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GUEST OBSERVATION
The Reserve Bank of Australia’s (RBA) announcement to hold the cash rate for April at 2.25 percentage points could ease the increase in house and unit values over the next month. A market slowdown would allow greater purchasing power for first time home buyers in unaffordable housing markets.
The number of first time homebuyers taking out home loans has declined as a result of the recent housing boom, which saw more investors enter the market. This is supported by ABS data, which shows that home loans taken out by first time homebuyers have steadily decreased from 18.8% in 2012 to 14.9% in 2015.
Furthermore, according to ABS data, the size of the average home loan increased 1.07% between December 2014 and January 2015, to $346,600.
The decision to hold rates is partly attributable to Australia’s two-tiered housing market. According to <a href="https://Onthehouse.com.au" target="_blank">Onthehouse.com.au</a> data, at February 2015, Sydney experienced quarterly growth of 3.55% for houses, and 2.83% in units. These are down from the January quarter of 4.10% for houses and 3.04% in units, although they still reflect strong investor demand.
Despite Sydney’s strong performance, other markets, including Melbourne and Brisbane, saw contraction in property values at the end of the February quarter.
On the supply side of the housing market, February housing approvals were almost at a five-year high. In NSW, approvals for February 2014 totalled 4,692 dwellings, approximately 2,600 of which were units. Dwelling commencements in NSW, as last recorded in September 2014, were at a high of 14,063, which is a 43% increase in commencements from the previous quarter, and is 49% higher than the five-year average of commencements.
Dwelling commencements also increased in QLD and VIC, but at a lower rate. Nationwide, commencements hit a record high of 54,436, despite migration currently sitting below the five-year average. A further cut in the cash rate could have seen funds misallocated in a market where migrant and first homebuyer demand is in decline.
Overall, despite the benefits to first time homebuyers, the rate hold decision does come within a tricky economic climate for the RBA, where economic indicators have remained virtually unchanged for the previous period.
Some notable indicators include:
<ul>
<li>The unemployment rate decreased from 6.4% in January to 6.3% in February. However, this was coupled with a decrease in the participation rate from 64.7% to 64.6%, suggesting that the unemployment rate fell as people came out of the labour force, rather than finding work.</li>
<li>Annual wage price growth was at a five year low in the quarter ending December 2014, at just 2.5%. The December quarter also saw low inflation, which was last recorded at 1.7%.</li>
<li>Iron ore is currently at a 10 year low, at $US46.7 a tonne. Iron ore is expected to fall further as competitors amplify supply to win greater market share.</li>
<li>Oil prices seem to be stabilising following a significant decline since July 2014. Oil rose marginally in the latest trading session to $US53 per barrel. While the price is stabilising at approximately half the five-year average, Australians may no longer enjoy further discounts in the oil price. </li>
</ul>
Though the above factors call for a further cut in the cash rate, the hold is more about timing than tightening monetary policy. This month will reveal new quarterly inflation figures and employment data, which would allow more insight into the impact of February rate cuts. 
Eliza Owen is a market analyst at <a href="https://Onthehouse.com.au" target="_blank">Onthehouse.com.au</a>.
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The RBA April rate hold will benefit first time home buyers: Eliza Owen

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GUEST OBSERVATION
Based on the latest RBA data on new building approvals, the building of high density housing is almost level with detached housing having grown 36% in the past year alone. This trend is set to continue and investors should think about taking advantage of the upturn.
It’s no surprise there’s been such a trend towards apartment living based on high house prices and a change in our lifestyles, overall.
The change kicked off in 2009, post-GFC when people wanted the stability of property ownership as an investment and being an accessible price point, the demand for units has escalated ever since.
<img src="/images/2015/04/10/pic%20april%2010%20one.gif" alt="">
Since 2009, a lot of buyers, particularly first homebuyers have been priced out of the market, needing an average of $530,000 for the typical Australian quarter acre block, up from $458,400 just 5 years ago.
In Sydney, that number is even steeper, going from $544,000 in 2009 to $781,600 now. Whereas the average apartment price in Sydney is now considerably less at $600,000.
Price aside, the appeal of apartment living has increased in recent years with many apartments located close to the CBD or other employment hubs with close proximity to parks as well as the overall quality of the buildings which has improved.
Councils must now comply to certain standards when it comes to new builds e.g. better privacy, more green space, certain hours of sunlight, etc. and buyers and residents appreciate that.
Take the development at Harold Park just 5kms from the Sydney CBD with 200,000 squares of green space, 70% of apartments in its Eden buildings were sold off the plan in 2013, demonstrating just how popular apartment living has become.
The trend shows no sign of slowing down and suggests that buying apartments as an investment is a lot less riskier than it was 10 years ago.
The demand is increasing and if you’ve invested in a growing area with lots of green space and good transport links, you’re likely to reap the rewards in years to come.
Tips for any new investor:
<ul>
<li>Go for buildings that are located near parklands and good transport links, preferably trains.</li>
<li>If a block is on a main road, go for an apartment with a different aspect which is likely to cut down noise as well.</li>
<li>Check the Strata Report for a full listing of the fees and rates you’ll be up for. Also, ask to see the minutes of the Strata committee meetings which will show up any major issues or structural damage.</li>
<li>If buying in an old building, be aware that your maintenance costs could be higher as things need replacing / upgrading.</li>
<li>A apartment in a smaller more boutique building will have more long term appeal than those in larger complexes</li>
<li>Get a feel for the building and surrounds, is there a lot of noise, what are the amenities like, is it well maintained, etc.</li>
</ul>
Steve Jovcevski is property expert at Mozo.com.au. 
FOR MORE INSIDER INFORMATION ON PROPERTY LOANS, RATES AND MORE: <a href="http://propertyobserver.com.au/forward-planning/tools/ebooks-and-webinars/42368-get-loan-savvy-expert-tips-for-a-first-time-investment-or-refinancing-loan-in-a-free-ebook" target="_blank">A FREE MOZO EBOOK</a>.
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Six tips for first time investors looking to buy sky high: Steve Jovcevski

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Home values across the Wide Bay-Burnett region increased by 0.5% for houses and 3.8% for units over the year to December 2014, according to CoreLogic RP Data.
The Wide-Bay Burnett region includes the Fraser Coast region, Gympie, South Burnett, North Burnett and Bundaberg. 
Over the past three years, capital growth across the region has been somewhat lacklustre with values having only appreciated by 2.7% for houses and 1.2% for units since December 2011.
The number of homes that sold across the region fell -2% over the 12 months to November 2014, however sales volumes are currently 3% higher than the five year average.
On average, homes across the region are taking upwards of three months to sell from when they are first being listed indicating the lack of demand across the market. 
The Wide-Bay Burnett region was named <a href="/news/qld/queenslands-wide-bay-burnett-region-one-of-australias-top-buyers-markets">one of the Australian property markets that most favoured buyers over sellers</a> by the Commonwealth Bank and CoreLogic RP Data in their latest Home Buyer's Index.
Click to open in new window:
<a href="/images/2015/03/16/wide-bay-mar-16-one.jpg" target="_blank"><img src="/images/2015/03/16/wide-bay-mar-16-one.jpg" alt=""></a>
Source: CoreLogic
Photo: Public domain.
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Wide Bay-Burnett home values grow slightly over 2014: CoreLogic RP Data

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At its meeting today, the Board decided to leave the cash rate unchanged at 2.25%.
Moderate growth in the global economy is expected in 2015, with the US economy continuing to strengthen, even as China's growth slows a little from last year's outcome.
Commodity prices have declined over the past year, in some cases sharply. The price of oil in particular is much lower than it was a year ago. These trends appear to reflect a combination of lower growth in demand and, more importantly, significant increases in supply. The much lower levels of energy prices will act to strengthen global output and temporarily to lower CPI inflation rates. Prices for key Australian exports have also been falling and therefore Australia's terms of trade are continuing to decline.
Financial conditions are very accommodative globally, with long-term borrowing rates for several major sovereigns at all-time lows. Financing costs for creditworthy borrowers remain remarkably low.
In Australia the available information suggests that growth is continuing at a below-trend pace, with overall domestic demand growth quite weak as business capital expenditure falls. As a result, the unemployment rate has gradually moved higher over the past year. The economy is likely to be operating with a degree of spare capacity for some time yet. With growth in labour costs subdued, it appears likely that inflation will remain consistent with the target over the next one to two years, even with a lower exchange rate.
Credit is recording moderate growth overall. Growth in lending to investors in housing assets is stronger than to owner-occupiers, though neither appears to be picking up further at present. Lending to businesses, on the other hand, has been strengthening recently. Dwelling prices continue to rise strongly in Sydney, though trends have been more varied in a number of other cities. The Bank is working with other regulators to assess and contain risks that may arise from the housing market. In other asset markets, prices for equities and commercial property have risen, in part as a result of declining long-term interest rates.
The Australian dollar has declined noticeably against a rising US dollar over the past year, though less so against a basket of currencies. Further depreciation seems likely, particularly given the significant declines in key commodity prices. A lower exchange rate is likely to be needed to achieve balanced growth in the economy.
At today's meeting the Board judged that it was appropriate to hold interest rates steady for the time being. Further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target. The Board will continue to assess the case for such action at forthcoming meetings.
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Prices varied, though Sydney strong says RBA Governor Glenn Stevens' April statement

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GUEST OBSERVATION
Ask a parent how far they would go to support the financial aspirations of their children, and chances are they will say: “Yes, if I had the money I would be happy to act as a guarantor for my children to purchase a property.”
Australian capital city house prices <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2015-01-02/home-prices-rise-nearly-8pc-in-2014-boosted-by-strong-december/5996972">rose</a> by 7.9% in 2014, while the number of <a href="https://www.abs.gov.au/AUSSTATS/abs@.nsf/Lookup/5609.0Main+Features1Jan%202015?OpenDocument" target="_blank">first home buyer commitments</a> as a percentage of total owner occupied housing finance commitments is near record lows - 14.2% in January 2015, compared to 20.4% in December 2012.
Many family-assisted first-home purchases are not being counted in the first home buyer data collected by the Australian Bureau of Statistics, but it’s likely the growing cost of owning a home is encouraging an increasing number of parents to help out via a guarantee, interest-free loan, initial deposit or simply making a monetary gift to their children. This financial support can change an individual’s decision to buy or rent a house or unit. Parental support can also help first home buyers avoid mortgage insurance charges that can easily exceed A$15,000 for a family home in a desirable suburb.
The risk to parents
Consumer advocates <a href="https://www.smh.com.au/money/borrowing/a-guarantors-key-decisions-20100524-w6om#ixzz3OfBpjcaI" target="_blank">cite “lots of cases"</a> where guarantors have been faced with the prospect of losing their home.
Since 2004 Australian banks have offered specific “family pledge” or “family guarantee” loans, allowing parents to provide both equity support and income support. These products are driving growth in the sector, adding to the risk for parents.
In the current economic climate with rising unemployment and costs of living, parents need to understand the risks of acting as guarantor, and all the legal responsibilities that come with it. The guarantor has a legal responsibility to repay the loan (along with any fees, charges and interest) if the borrower defaults. If the guarantee is tied against assets such as the family home, guarantors may end up losing their home, particularly if the parents’ financial position or health conditions have changed over the years. Often the lenders can sue the guarantor if the loan obligations are not met by the debtor. If parents have concerns, it may be a good idea to contribute towards the deposit so that a guarantee is not required.
It is equally important for parents to be educated with regard to the purpose of the loan, amount of the guarantee, to know in detail if their children have stable incomes, and the kind of loan they are guaranteeing (such as lines of credit or overdraft which have no specific time to maturity).
The risk to the banking sector
Family-pledged loans can be categorised as non-conforming loans, an area where lenders seek to minimise the level of risk as much as possible. The Australian Prudential Regulatory Authority has outlined some <a href="https://www.apra.gov.au/adi/Documents/Draft-PPG-APG223.pdf" target="_blank">guidelines</a> for ADIs with regard to loans including a guarantor relationship (e.g. from a parent of the borrower) to cover shortfalls in minimum deposit requirements. APRA acknowledges these loans carry a high risk and ADIs should carefully assess the guarantor’s income, credit worthiness, enforceability of potential claims and the value of any collateral pledged by the guarantor. APRA also emphasises that as a risk management strategy a prudent ADI should establish portfolio limits within its risk appetite for such lending. Such limits can be stress tested.
Since the 1997 Wallis Inquiry, <a href="https://www.rba.gov.au/publications/submissions/fin-sys-inquiry-201403/pdf/fin-sys-inquiry-201403.pdf" target="_blank">household leverage has almost doubled</a>. This has been accompanied by a significant increase in house prices relative to income over the past decade. Australian home prices are <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2014-09-14/bis-figures-confirm-australian-housing-overvalued-emerging-mark/5740808">50% higher than usual</a> relative to rents, and around 40% higher than usual when compared to incomes. The Bank of International Settlements has already warned that a price correction may be coming.
The <a href="https://fsi.gov.au" target="_blank">Financial System Inquiry</a> is seeking measures to ease the effects of the housing market on the economy along with ways that these measures can be implemented.
Inadequate bank supervision and poorly underwritten home mortgages led to the financial crisis. Easing credit constraints, delivering innovative products (along with fee generating activities) without considering the associated risks, and a lack of internal and external monitoring and supervision, can increase non-performing loans and threaten the financial system and its stability.
Mamiza Haq is lecturer in finance at The University of Queensland.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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The problems of relying on the bank of mum and dad: Mamiza Haq

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The number of homes transacting across the Latrobe-Gippsland region has fallen over the 12 months to November 2014, down 7% compared to November 2013, according to recent CoreLogic RP Date research.
Despite the fact that less properties have transacted over the year, property values across the region continue to climb, up 5.1% for houses and 5.5% for units over the year to December 2014.
Latrobe-Gippsland homes are taking a long time to sell currently, 118 days for houses and 122 days for units, however it is noted that this is an improvement when compared to the same time last year when homes were taking 121 days and 130 days to sell for houses and units respectively. 
Click to open in new window:
<a href="/images/2015/03/16/latrobe-mar-16-one.jpg" target="_blank"><img src="/images/2015/03/16/latrobe-mar-16-one.jpg" alt=""></a>
Source: CoreLogic RP Data
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House transactions decline in Latrobe-Gippsland region: CoreLogic RP Data

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GUEST OBSERVATION
Reverse mortgages are a way to release the equity in a home, which is an important component of wealth for many Australians.
Such mortgages have been proposed by the <a href="https://fsi.gov.au/">Financial System Inquiry</a> as a way to support the dissipation of wealth by retirees and boost the efficiency of Australia’s financial system.
The following chart shows the stark increase in mortgage lending by Australian banks since the global financial crisis (GFC). <a href="https://theconversation.com/australian-banks-are-too-exposed-to-mortgages-but-what-if-the-world-was-flat-31000" target="_blank">Australian banks hold approximately $1.3 trillion in mortgages.</a>
<a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/76264/area14mp/image-20150327-16112-131rvgy.jpg"><img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/76264/width668/image-20150327-16112-131rvgy.jpg" alt=""></a>
Mortgage loans provided by Australian banks (Authorised deposit-taking Institutions) Australian Prudential Regulation Authority
Reverse mortgages have matched this growth in relative terms but remain at the margin, with a total exposure of A$2.9 billion (see the line at the bottom of the chart), far below standard mortgages and higher risk loans such as interest-only and low-documentation loans. Despite this growth in volume, the number of lenders has shrunk over time. According to the Financial System Inquiry, more than 15 lenders existed before the GFC but just five remain today.
Why are mortgages so popular and reverse mortgages not so, despite an ageing population with many billions of home equity waiting to be released?
How reverse mortgages work
A reverse mortgage allows homeowners to access a lump sum or an annuity, using their home as collateral. The benefit of reverse mortgages is that borrowers often continue to live in the property until they die. The decision to sell a house is often an emotional one and can be avoided with this product because the loan may be repaid from the sale of the house after death.
Reverse mortgages may also be used to fund outgoings or, in aged care, accommodation bonds that are typically in the hundreds of thousands of dollars.
Alternatives exist: Australians who wish to access home equity often prefer to sell the home and buy or rent a smaller one. This decision may trigger costs such as capital taxes and other fees but may also have merits, as retirees move into a home of the space and standard they require. Free cash may then be converted into annuities, funding a monthly income for instance.
How does a reverse mortgage differ from a standard mortgage?
In a reverse mortgage, the loan amount increases over time, up to a limit, as the borrower draws on the line of credit. The loan amount grows further as interest is added to the outstanding sum. As borrowers often have limited other assets and income with which to repay the loan, and if they enjoy a long life, the loan amount can quickly compound to unexpected levels.
To protect consumers (covered by the National Consumer Credit Protection Act), legal and financial advice via standardised calculators must be provided to customers for these products. In addition, banks provide a “no negative equity” guarantee, which means the loan amount cannot exceed the property’s value.
Finally, interest rates are generally higher than for standard home loan products due to less competition in this sector and higher risks for the lender. In this part of the market lenders tend to provide no more than 50% of a property’s value while standard mortgages tend to be around 80% of value - higher if mortgage insurance is used.
What are the risks for lenders?
The no negative equity guarantee may result in losses if loan amounts exceed property values. Despite generous collateral buffers, this can happen in a number of ways. First, home prices may fall. It is not unreasonable in financial markets to see drops equivalent to prior rises.
In addition, home owners have a right to live in the property and repayment occurs only after death. If a borrower enjoys a long life after taking out a reverse mortgage, or if the loan amount accrues at a higher rate than house prices the lender can be caught by the no-negative-equity guarantee. Longevity risk is very difficult to assess as it requires predicting life expectancy.
Longevity risk is also subject to adverse selection. Unlike in life insurance, it is healthy consumers who are likely to be keen on reverse mortgages.
In addition, the limited number of reverse mortgages makes it difficult for banks to do their risk analysis. Lenders condition the loan amount on the age of borrowers (the older, the larger the possible loan amount).
Borrowers also have prepayment options and may refinance and prepay a reverse mortgage if they find a cheaper lender, exposing the original lender to further risk.
Another aspect is that once the negative equity threshold is reached the borrower has no further financial incentive to maintain the property, which could result in a further depreciation of the property value.
How to promote home equity release
Home equity release is positive for the efficiency of the Australian economy and in line with our concept of retirement. In the US the government provides no-negative-equity guarantees to take some risk off the lenders and support this market.
The Australian government might not be prepared to indemnify the industry for risk. However, the development of such markets could be supported with more general measures.
Firstly, <a href="https://theconversation.com/reverse-mortgages-need-a-rethink-if-theyre-the-new-age-pension-26433" target="_blank">homes may be further recognised in the means test that determines the age pension.</a> Such a measure may better match the needs of the population.
Secondly, a big industry concern is the limited availability of risk transfer solutions, such as derivatives and securitisation structures, which would allow banks to reduce both house price risk and longevity risk, at reasonable cost. It is difficult for banks to hedge or transfer longevity and house price risk. This is something of a catch-22 for the sector - only more equity release may lead to more risk transfer solutions and vice-versa.
Harry Scheule is associate professor, finance, UTS Business School at University of Technology, Sydney.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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Ageing population calls for more reverse mortgages: Harry Scheule

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Household consumption – three-fifths of gross state product – strengthened noticeably in NSW over 2014 (+4.1% year on year) alongside faster growth in household income and dwelling prices.
FIGURE 1. POSITIVE GROWTH OUTLOOK FOR NSW
<img src="/images/2015/03/24/anz-mar-24-one.jpg" alt=""> Source: ABS, ANZ Research
Discretionary spending, which is particularly sensitive to the economic cycle, grew strongly over 2014 (Figure 2). Spending on household goods strengthened in line with the pick-up in dwelling construction. Discretionary spending on services – recreation activities and hotels, cafés, and restaurants – also increased significantly over the year.
FIGURE 2. DISCRETIONARY HOUSEHOLD SPENDING HAS STRENGTHENED
<img src="/images/2015/03/24/anz-mar-24-two.jpg" alt=""> Source: ABS, ANZ Research
Consumer spending growth may be less robust this year as labour market conditions outside of Sydney remain challenging (see below) and house price growth is expected to moderate somewhat – retail sales growth in NSW has slowed considerably over the past six months or so (Figure 3). Nevertheless, strong population growth will provide ongoing support to spending and the lower currency will also direct a larger proportion of spending to local businesses.
FIGURE 3. NSW RETAIL SALES AND SYDNEY DWELLING PRICES
<img src="/images/2015/03/24/anz-mar-24-three.jpg" alt=""> Source: ABS, Core Logic RP Data, ANZ Research
INVESTMENT HAS BEEN WEAK OUTSIDE OF HOUSING
Dwelling investment in NSW has grown significantly over the past couple of years following a prolonged period of very low levels of building despite solid population growth (Figure 4). This has been driven by new housing construction, with renovations activity remaining subdued as it has nationwide. In contrast, business and public investment has been weak.
FIGURE 4. NON-RESIDENTIAL INVESTMENT HAS BEEN WEAK
<img src="/images/2015/03/24/anz-mar-24-four.jpg" alt=""> Source: ABS, ANZ Research
Residential construction is expected to grow further in the near term and then remain at a high level for a prolonged period (Figure 5). This would be very different to the typical boom-bust cycles in the past. This time, activity should continue to be supported by strong population growth, pent up demand, very low interest rates and ongoing house price growth in Sydney. Nevertheless, our analysis suggests that a sizeable net housing deficit will remain in NSW (Figure 6).
FIGURE 5. DWELLING INVESTMENT AND COMMENCEMENTS
<img src="/images/2015/03/24/anz-mar-24-five.jpg" alt=""> Source: ABS, ANZ Research
FIGURE 6. NSW HOUSING MARKET DEMAND AND SUPPLY
<img src="/images/2015/03/24/anz-mar-24-six.jpg" alt=""> Source: ABS, ANZ Research
In contrast to the strength in housing construction, business and public investment has been subdued in NSW. Equipment investment has been weak, like it has been nationwide and despite a substantial amount of non-residential building activity in and around the Sydney CBD, overall underlying non-residential construction in NSW declined by 8.1% year on year in 2014.
Falling mining investment has weighed on overall business investment (Figure 7). In contrast, non-mining capex has improved but the outlook remains very uncertain. Encouragingly, non-residential building approvals have risen to a high level and the pipeline of public engineering construction remains healthy despite the equivalent private pipeline weakening (Figures 8 &amp; 9). Office market fundamentals have begun to improve as well.
FIGURE 7. NSW CAPEX &amp; EXPECTATIONS
<img src="/images/2015/03/24/anz-mar-24-seven.jpg" alt=""> Source: ABS, ANZ Research
FIGURE 8. PRIVATE NON-RESIDENTIAL BUILDING APPROVALS
<img src="/images/2015/03/24/anz-mar-24-eight.jpg" alt=""> Source: ABS, ANZ Research
FIGURE 9. NSW ENGINEERING WORK YET TO BE DONE
<img src="/images/2015/03/24/anz-mar-24-nine.jpg" alt=""> Source: ABS, ANZ Research
This article continues on the next page. Please click below.
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INFRASTRUCTURE SPENDING COULD HANG IN THE BALANCE
The NSW government has proposed a large pipeline of public infrastructure projects in recent years, particularly roads, highways, bridges and rail. Of critical importance is the impact that the upcoming election will have on the Government’s infrastructure plans.
The current pipeline of projects under construction and committed to in the Budget will go ahead under a Labor government. But Labor will not commit to stage 3 of WestConnex, a tunnel designed to link the planned M5 East tunnel at St Peters to the future M4 East tunnel near Rozelle. Moreover, the building of a second harbour rail crossing would not begin until 2022 under Labor (it is slated for construction as early as 2017 under LNP). The Coalition has tied $11.3 billion to urban roads and urban public transport, $4.1 billion for regional transport, and $3.5 billion for social infrastructure projects to the proposed asset sales.
Labor has committed around $10 billion less than the Liberal National Coalition to infrastructure as it is opposed to the ‘poles &amp; wires’ privatisation and has a reluctance to increase debt.
FIGURE 10. NSW MAJOR PROJECTS PIPELINE
<img src="/images/2015/03/24/anz-mar-24-ten.jpg" alt=""> Source: BREE, company reports, Deloitte Access Economics, Infrastructure NSW, state government budget papers, ANZ Research
LABOUR MARKET DATA POINTS TO A DIVERGENT ECONOMY
Labour market conditions have been weak outside of Sydney. While the unemployment rate in Sydney has remained within earshot of 5% for some time, the regional unemployment rate has risen sharply to nearly 8% (Figure 11). This will reflect mining-related weakness in some regions but also the lack of property boom seen in Sydney.
FIGURE 11. LABOUR MARKET CONDITIONS ARE WEAK OUTSIDE OF SYDNEY
<img src="/images/2015/03/24/anz-mar-24-eleven.jpg" alt=""> Source: ABS, ANZ Research
THE HOUSING MARKET
The Sydney housing market is very strong. The median dwelling price has risen 30% since January 2013 and sales activity has picked up strongly. Housing investor activity in NSW has been much more pronounced than in other states (Figure 12). Foreign investment has also been strong. In contrast to the Sydney market, regional NSW house price growth has been more moderate (Figure 13).
While Sydney dwelling prices now look to be around fair value, we see further gains of around 8-10% over 2015 amid low interest rates and as demand continues to outstrip supply.
FIGURE 12. HOUSING INVESTOR ACTIVITY VERY STRONG IN NSW
<img src="/images/2015/03/24/anz-mar-24-twelve.jpg" alt=""> Source: ABS, ANZ Research
FIGURE 13. HOUSE PRICE GROWTH MUCH SLOWER OUTSIDE OF SYDNEY
<img src="/images/2015/03/24/anz-mar-24-thirteen.jpg" alt=""> Source: Core Logic RP Data, ANZ Research
THE BUDGET OUTLOOK – RIDING ON THE PROPERTY MARKET
Unlike other states and territories, NSW does not publish a fiscal outlook during the election campaign, which means it is more difficult to ascertain the most up-to-date fiscal outlook for the state.
However, it is expected the state will deliver strong revenue from residential turnover and rising house prices. Figure 14 shows that residential transfer duty has increased sharply after a brief slow-down in the first half of 2014.
FIGURE 14. NEW SOUTH WALES TRANSFER DUTY
<img src="/images/2015/03/24/anz-mar-24-fourteen.jpg" alt=""> Source: NSW Government, ANZ Research
The outlook for housing turnover and house prices suggests that the NSW Government should benefit from elevated levels of residential transfer duty for some time. An easing policy cycle and strong house price growth will continue to spur existing property turnover and encourage the construction of new housing.
The mid-year review revised up the government’s expectations for residential turnover growth to 12% in 2014-15, driven mainly by higher house prices. Given the recent rate cut by the RBA and the expectation for a further cut next month, we would not be surprised if annual growth in residential transfer duty for 2014-15 exceeds this forecast.
The cyclical nature of the government’s own-source taxation revenue means that it needs stable funding to execute long-term infrastructure upgrades. Asset recycling is one way to go about this.
Neither party’s fiscal plans imply deterioration to the AAA stable outlook from both major rating agencies.
NSW SEMI GOVERNMENT BONDS
The aftermath of the Queensland state election saw a significant repricing in the level of Semi government bonds to both the ACGB curve and the swap curve. Queensland Treasury Corporation (QTC) bonds widened by around 20bp in the 10 year part of the curve. NSWTC issues also seem to be affected by this dynamic. Investors have been concerned with the shifting sands of the Australian electorate and this has been reflected in the level of Semi government spreads. It has clearly been a negative for NSWTC, as the first state to face an election since the Queensland poll in late January.
As Figure 15 shows, the spread of NSWTC bonds to the ACGB curve is at the widest point since the Queensland election. This surprises us to an extent for a number of reasons. Firstly, the NSWTC credit rating is stable at AAA. In the case of Queensland, market expectations had priced bonds to reflect the probability that the LNP would be elected. Furthermore, one ratings agency continues to hold a negative outlook on Queensland’s rating.
NSWTC bonds have also come under pressure due to investor preference for the debt of the Supranational borrowing entities from Europe. These borrowers, such as Germany’s KfW and Rentenbank, as well as the European Investment bank (EIB), have seen a strong performance in recent months after the ECB announced they would be bought as part of the ECB’s QE program.
Domestic investors have been better overall sellers of Semi government bonds to buy the Supranational bonds given the yield pick-up and the potential for outperformance of these names.
We believe the underperformance in NSWTC bonds is unwarranted and that the recent widening of spreads would be arrested by a strong mandate for asset sales.
FIGURE 15. WIDENING OF NSWTC BONDS AGAINST THE COMMONWEALTH
<img src="/images/2015/03/24/anz-mar-24-fifteen.jpg" alt=""> Source: Bloomberg, ANZ Research
In the event of a strong election win for the incumbent government, we believe NSWTC bonds should tighten by 8-12bp against the ACGB curve. The borrowing requirements for NSW remain low, with $4.6 billion of term issuance for the FY 2014-15. Moreover, as outlined above, the NSW economy is in a robust position which should be reflected in the spread to other borrowers.
We also see the potential performance of the NSWTC index linked issuance. Much of the issuance of NSWTC’s index linked bond curve comes from electricity assets. In the event of asset sales, the need for this issuance would be reduced and should see the NSWTC index linked curve tighten against both the nominal and the ACGB curve.
FIGURE 16. WIDENING OF NSWTC LINKERS AGAINST THE COMMONWEALTH
<img src="/images/2015/03/24/anz-mar-24-sixteen.jpg" alt=""> Source: Bloomberg, ANZ Research
FIGURE 17. NSWTC INFLATION BREAKEVEN SPREAD
<img src="/images/2015/03/24/anz-mar-24-seventeen.jpg" alt=""> Source: Bloomberg, ANZ Research
Kirk Zammit is an economist with ANZ Research.
Justin Fabo is senior economist with ANZ Research.
Cherelle Murphy is senior economist with ANZ Research.
Martin Whetton is senior rates strategist with ANZ Research.
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Economy is strong, but little investment outside of housing: ANZ Research's NSW scorecard

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GUEST OBSERVATION
Handling your own tenants is much like cutting your own hair – it’s difficult and the end result would be much better off handled by a real professional.
Property managers play a larger role than some might think and often it’s the behind the scenes work that people underestimate. If an owner’s pool of tenants makes managing the kids in Cheaper by the Dozen seem like a breeze, it illustrates the complexities of the details that real estate agents deal with every day.
Renters can become disgruntled when ongoing issues are not dealt with properly and wonder why they can’t just contact their landlord directly. Sometimes, owners managing their own tenancies can be busy with other commitments and are unable to handle issues with the deft hand of a professional or in a timely manner. Often issues escalate into problems if not dealt with quickly; making it crucial the person responsible for managing the property is available full time.
Crucially, property managers are well versed in the legal rights of both the tenant and the owner. This means that both the owner and the tenant are safeguarded in all of their dealings. An agent is more experienced in picking out the ideal tenant that can make consistent payments, meaning less headaches and more time to seek out other investments.
Particularly, locally based agents are more likely to have the time to be devoted to not only the property, but also to the tenant. Local property managers provide a swift response to the inevitable problems that will arise. This is especially important when the owner is interstate or internationally based.
Additionally, your property is not always your only property. Often property owners juggle many places, which makes managing them all role that only a full-time job can handle.
Happy renters mean longer, ongoing relationships and most importantly, renewed leases.  Having a capable real estate agent looking after your investments and tenants effectively manages your properties, keeps your tenants happy, manages any issues before they escalate and most importantly – doesn’t have to bother you with the detail unless crucial.
If you handle your own tenants and they are tangled in a mess of mismanagement, hacking away at the issues can sometimes make the issue worse. Ensuring you have a property manager that has the dexterity and skill to properly handle any upcoming issues protects you and your tenant in the long-term.
Shane Goldfarb is director of <a href="https://www.hodges.com.au/st-kilda-real-estate" target="_blank">Hodges Real Estate St Kilda</a>.
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Why do we need property managers? Shane Goldfarb 

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Then unremitting diet of big-budget "reality" programs might be good for the economics of our three cash-strapped, revenue-challenged main TV networks, but it is not impressing viewers, who have deserted free-to-air TV prime-time viewing at a rate of one in 10 since the official ratings race started in February.
And there is likely more bad news ahead for the free-to-air networks, which have doubled down on reality shows for the year, with the coming of streaming services like Netflix.
According to analysis of Oztam ratings data for the ratings year so far by Fusion Strategy in Sydney, peak live main channel audiences are down 11.51% so far in 2015. And Fusion’s Steve Allen blames the three networks, which he says are “hammering away at each other with reality ... [and that] will diminish audiences further”.
And he will be proven right when Seven’s House Rules starts after Easter, and Nine starts its knock-off, Reno Rumble. It’s an expensive spoiler from Nine, which shows that the network has run out of ideas for new programs.
Oztam data shows that while both Seven and Nine have lost ground for their current headline reality shows (My Kitchen Rules and The Block), Ten’s audience is up dramatically -- but that is more to do with the fact that a year ago Ten started the year with its weakest audience figures in a decade or more. So far this season, MKR has lost 12.6% of its audience this year compared to 2014, with a 14.4% drop in the 16-to-54 demographics. The Block's audience has fallen 33% compared to 2014 and more than 38% in 16-to-54 viewers.
In a note to clients on Friday, Allen wrote:
“A large proportion, but not all the viewers, are happy with Reality TV … we estimate it is about 65%. The rest do not like or enjoy this genre ... [It’s] pretty clearly a reasonable number of viewers are tiring of Reality … yet this is the pattern the Networks have chosen and committed to for pretty much the whole year. Thus we think the outlook for audiences … just as SVOD [subscription video on demand] launches, as another competitive attack … is a little bleak and problematic."
Over the past couple of years the networks have used reality shows to cut programming costs in a very simple way -- by extending the nightly episodes from an hour or 75 minutes to 90 minutes. That means audiences are held longer to a winning format (in Nine’s case though it has amplified the fall in viewer numbers of The Block), enabling the networks to reap more revenue from charging high ad rates for the extra half hour -- more than they could for a new program. That in turn allows the network to cut half an hour of programming costs four or five nights a week, or one sitcom or two hour-long dramas -- and save upwards of $300,000 to $1 million in production and scheduling costs. The cost of the extra half hour for the reality program is marginal -- the vision would have been shot anyway (the shooting ratio for these programs is quite high).
The danger for the networks is that as the year goes on viewers will stop watching the new programs because they are bored, or have seen them before. And as we saw with Australia’s Got Talent on Seven a couple of years ago, and then on Nine, and Big Brother on Ten and Nine, once viewers get bored with a format, they stay away, costing the network huge amounts of wasted production costs and lost ad revenues.
The driver for this approach is the absence of any growth in TV ad revenues in the past five years -- in 2014 ad revenue for the three networks was less than it was in 2009, despite the rise in costs for big-ticket productions and the huge new broadcasting contracts for the AFL (Seven and Foxtel) and the NRL (Nine and Foxtel). Nine and Seven are now gearing up for the new AFL contract, so they will need to save every dollar of costs they can. Ten will talk the talk on how it wants a part of a new broadcasting contract, but unless the tooth fairy appears to drop a couple of hundred million dollars down its balance sheet, it won’t be a player. It has to convince TV advertisers and viewers it will return in 2016.
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Viewers switch off The Block as networks face harsh reality

Local developer Harridan is seeking to turn its Woolloongabba apartment project into the first stage of a broader transformation of Burke Street, using a new 16-storey mixed-use building to establish a greener pedestrian connection toward the rapidly evolving Boggo Road transport and knowledge precinct.

The South East Queensland developer has filed plans for 154 apartments on the <a href="https://www.apartments.com.au/new-apartments/4-burke-street-woolloongabba-qld-4102">southern side of Burke Street</a>, where its proposal has been designed alongside a wider vision by LatStudios for the street.

That vision positions the southern side of Burke Street for buildings of 15 storeys and above, while envisaging lower-rise development of up to five storeys on the northern side to transition into Woolloongabba's existing character housing. It also proposes wider pedestrian verges, deep planting, new street trees and upgrades to the pedestrian approach to Boggo Road Station.

The Harridan development itself has been designed by Brisbane-based Arqus Design and will comprise 154 apartments across 16 storeys. The mix is weighted heavily toward two-bedroom apartments, with 121 proposed alongside 10 one-bedroom and 23 three-bedroom residences. There will typically be around 14 units per floor.

A lower-ground car park and three podium levels will accommodate 156 resident parking spaces, along with visitor and commercial parking. There will also be 154 resident bicycle spaces and 40 visitor bicycle parks.

&nbsp;

Harridan is a family-owned developer and part of the Holmwood Highgate Group, with more than three decades of development activity across South East Queensland. Its portfolio spans residential, commercial and industrial property, with current residential projects including Riverbank on Byron in Bulimba, Esperance Residences in Carina and The Precinct at Kinross Road in Thornlands.

Wooloongabba has been popular for apartment developers, particularly since the announcement of the 2032 Summer Olympics games in Brisbane.

While there have been a lot of development applications, it has failed to materialize into real supply.&nbsp;

Sarazin has been the major player in the area. They are under construction at Murcia Residences, on the fringe of East Brisbane and Woolloongabba. They have just launched <a href="https://www.apartments.com.au/new-apartments/the-stanley-residences-woolloongabba-8-trafalgar-street-woolloongabba-qld-4102">The Stanley Residences</a>, in Woolloongabba on Trafalagar Street. They also have Nuage coming soon on the nearby <a href="https://www.apartments.com.au/new-apartments/nuage-woolloongabba-14-wellington-road-woolloongabba-qld-4102">Wellington Road</a>.

Joel Robinson

First look: Harridan plans Burke Street transformation beside Boggo Road transport hub

IN BRIEF

<ul>
	<li>
	Just three double-storey Sky Homes sit at the top of The Waterline, each with its own private marina berth and rooftop terrace.
	</li>
	<li>
	Construction on The Waterline is complete, with the first residents expected to move in from mid-October.
	</li>
	<li>
	Sky Homes range from 282 sqm to 367 sqm and are priced from $3.65 million.
	</li>
</ul>

<hr />
Lewis Land has opened the first completed sky home for inspection at Harbour Shores, giving buyers their first opportunity to step inside one of just three double-storey residences crowning The Waterline.

Each sky home comes with its own private marina berth, rooftop terrace and Broadwater views, combining the scale of a larger home with direct access to the boating lifestyle that underpins the wider <a href="https://www.apartments.com.au/new-apartments/harbour-shores-biggera-waters-564-oxley-drive-biggera-waters-qld-4216">Harbour Shores</a> masterplan.

[smartcode_project:default project_id=113271 project_image_fid=366708]

Lewis Land Head of Development Michael Long said the inclusion of a berth with every Sky Home had become increasingly valuable as marina access across the Gold Coast tightened.

“Marina berths are becoming increasingly difficult to secure across the Gold Coast, so including one with every Sky Home makes this a genuinely rare offering,” Long said.

“The private 70-berth marina will accommodate boats up to 12 metres in length and is positioned just 2.5 kilometres from the Broadwater, placing the open ocean only 15 minutes away.

“Being able to step out of your home onto your boat is a rare luxury, and it’s something residents here can look forward to when it opens later this year.”

[smartcode_project:default project_id=113271 project_image_fid=366709]

The display opening comes as construction completes on The Waterline, with the first residents expected to move in from mid-October.

The three Sky Homes range from 282 sqm to 367 sqm and each feature three bedrooms, three bathrooms, multiple living zones, expansive kitchens with butler's pantries and large balconies taking in the Broadwater outlook.

Each residence also has three secure basement car spaces and additional storage.

“This is the first opportunity the Gold Coast has had to step into Harbour Shores and see, touch and feel what we’re bringing to life here,” Long said.

“There are only three Sky Homes within The Waterline, ranging in size from 282sqm to 367sqm, with each residence featuring three large bedrooms, three bathrooms, multiple living zones, expansive custom-built kitchens with butler’s pantry, and large balconies capturing Broadwater views.”

<img alt="Harbour Shores" data-entity-type="file" data-entity-uuid="bab65e10-4fab-45e1-92d8-fc56e2ab98ff" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-25%20at%202.00.16%E2%80%AFPM.png?VersionId=XT8q76LsPkw3cYTsvN3JfFDaPLud90PN" />

Residents of The Waterline will have access to a private pool, along with Harbour Shores' wider collection of amenity including a lagoon pool, social clubhouse, tennis court, gym, yoga facilities and sauna.

Lewis Land partnered with Studio Collective to furnish the completed display, with the interiors designed to demonstrate how the residences could function as permanent homes rather than simply as show apartments.

Studio Collective Director Melissa Park said the surrounding waterways informed the interiors, but in a more restrained way than a traditional coastal scheme.

“We drew inspiration from the canals and coastal surrounds, but our approach was to interpret that subtly through layered materials and a grounded palette of earthy tones, rather than literal coastal references,” Park said.

“We introduced hero moments of green and teal to reference the surrounding waterways, while mirrored elements help reflect natural light.

“The result is a residence that feels elevated yet comfortable, somewhere buyers can genuinely imagine themselves living, entertaining and unwinding.”

Sky Homes are priced from $3.65 million.

Lewis Land is also offering private marina berths with The Residences, its limited collection of three and four-bedroom villas positioned directly along the Harbour Shores waterfront boardwalk.

Three-bedroom villas are priced from $2.99 million, while four-bedroom residences start from $3.19 million.

Harbour Shores is being marketed by Colliers International.

[smartcode_project_cta:default project_id=113271]

Lewis Land opens sky home display as The Waterline completes at Harbour Shores

St Vincent de Paul Society Housing Australia has filed plans for a major mixed-use housing precinct on the southern edge of the North Sydney CBD, adding another significant proposal to a pocket around North Sydn​ey Station that is quickly becoming one of the LGA's busiest development zones.

The State Significant Development Application covers a 5,990 sqm site at <a href="https://www.apartments.com.au/new-apartments/1-19-mackenzie-street-lavender-bay-nsw-2060">1-19 MacKenzie Street and 211 Blues Point Road in Lavender Bay</a>, immediately south of Nor​th Sydney Station and between the commercial core and the lower-rise Lavender Bay Heritage Conservation Area.

Designed by Wardle, the proposal would deliver a new residential tower comprising 88 build-to-sell apartments and 19 affordable apartments, alongside a separate co-living building with 57 rooms and a building manager's studio.

It would also see the significant restoration and upgrade of St Francis Xavier Catholic Church, the adaptive reuse of the former school building, new parish facilities, retail, a new public square and around 1,000 sqm of publicly accessible open space.

<img alt="Vinnies North Sydney" data-entity-type="file" data-entity-uuid="d5dd7f87-a617-463e-b577-17541e01f0e9" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%209.10.13%E2%80%AFAM.png?VersionId=4R8TsFN3P_LrrXO2HswTOIrx2blil8lh" />

The project is seeking a concurrent rezoning of the site to R4 High Density Residential and an increase in the maximum building height to allow a tower reaching RL120, or up to 20 storeys. The proposal was progressed through the NSW Government's Housing Delivery Authority pathway.

The build-to-sell component will be weighted toward larger apartments, with just six one-bedroom apartments compared with 31 two-beds, 43 three-beds and eight four-bedroom residences.

The 19 affordable apartments will comprise two studios, 15 one-bedroom apartments and two two-bedroom apartments, taking the total apartment component to 107 residences before the 58 co-living rooms are included.

<img alt="Vnnies" data-entity-type="file" data-entity-uuid="7d568ca5-cb90-4e18-96c6-d9795dba0c56" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%209.10.05%E2%80%AFAM.png?VersionId=GY2R5M9VtQh0EKy1vajaea19PSLOPuRD" />

Wardle's design for the Vinnies site has sought to negotiate that emerging high-rise context while retaining the lower-scale character of MacKenzie Street and the adjoining heritage conservation area.

The main building adopts a three-storey podium and tower arrangement, with the podium aligned to the ridgeline and front setback of St Francis Xavier Church.&nbsp;Wardle has designed the podium with colonnades, seating, recessed entries and active ground-floor frontages, with sandstone-toned precast concrete and face brick referencing the materiality of the existing church.

The tower then steps back eight metres to the south and six metres to the north before rising in a sculpted form comprising four interlocking quadrants. Wardle has also introduced rounded forms and chamfered corners to reduce the tower's perceived bulk and improve view sharing with neighbouring development sites.

Resident facilities and outdoor areas are planned at the separation between the podium and tower at Level 3, oriented toward Sydney Harbour and the CBD skyline.

The tower itself will feature a glass reinforced concrete facade, with recessed balconies and deep reveals used both to provide shading and privacy and frame views toward the harbour and city. The lower levels take a different architectural approach, using brick and sandstone-toned finishes intended to establish a stronger relationship with St Francis Xavier Church. The Church itself will be conserved and upgraded for its continued use, while the former school building will be adaptively reused as part of the co-living component.

<img alt="Lavendar Bay" data-entity-type="file" data-entity-uuid="2d4418ad-90aa-4d49-af93-c80b140aea80" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%209.09.47%E2%80%AFAM.png?VersionId=Kv4gzbsACaGvZSRuaqcfGC54jEJRXIDJ" />

&nbsp;

The proposal adds to an increasingly concentrated pipeline of residential development around Blue Street, MacKenzie Street and Lavender Bay.

Just west of the site, Central Element lodged plans earlier this year for one of the most significant residential developments proposed in Lavender Bay in recent years.

Central Element's SJB-designed scheme at 64-66 Lavender Street and 3-7 Middlemiss Street would deliver 163 apartments across two towers rising 23 and 32 storeys, replacing five existing apartment buildings containing 32 homes. The project also forms part of the Housing Delivery Authority pathway.

<a href="https://www.apartments.com.au/news/nsw/first-look-central-element-reveals-lavender-bay-apartment-plans?utm_source=chatgpt.com" rel="noopener" target="_blank">First look: Central Element reveals Lavender Bay apartment plans</a>

Immediately around North Sy​dney Station, another two significant proposals have emerged at 5 and 15 Blue Street.

Zurich Australian Insurance Properties is seeking to adaptively reuse its longstanding commercial building at 5 Blue Street, directly above North Sydney Station, rather than demolishing the structure.

Its SSDA proposes converting the building into a 14-storey mixed-use development with 62 apartments and 86 co-living rooms, together with ground-floor retail and a major refurbishment of Blue Street Plaza. The application is currently at the Response to Submissions stage.

<a href="https://www.apartments.com.au/news/nsw/first-look-zurich-targets-north-sydney-office-conversion-with-148-unit-proposal-above-metro-station">First look: Zurich targets North Sydney office conversion with 148-unit proposal above Metro station</a>

&nbsp;

First look: Vinnies files for 20-storey Lavender Bay apartment tower as North Sydney housing pocket heats up

When the opportunity arose for South Australian developer Palumbo to return to Kent Town, where it had previously delivered East Park Apartments and the East 
Rundle Apartments, it wasn't one the longstanding developer-builder was going to pass up.

The decision was quickly vindicated, with more than 30 apartments sold within the first month of launching <a href="https://www.apartments.com.au/new-apartments/royal-apartments-kent-town-2-8-north-terrace-kent-town-sa-5067">Royal Apartments</a> to the market.

The 206-apartment development, which will bring significant new supply to Adelaide's tightly held eastern city fringe, also gives <a href="https://www.apartments.com.au/developers/palumbo">Palumbo</a> the opportunity to bring new life to one of Kent Town's most recognisable watering holes.

[smartcode_project:default project_id=6109 project_image_fid=376073]

Royal Apartments incorporates the historic Royal Hotel, a venue Palumbo Managing Director Daniel Palumbo said has a longstanding connection with the local community.

"Everyone in the area has history with the Royal Hotel," Palumbo told Apartments.com.au.

"It was quite an active pub and social gathering place for locals. We want to bring it back to its former glory."

[smartcode_project:default project_id=6109 project_image_fid=376072]

The wider development will comprise two residential towers alongside the restored hotel, sitting on North Terrace opposite the Adelaide Park Lands.

For Palumbo, the project also marks a return to familiar territory.

The developer completed East Park Apartments next door more than a decade ago and jumped at the opportunity to develop in Kent Town again when the Royal Hotel site became available.

"The opportunity emerged, and we moved to secure the site," Palumbo said.

"We were approached by the previous landowner, who said they had extensive commitments in Sydney and weren't in a position to deliver the project.

"We took over the site and within six months recut the design scheme to be more in keeping with the type of development we want to bring to Adelaide.

"Now we're on the market and those changes have really resonated with local buyers."

That has translated into a strong start to sales, with 33 apartments transacting in the project's first 35 days.

Palumbo said the early purchaser profile had been consistent with the group's traditional focus on owner-occupiers rather than investor-led apartment stock.

"Local owner-occupiers have always been our market," he said.

"There are always some investors, but we've never developed what would be called traditional development stock. Owner-occupiers are very much our market."

[smartcode_project:default project_id=6109 project_image_fid=376068]

The buyer mix has been diverse so far, with downsizers and younger professionals both accounting for a significant portion of early sales.

South Australia's current stamp duty settings, which allow&nbsp;eligible homeowners in South Australia aged 60 savings of up to $103,830 on stamp duty when they downsize to a new property valued at up to $2 million,&nbsp;have helped encourage downsizer activity, while younger buyers in their late 20s and early 30s have been attracted to the opportunity to live immediately outside the CBD while still being able to walk into the city.



Location has been a major part of the proposition for both buyer cohorts.

[smartcode_project:default project_id=6109 project_image_fid=376075]

Royal Apartments sits on North Terrace directly opposite the Adelaide Park Lands, with residents able to walk through the parklands toward the East End, Rundle Street and Rundle Mall.

Apartments have been positioned to capture views across the parklands, Adelaide skyline, Botanic Gardens and Adelaide Hills.

Palumbo believes the scarcity of developable land along this section of the Park Lands makes the site particularly difficult to replicate.

"There's very few allotments on that side that can be developed," he said.

"If this location was in New York and you were sitting on Central Park, you'd be talking about a $60 million apartments."

Royal Apartments will offer a broad mix of residences, ranging from one-bedroom apartments through to four-bedroom sub-penthouses and penthouses.

Current listings include one-bedroom apartments from $680,000, while larger three and four-bedroom residences are priced around $2.5 million.

Residents will have access to a swimming pool, gym, barbecue and recreation areas, residents' lounge and dining space, and a communal deck.

[smartcode_project:default project_id=6109 project_image_fid=376067]

The apartments will feature generous balconies, while secure parking, bicycle storage and storage cages will also be provided.

A porte-cochère-style arrival and drop-off area has also resonated with buyers, particularly those attracted to being able to walk into the CBD during the day while retaining secure vehicle access at home.

Palumbo is acting as developer, architect and builder on Royal Apartments, continuing the vertically integrated model it has used across its South Australian portfolio.

The group was also behind the $150 million Sofitel Adelaide, the 251-room five-star hotel and residential tower which opened in 2021.

Palumbo said Royal's launch had come at an interesting time for the broader Adelaide apartment market.

Buyer confidence had initially been impacted by uncertainty surrounding the Federal Budget and broader economic conditions, but Palumbo believes sentiment is beginning to improve against a backdrop of significant investment flowing into South Australia.

He pointed to increased activity across defence and resources, including Olympic Dam, as potential long-term drivers of the state's economy and housing market.

"Money is starting to flow into Adeliade, significant amounts as Adelaide bucks the trend of the rest of the country.," Palumbo said.

"There's a lot of activity in the economy over the next decade. I think more investment will come into this market."

Early works on Royal Apartments are expected to commence this year, with major construction activity and cranes anticipated on site from early next year.

[smartcode_project_cta:default project_id=6109]

Palumbo's return to Kent Town strikes early chord with buyers

Go-to builder-developer <a href="https://www.apartments.com.au/developers/graya">GRAYA</a> is continuing to bulk out its already impressive and diverse apartment portfolio across South East Queensland. Their latest milestone is securing development approval for Silk, its boutique riverfront apartment development in St Lucia.

The approval clears&nbsp;the way for the team to begin construction planning for the 22-residence project.

<a href="https://www.apartments.com.au/new-apartments/silk-st-lucia-16-18-sandford-street-st-lucia-qld-4067">Silk</a> will rise 15 levels from an 810 sqm site at 16-18 Sandford Street, occupying a prominent bend of the Brisbane River with a prized northern aspect across Orleigh Park toward the Brisbane CBD.

The approved scheme will comprise 16 split-floor and six full-floor residences, continuing GRAYA's move into larger-format apartment developments targeting Brisbane's prestige owner-occupier market.

The project has been designed around the site's broad river frontage and dual-direction views, with GRAYA prioritising larger residences, privacy and outlook over apartment yield.

<img alt="Silk St Lucia" data-entity-type="file" data-entity-uuid="aa5c2349-f96c-4914-a812-1f2cd6827af8" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%208.25.44%E2%80%AFAM.png?VersionId=WY0vEU_7vYjeRJKQHiCwFdMxu8PvFh52" />

GRAYA Co-founder and Chief Executive Officer Rob Gray said the project had been shaped around local homeowners wanting to remain in St Lucia without maintaining a traditional family home.

"St Lucia is one of those suburbs people do not want to leave," Gray said.

"They know the river, the trees, UQ, the golf course, Toowong and Indooroopilly, and that familiarity is hard to replace.

"True riverfront opportunities here are exceptionally scarce. What we have designed at Silk is a way to stay in the suburb people love, with the scale and privacy of a private home and far less to maintain.

"This is not typical apartment product. It is a proper home on the river, and that is exactly what this market has been missing."

The approval comes as new apartment development continues to increase across the St Lucia and neighbouring Toowong corridor, although direct riverfront sites remain considerably more tightly held.

GRAYA Co-founder and Managing Director Andrew Gray said securing the approval had removed a significant element of development risk from Silk.

"Genuine riverfront sites of this quality in St Lucia are not something that comes up regularly," Gray said.

"The approval removes a substantial layer of execution risk, and the location underwrites demand in a way very few inner-city sites can.

"The fundamentals here are as strong as anything we have assessed in Brisbane."

<img alt="Silk St Lucia" data-entity-type="file" data-entity-uuid="d0f3d734-65e1-48e8-8ed3-2e0715ffcdd9" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-26%20at%208.25.56%E2%80%AFAM.png?VersionId=sOLSs_jdHkXLWbBKzRyayf5BfTb2vPsD" />

Silk will see GRAYA return to a stretch of the Brisbane River where it already has recent construction experience. The vertically integrated group recently completed ARC in neighbouring Toowong as builder for developer Spyre, delivering the riverfront project on a constrained site.

GRAYA will take a different role at Silk, controlling the project from design and development through construction and aftercare under its vertically integrated model.

The development will include a gym and resident leisure areas at ground level, integrated with the river's edge.

Silk joins a growing pipeline for GRAYA across Brisbane and the Gold Coast, which includes Enclave, The Gallery, Coral and Ripple.

The developer-builder has also recently lodged plans for its largest project to date, <a href="https://www.apartments.com.au/new-apartments/the-silo-19-chester-street-newstead-qld-4006">The Silo</a>, a proposed <a href="https://www.apartments.com.au/news/qld/graya-buys-frasers-newstead-site-plans-the-silo-between-james-street-and-gasworks-precincts">$700 million mixed-use development</a> in Brisbane's James Street precinct.

Silk is expected to predominantly target local owner-occupiers and prestige buyers seeking a permanent riverfront home in Brisbane's inner west.

Registrations of interest are now open, with further details on the project and construction program to be released as it progresses.

<hr />
<h2>SILK PROJECT FACTS</h2>

Developer-builder: GRAYA

Project: Silk

Location: 16-18 Sandford Street, St Lucia

Apartments: 22

Built form: 15 levels

Site: 810 sqm riverfront holding

Mix: 16 split-floor and six full-floor residences

Status: Development approved

Next step: Construction planning underway

[smartcode_project_cta:default project_id=152168]

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