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.
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[smartcode_project_cta:default project_id=112661]

SIERA kicks off construction at Northcliffe tower Exhale

2020 Property Breakdown

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From 1 January to 31 December there were 6,777 cuts to home loans, with an average cut of -0.30%, according to Canstar's database.

It recorded:

<ul>
<li>880 cuts to variable rates for owner occupiers, with an average cut of -0.21%</li>
	<li>2,455 cuts to fixed rates for owner occupiers, with an average cut of -0.33%</li>
	<li>764 cuts to variable rates for investors, with an average cut of -0.21%</li>
	<li>2,678 cuts to fixed rates for investors, with an average cut of -0.32%</li>
</ul>
Over the same period there were 535 home loan rate increases, with an average increase of 0.20%.

On 1st January 2020 the average variable rate for owner occupiers paying principal and interest was 3.73% (80% LVR). Today that rate is 3.32% The lowest variable rate was 2.69% and it is now 1.99% (80% LVR) or 1.77% (60% LVR).

On the 1st January 2020 the average 3-year fixed rate for owner occupiers paying principal and interest was 3.15%. Today the average 3-year fixed rate is 2.30%. The lowest 3-year fixed rate was 2.69% and it is now 1.89%.

<figure><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/2020_home_loan_rate_changes.jpg" rel="gallery-all"><img alt="" class="image-article-full-width-580px" height="505" src="/s3/files/styles/article_full_width_580px/public/pictures/article-images/2020_home_loan_rate_changes.jpg?itok=dknBFocG" width="580"></a></figure>Savings interest rates

From 1 January to 31 December Canstar recorded:

<ul>
<li>529 cuts to savings, with an average cut of -0.18%</li>
	<li>262 cuts to regular savings accounts, with an average cut of -0.19% </li>
	<li>267 cuts to bonus savings accounts, with an average cut of -0.17%</li>
</ul>
On 1st January 2020 the average regular savings account rate was 1.12%. Today that rate is 0.43%. The maximum rate was 2.65% and it is now 1.75% (available for 4-months).

On 1st January 2020 the average bonus savings account rate was 1.47%, now just 0.75%. The maximum rate was 2.25% and it is now 1.35%.
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From 1 January to 31 December there were 6,777 cuts to home loans, with an average cut of -0.30%, according to Canstar

urban.com.au

2020 saw 6,777 interest rate cuts across Australia's home loan institutions

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<h2>EXPERT INSIGHT</h2>

The first indicators for 2021 – home prices and manufacturing activity – are exhibiting signs of economic strength, rather than weakness.

Home prices are rising across the country. In fact home prices only fell in two of the 88 regions in the past month. And over the past year all but 12 regions posted gains in home prices. The icing on the cake: data shows that in 39 of the 88 regions, home prices were at record highs at the end of 2020.

The outback regions of South Australia and the Northern Territory as well as the mid to far north coast regions of NSW were amongst those posting the strongest home price gains in December. The Sydney Eastern Suburbs (down 0.1 per cent) and Far West and Orana region of NSW (-0.4 per cent) were the only two regions to record falls in home prices in December.

Regional home prices continue to outpace capital cities and house prices are out-pacing apartment prices. Both reflect Covid-19 effects, especially the new reality that work can be done anywhere and at any time.

The manufacturing sector is expanding solidly. In fact many companies reported that “backlogs of work had risen simply due to a short-term inability to expand production capacity sufficiently to meet the recent surge in demand.” And further, “efforts to boost capacity were reflected in manufacturers taking on extra staff at a rate not seen for just over two years.”   

What do the figures show?  Home prices – December 2020

The CoreLogic Home Value Index of national home prices rose by 1.0 per cent in December to be 3.0 per cent higher over the year. 

In capital cities, prices rose by 0.9 per cent to be up 2.0 per cent over the year. House prices climbed 1.1 per cent, but apartment prices rose by just 0.2 per cent. House prices were up 2.6 per cent on a year ago and prices of apartments increased by 0.2 per cent.

In regional areas, home prices jumped 1.6 per cent with house prices up 1.7 per cent and apartment prices up by 1.1 per cent. Regional home prices were up 6.9 per cent on the year with houses lifting 7.1 per cent and apartments up 5.9 per cent.  

The average Australian capital city house price (median price) in December was $696,413 and the average unit price was $574,388.

Home prices were higher in all eight capital cities in December: Sydney (+0.7 per cent); Melbourne (+1.0 per cent); Brisbane (+1.1 per cent); Adelaide (+1.1 per cent); Perth (+1.1 per cent); Hobart (+0.7 per cent); Darwin (+2.3 per cent); Canberra (+0.6 per cent).

Home prices were higher than a year ago in seven of the eight capital cities in December: Sydney (+2.7 per cent); Melbourne (-1.3 per cent); Brisbane (+3.6 per cent); Adelaide (+5.9 per cent); Perth (+2.0 per cent); Hobart (+7.7 per cent); Darwin (+11.9 per cent); Canberra (+8.5 per cent).

Total returns on national dwellings rose by 6.6 per cent in the year to December with houses up 7.1 per cent and units up by 5.0 per cent on a year earlier. In contrast, the S&amp;P/ASX All Ordinaries Accumulation Index rose by 3.6 per cent over the year to December. 

What are the implications for investors?

Higher home prices boost household wealth and also serve to boost borrowing capacity. As such the lift in home prices is positive for consumer durables including demand for cars.

CoreLogic reports that annual home sales were around 8 per cent higher over 2020. CoreLogic notes: “More home sales implies more work for a range of industries including real estate professionals, removalists, conveyancers, financiers and building inspectors along with more spending on household goods such as home furnishings, white goods and appliances.”

The strength in manufacturing is positive for employment and related sectors such as retailing. The increases in input prices and selling prices need to be watched though.

Risks to the housing market – prices, sales and building – include policy mistakes, the scaledown of JobKeeper and JobSeeker, new waves of virus infection and the length of time that foreign borders stay closed.

CRAIG JAMES is the Chief Economist at CommSec
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Regional home prices continue to outpace capital cities and house prices are out-pacing apartment prices

cjames

Home prices hit record highs across half of Australia despite COVID-19: Craig James

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EXPERT INSIGHT

With the deepest recession since the end of World War 2, a sharp collapse in employment in April and May and a halving in underlying population based demand for housing (as a result of the hit to immigration) it might have been expected that 2020 would have been a pretty bad year for house prices. As its turned out though the property market held up pretty well and in recent months has started to accelerate again. It certainly turned out a lot stronger than I anticipated 6-9 months ago.

Basically, the combination of reopening unleashing pent up demand, an avalanche of government incentives (including stamp duty concessions, various state support measures, HomeBuilder which has now been extended to March albeit at a reduced payment and an expansion of the First Home Loan Deposit Scheme), a further easing in lending standards on the way for early this year (with the removal of responsible lending obligations), record low mortgage rates, the desire to "escape from the city" helped along by ongoing bank payment holidays and Government income support measures averted a sharp fall in prices that would otherwise have followed from higher unemployment and underemployment, weak inner city rental markets and the hit to immigration and brought forward demand from first home buyers and owner occupiers. As a result property prices turned up far earlier than I had been expecting and there appears to be a bit of FOMO (or the “fear of missing out”) creeping into some markets – particularly outside of Melbourne and Sydney.

At the current rate of increase average capital city dwelling prices will surpass their September 2017 record high by March, although this masks a wide divergence with: record highs already in Brisbane, Adelaide, Hobart and Canberra and in average regional home prices; Perth and Darwin remaining well down on their 2014 highs; and Sydney and Melbourne prices having been range bound since 2017.  

Outlook

Australian home prices are likely to continue to be boosted through 2021 by record low mortgage rates, government home buyer incentives, with the recovery in the economy expected to offset the phasing down of income support measures and bank payment holidays. As a result average home prices are expected to rise by around 5% through the year.

However, the outlook is widely divergent across cities, within cities and across units versus houses.

The risks relate to: renewed coronavirus related lockdowns although so far new case numbers seem to be getting kept down and vaccines should help head off this risk entirely later in the year; higher unemployment and underemployment and distressed sales as government income and bank support measures wind down although the risk on this front are rapidly diminishing; falling rents and high vacancy rates in inner city Melbourne and Sydney weighing on investors; a 100,000 per annum reduction in underlying dwelling demand flowing from the hit to immigration; and a pandemic/work from home driven “escape to the suburbs and regions” that is weighing on inner city/unit prices but pushing up outer suburban/house and regional prices.

It remains hard to see that the reversal in net immigration from around 240,000 people per annum to an expected net outflow of people this financial year (of -70,000) and next (of -20,000) won’t have a significant impact. The surge in population growth of around 150,000 people per annum taking it to around 375,000 people per annum due to higher immigration from the middle of the 2000s was the main factor explaining very expensive Australian housing over the last 15 years as the property market became chronically undersupplied. The collapse in population growth which is likely to result in a halving in underlying demand for housing this financial year and next at the same time that governments are intent on supporting housing construction via various initiatives including HomeBuilder is likely to weigh on prices at some point as chronic undersupply gives way to oversupply in some areas. Particularly with rate cuts and incentives pulling demand forward and mortgage rate reductions reaching the end of the road. This is particularly likely to weigh on unit rents and prices along with investor demand in Sydney and Melbourne.

<img alt="image008.png@01D6B106.AC24C7A0" data-image-whitelisted="" height="376" id="m_-6478027253593781169m_-4542295210685584014_x0000_i1028" src="https://mail.google.com/mail/u/0?ui=2&amp;ik=134db8e8c7&amp;attid=0.7&amp;permmsgid=msg-f:1687916156705272432&amp;th=176caecd330f7270&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ9FtgYIq5JXDH2F_FyDfWWj9C1o7lbrwJ0rLtJRxkUsCjYI8qllivVKe1pXjUSJNWDUdLouyLHVy7qTgDDiqkj4DCVMLXl-pTuQmmupxL23y3wHb3M12fQAooA&amp;disp=emb&amp;realattid=176caec726b25664d67" tabindex="0" width="620">

Source: ABS, AMP Capital

Inner city Melbourne and Sydney are the most vulnerable to the hit to immigration, but this may not become fully apparent for another six months or so. Outer suburban areas and houses in these cities are likely to continue seeing solid price gains reflecting the “escape from the city” phenomenon against a backdrop of very low mortgage rates. On average Sydney and Melbourne price gains are likely to be modest at around 2 to 3% through 2021.

Other cities and regional areas are likely to perform well reflecting lower levels of debt and less exposure to immigration and as such as likely to see rising average prices with record low mortgage rates dominating. Adelaide and Brisbane are playing catch up after years of underperformance compared to Sydney and Melbourne, Canberra is benefitting from strength in public sector employment and Perth and Darwin are starting to recover after bear markets ever since 2014 helped by the recovery in mining investment in WA. Expect average price gains of close to 10% in Adelaide, Brisbane, Perth, Darwin and regional areas and around 5 to 7% in Canberra and Hobart.

The next chart puts the relative performance of the capital cities into perspective by focussing on rolling 5 year price gains. Basically, Sydney and Melbourne lead the longer term cycle and the other cities follow. Right now, Brisbane, Adelaide, Hobart and Canberra dwelling prices are playing catch up after underperforming Sydney and Melbourne through much of last decade and Perth and Darwin home prices are finally recovering from a multi-year bear market that went bust with the end of the mining investment boom. The surge in immigration played a big role in the outperformance of Sydney and Melbourne into 2017 and this is now going into reverse.

<img data-image-whitelisted="" height="355" id="m_-6478027253593781169m_-4542295210685584014Picture_x0020_9" src="https://mail.google.com/mail/u/0?ui=2&amp;ik=134db8e8c7&amp;attid=0.8&amp;permmsgid=msg-f:1687916156705272432&amp;th=176caecd330f7270&amp;view=fimg&amp;sz=s0-l75-ft&amp;attbid=ANGjdJ_gH4A3QD-fRbFPZ5uL1acBi9UQclRFlZW5h5YkYBpGbsseFJmIcT8l9FO0gBY-fXqDo6QcHXR13csczrDC4G-2YcCyYnxgAhCDQLHlYLdwZt4SAXlNf5KFFwY&amp;disp=emb&amp;realattid=176caec726b3a898ee8" tabindex="0" width="545">

Source: CoreLogic, AMP Capital

Outer suburban houses and dwellings in regional centres are likely to perform better than inner city units in most capital cities as a continuing trend to working from home and a greater focus on lifestyle dominates.

SHANE OLIVER is the Head of Investment Strategy and Chief Economist at AMP Capital 
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At the current rate of increase average capital city dwelling prices will surpass their September 2017 record high by March

soliver

2020 property market far stronger than anticipated when the pandemic first hit: Shane Oliver

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In a year that no one could have predicted, from a deadly global pandemic to our largest economic downturn since the 1930’s, CoreLogic’s recent Best of the Best 2020 Report reveals Australia’s $7.2 trillion residential real estate market proved remarkably resilient.

Eliza Owen, CoreLogic’s Head of Research Australia, says “The Best of the Best report for 2020 highlights the resilience of luxury markets in Australia, where the highest median house value was once again in Darling Point, and the highest median unit value was found in Point Piper, as with 2019.

“This is not to say these suburbs have been unaffected by the pandemic; indeed the high end of the Sydney market is generally more volatile to changes in economic conditions. However, this volatility also tends to see a rapid recovery in the wake of lower mortgage rates and an improvement in consumer sentiment.

“Perhaps even more surprising is that some of the suburbs more impacted by the pandemic are represented in this edition of the Best of the Best report as having the highest sales turnover value in the year to September.

“In the suburb of Melbourne, for example, unit values declined -3.4% between the onset of the pandemic in March, and the end of September. The total value of sales is down -3.9% in the year to September 2020 compared with the year to 2019. Yet the suburb of Melbourne has gone from having the sixth highest total sales value in 2019, to claim the number one spot in 2020,” says Ms Owen.

2020 in review

While the initial shock of COVID-19 led to a -2.1% decline in national property values between April and September, Australian housing values were 1.1% higher over the year to November following a recovery trend in the last two months.

Ms Owen says “Housing values have been supported by a strong mix of regulatory, monetary and fiscal measures, which have induced record-low mortgage rates, the deferment of mortgage repayment for households impacted by COVID-19, support for low income households, as well as grants and concessions for owner-occupier purchases.”

Demand for lifestyle areas is also a trend that may have been exacerbated, but was not necessarily triggered, by COVID-19. The narrative of Australians fleeing capital cities in search of a sea-change or tree change “because of COVID” has dominated reporting on the housing market through 2020.

“The relative popularity of lifestyle markets is evident in our report, and regional Australia out-performed the combined capital cities market. With the exception of the highest median value suburbs, our Best of the Best report is dominated by high performing regional areas across the country. Sunshine Beach on the Sunshine Coast has seen the highest annual capital growth in houses nationally, compared with 2019 when St Kilda in Melbourne saw the highest housing growth,” says Ms Owen.

Alternatively, rental market performance has been highly disparate. Ms Owen says “COVID-19 has had a severe impact on select rental markets in Australia, with Greater Melbourne unit rents falling -7.0% in the year to November 2020. Inner city rental markets of Sydney, Melbourne and to a lesser extent, Brisbane have been particularly impacted by the closure of international borders, where historically high demand from overseas migrants has been disrupted. Notably the vast majority of overseas arrivals to Australia are initially renters.

“However, there is a completely different dynamic in rental markets across Perth, Darwin, and other mining-related markets that has emerged. Following the long withdrawal of investor demand and several years of low new supply additions, rental markets are tightening. Across the suburb of South Headland, which holds the position of highest rental yields for units across the country, rents have increased significantly over the year following a long correction post mining-boom. This is also reflected in the WA capital, where Perth rent values have increased a remarkable 8.2% across dwellings over the year,” says Ms Owen.

2021 Outlook

Looking ahead to next year, Ms Owen comments on some expected trends.

“Record-low mortgage rates will likely be a significant tailwind for property values, and may place upward pressure on prices through 2021. Combined with a recovery in economic, some earlier factors considered a major risk to housing markets have been reduced, including the end of mortgage repayment deferrals.

“The inner-city Melbourne market is seeing greater risk in 2021, with an increase in listing stock weighing on a recovery in values. For example, modelled sales volumes for November estimate 4,301 transactions took place across Melbourne, compared with 8,054 new listings added to the market in the same period.  This means there was around 0.5 sales for each new listing added. This is very different from conditions across other capital cities, where the November sales to new listings ratio averaged 1.2 sales for each new listing added.

“So despite Melbourne dwelling values joining a broad-based recovery trend in November, and values rising 0.7% in the month, the disproportionate volume of stock to sales volumes may slow the rate recovery across the city in 2021.

“Property investment activity is likely to increase across smaller capital cities such as Perth, where rent values rose a remarkable 8.2% in the year to November. In Hobart, where gross rent yields are 4.6% across dwellings, the investor share of mortgage finance increased from a recent low of 16.4% in August 2020, to 21.8% in October across Tasmania.

“Institutional interventions will continue to shape the profile of property buyers, particularly as HomeBuilder is extended at a reduced rate into Q1 2021, and regulators monitor prudential lending standards. At June 2020, the housing debt to income ratio was 141.2, with housing debt accounting for most of Australian household debt. This poses an ongoing risk to the Australian economy, especially where heavily indebted households may be more likely to save rather than spend during periods of uncertainty or economic hardship.

“As a result, policy makers and regulators may watch for signs of rising household debt, or a decline in prudential lending standards that could lead to higher household debt. Higher LVR lending or higher loan to income ratios could be a trigger for macro-prudential intervention in 2021.

“Overall, the housing market outlook for 2021 is positive, given highly accommodative monetary and fiscal policy, signs of an economic recovery and many first home buyer incentives remaining in place through to early next year,” concludes Ms Owen.

ELIZA OWEN is CoreLogic’s Head of Research Australia
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CoreLogic’s Best of the Best 2020 Report released today reveals Australia’s $7.2 trillion residential real estate market proved remarkably resilient

2020 Property Breakdown

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