Builder-developer <a href="https://www.apartments.com.au/developers/mcnab-developments">McNab</a> has wasted little time reshaping one of South Brisbane's most significant undeveloped apartment sites after acquiring the property earlier this year.&nbsp;

McNab has lodged plans to scrap an existing approval for two 30-storey towers and instead deliver a single 28-storey residential building, preserving part of the site for a future development opportunity.

The proposal, lodged over <a href="https://www.apartments.com.au/new-apartments/64-peel-street-south-brisbane-qld-4101">64 Peel Street and 9 Cordelia Street</a>, is for a residential-led mixed-use development comprising 124 apartments above a landscaped podium, alongside a boundary realignment that preserves part of the land for a future residential project.

<img alt="First look: McNab resets decade-old South Brisbane approval with 124-apartment tower" data-entity-type="file" data-entity-uuid="743bf564-3f8f-45fc-b8d3-bbf18f5b628f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/mcnab%20Peel%20st%20podium.png?VersionId=EhCxGrVn_VFH3qTbKnI4WppGwaMnOn0t" />

Designed by <a href="https://www.apartments.com.au/architects/hayball">Hayball</a>, the development will deliver 119 two-bedroom and five three-bedroom apartments across 23 residential levels. A five-level podium will accommodate 135 car spaces, while the ground floor will include a 66 sqm commercial tenancy, an activated residential lobby with work-from-home spaces, and a publicly accessible landscaped plaza linking Cordelia and Peel streets.&nbsp;

Communal amenities will span Level 6 and the rooftop, including indoor and outdoor recreation spaces, a swimming pool, barbecue facilities, kitchen and dining areas, lawn space, sauna, steam room and yoga facilities.

The application also proposes a boundary realignment to create a standalone 1,290 sqm development lot while retaining an adjacent parcel for future redevelopment, allowing the balance of the site to contribute additional housing over time.

Hayball said the architecture has been shaped by the site's elevated corner position at the intersection of Peel and Cordelia streets and Brisbane's subtropical climate.

The design incorporates generous landscaped setbacks, a masonry podium wrapped with planting, large north-facing balconies, and a slender tower profile intended to maximise natural light, cross ventilation and long-range views. The rooftop has been conceived as a wellness-focused retreat overlooking Brisbane, with amenities positioned to capture views towards Mount Coot-tha and the CBD.

<img alt="First look: McNab resets decade-old South Brisbane approval with 124-apartment tower" data-entity-type="file" data-entity-uuid="c5f99e84-6ad8-4a87-82d1-869685b754d2" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/mcnab%20tower%20perspective.png?VersionId=Gw0IuJaSAlk.tvGBxInhZOcQAdIB..2b" />

The planning submission positions the proposal as a response to both changing market conditions and Brisbane's Kurilpa Sustainable Growth Precinct planning reforms.

McNab acquired the site after the previous approval was granted, with the existing scheme no longer reflecting current residential market demands, economic conditions, construction challenges, construction efficiencies or the quality of development outcome now being pursued, the planning report noted.

McNab continues to expand its residential development pipeline across Brisbane and the Gold Coast. The developer recently launched The Tannery in West End, securing more than 60 per cent of apartments before the project's public release. It is also delivering Elements Budds Beach in Surfers Paradise and Lucia Highgate Hill, an eight-apartment boutique development overlooking the Brisbane River.

Joel Robinson

McNab resets decade-old South Brisbane approval with 124-apartment tower

A steeply sloping Bellevue Hill site is set to accommodate a new mid-rise apartment development, with plans lodged for 20 homes that respond to the site's dramatic topography.

The proposal for the consolidated land at <a href="https://www.apartments.com.au/new-apartments/138a-140-bellevue-road-bellevue-hill-nsw-2023">138A-140 Bellevue Road</a> has been designed by Sydney architecture practice Common Office, which has used the site’s substantial fall to distribute the building’s scale and unlock 20 apartments without presenting the full height to the street.&nbsp;

“The unique design strategy leverages the site’s substantial topographical fall to facilitate increased density, presenting a seven-storey profile to Bellevue Road while rising to 10 storeys at the rear,” Common Office said in its architectural design report.

The apartment mix spans one, two, three- and four-bedroom residences. Four two-bedroom apartments are designated as affordable housing, while the plans also include two adaptable dwellings. The mix is majority three-beds, with the typical three-bed apartment offering around 144 sqm internally, with balconies of around 15 sqm.

The affordable housing component represents 15 per cent of the residential floor area and allows the project to access additional height and floor space under the NSW Government’s in-fill affordable housing provisions. The site also falls within the inner area of the Low and Mid-Rise Housing Policy because it is within 400 metres walking distance of Double Bay Town Centre.

<img alt="First Look: Plans lodged for topography-led affordable housing project in Bellevue Hill" data-entity-type="file" data-entity-uuid="b1230d0f-3bfa-4a11-abaf-0928c66ef345" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bellevue%20da.png?VersionId=dZeMK3P.OutGjN8ycjsxm8uNsj_QFWQv" />

Common Office has arranged the building around a masonry podium and a lighter upper volume, drawing on two recurring elements of Bellevue Hill’s established architecture: sandstone bases and the vertical proportions of local Inter-war Art Deco apartment buildings.

“The proposal is governed by a holistic design language that reconciles the solid horizontal masonry of the neighbourhood’s podiums with the elegant verticality of its Art Deco heritage,” the architect said.

“The building maintains a consistent rhythmic logic utilising deep recesses and a sophisticated material transition to break down the 10-storey scale into a series of articulated, human-scale volumes.”

<img alt="First Look: Plans lodged for topography-led affordable housing project in Bellevue Hill" data-entity-type="file" data-entity-uuid="0147f503-1af1-4d51-97fb-c2f1cba63a9d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bellevue%20bldg.png?VersionId=GoW7q3NlK67OpnePXhk7zvklrlKb72Qc" />

Large-format sandstone tiles will define the lower levels, establishing a robust base that negotiates the change in elevation from Bellevue Road. Above, red-tinted precast concrete frames, recessed balconies, anodised aluminium screens and expanded metal details will create a more vertically expressed façade. Integrated planter beds will introduce greenery across balcony edges and recessed sections of the building.

The elongated northern façade has been divided into three recessed vertical masses to reduce its perceived length. Triangular window elements and metal privacy screens reference the geometry of nearby Art Deco buildings while controlling overlooking toward surrounding homes. The southern elevation will incorporate further privacy screening, landscaped edges and deep balconies to maintain light and ventilation.

<img alt="First Look: Plans lodged for topography-led affordable housing project in Bellevue Hill" data-entity-type="file" data-entity-uuid="e8679cf1-18bc-4447-8a0f-0052b94ab83c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Bellevue%20da%20rooftop.png?VersionId=5SQqQqRFf76rvE2p1TbxJSweMN70AIbc" />

Private and communal landscaping is distributed throughout the development. A landscaped garden apartment is positioned within the lower portion of the site, while a communal terrace on Level 5 will include a central timber deck, barbecue facilities, resident planting plots and areas for outdoor dining and informal gatherings.

Common Office described the terrace as an elevated sanctuary designed to capture district views and sunlight. Its planting strategy incorporates endemic species associated with the Eastern Suburbs Banksia Scrub, extending the landscape vertically through the building and providing habitat for local flora and fauna.

A second communal outdoor area is proposed at roof level, with built-in seating, paved gathering areas and perimeter planting.

Bellevue Hill is enjoying renewed momentum in the new apartment market, with several boutique developments recently launched and currently under construction. Positive Investment Enterprise is delivering the 16-apartment Kew Palm House on Birriga Road, while Chanine Developments is also under construction at Florian, a 36-apartment project on Banksia Road.

&nbsp;

Bellevue Hill is enjoying renewed momentum in the new apartment market, with several boutique developments recently launched and currently under construction.

First Look: Apartment development pitched for Bellevue Hill, Double Bay fringe

South Brisbane's apartment pipeline continues to build momentum, with <a href="https://www.apartments.com.au/developers/trk-property-group">TRK Property Group</a> lodging plans for a 161-apartment tower on Montague Road as developers accelerate investment across the Kurilpa Sustainable Growth Precinct.

The proposal for 176–186 Montague Road would replace an existing office building with a 20-storey residential tower designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, adding to a growing pipeline of high-density projects reshaping one of Brisbane's fastest-evolving inner-city precincts.

The project has been conceived as a "living building", featuring a flowing tower form, extensive vertical landscaping, and generous communal spaces that respond to the evolving Kurilpa Sustainable Growth Precinct.

TRK Property Group Development Director Matt Kan said the project reflected the confidence developers have in South Brisbane's long-term future.

"South Brisbane is entering an incredibly exciting period, and we see Montague Road sitting right at the heart of that evolution," Kan said.

"With the former Visy site directly opposite us and significant investment planned throughout the broader Kurilpa precinct, there is a real sense of momentum around this part of the city and what it will become over the coming years.

"For TRK, this is an opportunity to be part of that next chapter and deliver a project that responds to where the precinct is heading, while contributing to the continued evolution of Brisbane's river edge."

<img alt="First look: TRK Property joins South Brisbane apartment surge with Montague Road tower plans" data-entity-type="file" data-entity-uuid="590fe1ad-f892-4446-a679-80e33a16d029" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/TRK%20tower%20facade.png?VersionId=uOJStrcKpyHFcPE1w6_9SMAFzVMCcZll" />

The scheme includes a mix of one, two, three and four-bedroom apartments, incorporating multi-purpose rooms in selected residences to provide additional flexibility for home offices or expanded living areas. The proposed mix comprises 15 one-bedroom, 13 one-bedroom plus MPR, 73 two-bedroom, 26 two-bedroom plus MPR, 30 three-bedroom, and four four-bedroom apartments.

Rather than adopting a conventional rectilinear tower, COX Architecture has developed a sculpted form inspired by the movement of the Brisbane River.

"The proposal has been designed by COX Architecture as a 'living building' that responds to the site's riverine setting, floodplain history and evolving urban context within the Kurilpa Sustainable Growth Precinct," the planning report states.

"The architectural form draws from the fluid nature of the Brisbane River, with a curved and undulating tower form that creates a varied architectural edge and avoids a conventional rectilinear tower expression."

The podium has also been designed as an architectural feature rather than a conventional parking structure, with cascading planting, screening and natural-toned materials softening its appearance. Resident parking is elevated above ground level to address the site's flood constraints, while habitable apartments sit above flood planning levels. Upper-level communal facilities are designed to accommodate shelter-in-place arrangements during major flood events.

<img alt="First look: TRK Property joins South Brisbane apartment surge with Montague Road tower plans" data-entity-type="file" data-entity-uuid="01fa15d0-90df-46c7-9555-7941fc45373c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/TRK%20podium.png?VersionId=mHyua.w1pHGBt9qEdWzrlsv.leztUCwO" />

Communal amenity is a major focus of the proposal. Around 1,815 sqm of shared resident space is proposed across the ground floor, level 19 and the rooftop, including co-working areas, indoor and outdoor recreation spaces, wellness facilities, dining and gathering areas, lawn spaces, a rooftop pool and spa, and extensive landscaping. At street level, a landscaped forecourt and approximately 345 sqm of publicly accessible open space along Montague Road are intended to improve the pedestrian experience while activating the building's frontage.

The development will provide 163 car spaces, including 152 resident bays and 11 visitor spaces, together with 144 bicycle spaces incorporating resident storage, visitor parking, bicycle maintenance facilities and e-mobility charging infrastructure.

The site sits within one of Brisbane's fastest-changing inner-city precincts, less than two kilometres from the CBD and within easy reach of South Bank, West End, the Queensland Cultural Centre and extensive public transport connections. The Kurilpa Sustainable Growth Precinct planning framework is encouraging higher-density residential development to help meet Brisbane's housing supply targets while supporting walkable, transit-oriented neighbourhoods.

TRK Property joins South Brisbane apartment surge with Montague Road tower plans

Article summary

<ul data-end="785" data-start="311">
	<li data-end="459" data-section-id="5hbcyr" data-start="311">Pikos Group has released the five-penthouse collection at Skye Kangaroo Point, headlined by a two-storey sky home spanning more than 1,000 sqm.</li>
	<li data-end="561" data-section-id="1p7lq8n" data-start="460">Early buyer interest suggests the residences could set a new Queensland apartment price record.</li>
	<li data-end="667" data-section-id="1y70z0l" data-start="562">The collection includes four move-in ready penthouses and the highly customised Skye One residence.</li>
	<li data-end="785" data-section-id="yvm0y1" data-start="668">The release caps one of Bri​sbane's most ambitious luxury apartment developments overlooking the Brisbane River.</li>
</ul>

<hr data-end="790" data-start="787" />
Pikos Group has released the five-penthouse collection at its <a href="https://www.apartments.com.au/buildings/skye-residences-by-pikos-kangaroo-point-8-river-terrace-kangaroo-point-qld-4169">Skye by Pikos</a> development in Kangaroo Point, with early buyer interest indicating the flagship residences could eclipse every apartment sale previously recorded in Queensland.

The collection crowns the luxury riverfront development with five residences, including four completed penthouses and Skye One, a two-level sky home spanning more than 1,000 sqm that will be tailored to its eventual owner.

[smartcode_project:default project_id=90059 project_image_fid=374075]

Wanting to offer a fully customisable home, Pikos is offering Skye One as a blank canvas, allowing the buyer to work alongside the developer's design team to customise the home's layout, finishes and internal spaces.

The residence will feature a 247 sqm private rooftop terrace with its own swimming pool, sauna, steam room, outdoor kitchen and multiple entertaining areas overlooking the Brisbane River and CBD skyline.

The remaining four penthouses have been completed and are ready for immediate occupation, each offering four bedrooms, expansive open-plan living areas, soaring ceilings and private lift access.

[smartcode_project:default project_id=90059 project_image_fid=374059]

One of the defining features throughout the project is its use of Roman Classic Travertine, with more than 20,000 sqm of the natural stone imported from Italy after being personally selected by Pikos Group Founder and Executive Director Pedro Pikos, interior designer Julie Williamson and third-generation stone specialist Mario Caucci.

Pikos said the penthouse collection represented the culmination of the company's long-term vision for Skye.

"True legacy isn't measured by what we build today, but by what endures tomorrow," Pikos said.

"Our ambition is to create places that become more valuable with time, enrich the lives of generations, and stand as timeless landmarks long after we've stepped away."

[smartcode_project:default project_id=90059 project_image_fid=374060]

Williamson said the interiors were inspired by the natural character of Kangaroo Point and the Brisbane River rather than international design trends.

"Materiality tells the story of a place," Williamson said.

"We looked to the movement of the Brisbane River, the texture of the cliff face and the warmth of the surrounding landscape to create interiors that feel understated, enduring and unmistakably Brisbane."

Positioned above the Kangaroo Point cliffs, Skye places residents within walking distance of Howard Smith Wharves, South Bank and James Street while offering uninterrupted river and city views.

[smartcode_project_cta:default project_id=90059]

Brisbane's next apartment price record? Pikos unveils Skye's exclusive penthouse collection

Article summary

<ul data-end="888" data-start="289">
	<li data-end="442" data-section-id="8tsh6o" data-start="289">DVB Projects is preparing to launch its second Gold Coast apartment development, with demolition now underway at 137 Old Burleigh Road, Broadbeach.</li>
	<li data-end="573" data-section-id="1nyxl3e" data-start="443">The 34-level tower will comprise just 49 ultra-luxury residences, including half-floor, full-floor and penthouse apartments.</li>
	<li data-end="717" data-section-id="oiyimj" data-start="574">The launch follows strong demand at DVB's nearby Sea Glass project, which is more than 50 per cent sold and currently under construction.</li>
	<li data-end="888" data-section-id="epk9o9" data-start="718">The development adds to the transformation of Old Burleigh Road, with premium beachfront apartment projects continuing to reshape the tightly held Broadbeach strip.</li>
</ul>

<a href="https://www.apartments.com.au/developers/dvb-projects">DVB Projects</a> is preparing to launch its second Gold Coast apartment development, with demolition now underway on the Broadbeach site as the Sydney developer moves closer to bringing the ultra-luxury project to market.

The 34-level tower at <a href="https://www.apartments.com.au/new-apartments/137-old-burleigh-road-broadbeach-qld-4218">137 Old Burleigh Road</a> will comprise just 49 residences, ranging from half-floor apartments through to full-floor homes and a penthouse. The launch follows the strong sales performance of DVB's nearby Sea Glass development. More than half of the apartments at Sea Glass, on the other side of Broadbeach, have been snapped up, well ahead of its late 2027 completion

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="2944b4be-c84e-4b54-8dc1-c712e76704c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/E02_Exterior_Street%20Level%20Entrance.jpg?VersionId=YoNig7pRdrE3HCue7sUj78LzJteeQf3H" />

The start of demolition at 137 Old Burleigh Road signals DVB Projects’ underlying confidence in the Gold Coast’s luxury beachside apartment sector.

“We see the Gold Coast as one of the most compelling lifestyle markets in Australia, particularly at the premium end where demand continues to deepen,” said Dean Brown, Managing Director of DVB.&nbsp;

“This project has been carefully designed to respond to that demand - delivering large-format residences with a level of quality, privacy and amenity that is still relatively rare in the apartment market on the beachside."

Brown says the site itself is "exceptional."

"Old Burleigh Road is one of the most tightly held beachfront strips, and opportunities to deliver a project of this scale and calibre in this location are extremely limited.”

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="398f377a-c037-455e-9250-0c5e0d84c35b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/I12_FF%20Balcony.jpg?VersionId=NwOiRWGMubR1c8wthuEfggklcja7al9." />

The project will comprise 40 half-floor residences of approximately 260 sqm, alongside eight full-floor residences spanning around 524 sqm.

A single penthouse will crown the building, featuring a private pool, barbecue area, indoor gym and dedicated entertaining spaces.

Residents will have access to a resort-style suite of amenities, including a 20-metre pool with daybeds, a gymnasium, hot and cold plunge pools, a sauna, and private residents’ lounge and dining facilities.

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="d1642bb0-9a66-4427-a022-dfc0988c6287" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/A02_Pool%20to%20View.jpg?VersionId=c0IXPyn_Gp_Kn3XCwzMrqIVkAdCEwVXP" />

Sales agent Todd Matheson, of <a href="https://www.apartments.com.au/project-marketer/pezet-matheson">Pezet Matheson</a>, which is marketing both 137 Old Burleigh Road and Sea Glass, said 137 Old Burleigh Road would address a clear gap in the market for genuine luxury products.

“There are very few opportunities on the Gold Coast where buyers can secure a residence of this size and quality in a new building,” Matheson said.

“What we’re seeing is a growing cohort of downsizers and interstate buyers who still want space - they’re not willing to compromise on living area, entertaining or finishes.

“This project has been designed with that buyer in mind. It offers the scale of a home, combined with the convenience and security of apartment living, in one of the coast’s most desirable positions.”

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="59aae0ca-5639-4320-8aca-d0bf60f48e43" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/E01_Exterior%20Hero.jpg?VersionId=DS8Zfy2WtgUEtdfe0TEUuf1W1GfcZq8S" />

Located on a 1,156 sqm site one block from the beachfront, the development will replace an ageing walk-up building and is expected to contribute to the ongoing transformation of the Old Burleigh Road strip into one of the Gold Coast’s most prestigious residential corridors.

With the development moving into the delivery phase, 137 Old Burleigh Road is slated to hit the market later this year.

[smartcode_project_cta:default project_id=145141]

DVB Projects to launch second Broadbeach apartment tower as demolition commences

Prominent New Zealand apartment and hotel operator, <a href="/developers/safari-group">Safari Group</a>, is offering up a prime investment opportunity for Australians to purchase off the plan in one of the world’s most popular ski destinations.

They recently took to market Mountain Oak Queenstown Apartments, in the growing precinct of Remarkables Park in Frankton, near the airport and at the foot of The Remarkables - the mountain range the locals like to call “The Remarks”.&nbsp;

Sydney investors have shown interest in the one, two and three-bedroom apartments that secure high-season occupancy six months over the year, primarily over summer and winter months.

They average 90 per cent occupancy across their portfolio over January, February, March, August, November and December, while shoulder season months of April, July, September and October are still occupied 70 per cent of the time, with the growing appeal of Queenstown becoming not just a hotspot for the snow, but a lifestyle destination.

Even in the low seasons of May and June, occupancy levels reach around 40 per cent.

<img alt="Safari Group’s Mountain Oak Apartments brings new investment potential to Queenstown" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_auto/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Ext_Cam15_Sunny.jpg?VersionId=SJAROUM_1s.Tr5ciMk4EEj5oAt_Vewmv" />

Safari’s Safari Hotels arm can also manage the holiday letting for an investor, from the listing on holiday accommodation websites such as Airbnb and Booking.com to the cleaning and maintenance of the investment. They’ve been in the short stay management business for 15 years and offer 24/7 support for investors, an important convenience benefit for any overseas investor

Another major drawcard for Australians is that New Zealand doesn’t have a stamp duty policy - so the entry price of NZ$639,000 (AU$586,000), is all that is payable on completion.

<img alt="Safari Group’s Mountain Oak Apartments brings new investment potential to Queenstown" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/313_Livingv2_WEB.jpg?VersionId=nV229fM0ZeYpoxOrX372HyGjfwY_LR8c" />

Safari is starting construction of the 141 apartments in Q2 this year, with a two-year build estimated to complete in mid-to-late 2027.<img alt="" data-entity-type="" data-entity-uuid="" height="15" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXczFpFAb7WuA6f4f9TtKWcqXyNwR8qqtakWv352ERkpqNlP3KwIo8YKxw67jZNHfpjEGIZGv5MQTbnvLZwNt8iu9IVdOrswOjCvBZ4zhSoOOLrpt6etVEZTN1gkBho0r_R72zdHNA?key=yq3daOanqHSb88QFd8jGYKdb" title="Click and drag to move" width="15" />​

The apartments will feature modern amenities and contemporary designs with expansive windows capturing sweeping views of The Remarkables mountain range.&nbsp;

Interiors are equipped with modern finishes, premium appliances, and secure electronic key-locked doors, ensuring a comfortable living experience for residents and guests alike.

With its strategic location near Coronet Peak and Cardrona Alpine Resort, as well as key retail and dining precincts such as Market Street, Five Mile Shopping Centre, and Remarkables Market, Mountain Oak offers a strong proposition for investors seeking high rental yields and capital appreciation in one of New Zealand’s most sought-after locations.&nbsp;

Queenstown’s sustained demand for visitor accommodation and rental properties is underpinned by a shortage of housing options, attracting both local and international buyers.

Safari Group offers low-touch investment proposition in Queenstown’s popular ski fields district

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Latest figures from the ABS (Australian Bureau of Statistics) show that building approvals fell by 7.8% in February, seasonally adjusted, following a rise of 1.1% in January, further placing pressure on the RBA to cut interest rates at today’s RBA board meeting.
With median property prices on the decline across all states and approvals for private sector housing down by 3.4% in February and a 15.8% drop in approvals for other dwellings, such as units and apartments, we can only hope that the interest rates will receive another cut soon.
Whether at today’s or at the May 1st meeting, the RBA will have to cut the interest rate to reinvigorate the market and make up for the slump we have seen since the last cut. While I can understand the RBA’s caution over the past two months, especially in view of the European financial climate, it has become obvious that further cuts should have taken place.
In order to strengthen the real estate market, boost new dwelling construction to meet the housing shortage and encourage market activity especially from first home buyers, an interest rate cut is a ‘must have’.
If we really wanted to invigorate the real estate market, perhaps, easing of planning costs and delays, an amendment of capital allowance provisions to enable accelerated depreciation of new rental dwellings and a national reduction of stamp duty obligations for first time buyers would be steps worth considering.
Cutting the interest rate, reducing the cost base of new housing, increasing housing supply, and boosting affordability are not only worthy aims, they are essential to a more productive economy. Housing is shelter and a necessity of life, and we should make curbing its shortage a high priority when making budgetary and legislative decisions.
Robert Projeski is a respected property finance expert and the managing director of <a href="https://www.amo.com.au" target="_blank">Australian Mortgage Options</a>, an independent mortgage management firm with over nine industry awards to its name. 
 
 
 
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rprojeski-4QFJisNwt8

RBA should cut interest rates today

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Last week I discussed <a href="https://www.propertyobserver.com.au/commercial/fourteen-questions-to-ask-yourself-before-you-begin-a-negotiation-in-commercial-property/2012032654018" target="_blank">14 questions you need to ask yourself before beginning any negotiation</a>. Here are a final six. Are you…
1. Remaining professional?
You simply can't afford to lose your temper and still retain respect, from the other party.
People can be insulting, and it is all too easy to respond aggressively. But sometimes they're just doing that to test you, or your patience. So you may simply need to suggest adjourning the negotiations to give them a chance to regain their composure.
If it is a genuine outburst on their part, they can cool down. And if it's merely a ploy, they're going to look rather stupid.
2. Aware of the benefits and consequences?
You need to try and understand the benefits and consequences for each party in the negotiation.
Only then can you properly decide when (and how) to make any concessions, also when (and how) to stand firm, with your own needs and requests.
3. Employing the power of silence?
Work on becoming comfortable with silence. Most negotiators feel the need to jump in with some comment whenever there is an awkward pause in proceedings.
But whenever the answer to your question will actually commit the other party, say absolutely nothing more. Otherwise, all you'll get is further conversation.
4. Avoiding on-the-spot decisions?
Never commit on a major point unless you are quite sure of your answer and you're on solid ground.
No matter what the pressure, all you need simply say is: "I may need to sleep on that, I'll get back to you tomorrow".
5. Considering the telephone?
By choice, negotiations should commence face-to-face.
However as things progress, you'll sometimes find more progress can be made by phone — because it takes out all the emotion and allows you to simply focus on the rational items, rather than any personal issues.
6. Documenting the final agreement?
Sadly, too many people leave the negotiating table with only a handshake. A short summary (by way of "heads of agreement", a confirming letter or an email) is all you need to tie down the deal.
You need to have some form of documentation at the end, if this is a serious negotiation.
What you might say is: "Let's make a few notes on the points we have agreed for each of our files and just initial it."
This is vital. It provides a basis for the contract to be prepared. And when the contract arrives, you can confidently say: "That's not what was agreed."
If you both have the same set of notes, it's easy to verify that the contract has been drawn incorrectly.
Otherwise, you'll quickly discover how recollections can often change — between reaching agreement and the formal contract emerging. As a result, you are forced to restart the negotiation again.
Bottom line: I hope this has helped you to gain a complete "helicopter view" of how each component of a negotiation ties in with all the others.
And with the framework at your fingertips, you are now better equipped to tackle your next negotiation.
Chris Lang is an advisor to commercial property investors and gives keynote speeches and regular seminars on the best way to invest in commercial property. He maintains a blog, <a href="https://his-best.biz/" title="Chris Lang's blog" target="_blank">his-best.biz</a>, which he updates regularly about the best way to get the most out of your commercial property investment. 
 
 
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Six final questions to ask yourself before commercial property negotiations

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For Melburnians, Prahran is synonymous with the iconic Chapel Street, hailed as Melbourne’s most stylish shopping precinct and renowned for its funky bars and every cuisine you can think of under the sun. Situated within five kilometres of the CBD, St Kilda and Albert Park, offering every form of public transport – be it tram, train or bus – it’s no wonder it’s a haven for young professionals wanting to make the most of inner-city living.
For these (very) popular reasons, Prahran is an area that doesn’t experience the same level of turnover as some of our nearby suburbs like Brighton. To give you an idea, jump on realestate.com.au and you’ll see Brighton currently holds 42% more stock than Prahran (158 properties listed in Prahran compared to 272 Brighton).
We had our first open for inspections in late January but it wasn’t until  February 11 that we really started building some steam with our first auction. To say things have heated up since then would be an understatement – seven weeks on and we’re working on a clearance rate of 86%.  Bear in mind auctions only represent roughly 70% of our sales and don’t take into account the properties sold privately.  
Statewide, clearance rates are also picking up, with the last few weekends hovering around 60% and Prahran faring even better at 74%. Despite the Big Four breaking ranks with the RBA this year and the unemployment rate dropping in February, confidence is clearly on the rise.
Why? A lot of buyers – especially in Prahran – were holding off towards the end of last year amidst cries of the market ‘bottoming out’. They’re now realising it’s time to get on with their lives while conditions remain favourable. Despite all the hoo-haa around the big four banks raising their rates in February, <a href="https://www.tradingeconomics.com/australia/interest-rate">interest rates are still historically lower – bar the period directly after the GFC – than they have been in a decade.</a>
What’s the major difference between the market now and during the GFC? If you remember back then, despite interest rates hitting a record low of 3% in April 2009, the Rudd government’s boost to the first- home owner’s grant meant property prices were being driven to record highs due to unprecedented demand (not surprising given the first-home owner’s grant was doubled to $14,000 for existing dwellings and incredibly tripled to $21,000 for new homes).
Right now, we don’t have that same level of demand inflating property prices. As a result, housing affordability has never been so attractive, and it’s reflected in what we’re seeing in the marketplace. In the last two months, we’ve seen a 10% increase in our crowd numbers and up to 15% increase in open for inspection attendance. Very strong numbers came through a three-bedroom townhouse we’ve just listed in <a href="https://www.realestate.com.au/property-house-vic-prahran-110000416">Mary Street</a> at our first open. With a lock-up garage and courtyard, and located within walking distance to Prahran Market and Chapel Street, we’re expecting this to sell successfully come auction day.
So what can we expect for the year ahead? Our market will remain steady, so those expecting more price reductions in Prahran will be disappointed. While our median unit price decreased from <a href="https://www.realestateview.com.au/portal/propertydata?rm=medianprice&amp;state=victoria&amp;suburb=prahran&amp;postcode=">$495,000 in December 2010 to $444,000 in December 2011, our median house price actually increased from $899,000 to $997,500.</a> People<a target="_blank" href="https://www.propertyobserver.com.au/victoria/prahran-a-melbourne-auction-hotspot-as-buyers-trade-down-from-toorak/2012040254127"> flock to Prahran because of its lifestyle and location</a>, and these fundamentals won’t change and will contribute to why capital appreciation and rental yields remain consistent.
My advice to buyers is to take advantage of the steadying market now. It’s a bit of a catch 22. You can continue waiting for more confidence to return before buying, but higher confidence means more buyers. With more buyers comes greater competition, and what will that ultimately result in? Higher prices.
Andrew James has more than a 20 years' experience in real estate and is director of <a href="https://www.hockingstuart.com.au/" target="_blank">hockingstuart </a>Armadale.
Photograph of Prahran courtesy of <a href="https://www.flickr.com/" target="_blank">Flickr</a>.
 
 
 
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Prahran: The hockingstuart mid-autumn 2012 property review

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Houses took nearly 11 months to sell in Ouyen last year, the slowest-selling locality in Victoria, according to RP Data. Ouyen houses took more than 100 days longer to sell than houses in the next slowest-selling locality, Paradise Beach. Property Observer notes there were just 17 sales in Ouyen last year.
<table width="205" cellpadding="0" cellspacing="0" border="0"><tbody>
<tr>
<td valign="bottom" nowrap width="103">
Locality
</td>
<td valign="bottom" nowrap width="103">
Days on Market
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="103">
Ouyen
</td>
<td valign="bottom" nowrap width="103">
324
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="103">
Paradise Beach
</td>
<td valign="bottom" nowrap width="103">
221
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="103">
Kerang
</td>
<td valign="bottom" nowrap width="103">
196
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="103">
Donald
</td>
<td valign="bottom" nowrap width="103">
191
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="103">
Briagolong
</td>
<td valign="bottom" nowrap width="103">
190
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="103">
Chiltern
</td>
<td valign="bottom" nowrap width="103">
186
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="103">
Malmsbury
</td>
<td valign="bottom" nowrap width="103">
184
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="103">
Metung
</td>
<td valign="bottom" nowrap width="103">
184
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="103">
Coburg
</td>
<td valign="bottom" nowrap width="103">
183
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="103">
Grantville
</td>
<td valign="bottom" nowrap width="103">
182
</td>
</tr>
</tbody></table>
 Source: RP Data
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Ouyen the slowest-selling locality in Victoria: RP data

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We’re about to launch into the mid-season compulsion with renovation programs.  It seems only moments since the last great furore over Channel 9’s The Block, which hit our screens mid last year.  During the course of the open house inspections, more than 300,000 people queued outside the homes to take a sticky beak over the intricacies of design.  Details of the price initially paid, previous owners and subsequent buyers were fished out and endless analysis followed. Such was the furore that many were convinced sales expectation would be achieved. However, the finale was heralded a disaster.  Only one property sold under the hammer and when renovation, stamp duty and subsequent sales costs were totted up, none of the homes – in and of themselves – made a profit.  However, that wasn’t the point.  Far exceeding expectation, it was the station’s highest-rating show of 2011 and factoring in the sponsorship and endless publicity, the “owner” (Channel 9) could have given away the homes and still made a healthy profit. 
Obsession with property isn’t unique to Australia, however it’s manifested itself as one of the great foundations of our culture to the point of being heralded – above everything else – as “The Great Australian Dream”.  Go out on a Saturday in Melbourne and you’ll see street auctions attended by 50 or so people, of which three-quarters will be there for the fascination value alone, intently concentrated on the numbers and either comparing their own properties against the result or dreaming of pursuing a similar acquisition. Although the desire to own property doesn’t set us apart as a nation and no one relishes the thought of paying a landlord well into old age, other countries have accepted a culture far more adapted to renting than owning and consequently overall demand for the purchase of property has been lower along with price appreciation. 
<country-region><place>Germany</place></country-region> is one such relatively well-known example. In Germany, the accepted culture is to rent rather than buy, with less than 50% of the population recorded as “owner-occupiers”. Because of this, rents have outpaced house prices since the year 2000. As with any country, the market is fragmented, with some cities performing better than others and there’s still a clear east/west divide. To accommodate a larger rental landscape, yields are monitored closely with a regularly updated publication called the Mietspiegel (Rent Mirror), which lists average rent prices in each district, and landlords are required to adhere to them. Leases are expectedly lengthy and agreed over years rather than months.  The responsibility to decorate or renovate falls upon the tenant, not landlord, and is often part of the negotiated contract. Tenants are given free rein to make the property at least “feel” as if it’s their own providing they return it to a “neutral” state upon vacation. 
The rental market in Germany is tight and it can take months for families to secure suitable accommodation.  In some towns, at least half the family wage is dedicated to the task. You may wonder why more don’t decide to purchase, and there are various reasons attributed to this.  Unlike in Australia, banks don’t court the buyer market – there are no property grants and few tax incentives.  Deposits have to be large and there’s a general, inbuilt, reluctance to borrow or even spend on credit. Interest rates are fixed – thereby avoiding the inflationary tendances changes to a variable rate can evoke – and population growth is low and has been falling since the year 2000. 
As with any country, Germany’s growth rates vary across different regions depending on supply and demand, however since the mid-1990s capital growth in the housing market has been unimpressive at best. Perhaps this is one reason we don’t see the same rate of real estate obsession in various European countries such as Germany as we witness here? For example, you won’t find streets lined with real estate agencies in Germany, or listen to discussions on “the state of the market” around the kitchen table. Property advocates are there to help people secure rental accommodation rather than purchase or sell. It’s a different landscape altogether. 
Australia’s obsession is built into the very fabric of our culture. Even the modest backyard cubby house has started to take on grand proportions, with companies specialising in building “eco-friendly” models complete with solar panels and plasma TVs. For those interested, they can fetch prices, up to, and in excess of $15,000 – and when you see the work involved, there’s no surprise why.  At the root of this obsession lays the widespread acceptance that property always goes up in value. It’s looked upon not so much as a place to live, but a key to building wealth and establishing financial security. I’m not telling you anything you don’t know; investment in bricks and mortar is encouraged from every quarter, from 95% LVR loans to open-handed tax incentives and property grants. 
However, we seem to have worked ourselves into a catch 22 situation because as the market ebbs and flows through its cycle and the supply of affordable and appropriately located accommodation diminishes, rental demand increases and yields rise, thereby locking a large section of society out of the market all together.  Consequently, gaining a foothold on the property ladder for first-home buyers is both a huge commitment and celebrated achievement. Once the first acquisition has been secured, it’s no wonder expectation and anticipation surrounding property prices feeds the obsession we feel when analysing price growth. However, in this respect, there’s a fine line to be drawn between obsession and greed. 
As entertaining as they are, programs like Channel 9’s The Block play to the latter, feeding the concept that it’s possible to renovate and “flip” a home immediately back onto the market, covering costs and gaining a healthy profit on the outlay.  Updating an old-styled home through a carefully thought out renovation is a fantastic idea if the owner is a) careful not to over capitalise and b) hold the property for a period of time suited to market conditions.  The first rule is perhaps the most important because one person’s tastes are not universal. Most potential owner-occupiers want to place their own stamp on a home, so while a good floor plan and effective use of interior space will provide a backdrop for a new buyer to do this, few want to pay a premium for someone else’s extravagance and it takes experience to recognise how to balance the difference. 
Interestingly, from all the “serious” buyers who viewed the properties used on The Block last year, three of the four homes were purchased by investors and subsequently rented for around $1,000 per week. No doubt most of the home buyers would have been interested in adapting the renovation ideas to their own tastes rather than paying a premium for a completed version not specifically tailored to their needs. It really was a perfect example of over capitalisation; however clearly that was half the fun of the program and proved great entertainment. Whether the properties will attract current yields in years to come as the initial shine wears off, especially considering the <a target="_blank" href="https://www.propertyobserver.com.au/residential/the-block-buyers-face-a-proposed-12-storey-richmond-apartment-block-threatening-their-investments/2011101851982">compromised position opposite a multistorey car park</a>, is debateable. However, no doubt this year’s series will attract a similar level of obsession as the last. 
Back in 2010, the consequences of a nation obsessed by renovation was discussed by Phillip Lowe – assistant governor at the Reserve Bank. He, along with others, argued that our obsession with renovating homes and building ever “bigger and better” is stagnating investment into new dwellings and exasperating the nationwide shortage of affordable accommodation.  The more we pour into renovating existing dwellings not just for our own living :wants”, but with a view to expecting a return “plus profit” on the initial outlay, the more expensive property becomes and the harder it is for first-home buyers and renters to secure a foothold. However, higher prices aren’t limited to homes renovated in inner-urban locations; government overlays and strict building regulations imposed on builders to ensure every new home meets the new “six-star” energy rating now adhered to in most states places additional and arguably unnecessary premiums on prices. 
It’s yet another example of how this obsession to build bigger and better has somehow traversed itself into policy proving that “affordable” isn’t the priority, less carbon emissions are.  Consequently, prices are unnaturally high in the growth regions of our capital cities – or at the very least, higher than they should be. As the population slows and affordability continues to take a hold, it’s likely that those who purchased new developments in the boom phases of the market cycle will lose money on their investments, at least in the short term. 
This requirement and obsession with property along with overcapitalisation on renovation hamstrings the market making property ever more unaffordable for a large section of our society. It’s not unique to Australia; other countries have similar issues providing affordable housing under strong population growth. Israel is one such example. Israel’s recent “Occupy movement, during which a record 7% of the population moved into a tent city, was initiated by a single renter unable to secure affordable accommodation in the inner-urban localities – areas with adequate facilities not available on the periphery. However, in Australia we have something these other countries don’t have, we’re different.  We have an abundance of land along with a comparatively smaller population and one of the best-performing economies in the world! 
It’s therefore should be a priority that we move the focus onto the low-income groups and come up with a broader debate on how we can make property more affordable for the larger percentage of our population most at need – both renters and home buyers.  It’s not just about building more roof space, it’s about doing it in combination with adequate facilities which will provide options for those stuck with high cost accommodation in inner urban suburbs, combating ever rising house prices and extreme rental yields.  These policies must be addressed nationwide if we’re to secure a prosperous future for all Australians – not just a privileged few.
 
Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition. She is Channel Ten’s property expert on <a href="https://ten.com.au/the-circle.htm">The Circle</a> and a senior consultant for <a href="https://nationalpropertybuyers.com.au/">National Property Buyers</a> servicing the needs - Australia wide - for home buyers and investors.
 
 
 
 
 
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catherinecashmore-6LXia3pPQj

Australia's obsession with bigger and better property is making it less and less affordable

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Every month, real estate magazines promote different hotspots and investment opportunities around Australia, and first-time investors can be tempted to jump on the bandwagon and blindly follow that advice.
Instead, I encourage you to do your own “hotspotting”. It’s all about finding the ideal investment property that suits you, your lifestyle and your investment goals.
DIY hotspotting is a time-consuming process, because there is so much research involved. Once you select the area you want to invest in, it’s important that you do your homework by checking out past and present capital growth rates, and investigating the level of infrastructure and amenities in the area, including roads, public transport, hospitals and schools.
All of this takes a commitment of time and energy, but this is definitely not an area in which you should cut corners. Trust me, I know, I learned the hard way.
Not doing your homework is one of the grand faux pas that investors — particularly first-time investors — make. And it can end up costing you a bundle.
There was a property we bought many years ago in Kalgoorlie in Western Australia. It was our eighth property purchase and at the time I thought, “I’m an experienced property investor, I know what I’m doing!”
And I took shortcuts.
I lived in Melbourne and the property we were looking at was on the other side of the country. We had done some research and identified Kalgoorlie as our next place to invest because we wanted to add a cashflow-positive property to our portfolio. In Kalgoorlie property prices were low and rental yields were high and there seemed to be plenty of opportunities to invest.
We were looking at a small house with an asking price in the high $100s, with a fantastic rental return of $330 per week, which suited us perfectly.
The lease was a little bit different in that it wasn’t a private rental, it was actually leased by the government. The government department was called GEHA (Government Employee Housing Association), and it was its sole focus to source and rent appropriate properties for their staff.
The brilliant thing about GEHA is that it likes stability, so leases tend to be long term — a minimum of three to five years with automatic CPI (Consumer Price Index) rent increases and options for lease renewal built into the lease contract. From an investor’s perspective, it sounded ideal.
At $330 per week the rental return was more than enough to cover the mortgage and ownership costs and the GEHA lease had another full year to go on its five-year term. At that point the department had the option to renew the lease for a further three years or terminate it.
The real estate agency that I was dealing with at the time was exclusively a sales agency and didn’t have a property management arm. I asked the agent what he thought the property would rent for in an open market, just in case GEHA didn’t renew the lease.
“Helen, you’ll get $330 per week easily on the rental market,” he assured me. It was exactly what I wanted to hear, so we put in an offer of $173,000 and 30 days later we settled on the house and celebrated the arrival of our first cash flow positive property.
What was my big mistake? I didn’t do enough homework. I just took the selling agent’s word for the rent on the open market. I didn’t try to validate the information he gave me, or get the opinion of property management agents in the area. I didn’t do any more research on GEHA to see whether it regularly renewed its leases. Nor did I check whether the property we were buying was even the type of property they still wanted for their employees.
You can guess what happened next.
Twelve months later, at the expiry of the lease, GEHA decided not to exercise its right to extend the lease.
At the time I thought, “OK, no problem. I’ll still get my $330 a week from another tenant” — in fact I was even thinking that I might be able to increase the rent a little! This was too easy.
I asked a property manager to look through the house and after doing so, she called me back right away. “Helen, you’ll be really excited,” she said. “The market’s really buoyant right now, there’s lots of demand for rental property, particularly this style of house.”
“I can easily get you $260 a week,” she said.
My jaw dropped.
Several seconds of silence passed before I regained my voice.
“You mean $360 per week, right?”
“No, no, $260 per week,” she confirmed.
I couldn’t believe it — I was truly gutted.
At a rental return of $260 per week the investment was slightly negatively geared — and the whole reason why we went to regional Western Australia was for the opportunity to secure a positive cashflow deal!
We had bought it because it was earning $330, which was great cashflow. In one phone call, our investment had gone from being our shining star to a bit of a lemon.
We offloaded the property at the first opportunity and we were even able to make a little money out of the re-sale. But as a result of that experience, I now always do detailed due diligence research when I’m in the market to buy. I generally end up with a 40-page document on each property, and that’s because I certainly don’t want that sort of thing happening again.
This is now your opportunity to learn from my mistakes. Don’t take shortcuts when it comes to your research. Yes, it takes time and effort to make the right decisions but if you put in the hard yards now, you’ll be rewarded with a robust investment property portfolio that will deliver great returns for years to come.
Helen Collier-Kogtevs is an educator and property investor. This is an excerpt from <a target="_blank" href="https://www.majorstreet.com.au">How to Start Creating Real Wealth Through Real Estate</a>, published by Major Street.
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hckogtevs-dj64yEnMLW

The danger of not doing your property buying research properly

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A rise in unemployment would be more likely to compel the Reserve Bank to cut interest rates than poor building approvals data, according to Commonwealth Bank senior economist Michael Workman.
“Today’s [building approvals] data would be seen as supportive of another RBA rate cut. 
“We see another rate cut coming soon. But think that it will be more because of clear signs of jobs-related weakness. 
“There is a school of thought that has the level of residential construction activity as more attuned to the state and local government land release and development cost process, rather than a direct interest rate issue,” Workman says.
March ABS unemployment data will be released on April 12 – the February release showed unemployment up slight from 5.1 to 5.2%.
Workman points out that the <a href="https://www.propertyobserver.com.au/industry-news/february-building-approvals-down-7.8-as-residential-construction-outlook-weakens-abs/2012040254116" target="_blank">7.8% February building approvals slump</a> was mainly due to volatility in the multi-unit segment and driven by a 66% drop in multi-unit approvals in NSW, which partially unwound the large rise of 86%, in January. “Excluding NSW, residential approvals rose by 5.5% but are still 8.3% lower than a year ago.
“Putting the residential approvals data into perspective, the moving annual total was running at 146,000 in February. This time last year it was 17,000 which was slightly lower than the 178,000 peak hit in October 2010,” he says. 
CommSec chief economist Craig James says the RP Data Rismark figures (dwelling prices up 0.2% in March), slump in building approvals and solid demand reported from Sydney estate agents at auctions over the past weekend show simply that “demand exceeds supply in many regions, supported by improved affordability and higher migration”. 
“While builders will continue to compete hard for available work, home owners are likely to see the value of their homes rise over the year. CommSec tips a modest 3% lift in prices over 2012. 
“Another fall in the manufacturing gauge (The Performance of Manufacturing index fell by 1.8 points to 49.5 suggesting manufacturing is contracting), weak dwelling approval and a low inflation reading keeps the Reserve Bank poised to cut rates. 
“Still, the stabilisation in home prices works the other way – keeping the Reserve Bank on the sidelines,” James says.
 
 
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lschlesinger-FZcF9M3vE6

Jobs figures more likely to influence RBA’s interest rate decision than building data: CBA

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Cheaper units outperformed houses in Australia’s major capital cities by a wide margin during March, according to the latest RP Data-Rismark Daily Home Value Index Results.
Capital city unit prices increased by 0.9% during the month to a median of $400,000, while detached house prices increased by just 0.1% to a median of $464,500.
Across both markets capital city dwelling prices (houses and units combined) were up 0.2% in March to a median of $445,000 leaving dwelling values unchanged over the quarter – the strongest quarterly result since March 2011, when values increased by 0.7%. 
“Looking at the quarterly results on a more granular basis, the improved conditions over the March quarter can largely be attributed to the performance of Australia’s largest housing market, Sydney, where values rose 1.1% over the quarter,” says RP Data research director Tim Lawless.
“Values were down across many of the other capital cities over the quarter, with the most significant drop recorded in Adelaide, where dwelling values were down 1.5%,” Lawless says.
The March figures show that units delivered investors a median rental return of 4.8%, while houses managed a median return of 4.1%.
Over the past 12 months, units have delivered investors a 2.2% total return (capital growth plus rental growth) while housing returns have fallen by 0.8 % over the same time.
RP Data senior research analyst Cameron Kusher tells Property Observer the better growth in units over houses in March is “definitely a trend” that has been in evidence over the past five years.
“It comes back to affordability and the fact that more people are willing to live long term in apartments.
“We now have fairly mature unit markets within capital cities – these have developed over the past 15 to 20 years,” he says.
While noting the strong performance in Perth over March, Kusher expects that Sydney will most likely be the best-performing capital city market over next 12 months.
“We don’t expect astronomical growth in Sydney, but around 3% for the year,” says Kusher.
Kusher says an undersupply of housing, fairly strong population growth and an easy of stock on market are driving the Sydney market.
As for Perth, Kusher says if the market has not yet begun recovering, it is now fairly close to that point.
However, he expects further weaknesses in Melbourne and on the Gold Coast.
Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/rpapril2.gif"><img src="/images/stories/rpapril2thumb.gif"></a>
Perth was the strongest capital city market in March, registering a 1.4% rise in dwelling prices to a median of $445,000 with unit prices up 1.8% to $384,000 and house prices up 1.4% to a median of $455,000.
Despite the improvement in March, Perth unit prices are still down 7.2% year-on-year while Brisbane-Gold Coast houses are down 7% year-on-year, making them the weakest unit and housing markets respectively over the past 12 months.
Sydney dwelling values increased by 0.4% over March, with units up 1% to $470,000 and houses managing just 0.2% growth to $572,000.
The Melbourne housing market fell 0.2% over March (down 5.4% over the past 12 months) with a 0.3% drop in house prices to $495,000 matched by a 0.3% rise in unit values to $420,000.
Adelaide had the greatest disparity in house and unit performance during March, registering 3.1% gain in unit prices to a median of $310,000 compared with a 1.8% drop in house prices to a median to $385,000.
Among the five major capital city markets, only the Brisbane-Gold Coast market bucked the trend, with house prices rising 0.5% to a median of $425,000 and unit prices falling 0.3% to $353,000.
Canberra units increased by 2.9% to a median of $417,500 while the small Hobart unit market gained 0.6% to be 15.4% for the first three months of the year with a median price of $275,000.
Over the quarter Hobart has the best performing capital city with dwelling values up 7.3% over the three months to March 31, 2012.
Darwin dwelling values increased by 1.1% over the month to a median of $470,000 with houses up 1.6% to $520,000, while unit values fell 1.3% to a median of $378,500.
The Northern Territory capital city has the highest rental yield for both houses (5.7%) and units (5.9%) of all eight capital cities.
According to Ben Skilbeck, managing director of Rismark International, there are a number of factors pointing towards an improvement in housing market conditions over recent months.
“The ratio of national house prices to household disposable incomes is currently below the decade average.
“Additionally, according to the ABS housing finance data, both the value and number of loan approvals for the purchase of established dwellings are at levels not seen since November 2009.
“First-home buyers as a proportion of all home loans approved are back to levels not seen for two years,” he says.
Skilbeck says yields are also showing modest improvements with rental yields for houses across the combined capital cities improving from 3.6% in 18 months ago to 4.1% currently with gross yields on units improving from recent lows of 4.4% to 4.8%.
“The most significant rental yield improvements have been recorded in Darwin, Perth and Brisbane, which have increased by 22%, 21% and 1% respectively from recent lows,” he says.
Photograph by Brian Yap, courtesy of <a href="https://www.flickr.com/" target="_blank">Flickr</a>.
 
 
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Units outperform houses as market stabilises in March: RP Data-Rismark

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RP Data and Rismark have reported their March quarter house price index results today, and the findings were encouraging. They certainly dispel any predictions of precipitous price falls. 
Across Australia’s eight capital cities, dwelling values actually increased by a modest 0.2% in the month of March with Sydney (+0.4%), Brisbane (+0.8%), Perth (+1.4%), Hobart (+1.4%), and Darwin (+1.1%) also registering decent capital gains. In contrast, home values fell in Melbourne (-0.2%), Adelaide (-1.4%), and Canberra (-0.3%). 
Over the first three months of the year, Australian dwelling values are unchanged (0%) across the eight capital cities. In fact, RP Data-Rismark’s hedonic index data suggest that Australian dwelling values have not budged at all since the end of October 2011, which makes sense given the RBA’s shift to a much more accommodative policy stance.
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As regular readers will recall, I previously forecast that we would see a cessation to the house price declines that were characteristic of 2011, and an improvement in activity during the first quarter of 2012. This appears to have panned out. 
While housing conditions naturally vary across the individual cities, RP Data-Rismark report a consistent pattern of stabilisation across the three major conurbations (see chart below). Since the end of November 2011, Sydney and Melbourne dwelling values are basically unchanged (-0.1% and +0.1%, respectively), while Brisbane values have actually edged up a touch (+0.5%).
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<img src="/images/stories/april22thumb.gif">
The standout performer in the year to date has been Sydney real estate, with dwelling values realising robust capital growth of 1.1% over the first quarter. Needless to say, it is rare that Sydneysiders read much that is positive about house prices, given the proclivities of local journos keen to grab headlines by peddling doom and gloom. 
The subsiding of material price falls since the RBA’s first rate cut in November is also clear across the smaller cities. With the exception of Adelaide (-4.1%), home values in Perth (+2.2%), Darwin (+5.2%), Canberra (-0.6%) and Hobart (+0.5%) are all around their November 2011 levels, or higher (see chart below).
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The stability in conditions is also evident in other indicators. Auction clearance rates have gradually improved, with the national rate now regularly printing above 50% (see chart below). Housing credit, which is a key demand-side proxy, is also expanding – not contracting – at a pace that would be expected given the growth in disposable household earnings.
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In the final chart below I have illustrated the RBA’s analysis of Australia’s housing debt-to-disposable income ratio.  For the best part of the last six years, the growth in Australian housing credit has tracked household incomes almost exactly 1:1. This is why the line in the chart has moved sideways. It is also what we’ve predicted for years now: that is, a deceleration in the double-digit household credit growth rates to a new normal of single-digit rates in line with incomes.
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Reflecting on today’s results, Rismark’s Ben Skilbeck added, “While the housing market remains soft, the fact that values did not change over the first quarter of 2012 suggests that it is consolidating its position following a weak 2011. In addition, the ratio of national house prices to incomes is currently below its decade average, which implies that affordability is better than it has been. Finally, we note that the share of first time buyers as a proportion of all loans approved is back to levels not seen for two years. First time buyers are typically a good weathercock for changes in affordability.”
Christopher Joye is a leading financial economist and a director of <a href="https://www.ybr.com.au/savings/index.cfm">Yellow Brick Road Funds Management</a> and Rismark. The above article is not investment advice.
 
 
 
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Sydney the standout performer in 2012 for dwelling values: Christopher Joye

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The Reserve Bank looks set to leave interest rates unchanged for the third straight month tomorrow  and might only cut rates once between now and September, two surveys of economists suggest. 
All 25 economists survey by Bloomberg expect the RBA to leave rates unchanged when it meets tomorrow, and just over half (14) expect the RBA to cut rates by to 4% on May 1. 
Interest rate futures markets are factoring in a greater possibility of a rate cut – they say there is about a 40% chance the RBA may loosen its monetary policy tomorrow. 
Looking ahead to the June 5 monetary policy meeting, 13 economists expect the cash rate to be at 4%, just three expect a further rate cut to 3.75% and a significant one-third expect the cash rate to remain at the current 4.25%. 
A separate poll of 18 economists carried out by the Australian Financial Review expects the Reserve Bank to cut interest rates just once more over the next six months to September.
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Twelve out of 18 economists polled expect the cash rate to drop to 4% over the next three months, with only Annette Beacher from TD Securities forecasting two rate cuts over the next six months. The remaining five expect rates to remain on hold over the next three months. 
The economists polled by the AFR predict lower inflation will make it possible for the RBA to cut rates. 
However Westpac chief economist Bill Evans says the RBA decision will be live tomorrow and could be swayed to cut rates. 
Evans says that if it were Westpac’s decision, it would cut rates tomorrow. 
“The bank's decision will be finely balanced and as always determined by subjective judgements. For the board to cut rates, it will need to be absolutely comfortable that the threshold for a move which has been clearly communicated in recent statements – that ‘demand conditions weaken materially – has been crossed. 
“While we believe that this condition has already been met, we feel that on balance a prudent central bank will decide to wait. Therefore we are maintaining our forecast for the next rate cut to be in May, followed by July,” says Evans. 
Evans says Westpac’s recent Coast-to-Coast report highlights the multi-speed nature of the Australian economy, complicating the decision for the RBA. Economic demand soared in Queensland (10.0%) and Western Australia (11.1%) in the second half of 2011 but contracted in South Australia (–0.6%), Tasmania (–0.7%) and Victoria (-0.4%). 
The report notes that NSW received a timely boost from its coal sector but it has still only managed to grow at a below-trend 2% in 2011. 
Similarly, CommSec chief economist Craig James says a “raft of sectors are under pressure in the current environment – retailers, manufacturers, home builders – and we can add banks to the list. 
“The case for another rate cut remains strong,” he says. 
Su-Lin Ong from RB C Capital Markets expects two rate cuts in 2012 due to a “sub-trend pace of growth, rising jobless rate, likelihood of further independent increases in standard variable rates, and a still challenging global outlook suggest the RBA should be doing more to support demand”. 
Ivan Colhoun, head of Australian economics and property research at ANZ, says recent communications by the Reserve Bank suggest the market is underestimating the chances of a reduction in the official cash at next week’s RBA board meeting notwithstanding  the recent increase in pricing by the market. 
“The minutes for March, together with a recent speech by the governor, contain subtle but important evolutions in the bank’s thinking. This raises our confidence in ANZ’s forecast of a rate cut by May and suggests a move at the April meeting cannot be ruled out,” says Calhoun. 
Writing in the Eureka Report, Alan Kohler says there are three reasons why the RBA should cut interest rates tomorrow. 
Firstly, as has always ready been pointed out by other commentators such as <a target="_blank" href="https://www.propertyobserver.com.au/economy/mark-bouris-takes-aim-at-rba-as-gail-kelly-warns-of-frequent-independent-bank-rate-rises/2012030853747">Mark Bouris</a> and <a target="_blank" href="/news">John Symond</a>, Kohler says “Australia's non-mining economy is stagnant at best”. 
While the mining the mining investment boom is locked and not dependent on China's GDP growth, Kohler says the other parts of the Australian economy are more vulnerable to a slowdown in China than they have ever been “because of their reliance on bulk commodity exports”. 
Kohler backs retailer Solomon Lew’s view that the RBA should cut rates by 50 basis points tomorrow to provide stimulus to the economy in light of planned spending cuts by the government to get the budget back in surplus by 2012-13. 
“The RBA will need to counter [the budget cuts if not next week, then in May and June,” says Kohler.
Lastly Kohler says a rate cut is needed to prevent the housing market from weakening further. 
“I had meetings this week with a senior banker and one of the country's largest housing developers, and it was clear that the banks are going to be restraining credit for a long time and this is going to suppress demand for housing.
“For investors it means cash rates will fall again this year so you should think about locking in with term deposits, if you haven't done so already,” Kohler says.
A mixed bag of recent economic data will add to the complicated picture for the RBA and could encourage it to keep rates unchanged until there is more evidence about which way the economy is heading. 
In the December quarter GDP growth was just 0.4% (below expectations of 0.8%) and housing starts fell another 7%. 
However the number of job vacancies rose 0.7% over the three months to February 2011, with 182,000 positions vacant while ANZ job advertisements also picked up. Commenting on these figures, CBA economist James McIntyre said deterioration in vacancies would bolster the case for a rate cut. 
Figures released today by the Rismark-RP Data show capital city home values rose 0.2% over the month of March 2012, leaving the market flat (0%) for the first quarter of 2012.
 
 
 
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