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

Joel Robinson

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

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

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

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

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

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

Bottega House secures landmark riverfront site in St Lucia 

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

SIERA kicks off construction at Northcliffe tower Exhale

APRA

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The Australian Prudential Regulation Authority (APRA) announced plans today to remove the investor loan growth benchmark which was introduced in late 2014.
It intends to replace it with more permanent measures which it suggests with continue strengthened lending standards.
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The benchmark on interest-only lending, established in March 2017, will continue to apply until further notice. 
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The 10 per cent benchmark on investor loan growth was a temporary measure, introduced in 2014 as part of a range of actions to reduce higher risk lending and improve practices.
Since then APRA said authorised deposit-taking institutions (ADIs) have taken steps to improve the quality of lending, raise standards and increase capital resilience.
APRA has written to ADIs today to advise that it is now prepared to remove the investor growth benchmark, where the board of an ADI is able to provide assurance on the strength of their lending standards.
But any return to more rapid rates of investor loan growth would raise concerns.
"Such an environment could lead APRA to consider the need to apply the counter-cyclical capital buffer or some other industry-wide measure," it warned lenders. 
For the 10 per cent benchmark to no longer apply, lenders will be expected to confirm that:
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<li>lending has been below the investor loan growth benchmark for at least the past 6 months;</li>
<li>lending policies meet APRA’s guidance on serviceability; and</li>
<li>lending practices will be strengthened where necessary.</li>
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As with previous housing-related measures, this approach has been taken in close consultation with the other members of the Council of Financial Regulators. With risks in the environment remaining heightened, it will be important for ADIs to maintain prudent standards and close any remaining gaps in lending practices.
APRA Chairman Wayne Byres said that while the announcement reflects improvements that ADIs have made to lending standards, there is more to do to strengthen the assessment of borrower expenses and existing debt commitments, and the oversight of lending outside of policy. 
"The temporary benchmark on investor loan growth has served its purpose. Lending growth has moderated, standards have been lifted and oversight has improved. However, the environment remains one of heightened risk and there are still some practices that need to be further strengthened. APRA is therefore seeking assurances from ADI Boards that they will maintain a firm grip on the prudence of both policies and practices." 
For ADIs that do not provide the required commitments to APRA, the investor loan growth benchmark will continue to apply.
As part of these measures, APRA also expects ADIs to develop internal portfolio limits on the proportion of new lending at very high debt-to-income levels, and policy limits on maximum debt-to-income levels for individual borrowers. This provides a simple backstop to complement the more complex and detailed serviceability calculation for individual borrowers, and takes into account the total borrowings of an applicant, rather than just the specific loan being applied for.
"In the current environment, APRA supervisors will continue to closely monitor any changes in lending standards.
"The benchmark on interest-only lending will also continue to apply. APRA will consider the need for further changes to its approach as conditions evolve, in consultation with the other members of the Council of Financial Regulators," Mr Byres said.
 
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j.ballantyne1990-6AQqhLzZaK

APRA moves to ease 10% lender growth restrictions

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Australian Prudential Regulatory Authority chairman Wayne Byres has said there is little evidence of a lending free-for-all.
The APRA chairman defended the banking regulators’ actions to reduce what were perceived to be growing risks in Australia’s housing market.
Speaking to lawmakers in Canberra, Byres said that without the introduction of tighter macroprudential measures it may have led to interest rate increases from the Reserve Bank of Australia and a further deterioration in lending standards.
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He faced more than an hour of questioning about revelations of poor lending standards from the Hayne royal commission at the House Economics Committee yesterday.
"We are still dealing with an environment in which arrears are not particularly high, they are higher than they have been for a while, but if lending was a free-for-all in the way that some are suggesting I think arrears rates and other things, indicators of financial stress, would be much higher than what they are now" Byres said.
The latest RBA data the proportion of impaired housing loans as a proportion of all loans is 0.15 per cent. 
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<div id="article-inline-ad">Sarah Henderson MP, the new chairman for the committee, asked whether the Australian community could have the confidence that APRA was up for the task.</div>
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Byres explained that the chief banking regulator had been engaging the largest lending institutions about their lending standards for several years and many of the issues raised were the responsibility of the corporate regulator, the Australian Securities and Investments Commission.
"The prudential standards are about safety ... boiled down to its absolute essence is the question 'Is the money of depositors safe' and I don't think anyone has drawn the conclusion that that isn't the case ... we shouldn't suggest that there is any threat at all to depositors money here," Byres said.
Byres was asked to elaborate on comments made before the House Economics Committee last month when he said the macro-prudential limits were "reaching the end of their useful life".
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Byres said the 10 per cent cap on the rate of investor lending announced in December 2014 was likely to be the first measure to be unwound.
Byres said he couldn't foreshadow the removal of the 30 per cent cap on the flow of new interest-only loans which was announced 12 months ago as "we've only just got that in place".
 
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Little evidence of lending free-for-all: APRA's Wayne Byres

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The Senate Economics Legislation Committee, Canberra have been given some charts which APRA chair Wayne Byres considered was helpful for any discussion on the house mortgage market.
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The APRA benchmark of no more than 30 per cent of new lending by Australian banks being on interest-only terms was not overly restrictive for borrowers who genuinely need the form of finance, APRA noted recently.
While roughly 1-in-3 loans granted can still be on an interest-only basis, APRA boss Wayne Byres advised last month that data for the last quarter of 2017 shows that only about 1-in-5 loans were interest-only.
 
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Byres said it had required the major interest-only lenders to establish strategies that incentivise more borrowers to repay their principal.
"The industry has been quite successful in doing so:, and the number of interest-only loans with high LVRs continued to fall to quite low levels.
"All of that is positive for the quality of loan portfolios," he told the A50 Australian Economic Forum dinner.
"While the direction in asset quality is positive, we’re not declaring victory just yet.
"We still want to see that the improvements the industry has made are truly embedded into industry practice.
"And we can modify our interventions as more permanent measures come into play.
"That will include, amongst other things, further strengthening of borrower serviceability assessments by lenders, strengthened capital requirements for mortgage lending imposed by us, and comprehensive credit reporting being mandated by the Government.
"Through these initiatives, we are laying the platform to make sure prudent lending is maintained on an ongoing basis," he said.
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Byres told yesterday's hearing APRA did not have any particular target for house prices.
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A recent review of the financial sector by the Productivity Commission found the clamp-down on interest-only applications may have actually provided a windfall for the banks and a cost to taxpayers.
Byres said he wasn't about to challenge the commission's calculation but said its view was oversimplified and believed there were other drivers at work.
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Eights charts on the housing mortgage market that matter: APRA chairman Wayne Byres

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The Australian Prudential Regulatory Authority has released a proposal that will require banks to differentiate risk weightings for residential mortgages.
It could potentially increase the cost of writing higher-risk loans.
The proposal seeks changes to the risk weightings banks should apply to owner-occupier, investor, interest-only and non-standard loans.
The paper noted APRA's view that there are "potential systemic vulnerabilities" to the financial system created from high levels of residential mortgages lending for investment purposes.
The Australian Broker news website reported ANZ and Westpac Group had introduced confidential changes to their assessment and approval of borrowers.
ANZ was adjusting the discretion available for its frontline mortgage assessors.
A spokesman for ANZ said the bank recently added "a higher level of approval for some discretions" used in its home loan policy for assessing serviceability.
Mortgage brokers claim banks seem to be showing less flexibility in interpreting guidelines on such matters as irregular income when assessing loan applications, BrokerNews advised after a report in the AFR.
The report also said that Westpac recently introduced strict tests of residential property borrowers' current and future capacities to repay their loans.
The change is said to be intended to identify scenarios that might affect borrowers' capacity to pay back their loans. These include having dependents with special needs that might require borrowers to spend on long-term care and treatment.
When asked for comment, a Westpac spokesperson told Australian Broker that the AFR report was based on a note the bank sent to brokers on Monday (12 February).
Earlier this month, Westpac amended its borrowing terms, including allowing the use of desktop valuations only for a maximum LVR of 90%.
A Westpac spokesperson told Australian Broker that the bank has also updated its household expenditure measure in line with the benchmark published by the Melbourne Institute for Social and Economic Research.
This followed Westpac's announcement in December that it would require home loan borrowers to disclose what they owe on short-term buy-now, pay-later loans on digital credit platforms like AfterPay and ZipPay. 
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High risk home loans targeted by APRA

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The APRA benchmark of no more than 30 per cent of new lending by Australian banks being on interest-only terms was not overly restrictive for borrowers who genuinely need the form of finance.
While roughly 1-in-3 loans granted can still be on an interest-only basis, APRA boss Wayne Byres advised last week that data for the last quarter of 2017 shows that only about 1-in-5 loans were interest-only.
Byres said it had required the major interest-only lenders to establish strategies that incentivise more borrowers to repay their principal.
"The industry has been quite successful in doing so:, and the number of interest-only loans with high LVRs continued to fall to quite low levels.
"All of that is positive for the quality of loan portfolios," he told the A50 Australian Economic Forum dinner.
"While the direction in asset quality is positive, we’re not declaring victory just yet.
"We still want to see that the improvements the industry has made are truly embedded into industry practice.
"And we can modify our interventions as more permanent measures come into play.
"That will include, amongst other things, further strengthening of borrower serviceability assessments by lenders, strengthened capital requirements for mortgage lending imposed by us, and comprehensive credit reporting being mandated by the Government.
"Through these initiatives, we are laying the platform to make sure prudent lending is maintained on an ongoing basis," he said.
Lending restrictions put in place by APRA on interest-only loans cost borrowers $500 million a year, according to the Productivity Commission.
In its draft report released following its review into competition in the Australian financial system, the PC has suggested that macro-prudential measures introduced to reduce IO lending were “blunt interventions."
“We estimated that the cost borne by taxpayers as a result of changes in home loan investor rates following APRA’s intervention on interest-only loans in 2017 was up to $500 million per year,” the PC report reads.
The PC claimed that the regulator’s measures boosted lender’s profits, reduced market competitiveness and hiked interest rates.
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APRA says IO loans now sit at 1 in 5 loans

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GUEST OBSERVER
This is an edited extract from APRA chairman Wayne Byres speech at the recent A50 Dinner.
First of all, let me join others before me in welcoming many of you to Australia. It is a long journey, so I hope you’re enjoying the experience now you’re here.
For those of you not familiar with APRA, we’re the prudential regulator of the Australian financial services industry. Our peers include organisations like OSFI in Canada, the UKPRA (although we are not part of the central bank), and a number of the Scandinavian regulators. Our mandate, put simply, is to promote safety within financial institutions, within a stable, open, efficient and competitive financial system. Our supervised flock includes banks and other deposit-takers, insurance companies, and most members of the superannuation industry. Between them, the institutions we supervise hold approximately $6 trillion in assets – at around 3.5x GDP, they represent the bulk of the Australian financial system.
As was the case when I appeared on this panel last year, Australia’s financial system remains fundamentally sound. While we would assert our prudential framework has certainly contributed to that, it’s also reflective of a broader economic environment that’s experienced a long period of relatively steady economic growth. Given that environment, most of our agenda has been, and continues to be, focused on ensuring that soundness is maintained and that we’re building resilience into the system while conditions are conducive to doing so. 
Housing
The other topic that generated some questions last year concerned housing, and so I thought I should say a few words about our actions in that area. 
The broad environment – high house prices, high household debt, low interest rates, and subdued household income growth – hasn’t changed greatly over the past 12 months (although in more recent times house price appreciation has certainly slowed in the largest cities - Sydney and Melbourne). Those conditions are not unique to Australia – a number of other jurisdictions continue to battle with somewhat similar conditions and imbalances. What’s notable for Australia, however, is the relatively high proportion of mortgage lending on the banking system’s balance sheet. 
Against that backdrop, and amidst strong competitive pressures among lenders, the quality of new mortgage lending and the re-establishment of sound lending standards have been a major focus of APRA for the past few years now. We introduced industry-wide benchmarks on (in 2014) lending to investors and (in 2017) lending on interest-only terms. As I have spoken about many times previously, these are temporary measures we have put in place to deliberately temper competitive pressures, which were having a negative impact on lending practices throughout the industry, and help to moderate the volume of new lending with higher risk characteristics. Left unchecked, the drive for growth and market share was producing an adverse outcome as lenders sought ways to accommodate higher risk propositions to grow new lending volumes. Instead of prudently trimming their sails to reflect an environment of heightened risk, lenders were pressured to sail closer to the wind.
Over time, our interventions have served their purpose and we have seen lending standards improve. Our most recent intervention was in relation to interest-only lending. Imposing quantitative limits is not our preferred modus operandi, but over many years we’d seen interest-only loans become easily available, and options for extending or refinancing on interest-only terms allowed borrowers to avoid paying down debt for prolonged periods. Those loans do, however, provide less protection to borrower and lender when house prices soften, and expose borrowers to ‘repayment shock’ when the loan begins amortising (made worse if it occurs at a time when interest rates are rising from a low base). 
Our benchmark of no more than 30 per cent of new lending being on interest-only terms is not overly restrictive for borrowers who genuinely need this form of finance – roughly 1-in-3 loans granted can still be on an interest-only basis – but it has required the major interest-only lenders to establish strategies that incentivise more borrowers to repay their principal. The industry has been quite successful in doing so: recent data for the last quarter of 2017 shows that only about 1-in-5 loans were interest-only, and the number of interest-only loans with high LVRs continued to fall to quite low levels. All of that is positive for the quality of loan portfolios.
While the direction in asset quality is positive, we’re not declaring victory just yet. We still want to see that the improvements the industry has made are truly embedded into industry practice. And we can modify our interventions as more permanent measures come into play. That will include, amongst other things, further strengthening of borrower serviceability assessments by lenders, strengthened capital requirements for mortgage lending imposed by us, and comprehensive credit reporting being mandated by the Government. Through these initiatives, we are laying the platform to make sure prudent lending is maintained on an ongoing basis.
Bank capital
One area that was of interest to this audience last year was the strengthening of banking system capital. On that front, I’m pleased to say we are getting close to the end of the journey. 
As some of you would know, the Australian Government conducted a broad-ranging inquiry into the Australian Financial System in 2014. Amongst other things, that inquiry tasked us with ensuring that Australian banks had ‘unquestionably strong’ capital ratios. In July last year, we published a paper setting out the benchmarks that we considered to be consistent with that goal. At a headline level, this required the four major Australian banks to strengthen their capital ratios, relative to end 2016 levels, by around 100 basis points on average to target CET1 ratio of 10.5 per cent (or about 16 per cent on an internationally comparable basis). We also said we expected that strengthening should be achieved by 2020 at the latest.
As things stand, the major banks haven’t quite hit this target yet, but are well on the way to doing so in an orderly fashion. We set a smaller task for the smaller institutions, and they by and large have it covered already.
That capital build-up is important because, as you’re all no doubt aware, we received a Christmas present from the Basel Committee in the form of the long-awaited package of reforms to finalise Basel III. The changes, in total, represent a significant overhaul of many components of the capital framework1.  
We have, however, committed to ensure that changes in capital requirements emanating from Basel will be accommodated within the unquestionably strong target we have set. In other words, given the banking system has largely built the necessary capital, the recent Basel announcement does not have any real impact on the aggregate capital needs of the Australian banks. They will change the relative allocation of capital within the system, but not add to the aggregate requirement beyond what has already been announced.
We’ll begin consultation on the proposed approach to implementing Basel III changes in the next week or two. Our initial public release will include indicative risk weights, but these will be subject to further analysis and an impact study to calibrate the final proposed risk weights and ensure we end up with a capital requirement that is consistent with our assessment of unquestionably strong capital levels. We also have some recent input from the Productivity Commission to feed into our deliberations, which we’ll give consideration to as we work through the consultation process.
In terms of timelines, the Basel Committee has agreed to an implementation timetable commencing in 2022, with further phase-ins after that. As I said earlier, we expect banks to be planning to increase their capital strength to exceed the ‘unquestionably strong’ benchmarks by the beginning of 2020. Whether we implement our risk weight changes in line with Basel timeframes or modify that timeline somewhat, it’s unlikely there will be any need for additional phase-in and transitional arrangements given the industry will be well placed to meet the new requirements. 
And just quickly on the other key components of the Basel reforms, we instituted the Basel liquidity and funding requirements in line with the internationally agreed timetable – the Liquidity Coverage Ratio (LCR) from 2015, and the Net Stable Funding Ratio (NSFR) from the beginning of this year – in full and without any transition. So the adjustment process to the post-crisis international reforms in Australia has the finish line well in sight.
Governance and culture
In addition to improvements in financial strength and asset quality, it’s also critical to the long run health of the financial system that the Australian community has a high degree of confidence that individual financial institutions are well governed and prudently managed. What has become more apparent and pronounced over the past year is that – despite their financial health and profitability – community faith in financial institutions in Australia, as has been the case elsewhere, has been eroded due to too many incidences of poor behaviour and poor customer outcomes. None of these have thus far threatened the viability of any institution, but they have certainly not been without commercial and reputational damage.
While most matters of conduct are primarily the responsibility of our colleagues at ASIC, these issues are nevertheless of great interest to a prudential regulator for what they say about an organisation’s attitudes towards risk. So as with the balance sheet strengthening of the financial system over the past few years, we have also taken a greater interest in efforts to strengthen behaviours and cultures. We can’t regulate these into existence, but we have been working to ensure Australian financial institutions have been giving greater attention to these matters than may have traditionally been the case. On these issues, it’s fair to say the journey continues.
Wayne Byres in the chairman of the Australian Prudential Regulation Authority.
You can find the <a href="http://www.apra.gov.au/Speeches/Pages/Remarks-for-Regulators-Panel-09022018.aspx" target="_blank">full speech here.</a>
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jrobinson-rf4aSBido9

The broad environment – high house prices, high household debt, low interest rates, and subdued household income growth: APRA chairman Wayne Byres

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APRA have finalised the rules governing the data that banks must hand over on their residential mortgage-lending operations.
They have been warning the banks of heightened risks and has been urging the banks to monitor the lending more closely, especially with the much publicised liar loans still sneaking through the cracks. 
On 24 October 2016 APRA released proposed revisions to the residential mortgage lending reporting requirements for authorised deposit-taking institutions (ADIs), Reporting Standard ARS 223.0 Residential Mortgage Lending (ARS 223.0) and accompanying reporting guidance.
On 23 May 2017, APRA released a revised ARS 223.0, which responded to submissions received and proposed a small number of additional data items. APRA sought feedback on these additional data items.
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APRA received six submissions from ADIs and industry associations in response to the May 2017 proposals. No submissions objected to the proposals, but changes and clarifications were suggested. 
APRA has made minor clarifications to reporting requirements and amended the reporting guidance as a result of these comments (see attached). 
Today APRA released the final ARS 223.0. Reporting will commence: 
<ul>
<li>for ADIs that currently report on Reporting Form ARF 320.8 Housing Loan Reconciliation (ARF 320.8), from the reporting period ending 31 March 2018; and</li>
<li>for ADIs that do not currently report on ARF 320.8, from the reporting period ending 30 September 2018.</li>
<li>APRA will conduct a webinar for ADIs in the coming weeks, to facilitate understanding of the changes.</li>
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Changes to reporting requirements
Loan-to-income (LTI) and debt-to-income (DTI) ratios
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APRA received feedback in two submissions that using gross income for LTI and DTI may not reflect ADIs’ risk management practices. However, ADIs that apply more conservative discounts or ‘haircuts’ to income will report higher LTI and DTI measures, limiting comparability. In APRA’s view, using gross income for reporting purposes is necessary to allow comparison between all ADIs, acknowledging that it does have limitations.
Two submissions asked for additional guidance on the definition of gross income. The definition of gross income for LTI and DTI reporting has been amended to exclude compulsory superannuation contributions. Further detail has been included in the reporting guidance. 
Additional increases in lending 
One submission sought clarity on whether loans to self-managed superannuation funds (SMSFs) and non-residents should be included in this item. The instructions have been updated to include such loans. 
Two ADIs noted in submissions that they do not expect to report this item, as all increases in credit limits are already captured as new loans funded. APRA confirms that loans subject to a credit assessment should be reported as loans funded, and not as an additional increase. 
Lending to private unincorporated businesses 
APRA proposed that ADIs report two data items on loans to private unincorporated businesses that are secured by residential mortgages. The definition of private unincorporated businesses is consistent with the Economic and Financial Statistics (EFS) proposed by APRA, the Australian Bureau of Statistics and the Reserve Bank of Australia.2 
Three submissions stated that collecting information on ‘family trusts with a controlling interest in a business’ would be problematic. APRA has amended the definition to include all family trusts, not just family trusts with a controlling interest in business. The EFS definitions were also amended accordingly. 
Two submissions suggested expanding the reporting to cover loans to all trading companies, to provide a more complete picture of ADIs’ lending activity. APRA does not propose to expand reporting beyond private unincorporated businesses. ARS 223.0 is intended to capture household (and similar) lending only. Commercial lending for property is captured on other reporting forms. 
External refinancing 
The current definition of external refinancing is limited to loans for substantially the same purpose as the loan they replace. One submission noted that it is not feasible for an ADI to know the predominant purpose of external loans. In line with EFS, the reference to the loan being for substantially the same purpose has been removed from the definition in ARS 223.0.
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Loan vintage 
Two submissions questioned if loan vintage should be measured from the date of a refinance or from the date of the original loan. As per the instructions, loan vintage is to be reported from when the loan is funded, meaning the date of a refinance should be used. 
To find out more about the changes <a href="http://www.apra.gov.au/adi/PrudentialFramework/Pages/Residential-mortgage-lending-reporting-requirements-response-Jan-2018.aspx" target="_blank">click here.</a>
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jonathanchancellor-7SQnKwU6yx

APRA update on review of deposit-taking institutions on mortgage lending

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The young high flying Sydney investor Nathan Birch has given his mildly bearish property predictions for 2018.
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"We are entering into a period of uncertainty," the face on Binvested forecast.
"Tighter lending regulation from APRA has made it difficult for buyers all over Australia to get finance.
"This has meant fewer buyers across all markets," says the young investor who knows just what it is like to seek finance and to sell in tightened circumstances.
Birch recently confirmed he had "briefly" fallen behind on "one or two mortgages" citing increased lending restrictions arising from the much-heralded Australian Prudential Regulation Authority investor crackdown.
He predicts it is likely the market will stagnate over the next 12 to 18 months.
"But, despite what the general population may think, this is excellent news for investors especially for those who are cashed up and finance ready.
"This year will be an excellent time to buy."
"While many are finding it difficult to get finance, those who are ready to pounce will have the opportunity to pick up properties for cheap."
He suggests the next 12 to 18 months will offer a "small window of opportunity" to buy properties that are ‘on sale’, before the market picks up speed again.
He says it was the type of market that he built my foundation portfolio on back in 2004 to 2009 as having fewer people buying properties, "it becomes easier to negotiate a good price."
"Vendors become more flexible with the amount they are willing to accept, because at the end of the day, they need to sell.
"If they want to sell, they have to settle for less."
Birch's opinion is that rates will continue to remain low over the next 12 to 18 months, unchanged for some time.
"The banking system is currently in unchartered waters. If the RBA was to increase the cash rate now, millions of Australians would find it difficult to repay their mortgages.
"This would have a flow on effect; with less consumer spending causing damage to the economy.
"The APRA changes have done what a rate rise would normally do – without causing financial strain for those with existing mortgages."
 
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APRA credit squeeze victim Nathan Birch sees stagnate property markets in 2018

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Commentator Alan Kohler says property doesn’t look like it will crash and the feared bubble is yesterday’s scare story after the interventions of APRA’s Wayne Byres between 2014 and 2017.
But the Australian newspaper columnist still says there is still time for a crash, "but so far so good, and at this stage it doesn’t look like happening."
He suggests all the bubble talk is about bitcoins and cryptocurrencies so the housing bubble is yesterday’s scare story. "The Australian housing bubble, so derided around the world and feared here, is having a soft landing," he wrote.
Kohler says Byers, the chairman of the Australian Prudential Regulation Authority can take much of the credit for "gently taking the air out of what was looking a pretty stretched balloon."
He started just a few months after taking over as chairman of APRA, with letters to the banks in December 2014 effectively firing a shot across the bows. The press release at the time advised it was watching especially property investor lending above 10 per cent growth and increases in high loan-to-value ratio (LVR) loans. Its other significant intervention in more recent times was on onterest-only lending which was restricted to 30 per cent of new loans, and only if LVRs were above 80 per cent, growth in investor lending had to be below 10 per cent. Kohler says APRA was forced into this because the RBA felt unable to raise interest rates to lean into the housing boom. "It must be acknowledged that APRA’s interventions over the past two years were exquisitely timed and directed — in effect APRA produced a much more targeted monetary policy than the RBA ever could." "Whereas RBA rate moves affect everyone and all rates, APRA was able to specifically increase interest rates for investor and higher risk loans only, and leave owner-occupier mortgage rates where they were, simply by leaning on the banks to restrict investor lending."
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APRA looks to have saved Australia from a housing crash in 2018: Alan Kohler

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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>
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<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>
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<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>
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<div>Property buyers will not only need to pay back principal, they'll need to have a decent deposit too.</div>
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<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>
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<div>A seismic shift in the market then, as more borrowers will now be compelled to pay back some debt.</div>
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<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>
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PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.
 
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