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]

GRAYA greenlit for riverfront St Lucia apartment development, Silk

National Australia Bank (NAB) has brought forward the timing of the first RBA cash rate cut by three months.

NAB is now expecting a cut in February, in line with ANZ and Westpac, having initially thought a cut wouldn't come until May.

Commonwealth Bank, the nation's largest lender, still thinks the first cut will come in December.

NAB changed its call following the August monthly inflation figures that were released at the end of September, showing it had dropped to 2.7 per cent.

"The risk has been skewed to a first cut earlier in 2025, and today’s change acknowledges the balance of risks has likely shifted sufficiently for the RBA to feel comfortable cutting a little sooner than we earlier expected," NAB noted in its latest update.

They added that the cadence of the cuts may be faster than its central profile.

"Domestic inflation pressures are cooling, but only gradually, and we continue to expect the conditions for a cut will not be in place this year.

NAB believes the easing cycle will end at 3.1 per cent by early 2026, which is five cuts from the current 4.35 per cent cash rate.&nbsp;

CBA also thinks 3.1 per cent will mark the end of the cutting cycle, while Westpac is forecasting 3.35 per cent, and ANZ is the most pessimistic at 3.6 per cent, which would be just three interest rate cuts.

<h2>What would a rate cut in February look like for borrowers?</h2>

According to&nbsp;<a data-saferedirecturl="https://www.google.com/url?q=https://link.mediaoutreach.meltwater.com/ls/click?upn%3Du001.IVvjJ-2BPT0A8C3VxtqKc6e3bj5hBuw27WFEYqovsYs7kPsgFulYrdOzeP8gI7CybJOya3_RgrM7qq-2BfK-2FtAHeRBLv5Qrb-2Bii5fzjLeKcP4w-2FkNgJPXygpiRhVUan3WV3QEggcf617UC8Z60RjQJZAqx7PiO7FtVJQSn0D46Zc3iTVP0kAhTTzG51cPpa5hrqz1OkSA-2BiXAxUajQ686MTtiseWBIdMdknd83aB7cOVgXlVTeHCGf3-2BcMHwfvI8TYlkUovqEhn4dj0KXf2eJGpb9-2BBv20hPXdLlPP9yD7DvFFDBM5yrTqxvcCiMfAsW1onD-2FcriL628eYdhNQE7bwzYrxcOYnmaYfRhGl-2FEHQ6eK2uQcLxs6Cbu6Dx0bYvpi5A6enmxMWU5TkcRYrP6Z8GbXZYtc5qSoKu6eWFBQR9K7fsjXwHMmby3D3X6Yx-2BxcDcdRruTG&amp;source=gmail&amp;ust=1727774368149000&amp;usg=AOvVaw2vK2ujS77CHs9VRvSSXzLC" href="https://link.mediaoutreach.meltwater.com/ls/click?upn=u001.IVvjJ-2BPT0A8C3VxtqKc6e3bj5hBuw27WFEYqovsYs7kPsgFulYrdOzeP8gI7CybJOya3_RgrM7qq-2BfK-2FtAHeRBLv5Qrb-2Bii5fzjLeKcP4w-2FkNgJPXygpiRhVUan3WV3QEggcf617UC8Z60RjQJZAqx7PiO7FtVJQSn0D46Zc3iTVP0kAhTTzG51cPpa5hrqz1OkSA-2BiXAxUajQ686MTtiseWBIdMdknd83aB7cOVgXlVTeHCGf3-2BcMHwfvI8TYlkUovqEhn4dj0KXf2eJGpb9-2BBv20hPXdLlPP9yD7DvFFDBM5yrTqxvcCiMfAsW1onD-2FcriL628eYdhNQE7bwzYrxcOYnmaYfRhGl-2FEHQ6eK2uQcLxs6Cbu6Dx0bYvpi5A6enmxMWU5TkcRYrP6Z8GbXZYtc5qSoKu6eWFBQR9K7fsjXwHMmby3D3X6Yx-2BxcDcdRruTG" target="_blank">Canstar</a>, if there is a cut in February, a borrower with a $600,000 loan today and 25 years remaining would see their monthly repayments drop by $92.&nbsp;

<table border="1" cellpadding="0" cellspacing="0">
	<tbody>
		<tr>
			<td colspan="3">
			Impact of 0.25% pt cut in February 2025
			</td>
		</tr>
		<tr>
			<td>
			Current loan size
			</td>
			<td>
			Drop in monthly repayment
			</td>
			<td>
			New monthly repayment
			</td>
		</tr>
		<tr>
			<td>
			$600,000
			</td>
			<td>
			-$92
			</td>
			<td>
			$3,907
			</td>
		</tr>
		<tr>
			<td>
			$750,000
			</td>
			<td>
			-$114
			</td>
			<td>
			$4,884
			</td>
		</tr>
		<tr>
			<td>
			$1M
			</td>
			<td>
			-$153
			</td>
			<td>
			$6,512
			</td>
		</tr>
		<tr>
			<td colspan="3">
			Source:&nbsp;<a data-saferedirecturl="https://www.google.com/url?q=https://link.mediaoutreach.meltwater.com/ls/click?upn%3Du001.xWMOP9hChsvn-2BC9O-2FebBihXIZ4cEzbiuENdxm-2Bx3-2FYEEgYMhZlKWNj5Zzy1YZ56RuASD_RgrM7qq-2BfK-2FtAHeRBLv5Qrb-2Bii5fzjLeKcP4w-2FkNgJPXygpiRhVUan3WV3QEggcf617UC8Z60RjQJZAqx7PiO7FtVJQSn0D46Zc3iTVP0kAhTTzG51cPpa5hrqz1OkSA-2BiXAxUajQ686MTtiseWBIdMdknd83aB7cOVgXlVTeHCGf3-2BcMHwfvI8TYlkUovqEhn4dj0KXf2eJGpb9-2BBv20v2akwr6-2BqLyRrlEgkJ4J-2BCCyY0x189xEHZA4Ylf8c7ChBqNIkhmftZzoFuZKFn43pw3oJVg2o1gumrpdA-2B7MB-2FBtmL2rFCI-2FXORATQHySCLVOMg7Vywv-2BqnnQUAtDz6XkvpwxdHFXh70VwKazzhJsICilEYOvP4ju0sIfi5g6TL&amp;source=gmail&amp;ust=1727774368149000&amp;usg=AOvVaw2qVnp6oqATgqDUi2Frm22q" href="https://link.mediaoutreach.meltwater.com/ls/click?upn=u001.xWMOP9hChsvn-2BC9O-2FebBihXIZ4cEzbiuENdxm-2Bx3-2FYEEgYMhZlKWNj5Zzy1YZ56RuASD_RgrM7qq-2BfK-2FtAHeRBLv5Qrb-2Bii5fzjLeKcP4w-2FkNgJPXygpiRhVUan3WV3QEggcf617UC8Z60RjQJZAqx7PiO7FtVJQSn0D46Zc3iTVP0kAhTTzG51cPpa5hrqz1OkSA-2BiXAxUajQ686MTtiseWBIdMdknd83aB7cOVgXlVTeHCGf3-2BcMHwfvI8TYlkUovqEhn4dj0KXf2eJGpb9-2BBv20v2akwr6-2BqLyRrlEgkJ4J-2BCCyY0x189xEHZA4Ylf8c7ChBqNIkhmftZzoFuZKFn43pw3oJVg2o1gumrpdA-2B7MB-2FBtmL2rFCI-2FXORATQHySCLVOMg7Vywv-2BqnnQUAtDz6XkvpwxdHFXh70VwKazzhJsICilEYOvP4ju0sIfi5g6TL" target="_blank">www.canstar.com.au</a>. Starting rate is the RBA existing average owner-occupier variable rate of 6.36%. Assumes banks pass the cash rate cut on in full the month after the meeting.
			</td>
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	</tbody>
</table>

Canstar Data Insights Director, Sally Tindall, says if core inflation continues to track in the right direction, or unemployment starts to accelerate significantly, we could well see a cash rate cut as early as February of next year.

“All four big banks now believe the RBA will be ready to cut the cash rate in just over four months’ time, if not before, in the case of CBA.

“However, the outlook for both inflation and unemployment is still highly uncertain. A couple of wobbly sets of inflation data could see the RBA holding for longer, particularly if unemployment remains relatively steady."

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Commonwealth Bank, the nation's largest lender, still thinks the first cut will come in December.

NAB bring forward first RBA cut to February 2025

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The RBA’s decision to leave the cash rate on hold at 2% was not unexpected and like last month’s cut will likely result in a more subdued response from lenders and savings providers. 
In February, the RBA’s rate cut was followed by a swift and generous 0.25% reduction in variable rates by 93% of lenders, while in May, the reaction was slower and a little more measured with only 33% passing on the full 25bps. Some lenders took up to three weeks to announce a rate decision and a further eight lenders still haven’t made a call either way. 
While the Bank’s first cut incited a proactive response, the most recent decrease meant lenders were forced to make tougher decisions based on their own funding measures and home loan margins. 
These cuts are certainly a good thing for refinancers, with the average rate now a low 4.72% (down from 4.98% in February), and the lowest variable rate a competitive 3.98%.
While we saw a huge number of fixed rate discounts being made in February, that trend has slowed and this month we’re seeing some lenders increase fixed rates for the first time in months. 
It’s possible we’ve hit the bottom of the cycle for fixed rates and while you can, you can still fix your loan for 3 years for less than the leading variable rate – at just 3.95%.  
In the past month, we’ve also seen changes on the investor front, with some of the country’s largest lenders cutting back on discounts and changing lending criteria in a bid to decrease their volume of investor loans, in response to pressure from APRA.
For example, each of the big 4 banks have removed discretionary pricing on investor loans and two lenders (Bankwest and Heritage Bank) have implemented a loan-to-value ratio limit of 80% for new investor loans.
Those looking to build up a house deposit are suffering a double whammy of high property prices and low savings returns. 
While the average property price in one of Australia’s top 8 capital cities will require a deposit of at least $57,000, the average at-call savings account will earn you just 2.43%. The best rate you can get by locking your money away for 6 months is only slightly higher at 3.5%.
Kirsty Lamont is a director at loan comparison site, Mozo.com.au
For information on property loans, rates and more, visit Mozo.com.au or <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">click here</a> for the free Property Observer eBook, Get loan-savvy – tips for a first time, investment or refinancing loan, which helps you decide on a home loan that meets your requirements. 
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Is the party over for borrowers? Mozo's Kirsty Lamont

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The Reserve Bank of Australia (RBA) has kept the official cash rate at 2% for June.
The RBA last cut rates in May and February.
"With the RBA focussing on stimulating economic growth, dragging the Australian dollar lower and lifting consumer spending, they are likely to focus less on the growth in the housing market," CoreLogic RP Data head of research, Tim Lawless said.
"The RBA is likely to look through the pause in the rise of dwelling values reported by CoreLogic RP Data for the month of May, paying more attention to the strong upwards trend that has been evident in Sydney and Melbourne since mid-2012. 
"Dwelling values have risen by 39% in Sydney and by 22% in Melbourne over the past three years, while the other capital cities have seen much more sedate conditions. 
"At a time when interest rates remain low, there is the expectation that tougher lending requirements to investors as well as higher supply levels will start to cool housing market conditions and bring the rates of capital gain back to more sustainable levels across the two largest cities where growth in dwelling values has been the highest," Tim Lawless said 
More time is needed to see if historic low interest rates are impacting on property markets outside of Sydney and Melbourne, according to the real estate network LJ Hooker.
LJ Hooker CEO Grant Harrod said the Reserve Bank of Australia’s decision to wait for May’s cut to influence the economy was sensible, despite weak business investment figures. 
He believes an interest rate cut is now more likely at the end of the year, if needed, to stimulate the economy.
“We haven’t seen any signs but it is too early to call if it’s had any positive effect in cities such as Perth and Canberra - it could take another three to six months,’’ he said.
In Sydney, a lack of listings combined with historic low interest rates are continuing to bring record numbers of people to open inspections and push up property prices. 
Mr Harrod believes it has evolved as a unique market and is likely protected from any ‘bubble’ due to a lag in DA approvals to match population growth.
“The biggest issue facing all agents at the moment is the lack of listings and the proliferation of buyers,” he said.
“The total number of properties available for sale across the LJ Hooker network is down by about five percent and the industry has dropped 5.5%.”
 
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Rates on hold at RBA June 2015 meeting

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<h3 id="mr-title">Statement by Glenn Stevens, Governor: Monetary Policy Decision</h3>
At its meeting today, the Board decided to leave the cash rate unchanged at 2.0 per cent.
The global economy is expanding at a moderate pace, but some key commodity prices are much lower than a year ago. This trend appears largely to reflect increased supply, including from Australia. Australia's terms of trade are falling nonetheless.
The Federal Reserve is expected to start increasing its policy rate later this year, but some other major central banks are continuing to ease policy. Hence, global financial conditions remain very accommodative. Despite some increases in bond yields recently, long-term borrowing rates for sovereigns and creditworthy private borrowers remain remarkably low.
In Australia, the available information suggests the economy has continued to grow, but at a rate somewhat below its longer-term average. Household spending has improved, including a large rise in dwelling construction, and exports are rising. But a key drag on private demand is weakness in business capital expenditure in both the mining and non-mining sectors and this is likely to persist over the coming year. Public spending is also scheduled to be subdued. Overall, the economy is likely to be operating with a degree of spare capacity for some time yet. With very slow growth in labour costs, inflation is forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate.
In such circumstances, monetary policy needs to be accommodative. Low interest rates are acting to support borrowing and spending. Credit is recording moderate growth overall, with stronger lending to businesses and growth in lending to the housing market broadly steady over recent months. 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 been supported by lower 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 both likely and necessary, particularly given the significant declines in key commodity prices.
Having eased monetary policy last month, the Board today judged that leaving the cash rate unchanged was appropriate at this meeting. Information on economic and financial conditions to be received over the period ahead will inform the Board's assessment of the outlook and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target.
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Strong again in Sydney: RBA Governor Glenn Stevens' June 2015 meeting statement

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APRA’s crackdown on home lending has prompted NAB to advise tightening to its lending policies, effective 5pm on Friday 5 June 2015.
New variable rates will apply for investment loans, according to communication from NAB to mortgage brokers, obtained by Australian Broker.
The new changes will apply within National Australia Bank's third party mortgage distribution businesses, Advantedge and NAB Broker.
The new investor loan variable rates range from 4.53% to 4.96% depending on the loan amount and LVR. 
For investor loans of $250,000 to less than $500,000, with an LVR up to 90%, the variable rate will be 4.63%. 
For loans less than $250,000, with an LVR up to 90%, the new variable rate will be 4.83%. 
Effective Saturday 13 June 2015, the maximum LVR (including LMI capitalisation) for investment loans will be reduced to 90%. Also effective Saturday 13 June, a loading will be applied on existing mortgage repayments as part of the serviceability assessment. This applies to existing loans which are not being refinanced or paid out as part of the application.  The affordability rate used in the serviceability assessment will be also be amended, effective Saturday 13 June, to be the higher of 7.40% or 2.25% above the effective borrower rate. Currently a 7.40% affordability rate is used for all applications. 
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NAB makes borrowing harder for property investors

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Refinancing is pretty much on the cards for everyone in today’s marketplace, estate agent John McGrath suggests.
"At some point, another lender will make it worthwhile to switch, or you might want to refinance with the same lender to release equity for your next move," he said.
"Refinancing is an opportunity. Yes, it can be a pain – in fact a major inconvenience, especially if you have to move all your accounts across to your new lender as part of a ‘package deal’, but you could save thousands of dollars every year so it really is worth the trouble, especially today with variable and fixed mortgage rates so low. 
"The most important piece of advice I can give you on refinancing is to get advice before you do it.
"It really pays to sit down with a reputable mortgage broker who will assess your current position; discuss what you want to do next; and then determine which lenders are most appropriate for you," he wrote on his switzer.com.au blog. 
Alan Hemmings, general manager of McGrath’s mortgage broking division, Oxygen Home Loans, gave John five tips on how to do refinancing well.
Do not accept the advertised rate – Most lenders advertise standard variable rates, others advertise with the ‘standard’ discounts available under their package. The truth is that lenders are discounting well beyond the rates they advertise, particularly for variable loans. 
Be aware of other costs – Exit fees on loans were banned a few years ago but you’ll still need to pay a discharge fee. Then there’s the establishment fee on the new loan, plus some other fees. It could easily add up to around $1,000. Ask yourself, will the interest rate saving cover the refinancing costs? Also be conscious of ongoing fees, such as annual package fees. 
Buyer Beware – Don’t fall for ‘honeymoon’ rate offers. Lenders use them to attract new business but what does the rate convert to after the introductory (honeymoon) period? You might find it goes to the standard variable rate or a ‘standard package’ discount of say, 0.3% for the rest of the loan. A negotiated discount of 0.9% for the life of the loan right from the start would work out cheaper. 
To fix or not to fix? – Understanding your likely future circumstances should guide you here. Most lenders now allow some additional repayments on fixed rate loans without penalty, however should you wish to ‘break’ the loan then you’ll be up for a fee. Remember, fixed rate loans provide certainty of your repayment amounts but not much flexibility.
Do you want fries with that? – What other banking facilities do you require? Do you need an offset account, credit card, access to free ATMs? Your overall banking needs might also dictate the type of loan you need. If you’re looking at a transaction account and credit card, a ‘package’ loan might suit you better than a basic loan. 
 
For information on property loans, rates and more, visit Mozo.com.au or <a href="/guides/get-loan-savvy-expert-tips-for-a-first-time-investment-or-refinancing-loan-in-a-free-ebook">click here</a> for the free Property Observer eBook, Get loan-savvy – tips for a first time, investment or refinancing loan, which helps you decide on a home loan that meets your requirements.
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Five tips for refinancing: John McGrath

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The RBA’s decision to cut the cash rate to 2% last month went against the recommendation of the CAMA RBA Shadow Board. Since then economic data continues to show signs of weakness. Unemployment is up slightly, investment down, and consumer and business confidence remain fragile.
The international economy continues to pose a threat to the Australian economy and inflation remains comfortably within the RBA’s target band. But asset prices, Sydney house prices in particular, continue to post high gains.
The CAMA RBA Shadow Board on balance prefers to hold firm but believes the cash rate has bottomed and an increase is due in the near future. In particular, the Shadow Board recommends the cash rate be held at its current level of 2%; it attaches a 60% probability to this being the appropriate policy setting. The confidence attached to a required rate cut equals a mere 2%, while the confidence in a required rate hike stands at 38%.
According to the Australian Bureau of Statistics, Australia’s jobless rate edged up to 6.2% in April. Worryingly, in the same month full-time employment, total employment and the participation rate have fallen. Wage growth remains at a record low: the Australian wage price index increased by 2.3% in the last quarter, well below the average of 3.5% for the period 1998-2015.
The Australian dollar remains range-bound between US76¢ and US80¢. Yields on Australian 10-year government bonds have increased further, to 2.84%, from its recent low of 2.59%, implying a steepening of the yield curve, normally a bullish sign.
Regional housing markets, particularly Sydney and Melbourne, and domestic share prices remain buoyant. This remains a primary concern for many Shadow Board members as the asset price increases coincide with an increase in private sector leverage, leading to misallocated investment and opening up the possibility of a costly price correction. According to the Reserve Bank of Australia total housing credit grew by 7.2% (year-ended) in April 2015, compared to 6% in April 2014.
The international economy remains subdued. For Europe, a noticeable pickup in growth is not on the horizon, at least not until the Greek debt crisis is resolved. Recent revisions of US data indicate that US growth this year has been slower than initially thought, with some analysts suggesting the US economy actually contracted in the first quarter. Without a string of good news about the US economy, the Federal Reserve Bank’s increase of the cash rate is likely to be pushed back ever more. Commodity prices are likely to remain soft and possibly fall further.
Consumer and producer confidence measures continue to be mixed. However, of particular concern is the outlook for domestic investment. The ABS survey of chief financial officers conducted in April and May of this year reveals that total capital expenditure is still expected to fall significantly, with the current estimate for fiscal year 2015-16 being 24% less than the corresponding estimate for fiscal year 2014-15. The trend volume estimate for total new capital expenditure fell 2.3% in the March quarter 2015 while the seasonally adjusted estimate fell 4.4%.
<h2>What the Shadow Board believes</h2>
The Shadow Board’s confidence that the cash rate should remain at its current level of 2% equals 60%. The confidence that a rate cut is appropriate is a mere 2%, whereas the Shadow Board considers it much more likely (38%) that a rate increase, to 2.25% or higher, is the appropriate policy decision for this month.
The probabilities at longer horizons are as follows: six months out, the estimated probability that the cash rate should remain at 2% equals 23%. The estimated need for an interest rate increase lies at 76%, while the need for a rate decrease is estimated at 3%.
A year out, the Shadow Board members’ confidence in a required cash rate increase equals 81%, in a required cash rate decrease 2% and in a required hold of the cash rate 17%.
 
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<h2>Comments from Shadow Reserve bank members</h2>
Mark Crosby, Associate Professor, Melbourne Business School:
“The case for a cut or cuts in the near future does not seem to be as strong as in past months.”
 
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Further signs that the economy is not weakening further, so that the case for a cut or cuts in the near future does not seem to be as strong as in past months. Still uncertainty on the global front, with the ever present possibility that Greece may finally default. But does not seem that would have longer term effects on global economies. As a result the longer term outlook would be for a start towards rate normalisation within 12 months.
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Mardi Dungey, Professor and Deputy Head, School of Economics and Finance at University of Tasmania:
“I recommend that a higher policy rate should have been maintained.”
 
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The RBA’s decision to ease monetary policy in May - the timing of which was partly to meet the “challenges of communication” (RBA Minutes of Board Meeting for May 2015) associated with the timing of the Federal Budget - is a gamble that accommodative monetary policy can overcome the problems of the inactive role fiscal policy is currently playing in macro policy making. As there seem to be few signs of improvement on the fiscal front, the RBA is taking a risk that looser monetary policy can fill part of this role and not cause structural problems elsewhere.
The Board meeting minutes make clear that most domestic conditions are if anything only a little weaker than in previous months; and there is considerable uncertainty as to whether consumption will respond similarly to that experienced in pre-crisis conditions – given the rather nasty scare experienced by many in the economy, it seems unlikely we will seem this type of response to lower rates.
More likely is that looser credit will inflate house prices – an area where the fiscal reform agenda could make substantial improvements by removing a number of incentives to over-invest in housing. Given the hand that the RBA has been played, it is not unreasonable that they chose to move rates. However, if all arms of policy were playing a role in active economic management this would not be the path I would recommend.
For that reason, my recommendations are based on the presumption that monetary policy cannot reasonably be expected to manage single-handed and that it is able to follow its usual best-practice course in setting policy in partnership with other arms of policy making, in which case I recommend that a higher policy rate should have been maintained.
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Warwick McKibbin, Chair in Public Policy, ANU Centre for Applied Macroeconomic Analysis (CAMA) , Crawford School of Public Policy at Australian National University:
“The distortion low interest rates is causing in asset markets is worsening.”
 
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Continued weakness in nominal GDP growth in Australia implies that the neutral policy interest rate continues to fall. However, evidence of rising asset prices, particularly in the housing markets of Sydney and Melbourne, makes the setting of interest rates increasingly complex. From the point of view of short term macroeconomic factors, low interest rates in Australia could be justified; however, the distortion this is causing in asset markets is worsening.
This highlights the difficult trade-off between short term growth and medium term vulnerability. My judgement is that the damage caused by a painful adjustment in the housing market and the high levels of leverage by households in an environment of a downward adjustment in trend economic growth is a dangerous mix that loose monetary policy and even more financial leverage cannot solve. Add to this situation, the move to normalise interest rates in the US and there are many bad scenarios for Australia that are plausible.
I recommend leaving interest rates unchanged (indeed I would not have lowered them to the current level). Monetary policy should be focused on medium term stability especially if it has little prospect of solving the problems that cause weak short term demand. There is strong evidence that a point have been reached where monetary policy cannot offset the core problems caused by uncertainty about economic and political prospects in the Australian economy.
The lack of substantial policy assistance from fiscal rebalancing or substantive economic reform generally, is increasingly backing the Reserve Bank into a corner. It appears that many politicians do not appreciate the risks that now face the Australian economy. No wonder investment is weak and uncertainty is damaging economic prospects in Australia. It may be that the optimistic projections in the recent federal budget turn out to be correct, however, the vulnerabilities within the Australian economy are growing and lower interest rates without any other policy response makes this situation worse.
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James Morley, Professor of Economics and Associate Dean (Research) at UNSW Australia Business School:
“The RBA has scope to hold the policy rate steady.”
 
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The relatively stimulative federal budget and the recent lower level of the Australian dollar mean that the RBA has scope to hold the policy rate steady this month and even start raising it back to its neutral level over the medium term.
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Jeffrey Sheen, Professor and Head of Department of Economics, Macquarie University, Editor, The Economic Record, CAMA:
“The cut in the cash rate to 2% in May was the right move.”
 
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In my opinion, the cut in the cash rate to 2% in May was the right move. My expectation is that it should remain at this level until at least early 2016. The net saving glut in Australia continues to be a problem. Consumption growth is unlikely to contribute much to growth normalisation because of the relatively high levels of household debt. Growth recovery will have to come largely from business investment, which unfortunately shrank badly in the March quarter and continues surprisingly in waiting mode, despite low interest rates.
The proposed federal budget in May 2015 turned less austere than anticipated, reducing one obstacle to the return to normal growth. The 20% trade-weighted exchange rate depreciation over the last 24 months will help growth recovery by boosting non-mining exports, but this boost should continue for a while to be more than cancelled by the falling value of mining exports.
Overall, upside inflation risk remains minimal since wages growth is modest and energy prices are unlikely to rise much. The outlook for Greek debt negotiations looks grim, with possible negative ramifications for global asset markets. Therefore, the Australian economy needs its current monetary policy push to remain for some time yet, and needs a stronger fiscal push.
The CAMA RBA Shadow Board is a project by the Centre for Applied Macroeconomic Analysis, based at the ANU, which asks industry and academic economists what interest rate the Reserve Bank of Australia should set. Timo Henckel is the non-voting chair of the Board.
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Interest rates should fall no further: the RBA Shadow Board

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Westpac has announced a two year introductory variable rate discount on both owner-occupier and investor loans.
Offering a 49 basis point two year discount, it puts the variable rate at 4.34%, before converting to 4.83% after the two year discount period (4.88% comparison rate).  Brendan Collogan, head of marketing for Westpac Home Ownership told Broker News Westpac has <a href="https://www.westpac.com.au/personal-banking/home-loans/variable/first-home-loan/" target="_blank">also abolished the $600 establishment</a> fee on all new Flexi First Option home and investment property loans.
This special offer is only available on new Flexi First Option Home Loan and Flexi First Option Investment Loans. 
It cannot be taken in conjunction with, or in addition to other special offers, negotiated rates or discounts. Not available to company and trust account holders.
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Westpac scraps $600 home loan establishment fee

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When it comes to house prices, 99.9% of Australian’s believe that because demand outstrips supply is the prime reason as to why house prices in Australia are as high as they are. Unfortunately, the greatest flaw in this theory is that the assumption is that when it comes to the housing market that banks and debt do not exist. 
In other words, just because there are a large sum of buyers seeking to buy a house relative to the available (sufficient) supply that the price can climb infinitively.
Lets look at two hypothetical property markets as an example.
<table style="width: 269px;"><tbody>
<tr>
<td width="139"> </td>
<td width="65">City A</td>
<td width="65">City B</td>
</tr>
<tr>
<td>Median Household income</td>
<td>$70,000</td>
<td> $70,000</td>
</tr>
<tr>
<td>Median House Price</td>
<td>$210,000</td>
<td> $700,000</td>
</tr>
</tbody></table>
 
Now here is where Australian society has made a dangerously flawed assumption. The Australian herd assumes that just because a city such as the hypothetical City B has a significantly higher house price that there is less housing stock available in the marketplace relative to demand than City A. And based on this assumption that supply is incredibly limited that homebuyers are able to magically come up with the necessary funds (based on the absolute assumption that desperation to secure a roof over their head is higher in City B v City A) available to purchase a median house at 10x the median income without debt.
What the overwhelming majority of the Australian public… (including the economists at the big banks and RBA) dont understand ‘or will not acknowledge’ is that it is almost near impossible for housing in both City A and City B to be as expensive as it is even if there was screaming demand relative to the available supply without banks and debt.
But when banks in one city are prepared to lend more than banks in another city relative to incomes, you will generally find house prices are higher in the city where the banks lend more.
<table style="width: 301px;"><tbody>
<tr>
<td width="157"> </td>
<td width="69">City A</td>
<td width="75">City B</td>
</tr>
<tr>
<td>Median Household income</td>
<td>$70,000</td>
<td> $70,000</td>
</tr>
<tr>
<td>Median House Price</td>
<td>$210,000</td>
<td> $700,000</td>
</tr>
<tr>
<td>Deposit</td>
<td>30%</td>
<td> 20%</td>
</tr>
<tr>
<td>Total Deposit</td>
<td>$63,000</td>
<td> $140,000</td>
</tr>
</tbody></table>
 
Now as per the above, if the banks in City A are only willing to lend households 210% of their income to purchase a home, that would mean there is a good chance (give or take a few % points) that the median household would only be able to acquire a maximum of $147,000 of debt (on top of their deposit) to purchase a house.
Theoretically, even if there was an actual dire shortage of houses available in the marketplace, you would find that more often that not the only way to drive house prices higher would be if the median homebuyer was able to come up with a larger deposit.
Lets assume that the median homebuyer in City A were to come up with an $70,000 deposit versus a $63,000 deposit. It would mean that the homebuyer would be able to pay $7,000 above the median house price. But in City B there is a distinctive difference (spread) between the median income generated by the median household and the median house price when compared to City A. 
All things being equal between the two cities where there are just as many homebuyers in each city desperate enough to get into the housing market. If the banks in City A are only willing to lend a median income homebuyer $147,000, but in City B banks are willing to lend a median to homebuyers $560,000, which city do you expect to have higher house prices if both property markets share the exact same level of demand?
So the next time you hear a chief economist from one of the major Australian financial institutions mention the importance of supply and demand– remember, they (and the banks they work for and lend significant sums of debt to homebuyers year after year) assume that the banking system has no involvement whatsoever in the housing market and has not made an impact on the price of a house through flooding the housing market with debt.
Artificial leveraged demand created by the Australian banking system in what is a nation where housing is completely unaffordable is what drives prices in Australia sky high. Funny how no major financial institution, research agency or government entity such as Treasury or the RBA will never address the demand side of the Australian housing market. Just the good old, ‘we have a housing shortage’ and the population is desperate… creating artificial desperation. <a href="https://blog.australiaboomtobust.com/wp-content/uploads/2015/05/Australian-Consolidated-Private-Gross-Debt1.jpg"> </a>
Lindsay David is the author of <a href="https://www.amazon.com.au/Australia-Australian-Credit-Property-Bubble-ebook/dp/B00JJ7UW0S/ref=sr_1_1?ie=UTF8&amp;qid=1410612321&amp;sr=8-1&amp;keywords=australia+boom+to+bust" target="_blank">Australia: Boom to Bust</a> and  <a href="https://www.amazon.com/Print-Central-Bankers-Lindsay-David-ebook/dp/B00TMHEDBY/ref=sr_1_1?ie=UTF8&amp;qid=1423979661&amp;sr=8-1&amp;keywords=print+the+central+bankers+bubble" target="_blank">Print: The Central Bankers Bubble</a>. David recently founded <a href="https://www.lfeconomics.com/" target="_blank">LF Economics</a> and holds an MBA from IMD Business School.
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LindsayDavid-WEhfyLvNJJ

Artificial desperation: Lindsay David

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Regional non-major lender Suncorp Bank has announced two new special offers available on its Home Package Plus product effective May 26.
Its standard variable and three year fixed Home Package Plus products will be offering an interest rate of 4.15% (comparison rate 4.16%) on new principal and interest loans of at least $150,000, with a maximum LVR of 80%.  Suncorp Bank head of intermediaries, Steven Degetto says interest rates are now at a generational low, "making it a good time for those looking to upgrade their current home, or assess their home loan options." The bank will also continue to waiver the annual Home Package Plus fee for the life of the loan, saving new customers up to $11,250.
FOR INFORMATION ON PROPERTY LOANS, RATES AND MORE, VISIT MOZO.COM.AU OR <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">CLICK HERE</a> FOR THE FREE PROPERTY OBSERVER EBOOK, GET LOAN-SAVVY – TIPS FOR A FIRST TIME, INVESTMENT OR REFINANCING LOAN, WHICH HELPS YOU DECIDE ON A HOME LOAN THAT MEETS YOUR REQUIREMENTS.
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Suncorp lowers rates for new principal and interest loans

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The RBA deputy governor Philip Lowe says recent measures from banking regulator, the Australian Prudential Regulation Authority (APRA) were having a "positive, albeit modest, effect".
"In the past couple of weeks you've seen a number of banks say they're requiring larger deposits for investor loans, they're offering smaller discounts on interest rates and smaller rebates, they're requiring higher serviceability levels," Dr Lowe said at yesterday's Thomson Reuters regulatory summit in Sydney.
But he added that the use of macroprudential tools can only be pushed so far.
"This is an issue that's very clearly on our radar screen. How far can you push the tighter regulation of the banking system without causing the same volume of loans to be made but just through a different financial intermediary," Dr Lowe said.
"In the '70s and the '60s we had a lot of the tools that are currently in vogue and we ended up getting rid of them was because what happened was that institutions found out ways of getting around the rules.
"Finance is very flexible and people are very good at moving the money from the people who have it to the people who want it."
He said Australia has not experienced rapid growth in non-bank loans yet, but any tougher regulations would make that far more likely.
"Maybe a few more loans are being made through non-bank lenders than through the banking system as a result of the tougher requirements, but it's very much at the margins," he said.
"But it's a margin that we do need to watch very carefully, and history tells us that if you make the incentive too misaligned between the banks and the non-banks then the funding will follow to the non-banks."
"My conversations with a number of banks around the country [suggest] the various APRA measures are having an effect," he said. 
"The measures so far seem to be having a positive albeit modest effect and it is worthwhile seeing how those play out.
"My subjective assessment would be the level of risk in bank mortgage portfolios has risen over the past couple of years."
Dr Lowe said the RBA was watching the steps taken in New Zealand.
"We follow these issues very carefully. Of course New Zealand's not the only country that's implemented some type of macroprudential regulation," he said.
"The number of countries that have done that over recent times is very large and so we watch, study the experience of other countries carefully."
"It is entirely appropriate that (Australian) households are careful as well because the level of risk there, while I don't think it is extreme, it has picked up and both financial institutions and households need to respond to that," he told the conference in Sydney.
"Household debt is high, property prices are very high, household income growth is slow, the unemployment rate has drifted up – all those things would suggest there has been an increase in the level of risk, particularly as people have bought property for investment purposes.
"In that environment, it is entirely appropriate [the banking regulator] APRA has a very close dialogue with financial institutions about the risks in those portfolios, and makes sure there are plenty of buffers there in case things don't turn out so well."
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