The residential transformation of St Kilda Road is set to continue into with more new apartment plans for the sought-after boulevard.

Wing Tai Asia has lodged plans for a major residential tower at 464-466 St Kilda Road, replacing the former VACC House with an 18-storey mixed-use development designed around a retained heritage podium and a sculpted contemporary tower.

The proposal, prepared under Victoria’s Significant Residential Development with Affordable Housing pathway, would deliver 325 apartments and ground-floor retail across the prominent 4,653 sqm boulevard site in Melbourne’s St Kilda Road North Precinct.

The project centres on the adaptive reuse of the site’s heritage-listed VACC Building, an eight-storey office designed by Bernard Evans that has occupied the address for decades. Planning documents state the development would involve “carefully dismantling and conserving off-site the original metal fabric of the podium visible from St Kilda Road,” before reinstating it as the defining frontage of the new scheme.

Above the restored podium, Wing Tai is proposing a curvilinear residential tower. The scheme includes 172 one-bedroom apartments, 63 two-bedroom apartments, 66 three-bedroom apartments, and 24 four-bedroom apartments, alongside two ground-floor food and beverage tenancies fronting St Kilda Road.

The tower has been designed with substantial articulation and variable setbacks to minimise perceived bulk and maintain view corridors along the boulevard. Urbis, which prepared the planning report, said the design “has been significantly articulated through a curvilinear design” with “an interplay with materials, façade expression and depth” to create visual separation and visual interest.

The proposal also includes 254 basement car spaces, landscaped pedestrian links connecting St Kilda Road and Queens Lane, and a biophilic landscape strategy featuring canopy trees, raised planters, cascading greenery and a glass oculus pool overlooking the eastern frontage.

Planning documents confirm the $270.1 million development will contribute 3 per cent of project costs to the Social Housing Growth Fund as part of the application process.

Wing Tai acquired the St Kilda Road property in 2018 alongside Abacus Property Group for $95.38 million, before later consolidating ownership of the site. The property previously served as the Victorian Automobile Chamber of Commerce headquarters for around 60 years.

The transformation of the St Kilda Rd boulevard is already beginning to materialise, with a number of high-profile projects recently completed, launched, or approaching launch as developers continue to back the long-term appeal of the precinct.

Among the most notable recent completions is Louise by Samuel Property Group, just off the strip on Queens Lane, the same pocket Hirsch &amp; Faigen recently launched The Queensbury. Mirvac is too on the same street with The Albertine, which is approaching completion.

Dexus recently secured approval for its slice of St Kilda Road, while Gurner also has approved plans for the precinct.

Joel Robinson

Wing Tai unveils 325-apartment St Kilda Road tower on former VACC House site

Malaysian developer <a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> is the latest to jump into St Leonards booming Transport Oriented Development precinct.

The developer, which has previously delivered Sapphire by the Gardens apartment development in Melbourne, identified the Atchison Street site in 2023. It filed a Scoping Report around 12 months ago, and now has revealed the designs for the new&nbsp;40-storey mixed-use tower.

The State Significant Development Application covers <a href="https://next-portal.urban.com.au/projects/14650/summary">20-22 Atchison Street</a>, a 1,374 sqm site positioned between St Leonards Station and the new Crows Nest Metro station.

Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the project would deliver 181 apartments, above a four-storey commercial podium, five basement levels, and new public domain works along Mitchell Street. The apartment mix comprises 35 one-bedroom apartments, 39 one-bedroom-plus-study apartments, 85 two-bedroom apartments, and 22 three-bedroom residences.

The proposal has been lodged as a shop-top housing development under the NSW Government’s TOD planning pathway, which allows increased density around key transport infrastructure. The site sits within the recently rezoned Crows Nest Accelerated TOD Precinct.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b799673d-48e2-46b0-801a-0e33a9330100" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20site.png?VersionId=dPh0UfwfaHpbFL1R7H1cbZNbIW0CHbCC" />

SP Setia acquired the Atchison Street site as part of its continued expansion into the Australian apartment market. In comments made to City &amp; Country (The Edge Malaysia) in 2023, SP Setia President and CEO Datuk Choong Kai Wai described the acquisition as “a strategic move” aligned with the group’s post-pandemic market recovery strategy.

“Our target for this exceptional development is local and overseas buyers, including first-home buyers, downsizers and investors,” Choong said.

The tower has been designed as a slender vertical form rising from a mixed-use podium, with COX Architecture positioning the development as a response to the evolving St Leonards and Crows Nest skyline.

“The purpose of the project is to facilitate the delivery of high-quality housing at a strategically located site and deliver a built tower outcome that is consistent with the desired future character of St Leonards and aligns with the TOD controls,” the design report stated.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b1a85eee-76f7-436c-a6da-73ba827b9b13" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20entry.png?VersionId=dA9jHGPMcm.dDbwk4QfxqWiY5bfh3UVt" />

The podium would incorporate retail uses fronting Atchison Street, commercial tenancies, landscaped communal areas, and pedestrian improvements along Mitchell Street. Vehicle access and loading would be consolidated via Atchison Lane.

Residents would have access to more than 665 sqm of communal indoor and outdoor spaces, while the development proposes 96 parking spaces across five basement levels.

The proposal also includes a commitment for 10 per cent of residential floor space to be allocated toward affordable housing through a monetary contribution.

COX said the tower form responds directly to the emerging high-density character of the precinct while seeking to maximise solar access, cross ventilation, and outlook from apartments.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="2163f85c-f63b-4be3-aafa-f8763976cec5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29_5.png?VersionId=WiAmtIKJ6.ZQ41EtYEQ1fol7AeorKBlL" />

“The building is orientated towards north,” the Apartment Design Guide compliance report noted, adding that the tower’s slim form was driven by the constrained inner-urban site dimensions.

The design also incorporates landscaped setbacks and communal open space at podium level, intended to soften the interface with surrounding streets and improve pedestrian amenity.

The project adds to a growing wave of redevelopment proposals reshaping St Leonards and Crows Nest following the opening of the Sydney Metro City line and the NSW Government’s push for higher-density housing around major transport nodes.

Last week Stockland filed plans just down the road. They want to build a <a href="https://www.apartments.com.au/new-apartments/601-pacific-highway-st-leonards-nsw-2065">52-storey tower on Pacific Highway</a>.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">First look: Stockland plans 52-storey, 538-apartment St Leonards tower&nbsp;</a>

First look: SP Setia targets St Leonards skyline with 40-storey TOD tower

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> has revealed plans for a new mixed-use tower at 10 Dangar Street, Wickham, advancing a proposal that would reshape the southern gateway to Newcastle’s city centre with one of the city’s tallest residential buildings.

The State Significant Development proposal, now on exhibition, seeks approval for a <a href="https://www.apartments.com.au/new-apartments/bowline-10-dangar-street-wickham-nsw-2293">43-storey tower</a> immediately adjacent to the Newcastle Interchange. The project would deliver around 200 apartments, including 42 affordable housing dwellings, alongside 99 co-living units, a 171-room hotel, retail space, and new public domain integrated through the site.

The scheme marks a significant escalation of plans previously approved for the site. Urban Property Group took over the prominent 2,904 sqm parcel, where excavation and demolition had already commenced under an earlier consent for a 14-storey mixed-use development.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="58a96dd9-407f-4d20-86b4-94e4bfeef74b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20podium.png?VersionId=LGlf08pdFGAZDzvx_CXC4XakHNZRuEE0" />

Designed by <a href="https://www.apartments.com.au/architects/sjb-architects">SJB</a>, the tower has been conceived as a landmark transit-oriented development anchored to the Newcastle Interchange precinct. The proposal includes 245 build-to-sell apartments across a mix of one, two, and three-bedroom residences, as well as two penthouses. Fifteen apartments and one operational unit are earmarked for NDIS housing. The co-living component would add a further 99 units, while the podium would accommodate retail uses and hotel facilities.

SJB said the site presents “a valuable opportunity to anchor the precinct by setting the standard for design, active ground planes and character at the key southern gateway.”

The architecture responds directly to the site’s position beside major transport infrastructure and within one of Newcastle’s fastest-evolving urban renewal precincts. The tower form sits above a sculpted podium designed to frame new public spaces, including a through-site pedestrian link connecting Station Street to Hannell Street, landscaped plazas, and activated retail edges.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="a7bd6ff0-f7db-4ce8-a6dc-ea56e72c6149" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20lanne.png?VersionId=xzf39VADyhj7zBQY2I9fx9vI62u2tuSb" />

The design report describes the project as part of the broader transition of Wickham into “a vibrant, high-quality mixed-use urban precinct” that leverages proximity to the station, open space, and regional connectivity.

A detailed public art strategy has also been prepared for the development. The strategy positions the project as “a transit-oriented development of state significance at the gateway to Newcastle’s city centre” and outlines a series of integrated artworks responding to Newcastle’s industrial and transport heritage.

Creative Road’s curatorial framework for the project, titled Unveil, draws on “stratified surfaces, carved volumes, and light-filled apertures” while referencing Newcastle’s transformation from an industrial city into a contemporary education and technology hub.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="77a882bb-14b1-4d28-99ff-9438e39508c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20site.png?VersionId=cevgo_vN0eKPK78P8YcEu3mKPLkpFqE7" />

The proposal is being advanced through the NSW Housing Delivery Authority pathway after being declared State Significant Development in June 2025. The accompanying scoping report states the development aims to “maximise the site’s proximity to the Newcastle Interchange by delivering transit-oriented development” while increasing housing supply and affordable housing provision within the Newcastle LGA.

Urban Property Group’s plans align with the long-term strategic vision established under the Wickham Master Plan, which identified the interchange precinct as suitable for substantial uplift in height and density. The current proposal would significantly intensify that vision, positioning the tower among the tallest developments proposed for Newcastle.

The site sits immediately north of the Newcastle Interchange, bounded by Dangar Street, Hannell Street, and Charles Street. It is surrounded by a rapidly growing cluster of residential towers and mixed-use projects that have emerged following the completion of the light rail and transport interchange.

First look: Urban Property Group unveils Newcastle’s latest tower at Wickham interchange

Bottega House has completed settlement of a landmark riverfront site in Macquarie Street, St Lucia, representing its first major Brisbane development.&nbsp;

Positioned on the banks of the Brisbane River, the <a href="https://www.apartments.com.au/new-apartments/180-macquarie-street-st-lucia-qld-4067">premium site at 180 Macquarie Street</a> features uninterrupted river frontage in one of Brisbane’s most tightly held residential precincts.&nbsp;

The proposed development, currently under assessment with Brisbane City Council, has been designed by <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/mim-design">Mim Design</a> and will deliver a boutique collection of premium residences positioned specifically for owner occupiers and downsizers.&nbsp;

The residences are set to redefine luxury apartment living in the area, with a focus on architectural quality, refined finishes, landscape integration and elevated amenities including curated wellness facilities, resort-style pools and recreation spaces rarely seen in the local market.&nbsp;

Exclusive sales for the project will be led by Keenan &amp; Byrne, ahead of an anticipated launch later this year.&nbsp;

Bottega House Managing Director Nick Malloch said the project reflects the group’s ambition to deliver a highly curated residential offering within one of Brisbane’s most tightly held precincts.&nbsp;

“This is an incredibly rare riverfront opportunity and one we have approached with a long-term perspective,” Malloch said.&nbsp;

“Our vision from the outset was to create a boutique collection of residences that feel more like private homes than traditional apartments, with generous proportions, refined finishes and exceptional amenity throughout."

Malloch says there is a&nbsp;lack of premium owner-occupier stock of this quality in the market, particularly for downsizers wanting space, privacy and a true lifestyle offering without compromise.&nbsp;

"Demand is expected to be strong given the scarcity of premium riverfront opportunities of this nature within Brisbane’s inner-west."&nbsp;

Bottega House secures landmark riverfront site in St Lucia 

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The arrival of the first piling rig officially marks the commencement of construction at SIERA’s new beachside apartment development, Exhale, in Northcliffe.

<a href="https://www.apartments.com.au/new-apartments/exhale-surfers-paradise-8-enderley-avenue-surfers-paradise-qld-4217">Exhale</a>, a glass-encased tower featuring 54 large-scale apartments at 8 Enderley Avenue, is SIERA’s third Gold Coast development. It follows the recently completed PIPIS Bilinga beachfront project, which achieved suburb-record prices, and the soon-to-be-completed Chevron Island development, Tapestry.

[smartcode_project:default project_id=112661 project_image_fid=359603]

<a href="https://www.apartments.com.au/developers/siera">SIERA</a> Founder and Managing Director Brent Thompson said the arrival of the piling rig represented a significant milestone for the development, which is scheduled for completion in late 2028.

Over the next month, around 260 piles are expected to be installed as work progresses on the basement structure. The building is anticipated to rise above ground level early next year, before unveiling its sculptural glass curtain wall, developed in collaboration with specialist façade engineers.

“The façade was designed to maximise panoramic coastal views while creating a distinctive architectural identity,” Thompson said.

[smartcode_project:default project_id=112661 project_image_fid=355935]

Designed by BDA Architecture, Exhale will comprise just 54 two- and three-bedroom residences across 26 levels, a level of low-density living rarely delivered in this beachside pocket between Surfers Paradise and Broadbeach.

The project has been conceived as a resident-only building, with no short-stay accommodation permitted. SIERA says the model is intended to appeal to long-term owner-occupiers rather than transient holiday demand.

[smartcode_project:default project_id=112661 project_image_fid=361052]

Residences have been designed with large-format layouts and expansive glazing, with most apartments featuring more than 30 metres of glass frontage to maximise natural light and ocean views.

The amenity offering spans two levels and centres on wellness and lifestyle, including a heated magnesium pool, sauna, yoga and Pilates studio, gymnasium, private dining facilities, cinema lounge, and dedicated surfcraft storage.

[smartcode_project:default project_id=112661 project_image_fid=359607]

More than half of the apartments have already sold. SIERA has also opened a sales gallery for Exhale at its Chevron Island commercial premises, near its Tapestry tower and the site of its second Chevron Island apartment development, which is slated to launch in early 2027.
</section>
</section>

[smartcode_project_cta:default project_id=112661]

SIERA kicks off construction at Northcliffe tower Exhale

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

<html><body>
Reserve Bank Governor Glenn Stevens has again weighed in on the value of the Australian dollar, <a target="_blank" href="https://www.rba.gov.au/speeches/2013/sp-gov-211113">telling</a> a group of economists the bank is open to the idea of intervening to bring its value down.

With the Australian dollar having been plus or minus 10 cents from parity with the US dollar for most of the past six years, many of us may have forgotten that only a decade ago Australians were complaining about how stubbornly low it was.
At that time the exchange rate was only a little above 50 cents, and some pundits were predicting worse was to come. Imported goods and holidays were expensive, but of course the beneficiaries of this low exchange rate were exporters of goods, as well as service exporters in the education and tourism sectors in particular.
Movements in the Australian dollar since the floating of the exchange rate in 1983 have been volatile and unpredictable, so that there is in fact nothing particularly unusual about the past decade, as the chart below shows.
<img style="font-size: 0.8em;" width="470" src="https://c479107.ssl.cf2.rackcdn.com/files/35280/width668/byzdphds-1384405044.jpg">
Data: Reserve Bank of Australia
Most Australian companies now know how to deal with exchange rate volatility through using hedging, which allows companies to deal with uncertainty about future exchange rates. While volatility might seem to be undesirable, there is remarkably little empirical evidence that the kind of volatility in the exchange rate that we suffer in Australia has significant costs.
Despite this, the majority of economists, including those within the Reserve Bank and the Treasury view the current exchange rate as too high. My view is a fair value for the Australian dollar would be in the range of 70 to 80 US cents, and there has been little to suggest that this range has moved in the past decade. This range would enable the competitiveness required for an even balance of trade over a long period.
In the early 2000s I was arguing that the Australian dollar was significantly undervalued, and today the exchange rate is overvalued to the tune of at least 15%. However, the undervaluation of the Australian dollar lasted for several years, and the current overvaluation is likely to continue for at least the next year or two.
There is no doubt that exchange rates can be misaligned, sometimes for very long periods of time. The exchange rate is an asset price, and as with other asset prices there is reasonable debate about what constitutes fair value, and how to estimate this value.
Misalignments can be driven by a number of factors. The recent overvaluation of the Australian dollar has been largely to do with loose monetary policy in the United States, and also Europe and Japan. With Australia’s economy being relatively strong, and our interest rates remaining above those in the rest of the West, money has flowed into Australia and kept our exchange rate strong.
What can we do about it?
At the moment there are a number of countries that have floating exchange rates that are suffering from similar problems with overvaluation to those facing Australia. These include emerging economies such as Brazil, middle income countries such as South Korea, and richer countries such as Switzerland. Some of these countries have tried to stop appreciation of the exchange rate, with mixed success.
The first means of addressing an overvalued exchange rate is to fix the exchange rate. We could for example, ask the RBA to fix the exchange rate at 75 US cents.
This would require the RBA to buy and sell as many Asutralian dollars as the market required at this fixed rate. At the moment that would have the RBA dramatically increasing its holdings of US dollars, as the supply of US dollars to buy Australian dollars at that price would greatly exceed market demand. Many economists argue that fixed exchange rates are too inflexible and should not be considered.
My view is that fixing the exchange rate should not be completely ruled out, but the problem is that this limits flexibility at times when this is required, and in the case of Australia, why would we fix to the US dollar, when that currency is clearly in such a decline?
At the moment such a peg would require ultra low Australian interest rates, which would no doubt lead to problems such as further overheating in property and other asset markets.
A less extreme form of intervention by central banks involves them buying and selling currency to try to limit exchange rate movements. The RBA for example, sometimes “leans against” big movements in either direction of the Australian dollar. The problem with these interventions is that there is limited evidence of their effectiveness in having a lasting effect on the exchange rate. The reason for this is that the size of the foreign exchange market is huge, even relative to the size of central bank asset holdings.
In the latest survey, turnover in the Australian dollar averages around US$180 billion per day, a very large amount even for central banks to create a dent in. For example, the central bank in Switzerland began intervening to try to limit Swiss Franc appreciation in 2009, and in the subsequent four years these interventions had at best a minimal impact on the exchange rate.
Many countries have tried to limit exchange rate movements by imposing “capital controls.” These controls can take various forms, but the idea is to tax or put some other kind of constraint on foreign money coming into a country, with the aim being to reduce the value of a currency. China has had capital controls as part of its managed exchange rate system, and Chile and Malaysia have also imposed capital controls in recent years.
As with central bank intervention, the evidence on the effectiveness of capital controls in managing exchange rates is mixed. Capital controls can work in a strong economy, but in a country such as Australia that requires significant capital inflow each year, putting costs on these inflows runs the risk of putting off foreign investors. At a minimum that is likely to lead to much higher interest rates, along with running a risk of recession as a result.
Another way to try to limit exchange rate overvaluation is to loosen monetary policy. The Reserve Bank long ago decided that the prime objective for monetary policy was to keep inflation low and stable. Other objectives should be secondary, and should not interfere with this inflation focus. I would agree with this focus, and to cut interest rates to weaken the exchange rate at the current time would not be appropriate.
Are there other options? The IMF lists six types of exchange rate regimes, and classifies countries accordingly. Aside from floating exchange rate systems such as Australia’s, all of the other regimes involve forms of intervention or controls such as those above.
There is only one other possibility. We could of course apply for admission to the Euro, so as to give that system a boost, or adopt the US dollar. Currency unions are not always a bad idea, though they seem to be a bit out of fashion, and in the case of Australia the big question is who should we form a union with? The Europeans? The Americans? Maybe we should cosy up to the Kiwis?
There is no doubt that our overvalued exchange rate is costly. When the US, Japan and Europe unwind their unusually loose monetary policy there is little doubt that the AUD will weaken. Unfortunately in the meantime the best we can do is hope that those days come sooner rather than later.

<hr>
Mark Crosby is associate professor of economics at <a target="_blank" href="https://www.mbs.edu/Pages/Default.aspx">Melbourne Business School</a>
This article was originally published at <a href="https://theconversation.com">The Conversation</a>. Read the <a href="https://theconversation.com/intervene-or-wait-the-rba-faces-tricky-path-to-a-lower-dollar-20091">original article</a>.
 
<img width="1" src="https://counter.theconversation.edu.au/content/20091/count.gif" height="1" alt="The Conversation">
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jake-cSmGT7VXVf

To intervene, or not to intervene? The RBA's dollar dilemma

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About half of all four- and five-year fixed rate home loans - and more than a third of three-year fixed rate home loans - have had their rates adjusted upwards in the past two months, according to financial comparison website RateCity.  
“The fact that a growing number of institutions are increasing their rates on fixed home loans shows where they think the market might be heading,’’ CEO Alex Parsons says.  
He points out that:  
<ul>
<li>
Since early September, 188 fixed home loans have had rate hikes – including 88 in the past fortnight - by a maximum of 0.55%.
</li>
<li>
The trend is for longer fixed rates drifting up.
</li>
<li>
Competition remains high among one- and two-year fixed home loans, with rates starting from 4.29% fixed for one year.
</li>
</ul>
The news has prompted RateCity to urge borrowers to prepare now for higher rates.
“Movements in fixed rates are common and based on a number of variables, but the trend is definitely to longer term rates drifting up,” Parsons said.  
In comparison, shorter term fixed rates remain largely unchanged, or even fell slightly in recent weeks, with one-year fixed rates as low as 4.29%.  
“We have seen a lot of competition in the shorter term fixed rates. While they are also subject to the same market forces as longer terms, they’re a lower-risk way for institutions to offer hot rates to attract new customers,” he said.  
Fixing can be an attractive option for borrowers because it offers repayment security, making it easier to budget. But they aren’t as flexible, which can be a drawback. Also, some lenders make it harder for borrowers to make extra repayments as a way of building a repayment buffer. And others charge big fees for exiting the loan before the end of the fixed term.
Another key area to watch out for is the interest rate to which fixed loans revert once the set period is over, said Parsons.  
“Most fixed rates revert to a variable rate option at the end of the fixed period, which, depending on the rate cycle, could be more than 1% higher,’’ he said. “This can mean having to fork out thousands of dollars more per year to service the same loan.  
“Borrowers should prepare for the eventuality of higher interest rates in the future and make sure they can comfortably afford to service the loan if rates increase to the historical average of around 7% or even higher.”  
For example, a 0.25% rate rise would increase the first 12 months’ repayments by $540 (or $45 per month) for a borrower with a $300,000 home loan and paying the basic variable rate of 5.19%.  
But, if rates were to return to their historical average of 7%, the same borrower would have to find an extra $333 a month, or $3996 a year.  
“If borrowers aren’t sure whether they want to fix or not, they do have the option of splitting their loan between fixed and variable – so they have the best of both worlds.”    
<a target="_blank" href="mailto:staylor@propertyobserver.com.au">staylor@propertyobserver.com.au</a>
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staylor-63KgDrKwoY

Fixed rates set to rise further in November: Rate City

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While fixed interest rates seem to have at last passed their nadir, the market still can't quite seem to get its head around the next movement in interest rates being up.
The implied yield curve at close of business this Tuesday was pretty much there, yet still suggested that on balance the cash rate may well be staying somewhere close to exactly where it is throughout the next calendar year.
<img width="470" src="https://3.bp.blogspot.com/-k0weKQVxMV0/UowjPpQikpI/AAAAAAAAK2k/HU_6ZgjcM74/s400/Low+interest+rates+for+2014.jpg" height="301">
Source: ASX
Whether or not the next move does prove to be an upwards adjustment, we are perhaps unlikely to see the first hike until the uptrend in unemployment is broken, however long that takes. Having spent too much of the last decade preparing ABS figures, one thing that I can warn you to expect from employment data is volatility, but we are hoping to see improving jobs data in 2014.
More cuts?
Views differ a little on the outlook for interest rates. NAB believes that there will be a cut in the official cash rate (OCR) to 2.25% in the middle of next year, while Westpac believes that the OCR will be cut twice in 2014 to just 2.00%.
What gives? The short answer is that falling mining investment is likely to represent a headwind for economic growth, and thus the Reserve Bank (RBA) may need to cut rates in order to stimulate. The expected level of total capital expenditure according to the ABS is now beginning to slide and is forecast to fall further as we head in 2014/15 after a booming decade.
<img width="470" src="https://www.abs.gov.au/ausstats/abs@.nsf/be4aa82cd8cf7f07ca2570d60018da27/1ecf42b5ec12e8bcca2573460014f2df/Body/0.1300!OpenElement&amp;FieldElemFormat=gif" height="179" alt="Chart: Financial year actual and expected expenditure- Total Capital Expenditure">
Source: ABS
The RBA forecasts below-trend economic growth next year before stimulatory interest rates beginning to push GDP upwards into 2015.
<a imageanchor="1" href="https://3.bp.blogspot.com/-v6GJ0NH9UDw/UowkgrqXthI/AAAAAAAAK2w/W_Q8oKlp_PA/s1600/RBA+GDP+forecast.jpg"><img width="470" src="https://3.bp.blogspot.com/-v6GJ0NH9UDw/UowkgrqXthI/AAAAAAAAK2w/W_Q8oKlp_PA/s400/RBA+GDP+forecast.jpg" height="429"></a>
Delayed effect
Interest rates tend to have a delayed impact on spending patterns. There are the first signs that the mortgage affordability dividend delivered by interest rate cuts totalling a non-trivial 225bps over the past two years are resulting in increasing consumer spending.
The major concern for many is that low interest rates will also result in resurgent housing markets. Interestingly, in 2011 there were a spate of blunt news articles stating in no uncertain terms that dwelling prices would not be turned upwards by lower borrowing rates.
The effects of an altered monetary policy stance are not evident overnight. Interest rates take time to impact levels of business and construction activity (anyone who is in inner Sydney, must surely  by now be aware of the increased levels of construction activity), and they take time to impact housing market sentiment too. Some easing cycles, of course, will have more impact than others.
By the time 2013 is out dwelling prices across Australia may have appreciated by ~10% for the calendar year, with the usual varying fortunes between cities and states. Here is how the RBA is seeing dwelling prices across Australia in its latest chart pack, the data of which runs to 31 October.
<img src="https://www.rba.gov.au/chart-pack/images/5-6-household-sector/6bl-dwelpri-small.gif?accessed=2013-11-20-13-50-26" alt="Dwelling Prices graph" width="470">
The evidence suggests that the housing market in Sydney is in the middle of a strong upswing, after a sloppy few years post-2003. Other markets such as Brisbane and Adelaide (and possibly Hobart) are only just beginning to respond in any meaningful manner to low interest rates by moving upwards.
For months now there has been a lot of sifting through the RBA tea-leaves in order to find supposed references - coded or otherwise - to a housing market intervention. I'm not seeing it, but if you have your proverbial magnifying glass to hand, you can do your own sleuth work, for here is what the latest <a target="_blank" href="https://www.propertyobserver.com.au/https://www.rba.gov.au/monetary-policy/rba-board-minutes/2013/05112013">RBA minutes of monetary policy</a> had to say on the matter:"Members noted that conditions in the housing market continued to strengthen. Nationally, dwelling prices were above their late 2010 peak, with prices over the three months to October increasing significantly in Sydney.
Housing turnover and loan approvals had picked up noticeably. Improved conditions in the established housing market were providing an impetus to dwelling investment, with residential building approvals increasing over the year.
Approvals increased notably in September, driven by a pick-up in high-density approvals, which tend to be quite volatile from one month to the next. In discussion, members observed that developments in the established housing market and the increase in new dwelling activity seen to date were among the expected effects of the low level of interest rates."
Macroprudential measures?
The RBA has duly noted the price action in Sydney but the use of turns of phrase such as "expected effects" doesn't suggest a particularly excited board to me, rather a watchful one. Note that were macroprudential measures to be introduced in Australia, they would spawned via the Australian Prudential Regulation Authority - more commonly known as APRA - rather than the Reserve Bank.
APRA is the agency which retains the power to act to change the behaviour and balance sheets of entities in order to achieve macroprudential outcomes. APRA will have noted that <a target="_blank" href="https://www.apra.gov.au/adi/Publications/Documents/Quarterly-ADI-Property-Exposures-June-2013.pdf">more than 38% of housing loan approvals in the June 2013</a> quarter were for interest only products. This suggests a high level of speculative investor activity and will be one point of concern.

<hr>
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 new 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>' was released on 1 September 2013.
 
 
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pwargent-M4siyDbqQY

It's going to be a low interest rates 2014, but will the RBA cut rates further?

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Under the GST law, a person or a business can claim input tax credits (ITCs) for acquiring things for a creditable purpose. A taxpayer acquires a thing for a “creditable purpose” to the extent he or she acquires it in carrying on his or her enterprise.
However, the GST law provides that a taxpayer does not acquire a thing for creditable purpose to the extent the acquisition is of a private or domestic nature.
Seems relatively straightforward – if that can ever be said about taxation matters! But, spending money on acquiring things of a private or domestic nature can be an area that confuses many.
In a recent AAT case, the Tribunal upheld GST and penalty assessments against a taxpayer concerning incorrect claims for ITCs.
The taxpayer carried on a computer repair business. Following an audit of the taxpayer's BASs for the period March 31, 2007 to February 28, 2011, the ATO issued GST net amount assessments, penalty assessments and cancelled the taxpayer's GST registration.
The Tax Commissioner disallowed many (although not all) of the taxpayer's ITC claims on the basis that he did not consider the taxpayer was carrying on an enterprise during the relevant tax periods, that the expenses on which the ITC claims were based appeared to be private in nature (e.g. certain legal and health expenses) and were considered not to have any obvious links to commercial activity, and that the taxpayer did not provide tax invoices for the expenses as claimed creditable acquisitions.
In an along-the-way win for the taxpayer, the Tribunal noted that the Commissioner reconsidered the matter in light of additional information since provided by the taxpayer, and now accepted that the taxpayer was carrying on an enterprise during the relevant tax periods and that the decision to cancel his GST registration should be set aside. For this reason, the Commissioner also accepted that some (but not all) of the input tax credits claimed were properly allowable.
In the taxpayer's case, the Tribunal said the reasons for the relevant supplies (ie made to him) not being taxable included that either it had not been established that the person making the supplies was registered or required to be registered and/or that the supplies by that person were GST-free or input taxed.
The Tribunal said the taxpayer claimed an ITC in respect of his purchase of a second-hand motor vehicle pursuant to a "private sale". No invoice was produced for this transaction. As no GST liability would have been incurred by the seller, the taxpayer was not entitled to any input tax credit.
The taxpayer also claimed a number of items for "occupancy expenses". The AAT said the Commissioner understood those expenses related to the taxpayer's personal accommodation, particularly in a private home in Perth. He did not accept the expenses were "creditable acquisitions". The Tribunal said no invoices were provided by the taxpayer in respect of the claims, so it had not been established that any GST was paid or incurred by the person that supplied the accommodation to the taxpayer.
The Tribunal worked through a number of other ITC claims that had been made by the taxpayer, finding that most were not allowable. It worked through the taxpayer's exercise book ledgers in the process. These included:
<ul>
<li>
Running expenses – the AAT said there was no evidence that any GST was incurred by the relevant supplier of those expenses.
</li>
<li>
Legal expenses – understood to relate to expenses connected to an assault the taxpayer suffered at a hotel. The AAT saw no connection with the taxpayer's business activity.
</li>
<li>
Health expenses, including gym expenses – the AAT considered that the items claimed are clearly private or domestic in nature and were insufficiently connected to the taxpayer's business.
</li>
<li>
Finance expenses – the Tax Commissioner said he was unable to match most of those items to invoices so that he could not be sure exactly what they relate to. In addition, some items related to cash advances made to the taxpayer but the AAT said the documents relating to these made no reference to any GST payable by anyone.
</li>
<li>
Electronic goods – again, the Tax Commissioner said he was unable to match most of those items to documentary evidence.
</li>
<li>
Reference magazines – the Commissioner accepted that the taxpayer's purchases of relevant information technology magazines were sufficiently related to his enterprise to be properly regarded as creditable acquisitions for GST purposes. But the same could not be said of other magazines the taxpayer purchased.
</li>
<li>
Event "hosting" - The items claimed under this characterisation related to functions held by the taxpayer in his room at the house for friends and/or clients. The Tax Commissioner's understanding was that attendance at these functions was by invitation only and was not open to the public generally. If that is the case, then these expenses cannot be creditable acquisitions because they are excluded by a specific provision in the GST Act.
</li>
<li>
Imported items - The taxpayer made a number of claims for imported items described as "reference-magazine" or "reference-book" and so on. The relevant invoices in each case showed that the relevant item was imported and do not record any GST component. The AAT said that, as stated, each acquisition was “A non-taxable importation” pursuant to the GST Act and the Customs Tariff Act 1995 – essentially because the value of the goods imported did not exceed $1000. Any such importation will not be a “creditable importation” pursuant to the GST Act. As such, there is no entitlement to an input tax credit for that importation.
</li>
</ul>
The Tax Commissioner allowed part of the taxpayer's claims concerning travel and telephone expenses.
After reviewing the case, the Tribunal considered that the GST net amount assessments in relation to each of the 48 individual monthly tax periods ended March 31, 2007 to February 28, 2011 inclusive were not open to review.
The AAT said it accepted that the inference from the evidence and the taxpayer's conduct throughout was that it showed a disregard of or indifference to a risk foreseeable by a reasonable person. The Tribunal saw no basis to counter the Commissioner's submission that the taxpayer's behaviour was reckless in that he claimed input tax credits for items clearly private or personal in nature and/or not acquired in the carrying on of the enterprise.
Taxpayers in business can validly claim input tax credits for many expenses they incur that relate to the business. However, it must be proved that GST was incurred or paid by the supplier of the goods/services and that they relate to carrying on an enterprise. The taxpayer in the above AAT case was not able to prove this to the satisfaction of the Tribunal in regard to many of the expenses he claimed. SMEs should take note.
For those interested in knowing more about how the GST system operates, the Thomson Reuters Australian GST Handbook 2013-14 contains an excellent explanation of the GST system, covering all aspects of the GST legislation – simply <a href="https://www.propertyobserver.com.au/https://www.thomsonreuters.com.au/australian-gst-handbook-2013-14-book/productdetail/120389">visit our website for details</a>.

<hr>
Terry Hayes is the editor-in-chief of tax news reporting at <a href="https://www.thomsonreuters.com.au/">Thomson Reuters</a>, a leading Australian provider of tax, accounting and legal information solutions. Featured product is the 2013-14 edition of "The Essential SMSF Guide", written by Tony Negline – see details <a href="https://www.propertyobserver.com.au/https://www.thomsonreuters.com.au/the-essential-smsf-guide-2013-14/productdetail/120644?utm_source=smartcompany&amp;utm_medium=webpage&amp;utm_campaign=smsf">here</a>.
This article first appeared on <a href="https://SmartCompany.com.au" target="_blank">SmartCompany</a>.
 
 
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thayes-XhNcNKLNWa

Claiming GST credits can be very costly without a ‘creditable purpose'

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So, you’ve got the home loan, bought the house and are now you’re settling in ...
Well, don’t get too comfortable - nothing stays the same and a proactive approach to your borrowing arrangements over time can save you thousands.
It seems your home loan can be likened to the car you drive – just as it reflects your lifestyle, needs and goals at any stage in life, so, too, should your home loan.
"This is well illustrated by the fact that the cheap runabout you drive when you’re in your early 20s is very different to the seven-seater four-wheel-drive you’ll need in your 40s when you have three children and their friends to transport," says Smartline Personal Mortgage Advisers’ Michelle Schaafsma.
"A young couple starting out who have managed to save their deposit and are in the early stages of their careers, on entry level incomes, probably only need a basic loan with minimal fees and features that simply allows them to maximise paying every dollar off as quickly as possible.
"However, five years later they’re in a very different situation. They’ve paid off a chunk of their home loan and both are earning considerably more and perhaps saving for something significant, such as renovations or an overseas trip. They may well be better off with a home loan package that includes an offset account, redraw, a low fee credit card and a more competitive interest rate.
"Later in life, as the couple moves towards retirement, they may not want or need a complex loan or loan structure. They may well want a basic loan again that is going to allow them to quickly pay out the final amount owing on their home loan in the last few years of their working lives."
Schaafsma said a good mortgage broker would review each client’s situation annually to ensure that loan products and structures in place continue to meet their needs and goals.
She says clients who haven’t reviewed their home loan arrangements in the past three years could be getting a better deal. "The point of the review should not be to focus just on the interest rate on offer and the lender, although they are certainly key considerations, but to determine whether you need the same things out of a loan now that you did when you first took it out.
"If your lifestyle, requirements and financial situation have changed, for better or worse, then there is probably scope to investigate other options.
"Take the couple facing cash flow pressure as a result of reduced household income and/or considerably increased expenses, such as private school fees, who have diligently been making principal and interest repayments on their home loan for 10 years.
"They could probably refinance their mortgage and reset the term of their loan. This would considerably reduce their repayments and improve their household cash flow position and their whole lifestyle."
Schaafsma said the policies and criteria of the banks had changed considerably in recent years and continue to do so. "So, it might be that some forms of income (such as commissions or bonuses) that weren’t previously considered by your lender now are, or that you’re able to borrow a higher percentage of the property’s value.
"The competition in the home loan market also means banks tend to offer loans on more favourable terms to new customers, or existing customers who are prepared to ask for a discount.
"An experienced mortgage adviser will consider your current situation in depth and be able to advise of the best approach to maximise the opportunities available to you."
 
 
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Home loans need to change to reflect your lifestyle

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Without a doubt one of the overwhelming characteristics of the Mosman market was the insatiable desire of residents to trade in the market. Today, it is instinctively clear that this desire has been lost as a result of the global financial crisis (GFC) as residents re-calibrate their lifestyles and requirements. For example, in 2012 out of 52 weeks there were on 33 occasions more than 100 houses on the market. In 2013 Mosman has only broken the 100 mark on just four occasions which explains why so few houses are on the market. I did a comparison for house sales in Mosman for 2013, 2012 and 2007 (the golden market before the GFC hit.)
Bear in mind before the GFC Mosman used to trade approximately 10% of the approximate 4,800 houses – 480.
Mosman house sales January 1 2013 to November 7 2013.
<ul>
<li>
Total – 267
</li>
<li>
Average Price – $2,825,942
</li>
<li>
Private Treaty – 207
</li>
<li>
Public Auction – 60
</li>
<li>
Total Value Sold – $714,324,833
</li>
<li>
Adjusted Clearance Rate – 44%
<ul></ul>
</li>
</ul>
Mosman house sales January 1 2012 to December 31 2012.
<ul>
<li>
Total – 283
</li>
<li>
Average price – $2,852,759
</li>
<li>
Private treaty – 250
</li>
<li>
Public auction – 33
</li>
<li>
Total value sold – $788,975,000
</li>
<li>
Adjusted clearance rate – 22%
</li>
</ul>
Based on what is on the market today it would be fair to assume that 2013 Mosman house sales will go very close to reaching $1 billion as well as breaking the 300 barrier, so all in all the Mosman market is performing much better than many give credit.
Mosman house sales January 1 2007 to December 31 2007.
<ul>
<li>Total – 374</li>
<li>
Average price – $3,035,363
</li>
<li>
Private treaty – 324
</li>
<li>
Public auction – 50
</li>
<li>
Total value sold – $1,135,225,667
</li>
<li>
Adjusted clearance rate – 38%
<ul></ul>
</li>
</ul>
So that’s what the good old days looked like although I’m prepared to forecast that Mosman will go very close to $1 billion in 2013 with total value sold. Houses are in blue and apartments in purple.
<img alt="7-11-2013 1-13-12 PM" src="https://www.rwm.com.au/files/2013/11/7-11-2013-1-13-12-PM.jpg" width="470" height="243">
Of course next year is another story with <a title="surging Sydney property market could spoil RBA’s New Year " href="/news" target="_blank">surging Sydney property market could spoil RBA’s New Year </a>given on Melbourne Cup Day the Reserve Bank of Australia (RBA) left the cash rate at 2.50% so I don’t think the cash rate will be changing anytime soon. The Aussie dollar is climbing back slowly to a possible parity so should the RBA raise the cash rate this would almost certainly drive the Aussie dollar to parity and beyond.
SQM Research director Louis Christopher was reported as saying the “number of enthusiastic buyers, particularly in Sydney, was behind the shortage of housing stock on the market” compared to this time last year. He said Sydney’s stock levels were down a “staggering” 17.3% which is about right given Mosman is struggling to break 100 yet two years ago we had 175 houses on the market in November 2011.
<img alt="6-11-2013 10-17-51 AM" src="https://www.rwm.com.au/files/2013/11/6-11-2013-10-17-51-AM.jpg" width="470" height="320">
Record low interest rates have seen the Sydney property market recording yearly growth past double digits to sit at 11.4% according to the Australian Bureau of Statistics (ABS). Sydney is leading the way with the weighted average of the eight capital cities posting a more than healthy 7.6% gain for the twelve months to September 2013. Canberra and Adelaide are still lagging behind recording 1.2 and 0.6% for the quarter. Perth (0.2%), Darwin (0.4%), Brisbane (1.2%), Hobart (1.4%), Melbourne (1.9%) and Sydney posting (3.6%) so one can only imagine the conundrum facing the RBA with which direction to take the cash rate.
Unless Sydney starts cooling down it will in all probability allow certain areas to crash and burn given the rest of Australia is so far behind. The areas that will be hardest hit will be south-west Sydney which previously has always had huge price corrections and given they are recording record prices so it’s hard to see this being sustained. In 2004, south-west Sydney sustained drops of up to 55% although this time around I don’t see it being as severe given what rocked the market then was the cash rate jumping from 4.25% in February 2002 to 6.75% in December 2007.
The cash rate will go back up and as history shows there are always casualties along the way.

<hr>
Robert Simeon is a director of <a style="font-size: 14px;" title="RWM" href="https://www.rwm.com.au/" rel="nofollow" target="_blank">Richardson  Wrench Mosman and Neutral Bay </a>and has been selling residential real estate in Sydney since 1985.
He has also been writing real estate blog <a title="Virtual Realty News" href="https://www.rwm.com.au/news/" rel="nofollow" target="_blank">Virtual Realty News</a> since 2000.
The RWM real estate model has sold in excess of $1 billion in database sales globally.
 
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robertsimeon-hRNTwJyXkQ

Sydney property market is going to give the RBA one hell of a headache

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The Reserve Bank of Australia has signalled the possibility of further rate cuts in its November monetary statement, saying economic growth prospects for 2013 remain below trend.
On Tuesday, the cash rate was left unchanged at 2.5%.
“Overall, the outlook for the global economy is much as it was a few months ago… The prospect of a pick-up in conditions in many advanced economies is likely to see growth for the world as a whole improve from a below-average pace in 2013 to around average in 2014,” the RBA says.
“It was appropriate to hold the cash rate steady, but not to close off the possibility of reducing it further, should that be needed to support economic activity consistent with the inflation target.”

<hr>
This article first appeared on <a target="_blank" href="https://www.smartcompany.com.au">SmartCompany</a>.
 
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RBA says further cuts possible

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A surging Sydney property market could spoil the RBA’s New Year as it seeks to dampen demand for housing but not jeopardise the success of its low rates policies on the broader economy.
With this scenario comes another conundrum: If the bank does have to raise rates for this reason how will it continue its push against the unwelcome effects on exports of a high Aussie dollar?
RP Data national research director Tim Lawless told the Australian Financial Review that he expected the RBA to ‘’remain vigilant’’ – especially in regards to the Sydney and Melbourne property markets -where prices are rising faster than in other cities.
SQM Research director Louis Christopher was reported as saying the number of ‘’enthusiastic buyers, particularly in Sydney, was behind the shortage of housing stock on the market’’ compared to this time last year. He said Sydney’s stock levels were down a ‘’staggering’’ 17.3%, although traditional spring listings are belatedly coming onto the market.
‘’Will (the RBA) allow Sydney to gallop into 2014?’’ he asked. ‘’It will be interesting to see how they respond.’’
Analysts were not surprised at the central bank’s decision to hold rates at 2.5% after eight cuts in the past two years. Lawless said the low rates had had the desired effect of stimulating the housing market.
‘’Transaction numbers are close to 20% higher compared with a year ago and dwelling values across our combined capitals index have risen 7.9% over the past 12 months,’’ he told the AFR.
He said more buyers on the market were encouraging more housing construction, and that the RBA was comfortable with the level of capital gains in the housing market. ‘’The current rate of growth is well below the highs achieved over previous growth cycles and dwelling values across every capital city, apart from Sydney, remain below their previous peaks.’’
 
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Surging Sydney property market could spoil RBA's New Year

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I had a lot of mail from last week’s <a href="/expert-insights/finance/the-20-tips-to-ensure-you-get-your-loan">top 20 tips on getting a mortgage</a>. A lot of readers wanted to know how to save money when you already have a home loan. Here are some tips:
<ol start="1">
<li>
Have a plan: you should plan to own your home as fast as possible, and therefore pay as little interest as possible.
</li>
<li>
Pay attention to the rate: consider a $350,000 loan over 30 years. If you had a 5.3% mortgage and refinanced at 4.94% – maintaining the same repayments – your loan term would drop from 30 years to around 27 years and five months, saving around $60,000 in interest.
</li>
<li>
Be prepared to refinance: to save on a mortgage, you must be prepared to go to a lender with a lower interest rate than your current one. Your mortgage may be a good deal when you sign-up but five years later it could be expensive by industry comparison.
</li>
<li>
Understand the loan term: shorter loan terms usually mean you pay less interest and pay the debt faster. Let’s say you a have $350,000 mortgage at 4.94%, and you opt for a 25-year loan rather than a 30-year: you’d pay 19% less in interest, saving you $61,626. Shifting to a 20-year term will save you $120,199.20.
</li>
<li>
Repayment frequency is key: the higher the frequency of payment, the slower the interest accrues and the faster you pay off the mortgage. If you pay half the monthly repayment amount fortnightly, rather than monthly, or a quarter of the monthly payment weekly, this means you end up paying the equivalent of an extra month’s payment each year. Consider an average mortgage of around $350,000 and a 30 year term at 4.94%. You’d save around four years and eight months off your loan term and over $56,000 in interest, by paying the monthly repayment weekly or fortnightly.
</li>
<li>
Put windfalls into your home loan: Tax refunds, Medicare rebates and work bonuses should go into the home loan, reducing interest and speeding repayment.
</li>
<li>
Have the right loan: ensure your mortgage allows you to put in lump sum amounts. Many fixed rate loans don’t allow this. If you’re offered an offset mortgage that lets you put your income directly into the loan, make sure this suits you. It requires discipline.
</li>
<li>
Do it early: increasing your repayments and putting in lump sums is most effective when you do it early in the term of the loan.
</li>
<li>
Know your fees: the headline repayment figure in your mortgage agreement is not the only number you should look at. Lenders charge different fees, so be cognisant of any incidentals that may not be captured in the comparison rate.
</li>
<li>
Beware of interest only: don’t select an interest-only loan if you want to repay it quickly. Always opt for principal + interest.
</li>
</ol>
When borrowers ‘set and forget’ their mortgage, they usually pay too much interest and have the debt longer than they should. Get focused and save yourself a lot of money.
<hr>
Mark Bouris is executive chairman of <a href="https://www.ybr.com.au/" target="_blank" rel="nofollow">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance.
You can contact Mark on <a href="https://twitter.com/markbouris" target="_blank" rel="nofollow">Twitter</a>.
 
 
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Top 10 tips to save money on your home loan

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Lower interest rates and surging property markets – particularly in Melbourne and Sydney – are helping loan providers reap rewards.
Aussie Home Loans last month reached the $2 billion milestone in home loans lodged through its three distribution channels: mortgage brokers, retail outlets and aggregator subsidiary National Mortgage Brokers (nMB). The group’s 150 retail stores broke through the $1 billion milestone for the month in loans provided to new buyers, re-financers and investors.
The $2.1 billion group result for October represents a 22.1% lift above October last year. The news was reported in Australian Broker Online.
This follows news that <a target="_blank" href="/news">more than $4 billion in home loans was processed last month by AFG</a>, Australia’s largest mortgage broker – the first time its national 1,900 brokers have collectively broken through the $4 billion mark.
The $4,057 million figure is 12% higher than the $3,624 million processed the month before, which was itself a record. The October 2013 figure is 30% higher than October last year, and 61% higher than October 2011, showing how far the mortgage market, and broader economy, has recovered over the past two years.
Aussie chairman and founder, John Symond, says the retail result is a standout, as Aussie only established a substantial retail arm following the acquisition of Wizard Home Loans in 2009.
“This result is due to the hard work of the entire Aussie Group and demonstrates that volumes are returning to a more healthy market condition as buyers take advantage of low interest rates,” he said.
On the back of the growth, Aussie is on the expansion trail with a recruitment drive for former real estate and finance executives to become mobile brokers and franchisees of new stores.
“We’ve seen substantial growth across our three distribution channels and are keen to find new brokers and franchisees to join our successful and winning team”, Symond said.
Aussie’s total loan portfolio is worth $57 billion, including aggregator nMB, which was acquired by Aussie in 2012.
“All three of our distribution channels are firing and we see no reason for our growth to slow, as interest rates continue to bump along the bottom and our operations are becoming more efficient and effective in servicing our new and existing customers.”
Meanwhile, mortgage delinquency rates in excess of 30 days in the Australian prime residential market dropped to 1.35% in August, down from 1.39% in July, according to Moody’s Investors Service’s Global Structured Finance Collateral Performance Review.
However, the August figure is up from the same time last year (1.24%), but analysts remain optimistic, says Australian Broker Online.
“Looking ahead, we expect the performance trends witnessed to date in 2013 to continue with stable delinquencies, underpinned by expected GDP growth of 2.0% to 3.0%, the current low interest rate environment, and a steady unemployment rate of 5.0% to 6.0%” says Jennifer Wu, vice president and senior credit officer at Moody’s.
The report says Australian prime 60-day-plus arrears in August, at 0.76%, also compare favourably to all economies covered in the report, except for Japan’s (0.29%).  
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