<p>The residential transformation of St Kilda Road is set to continue into with more new apartment plans for the sought-after boulevard.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p data-end="345" data-start="110">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.</p>

<p data-end="689" data-start="347">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.</p>

<p data-end="689" data-start="347">Dexus recently secured approval for its slice of St Kilda Road, while Gurner also has approved plans for the precinct.</p>


Joel Robinson

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

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p><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" /></p>

<p>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.</p>

<p>“Our target for this exceptional development is local and overseas buyers, including first-home buyers, downsizers and investors,” Choong said.</p>

<p>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.</p>

<p>“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.</p>

<p><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" /></p>

<p>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.</p>

<p>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.</p>

<p>The proposal also includes a commitment for 10 per cent of residential floor space to be allocated toward affordable housing through a monetary contribution.</p>

<p>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.</p>

<p><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" /></p>

<p>“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.</p>

<p>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.</p>

<p>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.</p>

<p>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>.</p>

<p><em>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></em></p>


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

<p><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.</p>

<p>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.</p>

<p>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.</p>

<p><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" /></p>

<p>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.</p>

<p>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.”</p>

<p>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.</p>

<p><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" /></p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p><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" /></p>

<p>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.</p>

<p>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.</p>

<p>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.</p>


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

<p>Bottega House has completed settlement of a landmark riverfront site in Macquarie Street, St Lucia, representing its first major Brisbane development.&nbsp;</p>

<p>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;</p>

<p>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;</p>

<p>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;</p>

<p>Exclusive sales for the project will be led by Keenan &amp; Byrne, ahead of an anticipated launch later this year.&nbsp;</p>

<p>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;</p>

<p>“This is an incredibly rare riverfront opportunity and one we have approached with a long-term perspective,” Malloch said.&nbsp;</p>

<p>“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."</p>

<p>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;</p>

<p>"Demand is expected to be strong given the scarcity of premium riverfront opportunities of this nature within Brisbane’s inner-west."&nbsp;</p>


Bottega House secures landmark riverfront site in St Lucia 

<section data-scroll-anchor="false" data-testid="conversation-turn-6" data-turn="assistant" data-turn-id="request-WEB:84a2af5e-d7cf-4ddf-922a-f4d44d6c6caa-2" data-turn-id-container="request-WEB:84a2af5e-d7cf-4ddf-922a-f4d44d6c6caa-2" dir="auto">
<section data-scroll-anchor="false" data-testid="conversation-turn-2" data-turn="assistant" data-turn-id="request-WEB:5a5ab36c-8dd3-454c-b456-c501f22f0eb4-0" data-turn-id-container="request-WEB:5a5ab36c-8dd3-454c-b456-c501f22f0eb4-0" dir="auto">
<p data-end="157" data-start="0">The arrival of the first piling rig officially marks the commencement of construction at SIERA’s new beachside apartment development, Exhale, in Northcliffe.</p>

<p data-end="459" data-start="159"><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.</p>

<p data-end="459" data-start="159">[smartcode_project:default project_id=112661 project_image_fid=359603]</p>

<p data-end="651" data-start="461"><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.</p>

<p data-end="950" data-start="653">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.</p>

<p data-end="1081" data-start="952">“The façade was designed to maximise panoramic coastal views while creating a distinctive architectural identity,” Thompson said.</p>

<p data-end="1081" data-start="952">[smartcode_project:default project_id=112661 project_image_fid=355935]</p>

<p data-end="1307" data-start="1083">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.</p>

<p data-end="1522" data-start="1309">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.</p>

<p data-end="1522" data-start="1309">[smartcode_project:default project_id=112661 project_image_fid=361052]</p>

<p data-end="1714" data-start="1524">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.</p>

<p data-end="1945" data-start="1716">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.</p>

<p data-end="1945" data-start="1716">[smartcode_project:default project_id=112661 project_image_fid=359607]</p>

<p data-end="2220" data-is-last-node="" data-is-only-node="" data-start="1947">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.</p>
</section>
</section>

<p>[smartcode_project_cta:default project_id=112661]</p>


SIERA kicks off construction at Northcliffe tower Exhale

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>
</body></html>

terryryder-YECXbqmri2

Fundamental cynicism of major banks on display: Terry Ryder

<html><body>
<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>
</body></html>

Sydney is declining, but doesn’t know it: Terry Ryder

<html><body>
<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>
</body></html>

pwargent-M4siyDbqQY

APRA strikes back to quell IO lending

<html><body>
<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>
</body></html>

ckusher-ujnxiKuFQs

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

<html><body>
<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>
<div class="separator"><a href="/images/2015/07/13/BA2.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"> </div>
<div class="separator"><img src="/images/2015/07/13/BA2.jpg" alt=""></div>
<div class="separator"> </div>
<div class="separator">
<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>
<div class="separator"> </div>
<div class="separator"><strong><span style="text-decoration: underline;">Supply of homebuyers</span></strong></div>
<div class="separator"> </div>
<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>
<div> </div>
<div><a href="/images/2015/07/13/hf6.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2015/07/13/hf6.jpg" alt=""></div>
<div> </div>
<div>
<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>
<div> </div>
<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>
<div> </div>
<div><a href="/images/2015/07/13/hf5.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2015/07/13/hf5.jpg" alt=""></div>
<div> </div>
<div>
<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>
<div> </div>
<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>
<div> </div>
<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>
<div> </div>
<div><strong><span style="text-decoration: underline;">The wrap</span></strong></div>
<div>
<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>
<div> </div>
<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>
<div>
<br>I'll be back to analyse the Lending Finance figures in more detail - including investor loans by state.</div>
<div> </div>
<div>Recall that the April 2015 figures showed Lending Finance leaping to a 7 year high.</div>
</div>
<div><span><em> </em></span></div>
<div>
<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>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</body></html>

APRA taps on the brakes: Pete Wargent

<html><body>
<div>
<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>
<div> </div>
<div>APRA's cooling measures will hit lower socio-demographic areas first as lower income earners struggle with the deposit hurdle.</div>
<div> </div>
<div>The first region to go in Sydney will be the south west, and to a lesser extent the west.</div>
<div> </div>
<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>
<div> </div>
<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>
<div> </div>
<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>
<div> </div>
<div><a href="/images/2015/09/14/Auctions.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2015/09/14/Auctions.jpg" alt=""></div>
<div> </div>
<div>
<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>
</div>
</body></html>

APRA measures to hit lower income suburbs: Pete Wargent

<html><body>
<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>
<p><a href="/images/2016/09/05/Chart-1-3-580x206.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/09/05/Chart-1-3-580x206.jpg" alt=""></p>
<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>
<p><a href="/images/2016/09/05/Chart-2-3-580x204.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/09/05/Chart-2-3-580x204.jpg" alt=""></p>
<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>
<p><a href="/images/2016/09/05/Chart-3-3-580x203.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/09/05/Chart-3-3-580x203.jpg" alt=""></p>
<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>
<p><a href="/images/2016/09/05/Chart-4-1-580x210.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/09/05/Chart-4-1-580x210.jpg" alt=""></p>
<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>
<p><a href="/images/2016/09/05/Chart-5-1-580x210.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/09/05/Chart-5-1-580x210.jpg" alt=""></p>
<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>
<div class="sharedaddy sd-sharing-enabled"> </div>
</body></html>

APRA

Editor's Picks

Have something to contribute?

Developments

New apartments

New townhouses

News

APRA

Editor's Picks

Receive the latest news stories to your inbox

Have something to contribute?

Developments

New apartments

New townhouses

News