housing bears will no doubt be forecasting (and demanding!) yet more declines. Housing bears are notoriously hopeless in picking housing market bottoms and I can assure you now it will be no different in this cycle! As mentioned, this coming weekend will be the opening of the new auction season for Sydney and Melbourne. We can expect just over 150 auctions in Sydney and around 200 for Melbourne. As each weekend goes by in February, auctions numbers will increase to the point where the market will should reach its full volume on the 2nd of March with about 850 to 1000 Saturday auctions that day for each city.</div>
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<a href="https://www.propertyobserver.com.au/subscribe" target="_blank"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/1/Subscriber%20strip%20ad.jpg" alt=""></a> As per the opening of each season, auction clearance rates will likely rise from the December lows. I am expecting Sydney to rise back into the late 40s or maybe early 50s after unreported results. While Melbourne may reach the high 50s. Be careful of the media reading too much into this. Some may herald this as a recovery in the housing market.  It won’t be. Just recall this time last year the market opened up with Sydney recording a clearance rates in the high 50s and Melbourne actually touched 70%. No, this downturn still has some legs to run yet. As mentioned above, Sydney and Melbourne remain heavily overvalued despite the price falls that have happened, there is a election just a few months away where negative gearing is at play, and then the banks are still being very draconian on providing loans to the market. But I have noticed one thing – there are more bargain hunters in the market. And the first home buyers are somewhat out. This downturn has been going on for over 18 months now. Its not new any more and the longer it goes for, the more sensitive it will be to any stimulus thrown at it.  APRA have also signalled a reversal of policy. Back prior to Christmas, APRA scrapped its interest only <a id="LPlnk67935" href="https://sqmresearch.us5.list-manage.com/track/click?u=9badbd870addb4af72206c2eb&amp;id=2a328c6fb0&amp;e=0aab96dc54" target="_blank" rel="noopener noreferrer" data-auth="NotApplicable">lending limits</a>, which was in our view the final straw for the market when the interest only limits were brought in earlier 2017.  Speculation is rising that the next move from APRA may well be to lower the 7% buffer threshold to maybe 6% or lower still. This buffer is a minimum servicing requirement that’s of the loan applicant if they could handle an average lending rate of 7%. With average lending rates in the 4s it is now very hard to see a scenario where lending rates lift by some 300 basis points. In the current environment, doing so would probably see revolution on the streets, let alone the deepest housing crash in history.   So, what are our forecast again? <img src="https://gallery.mailchimp.com/9badbd870addb4af72206c2eb/images/d8d04315-ef9c-44aa-9857-46476dcd0c83.png" data-imagetype="External"> Nothing much has changed in our view since the release of our results. We think our base case is very much in play but I do also think the odds have increased just a little more that instead of a possible rate cut later this year, the RBA will lean on APRA as mentioned above. Doing so may well create the same effect as a rate cut which  in turn, just might create a bottom in the current housing downturn, especially if APRA keeps loosening lending restrictions into 2020. Offsetting this view will be fears by investors over the repeal of negative gearing, assuming Labor wins in May plus the ongoing hard core scrutiny of the banks on loan applicants.  For now, there is no rush for buyers to enter into the market. But keep an eye out for easy pickings. We have quite a few distressed listings in our Distressed Property report now. Some 23,000 of them, of which, many vendors are quite negotiable…</div>
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Louis Christopher is the <a href="http://sqmresearch.com.au/about-us.php" target="_blank">managing director at SQM Research.</a> 
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Housing bears are notoriously hopeless in picking housing market bottoms: Louis Christopher

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SQM Research has calculated the national residential vacancy rate was 2.1% in October, with the number of vacancies Australia-wide falling to 67,781.
It was a slight drop on September.
Hobart's vacancy rate fell to a record low of 0.3%, the lowest since SQM started recording data in 2005. 
In Adelaide, the vacancy rate dropped to 1.4% from 1.6% in September and down from 2% a year earlier.
In Canberra, the vacancy rate dropped to 0.8% from 1.0% in September.
In the bigger cities, vacancies fell in Sydney to 12,435 in October, down from 13,114 in September, giving a vacancy rate of 1.9%, down from 2.1% the previous month.  In Melbourne, the vacancy rate fell to 1.8% with 9,390 rental properties available.
Click <a href="https://gallery.mailchimp.com/9badbd870addb4af72206c2eb/images/298d5ea0-09c4-42e3-8c4b-21e4e5134c6a.png" target="_blank">here to enlarge</a>.
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Elsewhere, the vacancy dropped in Perth to 4.1% from 4.5% in October, but is still the highest of any capital city. 
Darwin’s vacancy rate fell from 2.7% to 2.5% over the month.
The vacancy numbers highlighted tighter rental markets in many capital cities.
"We’ve seen big falls in Perth and Adelaide and even Brisbane appears to be recording a slight trend downwards right now," SQM's Louis Christopher said.
"However, we expect vacancies to rise in November and December due to seasonality such as students finishing up their semester and heading home, which may take some pressure off rents."
In Hobart, the shortage of rental accommodation is the most severe, with just 75 properties available for rent in October, prompting a record low vacancy rate of 0.3% and higher asking rents, especially for units which were up 7.9% over the month to 12 November.
Capital city asking rents over the month to 12 November fell 0.4% to $548 a week for houses. Unit asking rents rose 0.2% to $439 a week. Asking house rents jumped the most in Canberra by 2.6% over the month while asking rents for units jumped the most in Hobart by 7.9%. 
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Residential vacancy rate dips in October: SQM Research

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GUEST OBSERVER
Overall, I was disappointed by the lack of substance in the Four Corners program Betting on the House.
Claims were made without backing evidence. Too much was made of individual ‘hard-up’ cases. When will some borrowers understand that it is ultimately your responsibility to work out if you can service a loan or not?! Portraying the basket case of Mandurah as something that could happen to the rest of the country is laughable.
Mandurah, a regional town, approximately 100km south of Perth, has had problems for many years now. All that should be taken from this point is Australia has a mixed housing market where risks are elevated on isolated, regional areas.
Yes, of course, housing prices can and do fall. Perhaps if that point alone needs to be stated out aloud, over and over again, then fair enough. But I got a distinct impression that the implicit message that Mandurah could be a precipitous for something much wider and bigger.
<a href="https://www.propertyobserver.com.au/images/2017/08/24/d490ea71-67d8-464e-a910-da9867f795c4.jpg" target="_blank">Click to enlarge</a>
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Much was made of rising loan defaults and mortgage stress getting to a breaking point. Yet the reality is loan defaults remain at low levels and loan servicing at this stage is not an issue.
Yes, of course, if the RBA lifts rates aggressively, we could have a large correction in the market. For the record, we have been stating this in our Housing Boom and Bust reports for a number of years now. It is a risk that is well and truly acknowledged, not just by myself but by many others including the RBA who recently discussed what would now be regarded as the new “normal interest rate setting”.
<a href="https://www.propertyobserver.com.au/images/2017/08/24/e83fb76d-c4b0-4abf-8b70-6e07809bf536.jpg" target="_blank">Click to enlarge</a>
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Perhaps if there was a more rigorous discussion on this point (where is the new normal for interest rates) that would have been useful. Quite clearly, with the excessive amount of private debt in the economy, a cash rate of say circa 6% would smash the community, which I personally find concerning.
This is not the first time Four Corners has covered the housing market.
In May last year, they ran a story on the market, mainly covering negative gearing but also discussing how the market could pop. They rolled out Steve Keen and Lindsay David.  It was a relatively good piece, overall in comparison.  
Since then, the Liberal Government has gone some way to reforming Negative Gearing by preventing plant and equipment depreciation claim on existing investment properties and cutting out travel expenses. And there also has been further clamp downs on foreign investment activity with reports offshore that the rate of capital outflows from China has significantly slowed.
Yet, the market continues to rise…
Macrobusiness today provided a scoop on the fact that many of the commentators featured in the segment felt that their comments on population growth as being a contributor to an overvalued housing market, was cut out!  If so, this is a disgrace on the part of 4 Corners producers. Let’s just remember, Melbourne’s population is expanding by 120,000 a year or 2.4% pa.
Sydney is rising at 90,000 a year or 1.7% pa. These are massive numbers which are causing some rather obvious issues on housing and creating a strain on our existing infrastructure with long term ramifications for our natural resources.
Excessive population growth, while not the sole reason, is most certainly a large reason why Sydney and Melbourne housing markets are massively overvalued right now and yet are not correcting despite macro prudential action which has included interest rate rises on investors.  
If there cannot be a public discussion on this issue than this country has some real problems.
Louis Christopher is managing director of SQM Research. He can be contacted <a href="https://www.sqmresearch.com.au/" target="_blank">here</a>.
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Four Corners episode too light on: Louis Christopher

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GUEST OBSERVER
Here's my opinion on the possible effects of the markets based on Labor’s policy proposal. We might make a further assessment once we see more details from the Libs. 
Lets consider some of the fears that have been raised by various lobby groups who have argued both for and against.
Would there be a surge in rents?
In our opinion, we think no. And that is based on what happened in history as well as the fact that if Labor’s policy passed, it would keep negative gearing on new property.
Lets first consider history.
<a href="/images/2016/02/17/48566a79-6a5d-4f00-af6e-21b7564fd5b6.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/02/17/48566a79-6a5d-4f00-af6e-21b7564fd5b6.png" alt="">
As most of you are aware, Negative gearing was briefly scrapped by Paul Keating (As Federal Treasurer), Starting July 1985. It was then restated in Mid 1987.
As the chart illustrates, while rents were rising, certainly there was no spike in rental growth rates over that time. Indeed rental growth rates were returning back to be in line with the CPI rises recorded over that period. Rental growth rates were slower than what was recorded in the early eighties.
Post the period, rents did accelerate, however so was inflation as the economy entered into an overheated period post the stock market crash of 1987. Rental growth rate completely feel away as the economy entered into recession in 1990. At no time during this period did rents fall, and that is because overall inflation in the 80s was still relatively elevated. Rents and inflation have historically been closely correlated.
For those who are interested in the city by city break up over this time, ABC Fact Check compiled an accurate story last year.
As is illustrated by ABC most of the rises this time were primarily driven from Sydney and Perth with vacancy rates in these two cities already low prior to the scrapping of Negative Gearing.
Of course, the period 1985 to 1987 was a turbulent period for the economy and major economic reform. We had the slump in the Australian dollar caused by a blow out in our current account deficit, a deregulated financial sector, a stock market boom, followed by the almighty crash of October 1987. It was indeed the roaring eighties.
In this regard, we think the evidence of a spike in rents, directly attributed to the scrapping of negative gearing is scratchy at best. And worse, it is misleading.
But just in case there is a relationship there, Labors' proposal to keep negative gearing on new properties would most likely ensure a strong supply side response to the market. We have seen such directed stimulus work on the markets before, namely in the form of various first home owner grants, so we are confident, the market is responsive to such stimulus. 
A surge, followed by a slump in the market?
This would have to be one of the largest risks in Labor’s proposal. As the cross over date approaches at 1 July 2017, I believe there is a risk of  a surge in investor demand for existing property to take advantage of the grandfathering provisions. Then once the date is reached, a subsequent slump could occur by the drop off in demand from investors. Once again, this is not without its precedent. This phenomena occurred during the introduction of the GST and it also happened when the first home owners grants were repealed in 2003 and 2010.
Of course, this scenario is not guaranteed, and yes, there is a chance investors would see through the ramification of such a possible slump, and then therefore hold off buying on mass. But somehow I think the animal spirits are likely to take over as they have done the past. This risk certainly cannot be completely ruled out.
A solution to this is a scaling out of concessions on existing property over a period of time. I think for example a two year phase out period would do much to reduce this risk.
New properties record a price surge. But on resale would be discounted. 
We believe it is likely that a surge in demand for new properties would see an additional premium placed on such properties compared to the existing market. In our experience, off-the-plan developments, particularly for multi-story apartments come on at an average 20% premium to comparable existing units. Arguably this happens due to the ‘new’ nature of the product compared to existing properties which have older fixtures and fittings. This premium is eventually reduced to over time as ‘wear-and-tear’ develops on the property.
What may happen though is that the “20%” premium may further increase as demand surges. Remember, developers are always trying to maximise profit margin and there is no better way to do that then to lift the price! This would not be a desirable event at all as it would increase the chances of considerable investor capital losses on any resale, especially within the first five years of the life of the property. Remember, secondary purchasers will not be able to access the negative gearing benefits once the property is resold back into the market.
I also cant help myself scoff at the recent claim by Chris Bowen when he said
“Investing in a new property is not in any sense more risky than buying an existing property.”
Take it from me as someone that has assessed, analysed, owned, sold real estate of various property types over the years, new property is more risky than existing property. Lets just start with contract risk.
Has anyone read all the rescinded contracts that have taken place in Sydney last year over sunset clauses? Has anyone been reading on the appalling resale rates in areas such as Docklands over the years? Is anyone aware that quite a few builders/developers have gone belly up over the years?
Likely Scenario – An adjustment phase with some periodical distortions in the market, but no rent spikes.
We believe that should Labor’s proposal succeed there would be an adjustment period where, yes, many investors may stay away from existing property for a period of time, but only until such time that a rise in yields gives them incentive to start buying existing properties again. This would happen as investors would demand a higher yield to offset the lack of tax concessions.
But such a period would not go on forever. Once yields are higher, investors would then re-enter the market. Potentially yields could rise to the point where existing residential properties are cash-flow positive from day one, or at least, cash flow neutral. Which I believe would be a positive for the asset class over the long run.
For those advocating for a return to better value on residential property, the reduction in negative gearing concession may well trigger this process. 
But this adjustment does not necessarily mean there would be an outright “decimation of the market”. We may well likely see for example a period of stagnation in property prices for existing property. Or prices rising more slowly than rents.
I suspect the outcome here would be reliant on interest rate settings and the overall health of the economy. But to ensure such a more stable outcome, we do strongly suggest to Labor that a scaling out approach is a safer strategy. 
Louis Christopher is managing director, SQM Research and can be contacted <a href="https://www.sqmresearch.com.au/index.php" target="_blank">here</a>.
{mijopolls 130}
 
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No rent spikes or market decimation under Labor's negative gearing: Louis Christopher

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GUEST OBSERVER
The forecasts verses actuals reveal the nation outside Sydney is recording slightly weaker growth than we expected and Sydney is recording more robust growth than what we expected for this year. 
Why?
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<li>The mining downturn is having a considerable impact in a number of cities.</li>
<li>Listings remain well supplied, particularly in Brisbane, which itself has been a victim of the downturn, represented by higher than average unemployment (particuarly white collar) and manifested through high CBD offices (and residential vacancy rates).</li>
<li>The second rate cut of May 2015 was not built into our forecast. As a result Sydney has risen faster than our more optimistic expectations.  </li>
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<img src="/images/2015/09/02/Screen%20Shot%202015-09-02%20at%209.22.51%20AM.png" alt="">
Note our forecast was for dwellings based on the ABS data. The ABS is not reporting for the June quarter until the end of September so we have decided to use the APM data on the interim. Our base case scenario became redundant once rates were cut in February and the dollar sank below $U.S 85 cents (December 2014). That put Scenario Two squarely in focus which was for more robust growth with Sydney leading the charge once again at 11-15%. We formally updated the market about this change at the end of March. By all accounts, Sydney has done more than our forecasts so far this year. The second rate cut of May ensured this with property investors entering into a frenzy that shot the average Sydney house up by an estimated $50,000 in just a few short weeks. Literally, the market ‘gapped up’. Since then I get the impression the market is still testing those highs and is struggling to move much further. This is illustrated by lower auction clearance rates recorded in the past 8 weeks then the preceding period. Going forward, clearance rates will fall in Spring (as they always seasonally do). Most likely they will fall to the mid 60s. If they so happen to fall below 60% then something more negative is going on. Otherwise it will be just a very normal Sydney market. While we believed Perth was at a higher risk of a correction, we still believed the probabilities were that Perth would largely flatline on the basis that rate cuts would provide a soft landing. The rate cuts have provided a soft landing of sorts, but not to the point of stopping a correction. Perth dwelling prices are now falling. This is showing up in the APM numbers AND our own asking prices, which suggests vendors have lowered their asking prices on average by 4% over the past 12 months. While downplaying other bullish forecasts for Brisbane in 2014, we did lift our forecasts for 2015. However Brisbane is proving to be largely flat-lining this year as well. The reality is underlying demand in Brisbane remains sluggish and investor related demand also soft. The total housing finance approvals chart for Queensland illustrates this story. Yes there has been a little pick since the downturn of 2010-2012 however this year housing finance approvals have been flat.
<a href="/images/2015/09/02/27fe3292-d0ce-4db3-a78a-e4917ca42a9c.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/09/02/27fe3292-d0ce-4db3-a78a-e4917ca42a9c.png" alt="">
The end result is still more sellers than buyers in the market and this can be clearly seen on our stock on market index for the city. Until such time as there is a definite trend of declining stock, it is hard to see how Brisbane is going to record any substantial rise in prices, let alone a new property boom.  It is a similar story for Adelaide and Hobart, however we still remain more bullish on Hobart and think activity is increasing<a href="https://sqmresearch.us5.list-manage.com/track/click?u=9badbd870addb4af72206c2eb&amp;id=ba8e44005c&amp;e=0aab96dc54" target="_blank"></a>. Nevertheless outside Sydney and Melbourne, it is indeed a patchy market. This present climate comes with investor credit lending now slowing, potentially as a result of APRA’s actions. APRA has very recently stated it is now going to take a wait-and-see approach to the market. As APRA has now flexed its muscles and proved itself to be a key influencer on the housing market, it is interesting to note APRA’s current view of the world as presented last week, by the organisation’s chairman.   In short:
<ul>
<li>APRA believe that that housing portfolio risk profiles might have increased, and underwriting standards have “softened”, over time.</li>
<li>They believe house prices are “high” in areas outside Sydney and Melbourne.</li>
<li>They are largely leaving up to the Approved Deposit Institutions (Banks etc) to determine how best to meet APRA’s 10% investor lending annualised growth rate threshold should be applied.</li>
<li>They have left the door open to policies focussed on specific cities but for now will not employ such policies.</li>
</ul>
Perhaps the best way to gauge whether they will take further action down the track is by watching Investor housing credit which is published by the RBA. The latest result came out yesterday, which recorded a 0.6% increase in this measure. This was welcome news as the month result is below the annualised threshold of 10% growth set by APRA with some pundits claiming this is evidence of the APRA initiatives now working. One way, or the other, it appears APRA are intent on keeping investor credit growth below their stated 10% threshold. Given that it has been investors that have predominantly driven the housing market upward since 2012 there are ramifications for this policy. And that is slower housing price growth at the national level for next year. The magnitude of which we will explore in our 2015/2016 Housing Boom and Bust report, which is due to be released again later in September. On the interim, we will shortly be releasing a GOLD Coast outlook report including an assessment rating. That should be out on our website in time for next week’s newsletter. Needless to say, we have become rather bullish on the<a href="https://sqmresearch.us5.list-manage2.com/track/click?u=9badbd870addb4af72206c2eb&amp;id=8decbe51c1&amp;e=0aab96dc54" target="_blank"> </a>Coast.
Louis Christopher is property analyst for SQM Research. He can be contacted <a href="https://www.sqmresearch.com.au/" target="_blank">here</a>. 
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How do we fare compared to last year’s Housing Boom and Bust report? SQM's Louis Christopher

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<div>GUEST OBSERVATION</div>
<div> </div>
<div>Over the last three weeks. And in the last week in particular, there have been some key announcements that will likely have a meaningful impact upon the housing market. The screws have been further tightened and this time we think they will have an impact. To recap the major changes include:</div>
<ul>
<li>A requirement for banks to hold 2% more capital (compared to risk weighted assets).</li>
<li>A requirement for banks to lift risk weights on home loans, meaning the banks will not be able to leverage as much from their home loan assets as they were before.</li>
</ul>
<div>Banks have responded by:</div>
<ul>
<li>Announcing capital raises</li>
<li>Lifting interest rates on investment property loans</li>
<li>Reducing loan to value ratios on investment property loans and locations considered higher risk</li>
<li>Increasing the servicing requirements (e.g A loan service test on a higher theoretical interest rate).</li>
<li>Not allowing tax benefits from negative gearing to be used as income.</li>
</ul>
<div>Clearly the changes will knock out most of the weaker borrowers, which is what the changes are designed to do, besides strengthen the balance sheets of the banks. But will it move existing property investors to the exits? The cumulative effect of these changes will now most likely dampen demand from property investors. The announcement last week of interest rate increases was probably the final nail. Indeed trusted sources on the ground including agents and mortgage brokers in Sydney are informing me of would-buyers now holding back. We also note the recent decline in Sydney auction clearance rates to just back below 80%. Nevertheless clearance rates in the mid to high 70's is still suggestive of strong market. It should also be noted that SQM expects total residential property listings have surged in July, though the final result will not be known until early August. As we know the recovery in the housing market, particularly for Sydney has been investor driven. It’s a good time to re-publish the following chart which does clearly illustrate how investor have dominated this recovery. </div>
<div> </div>
<div><a href="/images/2015/07/28/HousingFinanceCommitmentsJuly2015.png" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2015/07/28/HousingFinanceCommitmentsJuly2015.png" alt=""></div>
<div> </div>
<div>
The problem is, property investors can be a fickle bunch. A number of them are momentum driven. Buy when the market is moving higher and sell when the market is heading lower. Forget about the fundamentals and the emotional attachment. It is the capital gain and preservation of that gain that counts. Contrast this with first home buyers and owner occupiers who tend to not care (as much) for the market ups and downs. They tend to be longer term holders. They tend to sell and buy on an upgrade/downgrade or when servicing improves/deteriorates.This makes for a market they may well be more volatile than previous cycles. Even so, is there enough here to create a full blown crash? No way. We would still need to see a lot more action from the banking sector than these initiatives before that happens. I believe rates would need to go up by at least 1.5% and at a time when there is some type of massive supply overhang on new stock. Neither seems likely at this point in time. Needless to say the probabilities have now rapidly increased of a housing market slowdown which could be commencing now. 
</div>
<div> </div>
<div>Louis Christopher is property analyst for SQM Research. He can be contacted <a href="https://www.sqmresearch.com.au" target="_blank">here</a>.</div>
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The slowdown we're going to have: Louis Christopher

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<div>
SQM's top 10 discounted properties have four located in Western Australia, and these four properties are clear examples of the continued impact of the commodities downturn.
Set in the rural town of Carabooda, number five and six on the list are not your typical family homes.
Sitting 48km outside of Perth CBD, both properties are set on over 15 hectares, with the potential to live and earn a living of the land.
Interestingly, both properties have been on the market for the same amount of time, however, number five, 292 Carabooda Road, as been reduced by two more percentage points, a total saving of $618,000. 
In contrast to these rural beauties, number eight and nine on our list are suitable for buyers wanting to be pampered and live in and close to Perth City.
Number eight, 4/134 Marine Parade, Cottesloe, has been on the market over two years now with the vendor slashing the price by $950,000.
With a reduction of just under a million dollars, this property is clearly a bargain.
Comparatively, number ten on our list 11/580 Hay Street, Perth, has recently passed the one year mark on the market, with the vendor slashing the price by half a million dollars.
</div>
<img src="/images/2015/06/17/sqmfallback2.jpg" alt="">
 Loius Christopher is an indépendant property analyst for SQM. You can follow him on twitter <a href="https://twitter.com/louichristopher" target="_blank">here</a>.
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Mining boom downturn triggers four WA offerings on SQM top discounted list 

Sydney developer Deicorp is set to officially open its <a href="https://www.apartments.com.au/new-apartments/hills-showground-village-castle-hill-2-mandala-parade-castle-hill-nsw-2154">Showground Village</a> precinct in Castle Hill.

NSW Premier Chris Minns will attend the opening on Sunday August 31, alongside&nbsp;Minister for Planning and Public Spaces Paul Scully, The Hills Shire Council Mayor Dr Michelle Byrne, Landcom CEO Alex Wendler, and Deicorp Founder Fouad Deiri.

Located just moments from Hills Showground Metro Station, the centre spans 9,500 sqm across four levels and features 26 specialty retailers as well as a 1,400 sqm public plaza, creating a new community meeting point for shopping, dining, fitness, and everyday convenience.&nbsp;

Showground Village forms part of the Hills Showground Station Precinct, an urban renewal initiative led by Landcom and Sydney Metro that will provide for around 2,300 new jobs over the next 20 years and around 9,000 new homes.&nbsp;

Deicorp was recently approved for another new development next door to Showground Village.

The new five residential buildings in the East Showgrounds Precinct, will see another 873 dwellings delivered, as well as&nbsp;3,500 sqm of open public space in the form of landscaped courtyards, a public park and communal outdoor recreational space including a playground, barbeque area, and outdoor seating.

“This approval will allow us to start construction on a range of beautifully designed, conveniently located apartments and create another vibrant, walkable and well-connected community,” said&nbsp;<a href="https://www.apartments.com.au/developers/deicorp" target="">Deicorp</a>&nbsp;Founder Fouad Deiri.

“These new homes will provide their residents with a seamless connection to jobs and services along Metro North West, and the new&nbsp;<a href="https://www.apartments.com.au/new-apartments/hills-showground-village-castle-hill-2-mandala-parade-castle-hill" target="">Hills Showground Village</a>&nbsp;retail precinct currently under construction."

Deicorp has several thousand apartments in planning and under construction across Sydney, from Zetland and Five Dock to Crows Nest and Macquarie Park.

[smartcode_project_cta:default project_id=133881]

Joel Robinson

Deicorp, NSW Premier officially open Showground Village, new retail and hospitality hub in Castle Hill

ASX-listed developer Cedar Woods is progressing its plans for its Southbank arts precinct site.&nbsp;

The developer has filed plans, which are now with the&nbsp;Department of Transport and Planning, for a new 20-level tower at&nbsp;<a href="https://www.apartments.com.au/new-apartments/141-151-sturt-street-southbank-vic-3006">141–151 Sturt Street</a>, a 2,718 sqm block opposite the Habitat Filter sculpture.

The proposal seeks to demolish the two-level&nbsp;commercial building, including a small supermarket and medical tenancies, and create a new building with 180 apartments and a focus on an&nbsp;active public realm and arts integration.

&nbsp;

<img alt="Southbank site" data-entity-type="file" data-entity-uuid="76a72db6-91ef-43ae-827d-a9cfa72893d2" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Site.png?VersionId=DZgtB4K6BswVh0QtCs3iLjXaLp0CbcEb" />

&nbsp;

There will be a full mix of apartment configurations, including 28 studio apartments, 16 one-bedroom, 104 two-bedroom, and 32 three-bedroom units.

Retail, creative arts, and residential amenity functions are integrated across the lower levels. A food and drink tenancy is planned to front Dodds Street, while a retail tenancy fronting Sturt Street will be accessed via an elevated walkway. The first floor includes a substantial 734 sqm creative arts space, envisioned to support Melbourne’s growing cultural and digital industries.

Architecture firm <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a> has put together the plans. In their&nbsp;Urban Design Report they highlighted the project’s ambition to embed itself within Southbank’s evolving cultural fabric.

A central feature of the design is a through-block link connecting Sturt and Dodds Streets, landscaped with native plantings and embedded with universal access ramps.

“The ramp has been thoughtfully integrated as the primary access point, ensuring universal accessibility for all users,” the report noted, with the link offering “a direct response to the urban planning scheme of creating more green spaces within our communities”.

<img alt="Southbank podium" data-entity-type="file" data-entity-uuid="4d24b1b2-d69c-4a11-a11d-ec6df432221c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/podium.png?VersionId=geWoJyZDmPSLODZ_.PNJ0LvpOmyyCdpo" />

The building’s podium form responds to the mandatory height limits along Dodds Street and maintains a fine-grain interface to adjoining developments. Above the podium, the tower is articulated with recessed balconies and a focus on views toward the CBD and surrounding arts institutions. A communal rooftop recreation deck and indoor lounge are positioned on level four, adjoining seven apartments and providing over 900 sqm of resident amenity space.

Vehicle access and loading will be provided via Dodds Street, with 155 resident car spaces located across two basement levels and the first three above-ground floors. Bicycle storage is more generous, with 226 spaces distributed across resident, staff and visitor needs.

Rothelowman describes the architecture as “humanist,” with ground-level interfaces designed to encourage social interaction and provide a dignified entry for both residents and passers-by. “All street interfaces are crafted to invite and nurture human connections,” the design report states. “The façade transitions to a human scale, providing an approachable and engaging streetscape”.

Cedar Woods, while well-known for its large communities it develops outside of Australia's capital cities, they have recently developed in Melbourne's inner-ring before. They are approaching completion at <a href="https://www.apartments.com.au/new-townhouses/88-leveson-north-melbourne-88-leveson-street-north-melbourne-vic-3051">88 Leveson</a>, just 15 townhouses in the heart of North Melbourne.

Cedar Woods progresses with new apartment plans in Southbank arts precinct

Brisbane developers Core Property Partners and Vector Property Australia has teamed up for Brisbane's newest apartment development.

The duo identified <a href="https://www.apartments.com.au/developments/east-brisbane-qld-4169">East Brisbane</a> as their preferred suburb, on the fringe of the Gabba Precinct, where they've just revealed BANKSII, 72 apartments opposite Raymond Park.

[smartcode_project:default project_id=136432 project_image_fid=5481]

The one-, two-, and three-bedroom apartments will sit in a glass-wrapped building that will also feature a rooftop with an&nbsp;infinity-edge pool, a BBQ area and alfresco dining spaces, sun lounges, and a sauna, as well as a resident-only gym and a ground-floor cafe.

Rhett Williams, Director of Vector Property Australia, said the project will lift the quality of the East Brisbane community and set a new benchmark.

"In Brisbane’s current property landscape, <a href="https://www.apartments.com.au/new-apartments/banksii-east-brisbane-169-wellington-road-east-brisbane-qld-4169">BANKSII</a> stands out through its emphasis on lifestyle-oriented living, connectivity and sophisticated design," Williams says.

[smartcode_project:default project_id=136432 project_image_fid=5479]

The 10-level building has been designed by MAS Architecture. Their designs were inspired by the native Banksia flower, with the architecture and interiors reflecting the organic symmetry of its namesake flora. MAS has interpreted this throughout the building’s curved form, façade detailing and interior palette.&nbsp;

The building’s flowing geometry and natural tones are complemented by large balconies and floor-to-ceiling glazing, maximising cross-breezes, daylight and views over the city, parklands and river.

“Having a strong narrative for a building helps us architecturally,” MAS noted. "We can choose colours that come off that species of flowers. The trunk and the trees and the flower elements all are now visible in our joinery on the inside and in our architectural finishes on the outside."

[smartcode_project:default project_id=136432 project_image_fid=5485]

Apartments will feature timber floors, soft porcelain tiles, brushed bronze fittings, and stone benchtops with warm veining.&nbsp;

Kitchens feature premium SMEG appliances and generous storage, while bathrooms have been designed as calming retreats with curved cabinetry and twin sinks in the master ensuites.

The building will feature a suite of rooftop and wellness amenities. Residents will have access to an infinity-edge pool, BBQ and alfresco dining areas, sun lounges and a rooftop sauna.&nbsp;

A residents-only gym will be located on the podium level, while a ground-floor café and landscaped laneway will further activate the site and improve neighbourhood connectivity.

[smartcode_project:default project_id=136432 project_image_fid=5488]

BANKSII will rise from a prime Wellington Road site, with the building oriented to overlook the adjacent Raymond Park and take in extensive city views. It is also on the doorstep of key&nbsp;lifestyle infrastructure, including the future Kangaroo Point Green Bridge, The Gabba stadium, and the planned Brisbane Live arena.&nbsp;

Public transport options, including ferry, bus and rail - including the future Cross River Rail Woolloongabba station - are all nearby, supporting a car-optional lifestyle just minutes from the CBD.

Williams said the team spent over a year searching for the ideal site before securing this location.

"We were attracted to <a href="https://www.apartments.com.au/developments/east-brisbane-qld-4169">East Brisbane</a> as it is a vibrant and growing community that offers a perfect balance of urban convenience and natural beauty with the parklands and river on our doorstep.”

The project is part of the broader Woolloongabba Games precinct, which is undergoing significant investment in the lead-up to the 2032 Brisbane Olympics. This urban renewal, coupled with infrastructure upgrades, is expected to enhance long-term liveability and capital growth in the area.

Given the wide max of configurations, BANKSII is expected to suit everyone from first home buyers and investors to families and downsizers.

[smartcode_project_cta:default project_id=136432]

BANKSII sales launch in booming East Brisbane apartment market

The Minns Labor Government will deliver Sydney’s first new heavy rail station in more than a decade – enabling up to 10,000 new homes by rezoning land around Woollahra and Edgecliff stations, right next to the CBD, to tackle the housing crisis and rebalance growth across the city.

Recent reports by the NSW Productivity Commission have warned that Sydney is losing twice as many young people as it is gaining, while also finding that Woollahra is the most feasible Local Government Area (LGA) in New South Wales to build new housing.

Despite this, housing approvals in Woollahra consistently lag well behind other LGAs, and the population has declined by 11 per cent over the past 50 years while Greater Sydney as a whole has grown by 74 per cent.

The new station that will be an eight-minute trip from Sydney CBD, will be located on the Eastern Suburbs train line in Woollahra, where a station build was started in the 1970s but never completed.

To enable the delivery of new homes the NSW Government will lead a rezoning of Woollahra and Edgecliff stations similar to other state led rezonings to allow additional homes to be built around the stations.

Affordable housing will also make up a proportion of development on the site with the final amount of affordable housing required, to be determined as part of the rezoning process.

The area surrounding the new station is within walking distance of major green and recreational space including Cooper, Trumper, Rushcutters Bay and Centennial Parks.

The Eastern Suburbs train line between Bondi Junction and Sydney CBD also has the lowest passenger usage rates during the AM peak of any line on the Sydney network, with only 43 per cent of operating capacity during the AM peak currently being utilised by passengers.

Sydney Water and Infrastructure NSW have confirmed there is capacity in the water and wastewater systems to accommodate the proposed 10,000 dwellings without major upgrades.

The rezoning is expected to take around two years and will further support the Government’s housing targets that rebalance the delivery of new homes around existing infrastructure.

&nbsp;

&nbsp;

Next stop Woollahra train station - delivering up to 10,000 new homes in the heart of Sydney

<section data-element_type="section" data-id="b086848">
Fresh off completing its mixed-use Malvern project Malvern Collective, Kokoda Property Group has acquired a prime site on Richmond's Bridge Road.

They are planning a mid-rise residential development with&nbsp;integrated wellness amenities and a vibrant ground-floor retail and dining offering.

The site, at&nbsp;487–495 Bridge Road, spans&nbsp;1,650 sqm with 50 metres of dual frontage across Bridge Road and Palmer Street. It is currently leased to Adairs, and has a large retail building and 20 onsite car parks.
</section>

<section data-element_type="section" data-id="534a164">
Kokoda Property Group’s acquisition forms part of a broader phase of growth in Melbourne, building on momentum from the completion of Malvern Collective and the recent purchase of a Burnley Street site for the developer’s first commercial project.&nbsp;

Mark Stevens, Kokoda Property Group’s Founder and Managing Director, said that the company’s Bridge Road site acquisition signals confidence in a city that is re-accelerating.

“Melbourne is regaining momentum,"&nbsp;Stevens said.

"After a cautious period post-COVID, we’re seeing buyer sentiment stabilise and capital leaning back into well-located, quality projects. Victoria now benefits from deep builder capacity and competitive delivery pricing, creating a rare opportunity to bring design-led inner-city developments to market without compromising on craftsmanship.

“Richmond ticks all the boxes for us – connectivity, culture and everyday amenity – making Bridge Road the perfect address for an amenity-rich, multi-use development."

<img alt="Kokoda" data-entity-type="file" data-entity-uuid="9a8de51d-8092-480a-8b7e-e081816692c2" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-08-29%20at%208.54.27%E2%80%AFAM.png?VersionId=VRHpV5.6beOu2cieKHWrw3ErMPuVOAuj" />

Envisioned as an “urban lantern” the building will bring a distinctive new presence to Bridge Road with a sculptural retail frontage, designed to honour the street’s heritage character while contributing to its renewal.

Stevens said the acquisition reflects the developer’s commitment to design-led addresses in Melbourne’s inner city.

“Drawing on Richmond’s rich heritage and dynamic character, we’ve envisioned a contemporary building that respects the past while elevating the way people live today. With dual frontages, curated ground-floor spaces, and a focus on wellness, this project will contribute to the neighbourhood’s evolution, appealing to both downsizers and a new generation of professionals.”

Kokoda Property will now progress concept design ahead of a future planning process.
</section>

Mark Stevens, Kokoda Property Group’s Founder and Managing Director, said that the company’s Bridge Road site acquisition signals confidence in a city that is re-accelerating

Louis Christopher

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