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>
		</tr>
	</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."

&nbsp;

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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Mortgage broker John Symond says he is worried that the APRA investor home loan lending crackdown will have unintended consequences given the huge increase in non-Australian residents buying property.
"I am just worried that there is not going to be unintended consequences here because you might find these foreign investors have even a bigger go because regular Australians are going to find it tougher to get through the hoops to be able to borrow money to buy an investment property, in most cases their future nest egg" John Symond, the founder and chairman of Aussie Home Loans said.
"I lot of these people are bringing money from China," he told Ross Greenwood on the 2GB Money News program last night.
 "Without picking on the Chinese, they have had a huge spike on new housing something like $12 billion in last 12 months - now this doesn't come under APRA as a lot bring money from China. 
"They are certainly help driving the pricing up and driving the shortage of properties available for first home buyers and people looking to buy their home in Australia.
"It is not just the Chinese there are other foreign investors who love Australia," he said.
The latest lending data suggests lenders are generally meeting the 10% growth restraint sought by APRA, though some still to sufficiently rein in the pace of investor loans.
It has been suggested more than 82% of investor lending remains within APRA’s macro prudential growth target (not materially above 10%).
While a number of lenders are comfortably below this range (around 12% of market share) and have scope to increase their exposure to housing investors, some lenders are tracking well above APRA’s macro prudential target growth range. 
The 10 per cent benchmark is not a hard limit, but is a key risk indicator for supervisors in the current environment. 
The benchmark has been established after advice from members of the Council of Financial Regulators, taking into account a range of factors including income growth and recent market trends.
ADIs with greater than $1 billion of residential term loans held 98.4% of all residential term loans as at 31 March 2015. These ADIs reported 5.3 million loans totalling $1.28 trillion.
Of these loans: the average loan size was approximately $243,000, compared to $235,000 as at 31 March 2014; $479.1 billion (37.4%) were interest-only loans; and $30.1 billion (2.3%) were low-documentation loans.
 
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jchancellor-FAypfDUnLy

Chinese buyers to benefit from APRA crackdown on local borrowers: John Symond

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Non-bank lenders are set to be flooded with interest from investor borrowers as loans from the Big 4 dry up in response to pressure from APRA, the loan comparison website, Mozo forecast. 
“Non-bank lenders are likely to reap the rewards of investors being turned away by the big banks,” said Mozo home loan expert, Steve Jovcevski. 
“Some investors are having applications rejected, resulting in a flurry of panicked refinancers flooding the market, especially those settling on properties as early as this week.”
“In particular, those who have bought properties off the plan will get a rude shock when it comes to financing their purchases,” he said.
"Mozo’s advice for investors is to look beyond the big four to non-bank lenders to secure an investor loan.  
"Out of 83 lenders on Mozo, 48 are non-bank lenders and not strictly under regulation by APRA," he said. 
The average Big 4 variable rate is 4.69% while the top rate from a non-bank lender is a low 3.98%. 
Top 5 non-bank loan rates:
<table border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" width="133">
Lender
</td>
<td valign="top" width="85">
Rate
</td>
<td valign="top" width="99">
Comparison rate
</td>
<td valign="top" width="99">
Max LVR 
</td>
</tr>
<tr>
<td valign="top" width="133">
Homestar
</td>
<td valign="top" width="85">
3.98%
</td>
<td valign="top" width="99">
4.01%
</td>
<td valign="top" width="99">
95%
</td>
</tr>
<tr>
<td valign="top" width="133">
Loans.com.au
</td>
<td valign="top" width="85">
3.98%
</td>
<td valign="top" width="99">
4.00%
</td>
<td valign="top" width="99">
90%
</td>
</tr>
<tr>
<td valign="top" width="133">
iMortgage
</td>
<td valign="top" width="85">
4.04%
</td>
<td valign="top" width="99">
4.08%
</td>
<td valign="top" width="99">
90%
</td>
</tr>
<tr>
<td valign="top" width="133">
Newcastle Permanent
</td>
<td valign="top" width="85">
4.09%
</td>
<td valign="top" width="99">
4.45%
</td>
<td valign="top" width="99">
80%
</td>
</tr>
<tr>
<td valign="top" width="133">
State Custodians
</td>
<td valign="top" width="85">
4.09%
</td>
<td valign="top" width="99">
4.42%
</td>
<td valign="top" width="99">
80%
</td>
</tr>
<tr>
<td colspan="4" valign="top" width="417">
Based on a $300k loan amount. Loans available to investors and owner occupiers.
Source: Mozo.com.au as at 22/5/15
</td>
</tr>
</tbody></table>
“Not being strictly regulated by APRA doesn’t mean it will be a walk in the park, these lenders will still be cautious as a result of the actions of the majors,” said Jovcevski.
“If you were looking to buy as an investment, it might mean a trip back to the drawing board to save more.”
“Across the board, serviceability measures will be more stringent so it’s even more important to have a solid savings history and a good payment record. Worst case scenario you may need to lower your purchase budget in order to borrow with an 80% LVR,” said Jovcevski. 
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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Mozo forecast non-bank lenders to reap shocked off the plan borrowers in APRA crackdown

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<div>The Bank of Queensland (BoQ) has been ordered to improve its home lending practices after the Australian Securities and Investments Commission (ASIC) found they were not consistent with the National Credit Act.</div>
<div> </div>
<div>ASIC was concerned that BoQ was using a benchmark figure, the Henderson Poverty Index (HPI), to estimate the living expenses of consumers applying for home loans, instead of asking them about their actual expenses, when assessing loan suitability. "In ASIC's view, the lack of enquiry about actual expenses, and sole reliance on HPI, was not consistent with responsible lending obligations imposed by the National Credit Act," the regulator said. "Bank of Queensland has updated its home loan application forms to obtain more information about a customer's living expenses."</div>
<div> </div>
<div>From this year, the bank has also been using the higher of the customer’s supplied figure or that new benchmark, BoQ’s chief risk officer Peter Deans wrote on the bank’s website.</div>
<div class="article_body">
“We have also been examining customer’s declared expenses more closely to determine the loan repayments they can afford,” he wrote.
ASIC acknowledged the co-operation of Bank of Queensland in resolving this issue.
ASIC notes that the bank will continue to review the circumstances of borrowers who go into hardship or default to ensure that they have not been disadvantaged by a loan provided prior to the change in policy.
ASIC Deputy Chairman Peter Kell said the outcome was part of ASIC’s ongoing focus on the lending industry’s compliance with responsible lending laws. 
"Lenders must carry out inquiries to determine whether a credit contract will be unsuitable for a consumer," Peter Kell said.
In November 2014, ASIC updated Regulatory Guide 209 Credit licensing: Responsible lending conduct (RG 209) to clarify that credit licensees cannot rely solely on benchmark living expense figures, and must also make inquiries about the borrowers’ actual living expenses.
 
</div>
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BoQ told to tighten home lending practices

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<div class="column">
As at 31 March 2015, the total of residential term loans to households held by all authorised lenders was $1.30 trillion, according to the latex March quarter 2015 APRA figures.
This is an increase of $23.9 billion (1.9%) on 31 December 2014 and an increase of $107.1 billion (9%) on 31 March 2014. 
 Owner-occupied loans accounted for 65.4% of residential term loans to households.
Owner- occupied loans were $852 billion, an increase of $12.7 billion (1.5% on 31 December 2014) and  $57.3 billion (7.2% on 31 March 2014). 
Investment loans accounted for 34.6% of residential term loans. Investment loans were $450.2 billion, an increase of $11.2 billion (2.6%) on 31 December 2014 and $49.8 billion (12.4%) on 31 March 2014. 
<img src="/images/2015/05/26/apra1.jpg" alt="">
The latest lending data suggests lenders are generally meeting the 10% growth restraint sought by APRA, though some still to sufficiently rein in the pace of investor loans.
It has been suggested more than 82% of investor lending remains within APRA’s macro prudential growth target (not materially above 10%).
While a number of lenders are comfortably below this range (around 12% of market share) and have scope to increase their exposure to housing investors, some lenders are tracking well above APRA’s macro prudential target growth range. 
The 10 per cent benchmark is not a hard limit, but is a key risk indicator for supervisors in the current environment. 
The benchmark has been established after advice from members of the Council of Financial Regulators, taking into account a range of factors including income growth and recent market trends.
ADIs with greater than $1 billion of residential term loans held 98.4% of all residential term loans as at 31 March 2015. These ADIs reported 5.3 million loans totalling $1.28 trillion.
Of these loans: the average loan size was approximately $243,000, compared to $235,000 as at 31 March 2014; $479.1 billion (37.4%) were interest-only loans; and $30.1 billion (2.3%) were low-documentation loans.
New housing loan approvals with ADIs with greater than $1 billion of residential term loans saw approval of $82.3 billion of new loans in the quarter ending 31 March 2015. This is a decrease of $10.9 billion (11.7%) on the quarter ending 31 December 2014 and an increase of $8.5 billion (11.5% on the quarter ending 31 March 2014.
Of the new loan approvals $51.9 billion (63.0%) were for owner-occupied loans, a decrease of $6.5 billion (11.2%) from the quarter ending 31 December 2014; $30.4 billion (37.0%) were for investment loans, a decrease of $4.4 billion (12.6% from the quarter ending 31 December 2014; $34.8 billion (42.3%) were interest-only loans; $9.1 billion (11.1% had a loan-to-valuation ratio greater than or equal to 90%; and $0.6 billion (0.7%) were low-documentation loans. 
 
<img src="/images/2015/05/26/apra2.jpg" alt="">
 
It was December 9 last year when tthe Australian Prudential Regulation Authority (APRA) wrote to authorised deposit-taking institutions (ADIs) outlining further steps it plans to take to reinforce sound residential mortgage lending practices. 
These steps have been developed following discussions with other members of the Council of Financial Regulators.
In the context of historically low interest rates, high levels of household debt, strong competition in the housing market and accelerating credit growth, APRA has indicated it will be further increasing the level of supervisory oversight on mortgage lending in the period ahead.
Las December APRA advised it did not propose to introduce across-the-board increases in capital requirements, or caps on particular types of loans, to address current risks in the housing sector.
However, APRA flagged to ADIs that it will be paying particular attention to specific areas of prudential concern.
These included:
<ul>
<li>higher risk mortgage lending — for example, high loan-to-income loans, high loan-to-valuation (LVR) loans, interest-only loans to owner occupiers, and loans with very long terms;</li>
<li>strong growth in lending to property investors — portfolio growth materially above a threshold of 10 per cent will be an important risk indicator for APRA supervisors in considering the need for further action;</li>
<li>loan affordability tests for new borrowers — in APRA’s view, these should incorporate an interest rate buffer of at least 2 per cent above the loan product rate, and a floor lending rate of at least 7 per cent, when assessing borrowers’ ability to service their loans. Good practice would be to maintain a buffer and floor rate comfortably above these levels.</li>
</ul>
In the first quarter of 2015, APRA supervisors indicated they would be reviewing ADIs’ lending practices and, where an ADI is not maintaining a prudent approach, may institute further supervisory action.
This could include increases in the level of capital that those individual ADIs are required to hold.
APRA Chairman Wayne Byres noted that while in many cases ADIs already operate in line with these expectations, the steps announced last December would "help guard" against a relaxation of lending standards and, where relevant, prompt some ADIs to adopt a more prudent approach in the current environment.
‘This is a measured and targeted response to emerging pressures in the housing market. These steps represent a dialling up in the intensity of APRA’s supervision, proportionate to the current level of risk and targeted at specific higher risk lending practices in individual ADIs’ he said.
‘There are other steps open to APRA, should risks intensify or lending standards weaken and, in conjunction with other members of the Council of Financial Regulators, we will continue to keep these under active review.’
The steps announced today build on the enhanced monitoring and supervisory oversight of residential mortgage lending risks that APRA has put in place over the past year, which has included a major stress test of the banking industry, targeted reviews of ADIs’ residential mortgage lending and the release of detailed guidance to ADIs on sound residential mortgage lending practices.
APRA’s heightened supervisory focus on lending standards is being conducted in conjunction with the review of interest-only lending announced by the Australian Securities and Investments Commission (ASIC).
</div>
</div>
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Property investor lending running at 12.4% annual growth: APRA

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The past few weeks have seen banks tighten up lending conditions for property investors – either charging higher interest rates or imposing lower loan to valuation ratios or both.
This is in response to increasing pressure from the banking regulator APRA (ie the Australian Prudential Regulation Authority) demanding that the 10% cap on property investor lending growth that it announced last December be adhered to. 
Those who have been around for a while might wonder what is going on. Isn’t this what used to happen in the dim dark days before the enlightenment of financial regulation in the 1980s. The answer is yes and the term “macro prudential regulation” – in reference to using prudential controls on lending to influence the economic cycle - is just a fancy term for what went on in the past. 
So why has it made a comeback? And will it work?
The focus on varying prudential controls to achieve macro-economic outcomes was quite common up until the early 1980s but went the way of the dodo when it was concluded that it was only leading to distortions in the financial system, as people found a way around them.
So while financial system regulators, like APRA, continued to ensure that prudential standards were met, from the mid 1980s varying interest rates to control the housing and economic cycle became the norm. And this worked reasonably well.
The last major boom in Australian property prices ended around 2004. This was a cracker and saw average home prices around Australia rise an average of nearly 15% per annum over the five years to the end of 2003; a massive surge in housing related credit with property lending growing 21% and property investor lending growing 30% in 2003; this in part was fuelled by property spruikers running property investment seminars on a grand scale; and there was little doubt that house price gains were being extrapolated off into the future in investors’ minds and that this in turn was driving more investment.
<img src="/images/2015/05/26/oliver1.jpg" alt="">
(Source: CoreLogic RP Data, AMP Capital)
The surge into 2003 took the property price to household income ratio from around three times to around five to six times and saw real property prices go from well below trend to well above.
As a result concern about a property bubble and poor housing affordability came to the fore. It was “cooled down”, not by prudential controls but by a combination of “jawboning” by then RBA Governor Ian Macfarlane warning against the dangers of property speculation and then the start of an interest rate tightening cycle as the economy improved. The collapse of a high profile property spruiker’s business and poor home affordability also helped. 
But while the prudential regulator made sure that lending standards were being maintained, prudential controls were not varied to achieve macro-economic outcomes.
This time is a bit different for several reasons. 
<ul>
<li>First, property price gains are nowhere near as strong – over the last five years average capital city home prices have risen at just 3.5% pa. For Sydney it’s just 6.5% pa. </li>
<li>Second, the gains are not broad based – while Sydney home prices are up 14.5% over the year to April, for the other capital cities the gain is just 1.7%. </li>
<li>Third, credit growth is running at a fraction of what was seen in 2003 with total housing related credit up 7.3% over the year to March and investor credit up 10.4%.</li>
<li>Finally, unlike in 2003 and 2004 the economy is much weaker. Back then growth had been picking up after a soft patch and was being helped by a super low $A, households happy to take on more debt – remember the line about households having an ATM in their living room - and the start of the mining boom. Now the economy has been sub-par for several years as the mining boom is unwinding. In fact, the rest of the economy needs very low interest rates.</li>
</ul>
But of course its never that simple as the RBA and regulators are aware that expressed relative to household income both home prices and household debt levels are already very high – having never really unwound from the surge into 2003-04. And so they are fearful of letting low interest rates drive them much higher given the risk to the financial system and economy should they then fall sharply.
So to balance all these cross currents there has been a return to using macro prudential controls in order to allow the low interest rates that the economy as a whole needs but at the same time to keep a lid on the property market.
Will it work? Only time will tell on this one. APRA is pretty adamant that it wants to see growth in property investment lending slow into the second half of the year and if lenders don’t tow the line then tougher action is likely. So my feeling is that it probably will work and we should expect to see a slowing in the availability of credit for property investors and as a result some slowing in home price growth in Sydney (maybe back to around 8% pa) and to a lesser degree Melbourne over the next year. However, a downturn in property prices will likely have to await the start of interest rate hikes maybe late next year or in 2017.
However, there are several risks around this. APRA’s 10% “cap” on property investor lending growth could prove too lax and on the other side its hard to know when such regulatory tightening has gone too far in which case the property market could slow more than expected. There is also a danger that it hits cities that are weak anyway (basically all the capital cities except Sydney and Melbourne). And longer term, lenders and borrowers may try to find a way around such prudential controls. 
But hopefully by then the economy will have returned to normal and we can go back to relying on interest rates to control the property cycle.
<a href="https://www.propertyobserver.com.au/https://plus.google.com/110172465327488162875?rel=author" target="_blank">SHANE OLIVER</a> is head of investment strategy and economics and chief economist at <a href="https://www.ampcapital.com.au/home" target="_blank">AMP Capital</a> and is responsible for AMP Capital's diversified investment funds. 
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soliver-smf6LQXgW9

Back to the past to control the property cycle: Shane Oliver

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Melbourne buyers agent Ian James expects the Victorian state government foreign nationals stamp duty tax "may well be the straw that breaks the camel’s back."
Noting the vast majority of foreign nationals buying investment properties are buying apartments off the plan, Ian James says for the most part a foreign national purchaser buys in Melbourne because their kids are going to school here or they are waiting to get permanent residency and further to that, citizenship. 
"These are the people who will be your future neighbours, your children’s friends at the local school," Mr James said.
"We need to increase our population as quickly as possible and whilst the Government looks for more ways to waste our money, I think there are better ways to collect it."
He said the foreign national investors who buy land and develop townhouses, villas or homes to live in create jobs here in Australia. 
"The foreign nationals spend money to build homes, and furnish them spending money locally in shops.
"A local buyer can purchase an older home, rent it out for several years until the land appreciates enough to get a further loan to build or redevelop the land. 
"This means, no extra work for builders, no cabinet makers or furniture manufacturers."
But the JPP Buyer Advocates founder says many of the off the plan properties being sold to them are "overpriced by usually 20%+ and are very difficult to lease out. 
"They are quite often inner city or on the fringe in Docklands and Southbank. 
"Foreigners hold them for 3-5 years and then they sometimes sell them at a break-even or even a loss. 
"The Victorian state government wants to stop foreign nationals buying in Victoria by increasing the stamp duty they must pay. 
"This new 3% tax may well be the straw that breaks the camel’s back. 
"And for all those high rise developments in the pipeline – good luck!!!," he recently blogged at <a href="https://www.jpp.com.au/market-comment/market-forces/foreign-investment-and-a-xenophobic-money-grabbing-government/" target="_blank" style="line-height: 1.3em;">JPP Buyer Advocates</a>. 
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New Victorian foreigners tax the straw to break the camel's back: Ian James

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If APRA enforce’s the assessment of a new mortgage holder’s ability to pay down their mortgage obligations the right way, it would cause a heavy blow to the Australian economy. The base assumption is that mortgage stress starts when more than 30% of household income is used to pay down the mortgage. Most households with new financing are already experiencing this stress at record low rates.
In Australia’s instance, and based on after tax income, households would only be able to borrow 3.64x the household income (unless the household already has other debt commitments) if the 7% servicability rule was to be property enforced. The only way to safely assure that new mortgage holders would be able to absorb 7% interest on a new mortgage is if it is based on the ability of the mortgage holder to manage 7% interest rates after income tax and all other debts taken into considerations have been factored in….unless you allow for dodgy measurements which Australian lenders are good at using.
<img src="/images/2015/05/25/lf_economics.jpg" alt="">As the above figure illustrated, this would mean one heck of deleveraging event in Australia if new borrowers borrow significantly less than the previous borrowers which would break down Australia’s Ponzi household lending business. Had the RBA not taken abnormal measures to save the housing market now on two occasions in the last seven years, Australia would not be in this problem so far down the road. Until then, hardly a shred of chance APRA will act tough. Like it’s associates at the RBA, talk is talk and data is data. And both have been managing a bubble, not an economy. That’s what the data tells us.
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. He blogs at <a href="https://blog.australiaboomtobust.com" target="_blank">Australia Boom to Bust.</a>
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LindsayDavid-WEhfyLvNJJ

APRA won't act tough, just talk on property investor lending: Lindsay David

<html><body>
<div>People seem to love the idea of "macro-prudential" measures. </div>
<div> </div>
<div>It all sounds new and rather exciting, but in truth the term simply refers to financial regulation and approaches to managing systemic risks. 
</div>
<div>In respect of the housing market, the more popular ideas tend to include caps on loan-to-value ratios or restrictions on the level of debt that can be taken on by a borrower expressed as a multiple of income.</div>
<div> </div>
<div>The Reserve Bank of New Zealand (RBNZ) has taken the approach of limiting lending to investors in Auckland, while investor loans will attract additional capital charges.</div>
<div> </div>
<div>While such a targeted approach has seemed unlikely to date in Australia, lenders do already use similar methods to weed out high-risk loans, for example through restrictions on lending in mining towns, or on certain property types which are perceived to be of higher risk.</div>
<div> </div>
<div>The Reserve Bank of Australia (RBA) has announced on multiple occasions that it is working with APRA in order to monitor lending standards, with APRA already having indicated an advisory 10 per cent cap on the growth of investment mortgage lending books.</div>
<div> </div>
<div>Some banks are now insisting on 20 per cent deposits for investment loans. Others are tweaking borrowing rates, and others still have banned mortgage lending against property investments in self-managed superannuation funds (SMSFs).</div>
<div> </div>
<div>Eventually these measures will begin to take hold of Australia's property markets, even if through perception alone. </div>
<div> </div>
<div>Whether or not more robust measures are taken to target specifically the rampant Sydney market remains to be seen.</div>
<div> </div>
<div>Let's take a look in three parts at the termination of the last Sydney housing market boom in 2003/4 to see what we can learn. 
</div>
1 - The "double tap" 
<div>Just as has been the case lately in this cycle, APRA began to discuss privately and publicly its concerns with the Sydney housing market through 2003.</div>
<div> </div>
<div>The regulator also took additional steps to collect data on mortgage lenders in order to identify the outliers, and held discussions with boards in order to seek assurance that prudent lending standards were being maintained.</div>
<div> </div>
<div>This alone did not have the desired effect, and APRA consequently ramped up capital requirements and adjustments to mortgage insurance in order to moderate the market.</div>
<div> </div>
<div>Arguably, however, a bigger factor in snapping off the Sydney boom of just over a decade ago was the "double tap" on the brakes applied by the Reserve Bank, hiking rates from 4.75 per cent to 5.25 per cent through two rapid-fire tightening shots in November and December 2003.</div>
 
<div class="separator"><a href="https://2.bp.blogspot.com/-pgA6kSfQOLQ/VV8GFNlad7I/AAAAAAAAVjo/EKsxZSpHm1s/s1600/jc1.jpg" target="_blank"><img src="https://2.bp.blogspot.com/-pgA6kSfQOLQ/VV8GFNlad7I/AAAAAAAAVjo/EKsxZSpHm1s/s640/jc1.jpg" width="640" height="274"></a></div>
Click to enlarge all charts
 
Given that Sydney dwelling price growth was all but cooked within the next quarter, this was arguably the most important factor, with the standard variable mortgage rate (SVR) thereafter remaining above 7 per cent all the way through until the financial crisis.
<div> </div>
<div>One troubling matter for the regulator this time around is that the odds of standard variable rates heading to 7 per cent again any time soon are nil, while new borrowers are able to fix borrowing rates at levels close to 4 per cent.</div>
<div> </div>
<div>Futures markets are pricing an inverted yield curve for the remainder of this calendar year, and no rate hikes are priced for 2016 either, with the cash rate expected to remain at historic lows for at least the next 18 months.</div>
<div> </div>
<div class="separator"><a href="https://2.bp.blogspot.com/-R30idufUauE/VV8GGE8h5KI/AAAAAAAAVj8/42KD_MqTwKk/s1600/jc2.jpg" target="_blank"><img src="https://2.bp.blogspot.com/-R30idufUauE/VV8GGE8h5KI/AAAAAAAAVj8/42KD_MqTwKk/s640/jc2.jpg" width="640" height="260"></a></div>
 Ergo, higher lending rates will not be the dampener. Part 2 - Supply and underlying demand 
<div>Another factor which will be different through this Sydney cycle is interstate migration. In the year to September 2003, nearly 33,000 persons fled New South Wales for pastures new. As you can see from my chart below, the mirror image movement in the line denoting Queensland in 2003 shows you that they were heading for a cheaper lifestyle in the Sunshine State.</div>
<div> </div>
<div class="separator"><a href="https://1.bp.blogspot.com/-PMeyYwjJH_E/VV8OQGujGAI/AAAAAAAAVk0/gDyBlT9ayf8/s1600/JC9.jpg" target="_blank"><img src="https://1.bp.blogspot.com/-PMeyYwjJH_E/VV8OQGujGAI/AAAAAAAAVk0/gDyBlT9ayf8/s640/JC9.jpg" width="640" height="262"></a></div>
 However, interstate migration is not going to be a factor to slow the Sydney market in 2015.
In fact, interstate migration from New South Wales has fallen to its lowest level on record, and is set to decline yet further in the months ahead as Sydneysiders stay put for the superior employment prospects.
This is putting intense pressure on the Sydney property market, its rail, roads, public transport and infrastructure.
The below chart says it all. We are constructing far fewer houses than in decades gone by with the supply of shovel-ready land in Sydney falling to almost zero, but population growth in New South Wales has exploded higher.
<div> </div>
<div class="separator"><a href="https://2.bp.blogspot.com/-LvQKaqLVW6Y/VV8GGBbmiUI/AAAAAAAAVkE/0NpsNRJCW3M/s1600/jc3.jpg" target="_blank"><img src="https://2.bp.blogspot.com/-LvQKaqLVW6Y/VV8GGBbmiUI/AAAAAAAAVkE/0NpsNRJCW3M/s640/jc3.jpg" width="640" height="268"></a></div>
<div class="separator"> </div>
<div class="separator"> </div>
<div>My <a href="https://petewargent.blogspot.com.au/2015/05/construction-boom-to-break-all-manner" target="_blank">chart packs</a> have shown that rolling annual apartment approvals have ramped up to around 27,000 in Greater Sydney, which is a start, but is hardly going to be enough in itself to pull up the property boom.</div>
<div> </div>
<div>The Real Estate Institute of New South Wales (REINSW) figures showed that at the end of the 2003/4 property boom Sydney had a vacancy rate of 4.4 per cent, and 5.3 per cent on the outer.</div>
<div> </div>
<div>If a property market "in equilibrium" is said to have a vacancy rate of 3 per cent, then Sydney has got some building to do before we get back to that level, at least in the suburbs I visit, which are largely close to the city.</div>
<div> </div>
<div class="separator"><a href="https://4.bp.blogspot.com/-03guB3XyK8M/VV8GFR2giGI/AAAAAAAAVjs/d3qOL8mNbP4/s1600/JC5.jpg" target="_blank"><img src="https://4.bp.blogspot.com/-03guB3XyK8M/VV8GFR2giGI/AAAAAAAAVjs/d3qOL8mNbP4/s640/JC5.jpg" width="640" height="278"></a></div>
A handful of urban precincts are starting to become "well supplied", particularly to the north of the famous coat-hanger, but as I've shown here previously, the new supply is predominantly of the high rise unit variety.
<div class="separator"><a href="https://3.bp.blogspot.com/-ms2EMUJ1vDk/VV8GFL8VBTI/AAAAAAAAVjw/yzDxHUzND2U/s1600/JC6.jpg" target="_blank"><img src="https://3.bp.blogspot.com/-ms2EMUJ1vDk/VV8GFL8VBTI/AAAAAAAAVjw/yzDxHUzND2U/s640/JC6.jpg" width="640" height="272"></a></div>
With population growth in New South Wales tracking at above 105,000 per annum, there is a huge and growing demand for property in the harbour city.
 Part 3 - The pipeline 
<div>One final point is that there is an enormous volume of pent-up buyers in the pipeline already, with record loan volumes written prior to the newly-announced lending measures.</div>
<div> </div>
<div>In March, there were $5.9 billion of investor loans written in NSW, the highest figure ever recorded in Australia.</div>
<div> </div>
<div class="separator"><a href="https://4.bp.blogspot.com/-0a3mBnK3X4g/VV8HM4KJ-sI/AAAAAAAAVkc/1JzdeXswOBg/s1600/JC7.jpg" target="_blank"><img src="https://4.bp.blogspot.com/-0a3mBnK3X4g/VV8HM4KJ-sI/AAAAAAAAVkc/1JzdeXswOBg/s640/JC7.jpg" width="640" height="270"></a></div>
The clincher for mine, though, is that now this has become by no means an investor boom alone - owner-occupiers are piling into the market too, for fear of missing out.
<div>Rolling annual lending to owner-occupiers in New South Wales has leapt to its highest ever level at more than $70 billion...and rising fast.</div>
<div> </div>
<div class="separator"><a href="https://1.bp.blogspot.com/-I3Ldgsooyyw/VV8HM55JMPI/AAAAAAAAVkg/kpA8FUgbqCA/s1600/JC8.jpg" target="_blank"><img src="https://1.bp.blogspot.com/-I3Ldgsooyyw/VV8HM55JMPI/AAAAAAAAVkg/kpA8FUgbqCA/s640/JC8.jpg" width="640" height="276"></a></div>
I note that some commentators have called "fading demand" in Sydney based on transaction volumes. I can see why you might think that if you haven't actually been here lately, or attended any viewings, or auctions, but this is to be wrong-footed by the data.
The principal reason for the diminished number of transactions is that vendors have held back in anticipation of higher prices.
The level of stock on market in Sydney is almost unthinkably low at the present time, and until this changes the number of buyers will continue to massively outweigh available stock, and prices will continue to rise, confounding the critics.
 <a href="https://1.bp.blogspot.com/-wkeCVDQ5tRI/VV8GGJdUvMI/AAAAAAAAVkA/34hWNZwdNWI/s1600/jc4.jpg" target="_blank"><img src="https://1.bp.blogspot.com/-wkeCVDQ5tRI/VV8GGJdUvMI/AAAAAAAAVkA/34hWNZwdNWI/s640/jc4.jpg" width="640" height="276"></a> 
<div>If you stop to do the numbers, you will see what I mean. In March 2015 $12.5 billion of mortgage finance was written in the state (as compared to less than $7.5 billion in March 2013). And there is hardly anything listed for sale; at least not for very long.</div>
<div> </div>
<div>And this is before we begin to account for the impact of foreign capital, which every single auction I have attended this year leads me to believe is material, if not game-changing.</div>
<div> </div>
<div>I have no doubt that macro-prudential measures will serve to slow the market eventually - and there may be many more tools deployed that we have not been made aware of - but not before Sydney's median house price has been pushed up towards $1 million and investors have bid gross apartment yields all the way down into the mid 3 per cent range.</div>
<div> </div>
<div>
PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>. His book '<a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>' is out now.
</div>
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pwargent-M4siyDbqQY

Sydney still heading to $1 million median and 3% rental yields despite macro prudential: Pete Wargent

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<div>GUEST OBSERVER</div>
<div> </div>
<div>So what's going on with APRA currently?</div>
<div> </div>
<div>Firstly, the changes are not targetted at homeloans taken to purchase your homes. Rather, there is pressure on the lenders to tighten their policies for lending against, and to buy, investment properties.</div>
<div> </div>
<div>Lending to property investors is way past the speed limit, particularly in Sydney &amp; Melbourne. APRA have made it clear that the banks need to be more careful.</div>
<div>The capital aqequacy ratio's for the banks will also increase. What this effectively does it make it more expensive for banks to lend to investors.</div>
<div> </div>
<div>NAB, CBA &amp; Westpac have already announced to us that investors will not be offered discounts better that is what is published. As you know, us brokers often get discounts 30 or 40 points better than what the banks advertise. Thankfully, we expect our capacity to get much better-than-published rates will still apply to home loans for places you will live in.</div>
<div> </div>
<div>St George is one of my favorite banks, in large part due to their flexibility for investors. They have pre-warned iChoice of forthcoming changes too. For those of you wanting to land a better rate on your investment loan, or perhaps to unlock some equity, these are probably things you should be considering to do immediately, like right now. And the $1,250 Refinance Rebate is still alive. The mortgage industry is ready for a few busy weeks ahead.</div>
<div> </div>
<div>Once all the changes have been implemented, we will see stricter servicing calculations and pressure to reduce interest-only loans and 'cash-out' (equity unlocking). Also, several lenders have already ceased exceeding 80% LVR for investment property loans. On that note, it is important for anyone you know that may have a pre-approval in place for an investment property. Pre-approvals arent always what they seem to be.</div>
<div> </div>
<div>It's being branded a 'mini-GFC' but at the end of the day, it seems like we are simply going back to the old days, where speculative investment loans are harder to get and are not priced the same as your owner-occupied home loan.</div>
<div> </div>
<div>At the end of the day, the concerns held by APRA are to protect our system should we in fact be at 12 o'clock on the property cycle. You can be assured that we at iChoice are on our front foot with all changes and will kep you posted, and are more than happy to advise based on your individual goals and circumstances.</div>
<div> </div>
<div>Jason Khoury is the principal at iChoice. He can be contacted <a href="mailto:jason@ichoice.com.au" target="_blank">here</a>.</div>
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Concerned over getting an investment property loan?: iChoice's Jason Khoury

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Ramping up its supervision after the surge in property prices to the investor driven east coast property markets, Australian Prudential Regulation Authority chairman Wayne Byres has indicated the authority was aware of lending examples that were less than prudent.
“So there is no confusion, let me be clear that Australian ADIs (authorised deposit-taking institutions) are thankfully well away from the types of subprime lending that have caused so many problems elsewhere (for example, lending with an loan-to-value ratios in excess of 100 per cent, at teaser rates, to borrowers with no real capacity to repay),” he said.
“Nevertheless, our overall conclusion from this hypothetical borrower exercise was that there were clearly examples of practice that were less than prudent,” he told the recent Customer Owned Banking Association event, which was not open to media, but reported by The Australian.
“Authorised deposit-taking institutions with more aggressive practices should fully expect to find APRA increasingly at their doorstep," he said.
Meanwhile major lenders have been withdrawing discount offers extended to brokers on property investment loans. 
The Australian Broker website revealed today that two major banks have amended pricing discounts available to standard variable rate and fixed rate investment loans.
It is all part of the Australian Prudential and Regulatory Authority clamp down on current high lending levels of property investor loans.
National Australia Bank has also flagged a reduction in the discounts offered to property investor loans following the APRA request to keep investor loan growth below 10% per annum.
Available funds will be cut back "by at least a third" within weeks, John Symond, the founder and chairman of Aussie Home Loans believes as banks react to the regulatory authorities.
"Banks are going to be knocking back a lot of investor applications," <a href="/expert-insights/investing/tougher-apra-set-to-restrict-property-investor-lending-by-at-least-a-third-john-symond">he told Ross Greenwood on the 2GB Money News program this week</a>.
The Commonwealth Bank has reviewed its $1,000 Investment Home Loan Rebate Offer. “We will honour the offer for all Investment Home Loan applications, created by close of business on Friday 15 May,” the email read. The CBA announced reduced pricing discounts offered on investor loans, while stressing "heavier discounts very much remain available for Owner Occupied lending”. The ANZ head of third party relationship channels, Kieran Evans advised ANZ is carefully managing its home loan business to ensure its portfolio grows in a balanced way. “As a result, we will be introducing a range of changes to how we manage investor lending effective immediately,” he said. For customers with investor only lending, ANZ will only offer advertised rates – discretionary pricing will be not be available, the major said.
However, for customers with existing owner occupier lending with ANZ, the major will offer discretionary pricing on investor loans. Further, to offset the removal of investor switching discretions, Evans said ANZ have increased the owner occupier discretion to $1,200 and have reduced the eligibility to greater than $500,000.
Bankwest has made it harder for investors to secure loans, as APRA’s campaign on lending standards is taking effect.
Bankwest will now apply a maximum LVR of 80% for investment purposes, including property and shares, a departure from the bank well known for accepting investor loans up to 98% LVR.
The value of home loans written in March jumped 3.8 per cent to $31.3 billion, up 11.7 per cent over the year.
The March rise was principally by investor lending, up 6.4 per cent.
On an annual basis, investor loans were up 20.9 per cent rate, which was more than double the 10 per cent speed limit identified by APRA regulators earlier this year.
Banks have also been re-assessing the rental income levels that they are calculating when taking into account overall income of investors.
And making it tougher Westpac also foreshadowed changes which will impact investors’ serviceability with the bank removing negative gearing benefits from its servicing calculator.
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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