<p><a href="https://www.apartments.com.au/buildings/aura-by-aqualand-north-sydney-168-walker-street-north-sydney-nsw-2060">AURA</a>&nbsp;doesn’t just rise over North Sydney, it redefines it. Now in its final release, <a href="https://www.apartments.com.au/developers/aqualand-australia">Aqualand</a>’s $1 billion architectural statement is not just complete, but already reshaping the way people live, connect and dine in this rapidly evolving harbourside CBD.</p>

<p>Positioned beside the new Victoria Cross Metro Station and boasting panoramic views across Sydney Harbour, Aura’s 386 residences crown a mixed-use precinct designed with unapologetic ambition. The curvaceous sandstone-inspired form by <a href="https://www.apartments.com.au/architects/woods-bagot">Woods Bagot</a>, paired with <a href="https://www.apartments.com.au/interior-designers/richards-stanisich">Richard Stanisich</a>’s understated interiors, sets a design tone that’s both monumental and intimate.</p>

<p>At its peak, literally, the two penthouses so spectacular they command their own names; La Davina and Il Magnate. The residents are spread across the&nbsp;entire top floor, offering what many consider the most refined residences ever built in North Sydney. Designed by Richard and Kirsten Stanisich, each four-bedroom home is meticulously crafted to evoke calm, space, and permanence.&nbsp;</p>

<p><iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/VB70993aG-I?si=adRBlXQliYmYvaSz" title="YouTube video player" width="560"></iframe></p>

<p>The kitchens are fully wrapped in natural stone, with integrated Gaggenau appliances, Sub-Zero fridges, concealed sculleries, and even a zip hydro tap delivering boiling, chilled and sparkling water on demand. A linear stone fireplace anchors the open-plan living space, dividing lounge and dining zones with quiet sophistication.&nbsp;</p>

<p>[smartcode_project:default project_id=30959 project_image_fid=292861]</p>

<p>The master suite, meanwhile, feels more like a private retreat, complete with a custom stone makeup vanity, walk-through dressing area, and spa-inspired ensuite with heated stone floors, a freestanding Villeroy &amp; Boch tub, and timber veneer joinery throughout.</p>

<p>Kirsten Stanisich, Director of Richards Stanisich, said the penthouses offer incredible scale reflective of a single residence.&nbsp;</p>

<p>“We sought inspiration for these remarkable residences from the classic top-floor Parisian apartment," Stanisich said.</p>

<p>"We looked at what made these French apartments so elegant and found it really came down to their scale. It was ultimately this generosity of space that we used for the AURA penthouses, where we’ve designed considered rooms with deep large-scale proportions."</p>

<p>[smartcode_project:default project_id=30959 project_image_fid=310337]</p>

<p>Everyday living at Aura feels no less elevated. A dedicated 24-hour concierge, Technogym fitness centre, sky dining terraces, and a resort-style pool serve a lifestyle designed to rival luxury hotels.</p>

<p>At street level, Aqualand’s own hospitality arm, Etymon Projects, curates a precinct of LA-style bistros, Japanese fine dining, and local wine bars, all seamlessly integrated into the building’s sculptural podium.</p>

<p>[smartcode_project:default project_id=30959 project_image_fid=310337]</p>

<p>This final chapter, aptly dubbed The Finale, is more than a sales phase, it’s an invitation to two of the most exclusive apartments ever to be built in North Sydney.</p>

<p>With limited residences remaining, buyers can access curated incentives including stamp duty rebates, rental guarantees, legal fee coverage, and even $20,000 towards dining within the precinct.</p>

<p>From generous one-bedders to The Icons, two singular penthouses priced well into prestige territory, Aura’s offerings reflect a scale and calibre rarely seen in urban Sydney. And with move-in now immediate, this is no longer a promise of future luxury. It’s happening.</p>

<p>[smartcode_project_cta:default project_id=30959]</p>


Staff Writer

Aqualand unveils penthouse collection at AURA By Aqualand in North Sydney

<p data-end="350" data-start="236">There’s no sign of the development wave that began several years ago slowing along Old Burleigh Road.</p>

<p data-end="625" data-start="352">Around 10 new apartment developments are either underway or preparing to launch along the 800-metre strip stretching from the southern edge of Surfers Paradise towards the heart of Broadbeach, collectively adding just shy of 1,000 new apartments to the beachfront corridor.</p>

<p data-end="884" data-start="627">The latest plans propose a further 30 apartments to replace an original six-unit walk-up on a 658 sqm site at <a href="https://www.apartments.com.au/new-apartments/20a-old-burleigh-road-surfers-paradise-qld-4217">20A Old Burleigh Road</a>. The 14-storey building has been designed by Ferro Chow Architecture, which recently joined the Elevation Architecture Group.</p>

<p data-end="1031" data-start="886">The developer behind the project is Geoffrey Booth, whose Future Liv In has focused on delivering rental accommodation across regional Australia.</p>

<p><img alt="Old Burleigh Road" data-entity-type="file" data-entity-uuid="99d393e7-d404-43bc-80cb-6255c39b83d6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-01-05%20at%2012.28.44%E2%80%AFPM.png?VersionId=ZFT8F3mOny4M4ut.kFF3woC9WH9oR5gT" /></p>

<p data-end="1469" data-start="1033">The Old Burleigh Road development will comprise 18 two-bedroom apartments, 10 three-bedroom apartments, and a single four-bedroom residence occupying the entirety of level 12. Above, the building will be crowned by a two-storey penthouse with its own private lift, several multi-purpose rooms, and two rooftop terraces — one featuring a puppy lawn and spa, the other offering a private swimming pool, sunset deck, and built-in barbecue.</p>

<p data-end="1676" data-start="1471">Resident amenities will be located on the second level and include a pool with adjoining spa, cabana, and pool deck, along with an indoor residents’ lounge featuring a bar and an alfresco barbecue kitchen.</p>

<p data-end="1885" data-start="1678">In the architectural statement submitted by Elevation Architecture, the project is referred to as “UMI”, which the firm says has been “inspired by the majestic hinterlands and shaped by the coastal climate”.</p>

<p data-end="2030" data-start="1887">“It is an exemplar of how community living can still feel at one with nature, breathable, and deeply connected in place,” the architects noted.</p>

<p data-end="2253" data-start="2032">They added that the site benefits from established building separation to adjoining towers, helping to maintain privacy, sunlight, and residential amenity, while still offering direct beach access within an urban setting.</p>

<p data-end="2537" data-start="2255">“Drawing inspiration from the Gold Coast hinterlands and the region’s natural landscape, the podium and tower detail highlights the contrasting elements of treetop green and cliff-face peach. The vibrant texture and materiality shaped by time has a richness in depth and character.”</p>

<p><img alt="Old Burleigh Road" data-entity-type="file" data-entity-uuid="b3d6c923-a0ab-4d74-86da-177313447e8e" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-01-05%20at%2012.28.38%E2%80%AFPM.png?VersionId=i2fygmoVQM6hWpbATTAW_yTitoMTrnI1" /></p>

<p data-end="2687" data-start="2539">Old Burleigh Road has become a hotspot for developers, with the three-tower Jewel development kickstarting a wave of projects up and down the strip when it was completed in 2020.</p>

<p data-end="2884" data-start="2689">Currently under construction and approaching completion is <a href="https://www.apartments.com.au/new-apartments/faro-broadbeach-123-old-burleigh-road-broadbeach-qld-4218">FARO Broadbeach</a> by 5Point and Bottega, 21 large-scale half- and full-floor apartments. 5Point is also behind the recently launched <a href="https://www.apartments.com.au/new-apartments/lumara-108-old-burleigh-road-broadbeach-qld-4218">Lumara</a>, another 37 apartments to add to the pipeline.</p>

<p data-end="3329" data-start="2886">Luxury builder GRAYA is progressing construction on <a href="https://www.apartments.com.au/new-apartments/enclave-by-graya-118-old-burleigh-road-broadbeach-qld-4218">Enclave</a>, its first Gold Coast tower, while Polycell remains the most active developer on the street. They are preparing to launch <a href="https://www.apartments.com.au/new-apartments/sandpiper-broadbeach-155-old-burleigh-road-broadbeach-qld-4218">Sandpiper</a>, a 50-storey redevelopment of the former Sandpiper Holiday Resort that will deliver around 200 apartments alongside extensive resident amenity. The group also has another 130-apartment project approved nearby, as does <a href="https://www.apartments.com.au/news/qld/dvb-approved-for-second-broadbeach-apartment-development">Dean Gallagher’s DVB Projects</a>.</p>


Joel Robinson

First look: Old Burleigh Road apartment development wave continues

<p data-end="255" data-start="117">Sunshine Coast developer Habitat Development Group continues to position itself as one of the region’s largest new apartment developers.</p>

<p data-end="598" data-start="262">Its latest project is in Maroochydore, where it is currently delivering <a href="https://www.apartments.com.au/new-apartments/the-millwell-2-millwell-road-east-maroochydore-qld-4558">The Millwell</a>. Adjacent to the new 53-hectare Maroochydore City Centre project, Habitat is planning a further 180 apartments on a 3,468 sqm site at <a href="https://www.apartments.com.au/new-apartments/132-136-aerodrome-road-maroochydore-qld-4558">132–136 Aerodrome Road</a>. The site was purchased with approval for a smaller 13-storey, 103-unit building.</p>

<p data-end="983" data-is-last-node="" data-start="605">Habitat will demolish the two existing retail centres, currently home to the Salvation Army Family Store and Neighbours Aid, and replace them with an 18-storey building featuring the significant rooftop amenities that have become a hallmark of Habitat developments in recent years. The rooftop will include both indoor and outdoor spaces, anchored by an infinity swimming pool.</p>

<p><img alt="Maroochydore" data-entity-type="file" data-entity-uuid="ad434d07-666b-4614-b33e-530ad6a2d261" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-01-05%20at%2010.12.33%E2%80%AFAM.png?VersionId=7pyLsPWKQuwv0us3_v.9DmbzEc2VZe9Z" /></p>

<p>There will be a mix of one- to four-bedroom apartments.</p>

<p>The Development Assessment Report, submitted to the Sunshine Coast Council, says the proposal&nbsp;is not speculative, but a response to both zoning intent and demonstrated housing need.</p>

<p data-end="931" data-start="563">“The proposed development represents an appropriate and logical intensification of the site, consistent with the planning framework and the intended urban outcomes for the locality.”</p>

<p data-end="1484" data-start="1120">Across the Sunshine Coast, councils are increasingly scrutinising not just height or yield, but whether new projects genuinely align with the long-term structure plans underpinning growth corridors. The&nbsp;ASTP Planning Report&nbsp;reinforces the approach, noting that the project has been shaped around site responsiveness rather than generic typology.</p>

<p data-end="1658" data-start="1486">“The development has been designed to respond to the physical constraints and opportunities of the site, while delivering a high-quality residential outcome that integrates with the existing and emerging urban context.”</p>

<p data-end="2275" data-start="1884"><img alt="Habitat" data-entity-type="file" data-entity-uuid="3a03fc54-4ca5-4868-88d0-eeced70604e2" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-01-05%20at%2010.12.28%E2%80%AFAM.png?VersionId=1pkK3lJrrZjkghTLBReM2zatcas4Nc4B" /></p>

<p data-end="379" data-start="125">In mid-2025, Habitat, a developer that also builds its own projects, commenced construction on The Millwell, located just over one kilometre from the new proposal. The Millwell will comprise more than 200 apartments across two eight-storey buildings.</p>

<p data-end="653" data-start="386">Habitat also has two projects on Lake Kawana in Birtinya: <a href="https://www.apartments.com.au/new-apartments/st-clair-birtinya-930-931-waterside-retreat-birtinya-qld-4575">St Clair</a>, a 200-unit, two-building development launched last year and set to welcome buyers this year; and Esperance, a 175-apartment project currently progressing through the development approval process.</p>


First look: Habitat continues to bolster Sunshine Coast apartment pipeline with Maroochydore development plans

<p data-end="475" data-start="307">John Camilleri, the breeder of legendary racehorse Winx, is set to deliver a landmark two-tower beachfront development that would redefine the Surfers Paradise skyline.</p>

<p data-end="693" data-start="477">Camilleri, who spent around $100 million acquiring development sites across the Gold Coast in 2025, has lodged plans for two new towers on the dress-circle stretch of Garfield Terrace, just two days before Christmas.</p>

<p data-end="893" data-start="695">In assembling the site, Camilleri's Celestino Developments has effectively acquired the 71 Garfield project by Iris Capital and AALTO by Weiya Holdings, creating an unrivalled <a href="https://www.apartments.com.au/new-apartments/63-79-garfield-terrace-surfers-paradise-qld-4217">4,000 sqm beachfront holding along Garfield Terrace</a>.</p>

<p data-end="1074" data-start="895">The proposal comprises two residential towers of 55 and 48 storeys, linked by a dramatic skybridge which will home “exclusive VIP and wellness amenities.”</p>

<p data-end="1326" data-start="1076">In total, the development would deliver 275 two-, three- and four-bedroom apartments across the two towers, rising above a shared landscaped podium that incorporates a central green space and a beachfront swimming pool stretching more than 90 metres.</p>

<p><img alt="DBI" data-entity-type="file" data-entity-uuid="097900f3-6bef-4919-b168-b08f2f762876" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-30%20at%209.37.58%E2%80%AFAM.png?VersionId=et0SpmcvaPPVrexI_zWi46BVFtZBxAzx" /></p>

<p data-end="1531" data-start="1328">Architecture firm DBI, in documents submitted to Gold Coast City Council, said the project at 63–79 Garfield Terrace would “establish a new benchmark for beachfront residential living on the Gold Coast.”</p>

<p>"The project occupies a rare, uninterrupted oceanfront site and has been shaped by a design philosophy that merges architectural elegance with environmental responsiveness and a carefully curated lifestyle experience. Together, the 48-storey North Tower and 55-storey South Tower form a distinctive twin-tower composition whose dynamic silhouette will make a significant contribution to the Surfers Paradise skyline."</p>

<p data-end="2074" data-start="1964">DBI said the architectural language draws inspiration from the fluidity and movement of the coastal landscape.</p>

<p>"Each tower is defined by organic, curving forms and continuous balcony ribbons that wrap the buildings, providing deep shading, enhancing environmental performance, and reinforcing the rhythmic, sculptural expression of the façade. These balcony forms also reduce the apparent mass of the towers while maintaining strong visual continuity from podium to summit. Sculpted reflective downturns run along the western spine of both towers, shifting and lifting as they extend upwards to frame service zones and open eastward to maximise ocean views."</p>

<p><img alt="Garfield" data-entity-type="file" data-entity-uuid="a2a00ce3-a0e9-45d6-b4b5-b7baed592ac5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-30%20at%209.53.40%E2%80%AFAM.png?VersionId=DnruWV1dhLrtXOeElwekyd7vPq2gw55t" /></p>

<p data-end="2804" data-start="2627">The project’s most striking feature is the skybridge at level 45, which will house executive lounges, formal dining spaces, wellness facilities and panoramic ocean-facing views.</p>

<p data-end="2978" data-start="2806">“The skybridge enhances the identity of the development, promotes social interaction, and delivers a lifestyle experience not found elsewhere on the Gold Coast,” DBI added.</p>

<p data-end="3245" data-start="2980">The podium will host an extensive suite of recreational amenities, including resident lounges, private dining rooms, a large open green lawn, and the signature 90-metre pool stretching along the beachfront. The pool is divided into lap, lounge and children’s zones.</p>

<p data-end="3406" data-start="3247">The southern end of the podium will accommodate additional wellness facilities, including a gymnasium, plunge pools, treatment rooms and a dedicated yoga lawn.</p>

<p><img alt="Garfield" data-entity-type="file" data-entity-uuid="ee1b4f25-231f-4804-83b1-a573a1481962" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-30%20at%209.55.47%E2%80%AFAM.png?VersionId=zObzIA3D5w7EwqPsHjr2pKrA4vbB28zL" /></p>

<p data-end="3625" data-start="3408">There will be 127 apartments in the North Tower and 148 in the South Tower, including multiple penthouses, while the Enderley Avenue and Oceanway frontages will be activated by a series of food and beverage tenancies.</p>

<p data-end="3986" data-start="3627">Camilleri emerged as the most active site acquirer on the Gold Coast in 2025. He spent just over $30 million acquiring Pacific Point, a 10-level Surfers Paradise apartment block and an adjoining three-level duplex, from fellow racing identity and Aquis billionaire Tony Fung. Plans are now underway for a 93-apartment, 40-storey tower on the 1,682 sqm site.</p>

<p data-end="4229" data-start="3988">He also paid $53.65 million for the 1,500 sqm Garfield Terrace site previously marketed as AALTO by Weiya Holdings, before acquiring the adjoining parcel from hotel billionaire Sam Arnaout’s Iris Capital, the developer behind V&amp;A Broadbeach.</p>


First look exclusive: Billionaire Winx breeder’s bold two-tower Surfers Paradise play with 45th-storey skybridge

<p data-end="460" data-start="273">The Melbourne-based HLA Group is the latest developer to expand into South East Queensland, lodging plans for a unique mixed-use short-term accomodation and apartment building in Taringa, with the building design inspired by the Glasswing Butterfly.</p>

<p data-end="972" data-start="462">The development application for 10 Morrow Street seeks approval for a total of 232 dwellings, comprising 116 residential apartments and 116 short-stay accommodation units. The build-to-sell residential component is made up of 31 one-bedroom apartments, 67 two-bedroom apartments, 17 three-bedroom apartments, and a single four-bedroom apartment, offering a diverse mix aimed at singles, couples, families, and downsizers.</p>

<p data-end="972" data-start="462"><img alt="Taringa" data-entity-type="file" data-entity-uuid="33913cd4-9839-4456-b325-d35b3f8b4694" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.40.26%E2%80%AFPM.png?VersionId=sLvc7jUrYzDwqPDZBPrXTosKHDSp.qrt" /></p>

<p data-end="1568" data-start="974">Designed by Ellivo Architects, the tower takes strong inspiration from nature, with the architectural language driven by one of Queensland’s most delicate species. As described in the planning documents submitted to Brisbane City Council, Ellivo Architects state the design is “inspired by the elegance of the Glasswing butterfly," and mirrors the graceful sweep of its wings, a form that feels light, fluid, and alive.</p>

<p data-end="1568" data-start="974">“Lush subtropical greenery is throughtfull woven throughout, transforming the building into a sanctuary in the heart of the city.”</p>

<p data-end="2022" data-start="1570">The proposal positions the building as more than a conventional residential tower, with Ellivo Architects describing 10 Morrow Street as “an urban oasis that blends short term accomodation with residential living. A destination for rest, relaxation, and renewal.”</p>

<p data-end="2022" data-start="1570"><img alt="Taringa" data-entity-type="file" data-entity-uuid="84e9a0ff-464e-4973-bffe-5d5a8fe9f087" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.40.32%E2%80%AFPM.png?VersionId=dhX9eVgUaQE2TvCzJPhF8N8_hzYSKpyK" /></p>

<p data-end="2481" data-start="2024">Formally, the building’s massing and floorplate are directly shaped by its butterfly inspiration. Ellivo explain that, “adopting the wings of the Glasswing Butterfly, the tower's plan is divided into four distinct quadrants, each shaped to mirror the wing's segmented geometry and taking the slender ‘veins’ up the facade of the tower.”</p>

<p data-end="2481" data-start="2024">"This approach results in a sculpted tower form with articulated façades and a strong vertical expression."</p>

<p data-end="2481" data-start="2024"><img alt="Taringa" data-entity-type="file" data-entity-uuid="5947011d-ff6c-4a57-bdc1-9072a472a79c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.40.29%E2%80%AFPM.png?VersionId=nnGqd4WCZM8AOJZY.c3u49BO4LurKRhb" /></p>

<p data-end="2727" data-is-last-node="" data-is-only-node="" data-start="2483">The Assessment Report by Human Habitats said the 19-storey tower capitalises on its strategic connectivity and prominence at the entrance of Taringa Village and adjoining the Taringa Station.</p>

<p data-end="2727" data-is-last-node="" data-is-only-node="" data-start="2483">"The proposal offers a significant revitalisation of the subject site that integrates architectural excellence, innovation, and sustainable design to directly address long-standing connectivity and safety challenges, housing supply , and diversity together with enhanced streetscape activation and convenient access to major transport corridors."</p>

<p data-end="2727" data-is-last-node="" data-is-only-node="" data-start="2483">HLA Group Australia is registered to South Yarra and is currently delivering Adamson No.5, just 15 luxury apartments that start from around $2 million.&nbsp;</p>


The Butterfly Effect: Glasswing butterfly inspires Taringa apartment development

APRA

<html><body><p>APRA intervention and credit controls would be much preferred to what New Zealand has decided to do to calm their property market, following 20% house price gains in a yea, according to veteran Australian estate agent John McGrath.

His comments came after the NZ Prime Minister, Jacinda Ardern has announced plans to remove tax deductibility on investment loan interest payments (except new builds) not just for future buyers but existing landlords, too. 

He noted macroprudential controls, whereby APRA instructs the banks to restrict credit, are far more likely in Australia.

"They’ll probably restrict the number of new interest-only loans or reduce the debt-to-income ratio for new borrowers – things like that. 

"There are many levers they can pull.   

"But that’s a long way off, in my view. Sydney and Melbourne home prices are only just past their previous peaks and other capitals, particularly Perth, are enjoying a long-awaited catch-up on capital growth," he noted.

"This is actually helpful to the economy because of the psychological ‘wealth effect’ that rising home values creates. 

"People feel richer and spend more at the shops, which creates jobs.

"Plus, when (not if) stock levels increase, the market might settle down on its own.  

"Let me tell you, APRA intervention and credit controls would be much preferred to what New Zealand has decided to do to calm their property market," McGrath said. </p></body></html>

The NZ Prime Minister, Jacinda Ardern has announced plans to remove tax deductibility on investment loan interest payments, except new builds.

jchancellor

John McGrath says APRA credit controls preferable to New Zealand's new rules for property investors

<html><body><p>The Australian Prudential Regulation Authority chairman Wayne Byres has told parliamentarians that the regulator’s job was not to “solve house prices” or “solve affordability.” 

But Byers did tell the House of Representatives Economics Committee that APRA was watching closely for riskier lending.

“The last statement from the Council of Financial Regulators said quite clearly we are watching for a deterioration in lending standings and that’s not evident at this point,” he said 

“That is not to say it won’t emerge but it’s not obvious at this stage.” 

Byres accepted that house prices would rise faster than incomes when he noted the regulator remained focused on protecting depositors and the stability of the financial system.

“It’s not our job to solve house prices and it’s not our job to solve house pricing affordability,” Byres said.

“We are watching for a deterioration in lending standings, and that’s not evident at this point. 

"That is not to say it won’t emerge, but it’s not obvious at this point,” Mr Byres said.

The comments come despite strong monthly price growth and the highest auction clearance rates in years.

The AFR recently reported APRA data revealed a 31 per cent increase in interest-only loans, a 27 per cent increase in mortgages with a loan-to-valuation ratio (LVR) of 95 per cent and a 26 per cent increase in mortgages where the borrower was granted a loan more than six times their annual income.

Byres noted buying activity was being driven by first home buyers, which was creating a different dynamic to the prior times of APRA intervention that curbed investor and interest-only loans in 2014 and 2017.

Byers did note the vast majority of home owners who stopped mortgage payments during the pandemic last year had resumed repayments.

Deferred loans accounted for 0.5 per cent of banks’ total loan books in February, the parliamentary committee was advised on Monday.

It was down from 10 per cent on last May.

APRA will be monitoring how lenders dealt with customers still struggling to pay their mortgages.
</p></body></html>

APRA, the prudential regulator has also rejected any suggestion the regulator’s job was to “solve house prices.” 

APRA doesn't see role as solving housing affordability

<html><body><p>The former APRA chairman Jeff Carmichael believes that lending restrictions are being discussed at the moment by banking regulators.

It comes as he sees the recent home price hikes as “the starting of overheating”.

“I think APRA will be starting to look at those very carefully, certainly over the next six to 12 months — whether they need to make adjustments in LVRs, debt-to-income ratios, debt-service ratios to raise the bar for the banks, so that they are not fuelling that overheating in the mortgage market,” he told The Age.

Carmichael expects lenders could start restricting their own offerings if, and when they become concerned about the market given housing loan commitments continue at record levels according to the Australian Bureau of Statistics.

The regulator has acted twice recently in restricting lending forcing banks in 2014 to restrict their offerings to investors and in 2017 with interest only loans restrictions.

The current boom is however being driven by owner occupiers.

Last week the Council of Financial Regulators, which is made up of the RBA, Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC) and the federal Treasury, advised it was keeping a close eye on lending standards.

Most economists think any macroprudential policies to restrict lending will not be introduced until 2022.</p></body></html>

The regulator has recently acted twice forcing lenders to impose tougher lending restrictions

Tightened lending is coming: former APRA boss

<html><body>
<p>The fundamental cynicism of major banks has been on display in the past week, with lenders exploiting APRA’s anti-investor measures to boost their profits.</p>
<p>Most major lenders have lifted interest rates for investors and then tried to represent the cash grab as a “we had no choice” situation caused by the regulators.</p>
<p>There is no justification for the interest rate hike. Lenders have already tightened their lending criteria in a number of ways designed to eliminate many fringe dwellers from the possibility of borrowing to buy investment properties.</p>
<p>The interest rate hike is clearly not motivated by a desire to further restrict investor activity. It’s simply a profit-boosting play which can be explained away, conveniently but dishonestly, as a consequence of APRA moves.</p>
<p>How do we know?  Because the big banks and other lenders have lifted interest rates on existing investor loans, not just on new ones.</p>
<p>Increasing interest rates on existing loans does nothing to reduce investor borrowing to buy real estate. All it does is boost bank profits. </p>
<p>If they were fair dinkum in their claims that they’re acting “as part of our commitment in meeting APRA’s benchmark” (as Westpac tried to claim), they would lift rates on new loans only.</p>
<p><span>The Bank of Queensland, which lifted its standard variable rate for investor loans 29 basis points, has a master of weasel words on staff called Matt Baxby who came up with this classic to justify the unjustifiable this week: “</span>We are adopting a prudent position that is aligned with the market and balances our own growth objectives with the risks associated with investor lending in general and the overall growth of investor lending in the market as a whole.”</p>
<p>If you can make sense of that statement, please write and let me know. I think a reasonable translation is: “We’re shafting a significant proportion of our existing customers but we’re hoping you won’t notice.”</p>
<p>Beyond that, the APRA measures and lenders’ response to them are an extraordinary case of overkill by bureaucrats who clearly don’t have a grip on market reality. </p>
<p>The faceless APRA boffins who make their pronouncements never stand up to be identified or face any scrutiny of their actions. If we had the opportunity to question them, whoever they are, I’m quite certain we would discover their understanding of real estate markets is wafer thin.</p>
<p>Essentially, Sydney is having a boom and all of Australia is being punished for it.</p>
<p>Taking punitive measures that apply nationally in response to an issue in Sydney is tantamount to amputating a leg to cure a sprained ankle.</p>
<p><span>I note </span>that the Property Investment Professionals of Australia (PIPA) has questioned the decision by lenders to increase interest rates for both new and established property investors, suggesting a different approach should’ve been taken to ensure a sustainable property market.</p>
<p>PIPA chair Ben Kingsley said APRA’s pressure tactics to force individual lenders to lock out investors have raised both concerns and question marks for the industry.</p>
<p>“Increasing borrowing costs for investors who bought into the market some time ago seems unfair and detracts from what should be the common goal of creating a balanced property market,” he said.</p>
<p>PIPA suggested that more targeted measures to slow new investor lending in certain areas, such as decreasing and restricting borrowing power for new investors in locations where the market is particularly heated, would have been a better approach.</p>
<p><span style="line-height: 1.3em;">Couldn’t agree more.</span></p>
<p><em>TERRY RYDER is the founder of <a href="https://www.hotspotting.com.au/" target="_blank">hotspotting.com.au</a>. You can <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email him</a> or follow him on <a href="https://twitter.com/hotspotting" target="_blank">Twitter.</a></em></p>
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terryryder-YECXbqmri2

Fundamental cynicism of major banks on display: Terry Ryder

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<p>There’s little doubt that the Sydney slowdown is under way.</p>
<p>I note that the boffin who runs APRA is trying to claim credit for a reduction in investor activity, but the wind-down in Sydney sales volumes pre-dated his misguided measures to prevent investors from buying real estate.</p>
<p>In terms of sales activity, Sydney peaked way back in the December Quarter of 2013. Auction frenzy and price growth has continued because sales levels have fallen away only gradually. And history shows that markets take time to adjust to new circumstances. Sales activity can be falling for six months or more before prices start to react.</p>
<p>Transactions in the March Quarter 2015 were down on the December 2014 Quarter and also below the March 2014 Quarter. The June 2015 Quarter has shown a further gradual decline.<span style="line-height: 1.3em;"> </span></p>
<p>The most telling barometer of the Sydney slowdown is the number of individual growth markets, as revealed by Hotspotting’s quarterly research for the Price Predictor Index. </p>
<p>The February research found 118 suburbs with rising sales activity across the Sydney metropolitan area. The May survey found 72. The latest research finds only 36 suburbs with a growth trajectory.</p>
<p>The dominant market type in Sydney now is what we call “plateau” markets. These are suburbs where sales activity was previously rising, but now sales levels have tapered off – still at a healthy level, but below the peak activity.</p>
<p>This is an indicator that the market is beginning to loose its heat.</p>
<p>Another indicator that the cycle has almost run its course is that the leading growth markets are on the fringes of the metropolitan area.</p>
<p>The leading precincts, still with growth markets, are the Campbelltown (far south-west) and Penrith (far west) municipalities.</p>
<p>Other areas still hanging in there (lots of plateau markets) include the Bankstown, Blacktown and Parramatta municipalities.</p>
<p>Yet another sign that the boom cycle has moved on is the performance of regional New South Wales markets. I’ve reported previously that Sydney’s momentum has rippled out into regional centres – firstly those close to Sydney, like Wollongong, Gosford and Newcastle, and more recently those further afield.</p>
<p>The latest survey shows that Regional NSW has considerably more growth markets than Sydney does – almost double the number, in fact. </p>
<p>Sydney is declining, but doesn’t know it, while the state’s regional cities are increasingly buoyant.</p>
<p><span style="line-height: 1.3em;">Tuned-in investors will have moved on from Sydney some time ago. The price growth of the near future will be found in places like Port Macquarie, Albury, Goulburn, Coffs Harbour and Tweed Heads.</span></p>
<p><em> </em></p>
<p><em>TERRY RYDER is the founder of <a href="https://www.hotspotting.com.au/" target="_blank">hotspotting.com.au</a>. You can <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email him</a> or follow him on <a href="https://twitter.com/hotspotting" target="_blank">Twitter.</a></em></p>
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Sydney is declining, but doesn’t know it: Terry Ryder

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<p>EXPERT OBSERVATION</p>
<p>In a recent letter to all Australian authorised deposit-taking institutions (ADIs) entitled ‘Embedding Sound Residential Lending Practices,’ APRA indicated that lenders need to limit lending at very high debt to income levels.  </p>
<p>The actual wording of the comment was, APRA expects ADIs to commit to developing internal risk appetite limits on the proportion of new lending at very high debt to income levels (where debt is greater than 6 times a borrower’s income), and policy limits on maximum debt to income levels for individual borrowers.  </p>
<p>This doesn’t suggest that there is any hard limit on loan to income (LTI) ratios above 6 times but it does suggest that there will be less appetite for mortgages which are in excess of 6 times incomes.</p>
<p>Utilising gross household income data that has been modelled by the Australian National University (ANU) Centre for Social Research and Methods we can take a look across the individual capital cities at what the impact of limiting debt to income ratios to six times would be.  </p>
<p>The following charts look at annual gross household incomes with a comparison to median values at the end of 2017.  Incomes are elevated six times for comparison to median prices.  </p>
<p>The high median value relative to incomes implies the typical Sydney household would probably be targeting properties across the lower quartile of values rather than around the middle of the valuation range. </p>
<p><img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg1.png" alt="2018-05-25--blogimg1" width="1102" height="480"></p>
<p> </p>
<p><img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg2.png" alt="2018-05-25--blogimg2" width="1102" height="480"></p>
<p>Six times the median gross household income in Sydney is calculated at $688,764.  </p>
<p>The median house value in Sydney is $1,058,306 and the median unit value is $774,124.  </p>
<p>What this means is that if a buyer wanted to purchase the median house under this scenario they would need a deposit of $369,542 and for the median unit they’d need a deposit of $85,360. </p>
<p><img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg3.png" alt="2018-05-25--blogimg3" width="1102" height="480"></p>
<p> </p>
<p><img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg4.png" alt="2018-05-25--blogimg4" width="1102" height="480"></p>
<p>At the end of 2017, Melbourne’s median house value was $832,735 and the median unit value was $574,052.  At the same time, the median gross household income was $1,553/week with six times this annual income was recorded at $605,787.  Based on these figures, at 6 times income, borrowers in Melbourne can still afford the median unit but would need a deposit of $226,948 to be able to borrow below six times their income for the median house.</p>
<p><img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg5.png" alt="2018-05-25--blogimg5" width="1102" height="480"></p>
<p>  </p>
<p><img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg6.png" alt="2018-05-25--blogimg6" width="1102" height="480"></p>
<p>Unlike Sydney and Melbourne, households on the median income in Brisbane can still afford to borrow enough for the median valued house or unit.  The borrowing power for someone on the median income is $608,830 which is lower than both the median house ($531,248) and median unit ($383,752) value. <br> </p>
<p><img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg7.png" alt="2018-05-25--blogimg7" width="1102" height="480"></p>
<p> </p>
<p><img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg8.png" alt="2018-05-25--blogimg8" width="1102" height="480"></p>
<p>The typical household in Adelaide can still afford the median house and unit.  As at December 2017 the median house cost $458,806 and the median unit $331,325.  Based on the median gross household income of $1,277/week someone on this income could borrow up to $498,161.<br> </p>
<p><img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg9.png" alt="2018-05-25--blogimg9" width="1102" height="480"><img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg10.png" alt="2018-05-25--blogimg10" width="1102" height="480"></p>
<p> <br>Based on the median household income for Perth, someone borrowing six times their annual income could borrow $616,088.  Based on this figure, a borrower purchasing the median property would be comfortably below six times their annual income whether they’re purchasing a houses ($484,562) or a unit ($408,488). </p>
<p><img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg11.png" alt="2018-05-25--blogimg11" width="1102" height="480"><img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg12.png" alt="2018-05-25--blogimg12" width="1102" height="480"></p>
<p><br> <br>A borrower in Hobart on the gross household income ($1,248/week) borrowing six times their annual income could borrow up to $486,823.  The $486,823 figure is lower than the median house ($424,251) and median unit ($335,289) value for Hobart. </p>
<p><img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg13.png" alt="2018-05-25--blogimg13" width="1102" height="480"><img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg14.png" alt="2018-05-25--blogimg14" width="1102" height="480"></p>
<p><br>Median household incomes in Darwin are quite high at $2,200/week.  Based on a borrower’s ability to borrow six times the household income, the median household could borrow up to $858,063.  Median house value ($469,083) and median unit values ($356,992) are significantly lower than $858,063. </p>
<p><img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg15.png" alt="2018-05-25--blogimg15" width="1102" height="480"><img src="https://www.corelogic.com.au/sites/default/files/2018-05/2018-05-25-blogimg16.png" alt="2018-05-25--blogimg16" width="1102" height="480"></p>
<p> <br>Like Darwin, Canberra also has relatively high median household incomes at $2,170/week.  Someone borrowing six times the annual income would be able to borrow up to $846,358 which is significantly higher than the median house and unit values which are recorded at $669,642 and $431,048.<br>Of course median values don’t tell the whole story, as many properties are valued below as there are above however, it is valuable in providing a guide for what impact limiting high loan to income lending would have.  </p>
<p>In Sydney the median household can’t afford the median house or unit if there was a LTI limit of 6 times and in Melbourne the median household can’t afford the median house.  Were hard limits on LTI to be implemented it would have a much bigger impact on Sydney and Melbourne than any other areas of the country.  Any limit would still have some impact on households outside of Sydney and Melbourne, not to mention those that are purchasing properties additional to their principal place of resident.</p>
<p>Also keep in mind that these figures are only looking at a single scenario.  In most instances a lender will not allow a borrower to borrow 100% of the value of a property and if a borrower has a deposit of less than 20% they will need to pay lenders mortgage insurance (LMI).</p>
<p>So far there is no indication of a hard cap on LTI ratios.  What is clear is that APRA would like to see high LTI lending dialled back and that will have an impact on some borrowers, particularly those purchasing more expensive properties and/or those that have multiple properties.</p>
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ckusher-ujnxiKuFQs

What would lending caps of six times your income look like?

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<div>If anyone doubted APRA's commitment or ability to quell interest-only lending, then they definitely shouldn't any more.</div>
<div> </div>
<div>New interest-only loans have been smashed to smithereens, down from 45.6 per cent of the market at the 2015 peak to just 16.9 per cent.</div>
<div> </div>
<div class="separator"><a href="https://1.bp.blogspot.com/-zswlpvzps3E/WigMRNV_yAI/AAAAAAAAnVU/lHVGM4KBkwwiIzu2Db1M_Wu_ZRql-JL3QCLcBGAs/s1600/IO.jpg"><img src="https://1.bp.blogspot.com/-zswlpvzps3E/WigMRNV_yAI/AAAAAAAAnVU/lHVGM4KBkwwiIzu2Db1M_Wu_ZRql-JL3QCLcBGAs/s640/IO.jpg" width="640" height="384" data-original-height="828" data-original-width="1375"></a></div>
<div class="separator"> </div>
<div class="separator"> </div>
<div>Banks continue to wind back high loan-to-value ratio (LVR) lending, continuing a trend that has been underway for 4 years now. </div>
<div> </div>
<div>Property buyers will not only need to pay back principal, they'll need to have a decent deposit too.</div>
<div> </div>
<div class="separator"><a href="https://1.bp.blogspot.com/---2itDzQ4n0/WigMRKZLz0I/AAAAAAAAnVY/1Zi2PyTRlrwptGVf9ipTWhgRF6OfBmvEQCLcBGAs/s1600/APRA1.jpg"><img src="https://1.bp.blogspot.com/---2itDzQ4n0/WigMRKZLz0I/AAAAAAAAnVY/1Zi2PyTRlrwptGVf9ipTWhgRF6OfBmvEQCLcBGAs/s640/APRA1.jpg" width="640" height="384" data-original-height="831" data-original-width="1381"></a></div>
<div class="separator"> </div>
<div class="separator"> </div>
<div>Despite this, the total value of residential mortgages on ADI books rose by +6.9 per cent over the year to September, as the pendulum swings from investors to homebuyers.</div>
<div> </div>
<div class="separator"><a href="https://2.bp.blogspot.com/-Si9WlQyE2KA/WigMROdTkDI/AAAAAAAAnVQ/n90AzNH4ehc_YxyJx67BsNSfvbPyGLxSgCLcBGAs/s1600/APRA3.jpg"><img src="https://2.bp.blogspot.com/-Si9WlQyE2KA/WigMROdTkDI/AAAAAAAAnVQ/n90AzNH4ehc_YxyJx67BsNSfvbPyGLxSgCLcBGAs/s640/APRA3.jpg" width="640" height="384" data-original-height="830" data-original-width="1382"></a></div>
<div class="separator"> </div>
<div class="separator"> </div>
<div>A seismic shift in the market then, as more borrowers will now be compelled to pay back some debt.</div>
<div> </div>
<div>With interest-only lending peaking in 2015, the greatest volume of rollovers will occur in 2020 - <a href="http://petewargent.blogspot.co.uk/2017/10/p-cliff" target="_blank">see here</a> for my thoughts on what might happen then. </div>
<div> </div>
<div class="separator">
<a href="https://1.bp.blogspot.com/-Uid2rCJIsEs/WigSMe3FNOI/AAAAAAAAnVo/gXeo4S5y4DUBHMnxjtL28IR_T3Sf-dbAwCLcBGAs/s1600/lightning-1082080_1920.jpg"><img src="https://1.bp.blogspot.com/-Uid2rCJIsEs/WigSMe3FNOI/AAAAAAAAnVo/gXeo4S5y4DUBHMnxjtL28IR_T3Sf-dbAwCLcBGAs/s640/lightning-1082080_1920.jpg" width="640" height="422" data-original-height="1060" data-original-width="1600"></a>
<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank"><span class="s2">blogger</span></a>.</span></p>
<p><span class="s1"> </span></p>
</div>
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pwargent-M4siyDbqQY

APRA strikes back to quell IO lending

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<div>Total ABS Housing Finance for the month of May 2015 came it at a seasonally adjusted print of above $31 billion for the third time on record, with all three of the strongest months taking place consecutively over the three months to May.</div>
<div> </div>
<div>On a trend basis, therefore, monthly total housing finance surged to its highest ever level at $31.9 billion.<br><br>This was in spite a seasonally adjusted dip in the month of May after lending in April had threatened to explode off the top of the chart.</div>
<div> </div>
<div><a href="/images/2015/07/13/HF1.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2015/07/13/HF1.jpg" alt=""></div>
<div> </div>
<div>
<div>On a rolling annual basis total owner-occupier lending has blazed upwards by 9 per cent over the past year to a record $212 billion.</div>
<div> </div>
<div>Meanwhile investor lending has screamed 22 per cent to $148 billion, obliterating all previous records by an enormous margin.</div>
<div> </div>
<div><a href="/images/2015/07/13/HF3.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2015/07/13/HF3.jpg" alt=""></div>
<div> </div>
<div>
<div>That said, total housing finance on a seasonally adjusted basis had been higher in April at a downwardly revised $32.5 billion, and therefore the less exuberant May result of $31.1 billion represented a decline of 5.3 per cent for owner-occupier lending and 3.2 per cent for investment loans.</div>
<div> </div>
<div>This suggests that initial action taken to tighten lending standards may have been taking some effect by the end of May.</div>
<div> </div>
<div>Overall this should be healthy news for the housing market over the medium term - rampant lending growth had been becoming far too skewed towards investors, and therefore it is doubly important for Australia that robust lending standards are maintained.</div>
<div> </div>
<div>The May figures showed investor lending as being "only" 19 per cent higher than in the prior year corresponding period following a blistering 23 per cent year-on-year increase in April - which suggests that APRA will have more work to do over the near term.<br><br>
</div>
<div>
<div>
<strong><span style="text-decoration: underline;">Premature extrapolation?</span></strong><br><br>This will doubtless result in the regulation "housing gloom" headlines, with commentators choosing to highlight the lower seasonally adjusted monthly figure rather than the trend hitting the highest level in history (the opposite of what they recommend we do when observing surprisingly strong <a href="https://petewargent.blogspot.com.au/2015/07/economy-adds-225000-jobs-in-year" target="_blank">Labour Force </a>data). </div>
<div> </div>
<div>You can make your own "captain's call" on this.<br><br>Below is the raw "Original" data - not seasonally adjusted - which shows May 2015 to be the third highest result on record for Housing Finance at $32.6 billion, with total lending actually well up on April, but a little below the $33.1 billion level seen back in March.<br><br>Westpac has already noted that the seasonal adjustment may be suffering from a technical glitch this month.</div>
<div> </div>
<div><a href="/images/2015/07/13/hf4.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2015/07/13/hf4.jpg" alt=""></div>
<div> </div>
<div>
<div>Note that the May figures naturally would not have been affected by the latest interest rate cut, with market activity through June and July having suggested something of a lift.<br><br>Whether or not mortgage approvals and in turn property markets begin to tee off again around October/November time remains to be seen.</div>
<div> </div>
<div><strong><span style="text-decoration: underline;">4 observations</span></strong></div>
<div> </div>
<div>A few points to make here. </div>
<div> </div>
<div>Firstly, commentators have been calling a housing market slowdown for years now, yet over the three years from May 2012 the "Original" data shows owner-occupier lending has steadily increased to be 24 per cent higher, while investor lending has roared upwards by a whopping 73 per cent.</div>
<div> </div>
<div>Given the above it would be prudent to digest more than one month of near-record high figures before coming to too many hard conclusions.</div>
<div> </div>
<div>Secondly, a number of media observers seem to be labouring under the misapprehension that regulators would like to see dwelling prices declining, which is patently not the case.</div>
<div> </div>
<div>APRA sees its role at the present time as weeding out riskier lending and slowing the rate of investor credit growth down to a more sustainable pace.<br><br>One suspects that even at the first inkling of significantly falling prices the regulator will once again take a back seat.</div>
<div> </div>
<div>Thirdly, the cost of mortgage debt remains almost absurdly cheap - it's possible to obtain mortgage rates with a "3 handle" right now - so if credit is not unduly restricted there is plentiful untapped demand for mortgage credit with a strongly expanding population and around 225,000 new jobs created in the past 12 months.<br><br>The market hasn't run out of willing buyers and nor has underlying demand mysteriously dried up overnight; rather it has been temporarily curbed by regulatory intervention.<br><br>Recall that the latest ABS Finance &amp; Wealth data showed that in aggregate currency and deposits, superannuation balances and housing equity are all at new record highs, with total household wealth surging past a record $8 trillion<a href="https://petewargent.blogspot.com.au/2015/06/household-wealth-surges-past-8-trillion" target="_blank">.</a><br><br>
</div>
<div>Fourthly, if anything the softer result for May increases the likelihood of a further interest rate cut by November 2015.</div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Generalisation trap</span></strong></div>
<div> </div>
<div>By far the most important point, though, is that there is no "property market" (singular) in Australia, so it would be unwise to generalise too broadly, although due to necessity all of us do so at times.</div>
<div> </div>
<div>We already know that many resources regions are moving the process of experiencing very sharp corrections, particularly in Western Australian and Queensland.</div>
<div> </div>
<div>Owner-occupier lending has now been sliding lower in aggregate in Western Australia for 12 months, albeit fairly moderately, implying that some sectors of Perth property markets are set to lose ground.<br><br>Owner-occupier lending has also now been slipping lower in aggregate in the Northern Territory for the past seven months, so the outlook for Darwin looks to be soft too.</div>
<div>
<br>As for the Sydney market commentary - where pundits have been calling the peak every month for at the past two years - well, it's been pretty bad, hasn't it?</div>
<div> </div>
<div>There have been i<span>ndicators of the market mania waning for a little while now, yet auction clearance rates are still tracking at <span>~</span>80 </span>per cent or a little above, and the warmer months will be rolling around once again before we know it.<br><br>Meanwhile stock on market in Sydney remains at remarkably low levels.<br><br>Charted below is the rolling annual owner-occupier lending data at the state level.</div>
<div> </div>
<div><a href="/images/2015/07/13/HF2.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2015/07/13/HF2.jpg" alt=""></div>
<div> </div>
<div>
<div><strong><span style="text-decoration: underline;">Lending standards tightened</span></strong></div>
<div> </div>
<div>On a seasonally adjusted basis owner-occupier lending declined in all states and territories in May, and fairly sharply in some cases.</div>
<div> </div>
<div>The question now is largely one of whether the regulator APRA continues to apply further pressure to outlying lenders, and if so, for how long.</div>
<div class="separator"> </div>
<div class="separator">This is all somewhat reminiscent of what we saw in England back in 2014, when the Mortgage Market Review (MMR) gummed up lending processes for several months, often with seemingly aimless box-ticking exercises and paper shuffling.</div>
<div class="separator"> </div>
<div class="separator">The pen-pushing and the SOX-style administrative obstacles certainly had the desired effect, taking the speculative heat out of the market for a fair period of time.</div>
<div class="separator"> </div>
<div class="separator">Yet borrowing rates remain remarkably cheap in Britain and average UK house prices have risen again to new record highs this month while quarterly mortgage approvals are up by 6 per cent according to the latest Bank of England data. </div>
<div class="separator"> </div>
<div class="separator">I expect that any material slowdown in Australian mortgage lending will be temporary and this housing market cycle will have a long way to run yet in Brisbane, Hobart, Canberra, and even Adelaide, despite its desperately weak full time employment trends.</div>
<div class="separator"> </div>
<div class="separator">Sydney's property markets are still gravitating higher for now, but must necessarily be closer to the end of their growth phase of the cycle than the beginning.</div>
<div class="separator"> </div>
<div class="separator">Greater Melbourne is also still humming along, but is waving through for approval extraordinary volumes of unit and apartments, which should stall rents and growth in that sector in time.</div>
<div class="separator"> </div>
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<div class="separator">Rhetoric has long suggested that the Reserve Bank needs lending finance and the housing market to be strong in order to drive consumption, particularly given the parlous state of other sectors of the economy.</div>
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<div class="separator"><strong><span style="text-decoration: underline;">Supply of homebuyers</span></strong></div>
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<div>An interesting aspect of this market cycle has been that the number of owner-occupier mortgage commitments has been considerably lower than we have seen in previous cycles.</div>
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<span>One key driver of this has been the sheer number of first time buyers who are opting to buy an investment property as their first step onto the housing ladder.</span><br><br><span>Surveys indicate that the first time investor figures are very much material, a trend which has long been evident to anyone who works in capital city real estate, especially in Sydney.</span><br><br><div>Given the high transaction costs of buying and selling property - and with young people changing jobs and even careers more frequently than ever before - it makes a great deal of sense for many young buyers to rent where they live and invest elsewhere (provided they do so sensibly and with a long term time horizon).</div>
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<div>As for fading demand from homebuyers? Again, it's wrong to generalise too broadly, but here are the rolling annual <strong>numbers</strong> of mortgage commitments written by state.</div>
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<div>I know that in some inner Brisbane suburbs where house prices are now rising resolutely, only today in mid-2015 after years of stagnant prices since 2007/08 are many homeowners able to contemplate selling to downsize or move elsewhere.</div>
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<div>Some have been effectively trapped having paid top dollar at a preceding market peak - after stamps and holding costs only now are some vendors able to justify selling in order to move on. </div>
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<div>At the same time there increasingly appears to be a surge of interest from interstate investors, from New South Wales in particular.<br><br>In rolling annual terms the number of owner-occupier commitments has continued to increase in the three most populous states plus the Australian Capital Territory, but on the other hand has been declining moderately in Western Australia, South Australia, Tasmania and the Northern Territory.</div>
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<div><strong><span style="text-decoration: underline;">The wrap</span></strong></div>
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<br>It's worth remembering that most market commentary which looks for trends over the short to medium term is little better than educated guesswork.<br><br>After all, how many commentators were predicting Sydney prices would be up by close to 50 per cent since 2012? Not many!<br><br>The fundamentals haven't changed too much and demand for property remains close to its highest ever level.<br><br>Unemployment has declined steadily from 6.3 per cent to 6 per cent following 225,000 new jobs created over the past 12 months. Population growth has slowed to around 330,000 per annum, with the declines to be felt most keenly in the resources states. Mortgage rates are as cheap as we have ever seen.<br><br>X-factors may include heavy pressure on lenders from APRA, an implosion in China, or a black swan event.</div>
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<div>Finally for today, without properly dissecting the allocation of investor credit by state it is impossible to draw too many firm conclusions given that more than 40 per cent of credit is presently being written to investors.</div>
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<br>I'll be back to analyse the Lending Finance figures in more detail - including investor loans by state.</div>
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<div>Recall that the April 2015 figures showed Lending Finance leaping to a 7 year high.</div>
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<span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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APRA taps on the brakes: Pete Wargent

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<em>CoreLogic-RP Data</em> reported a preliminary auction clearance rate of 75.1% for Sydney on Saturday with more than 1,000 auctions held over the week.</div>
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<div>APRA's cooling measures will hit lower socio-demographic areas first as lower income earners struggle with the deposit hurdle.</div>
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<div>The first region to go in Sydney will be the south west, and to a lesser extent the west.</div>
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<div>On the other hand the traditionally wealthier suburbs of the lower north shore, the eastern suburbs, and the inner west are poised to hold up much better. </div>
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<div>Unsurprisingly further research from the Domain Group showed that auction clearance rates held up to track at exceptionally high levels in the inner west (82.8 per cent), the lower north shore (82.3%), the northern beaches (79.6%) and the city &amp; east region (77.9%).</div>
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<div>On the other hand over the past two weeks auction clearance rates have tanked in the west (from 76.9% to just 66.3%), and particularly in the south west (from 69.8% to just 54.9%.</div>
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<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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APRA measures to hit lower income suburbs: Pete Wargent

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<p>The Australian Prudential Regulation Authority (APRA) released its June 2016 quarter property exposures data earlier this week. </p>
<p>The data looks at exposure to the property market by Australian Authorised Deposit-taking Institutions (ADI).  It’s valuable because it provides deeper insight into lending from mortgage lenders which isn’t available from the Australian Bureau of Statistics (ABS) monthly housing finance data.</p>
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<p>At the end of the June 2016 quarter, across all Australian ADI’s, there was $1.437 billion in outstanding residential mortgages to households. </p>
<p>The value of outstanding mortgages has increased by 8.1 percent year-on-year, which is the slowest year-on-year growth rate since the June 2014 quarter. </p>
<p>Outstanding mortgages include $930.4 billion outstanding to owner occupiers and $506.3 billion outstanding to investors. </p>
<p>The value of owner occupier mortgages has increased by 14.8 percent year-on-year, its largest rise since March 2010. </p>
<p>The value of investor mortgages outstanding has fallen by -2.4 percent year-on-year, its greatest decline on record. </p>
<p>To put the investor lending slowdown into perspective, 12 months ago investor mortgage credit had increased by 12.7 percent.</p>
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<p>Taking a look at potentially higher risk forms of lending, in June 2016 there was $557.0 billion in outstanding mortgage credit for interest-only mortgages, $2.753 billion for reverse mortgages, $24.7 billion for low-documentation mortgages and $1.0 billion in other non-standard mortgages. </p>
<p>Almost two-fifths of the value of outstanding mortgages (39.3 percent) is for interest-only mortgages. </p>
<p>Year-on-year there have been increases in the value of mortgage credit for interest-only (+7.7 percent) and reverse mortgages (+1.8 percent) while credit for low-documentation (-16.2 percent) and other non-standard loans (-8.5 percent) has fallen.</p>
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<p>The average outstanding mortgage balance was $252,100 which was 4.5 percent higher over the year to June 2016. </p>
<p>Across the different mortgage types the average outstanding balances were recorded at: $308,000 for loans with an offset, $335,200 for interest-only loans, $97,400 for reverse mortgages, $191,000 for low-documentation loans and $191,900 for other non-standard loans.    </p>
<p>The average balances have increased over the year for loans with an offset (+4.4 percent), interest-only mortgages (+4.6 percent) and reverse mortgages (+2.7 percent) and fallen for low-documentation loans (-1.2 percent) and other non-standard loans (-2.2 percent).</p>
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<p>Looking at new lending over the June 2016 quarter, there was $98.4 billion in new mortgage lending, $64.4 billion of which was for owner occupiers and $34.0 billion for investors.  It was a record quarter with the value of lending 20.7 percent higher over the quarter and 2.1 percent higher year-on-year. </p>
<p>Over the quarter the value of lending to owner occupiers rose by 15.2 percent while investor lending jumped 32.5% to its highest level since June 2015. </p>
<p>Year-on-year owner occupier lending is 16.2 percent higher while investor lending is -16.9 percent lower. While investment lending has certainly increased of late, it is difficult to know exactly how much is being driven by more volume and how much is being driven by borrowers taking out larger mortgages.</p>
<p>No data was available this quarter on new low-documentation lending however, there was $35.6 billion in interest-only lending, $136 million in other non-standard loans, $47.4 billion in loans from a third part source $3.5 billion worth of loans approved outside of serviceability. Although new interest-only lending is -19.1 percent lower year-on-year, it increased by 25.1% over the quarter which is in line with the significant jump in new lending to investors. </p>
<p>It was also the largest quarter since June 2015 for other non-standard loans. The $3.5 billion of loans approved outside of serviceability was the lowest since the March 2015 quarter.</p>
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<p>Looking at the loan-to-value ratios (LVR) on new mortgages over the quarter it is clear that lenders and or borrowers are becoming more conservative and using larger deposits.  Over the quarter, a record-high 78.0 percent of mortgages had an LVR of less than 80% (meaning the borrower had a deposit of at least 20 percent). </p>
<p>Over the quarter the value of lending increased across each of the LVR bands shown however, year-on-year the value of lending for LVRs of less than 60 percent is up 19.2 percent, for LVRs between 60 percent and 80 percent it is -1.1 percent lower, for LVRs between 80 percent and 90 percent it is 6.1 percent higher and for LVRs above 90 percent it is -20.7 percent lower.  Encouragingly, just 8.3 percent of all new mortgages had an LVR of more than 90 percent which is a record-low.</p>
<p>Overall the data shows that there has been a rebound in new lending to investors and a commensurate increase in interest-only lending over the past quarter.  After annual investor housing credit growth has slumped to well below APRA’s 10%pa speed limit it is clear that some lenders have scope to dial-up their lending to investors.  It also shows that despite historically weak rental markets and record low rental yields that there remains demand from the investment segment of the market.</p>
<p>While investment lending has lifted over the past quarter, the data is showing there is a more conservative approach to high LVR lending. The ongoing declines in lending with an LVR above 90 percent is encouraging because it should lead to reduced risk.</p>
<p>Over the coming quarters we’ll be closely watching how much higher investment lending lifts.</p>
<p>Keep in mind that despite record low yields, the returns are still superior to putting money in a term deposit, especially once you factor in the recent capital growth as well. Interest-only lending trends will also be important to watch with APRA already having raised concerns about that particular type of lending.</p>
<p><em>Cameron Kusher is research analyst for CoreLogic. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.</em></p>
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