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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</section>

[smartcode_project_cta:default project_id=112661]

SIERA kicks off construction at Northcliffe tower Exhale

APRA

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Shadow banks are up in arms over extensive new powers being given to the Australian Prudential Regulation Authority that they say could restrict loans to home buyers who don’t otherwise qualify on the stricter criteria applied by banks.
An exposure draft released last week said APRA will be able to use the same "macroprudential" powers it has applied to "authorised deposit-taking institutions" (ADIs) – such as investor and interest-only lending caps – on non-banks, The Australian Financial Review reported.
Big non-bank lenders such as ASX-listed Pepper Group, Resimac, Firstmac, Latitude and Liberty Financial are preparing submissions to Treasury to highlight the risks of APRA’s new powers, which they say may curb their lending, increase funding costs and could compound any housing market downturn.
Back in April, top executives of Firstmac, Australia’s biggest non-bank lender, had said that the "invisible hand of APRA" was trying to rein in non-banks’ lending to property investors. Shadow banks are not regulated by the APRA, but by the Australian Securities and Investments Commission.
This followed APRA’s advice to authorised deposit-taking institutions (ADIs) that it was “monitoring the growth in warehouse facilities provided by ADIs to other lenders”. 
Investors in the non-banks' mortgage securitisations are also worried by the broad scope and uncertainty around the new laws, which could result in investors demanding higher returns and forcing up borrowing costs.
"It is a bolt from the blue, it is extraordinary, it is just so broad," a source in a leading non-bank lender was cited as saying the AFR.
The development comes even though shadow banks fund lending from capital markets and don't take deposits. 
Shadow banking is a colloquial term referring to lenders not regulated by APRA, though they are regulated by the Australian Securities and Investments Commission so have to lend responsibly.
Non-bank lenders have been on the regulatory radar ever since they started reporting higher loan volumes ever since banks were reined in with lending caps for investor mortgages. 
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jonathanchancellor-7SQnKwU6yx

Shadow banks sound credit alarm over new APRA powers 

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Research released by RateCity.com.au has questioned the effectiveness of hiking rates to deter certain buyers.
RateCity.com.au analysed of over 100 lenders two months after the latest APRA intervention and found the majority of banks are penalising investors and interest-only borrowers by as much as 0.56 percentage points.
RateCity.com.au money editor Sally Tindall said investors paying interest-only are being hit the hardest at an average rate of 4.88 percent while owner-occupiers doing the right thing by paying down their debt are being rewarded with an average rate of 4.31 percent.
"While promoting sound lending measures was fundamentally important, there were question marks over the effectiveness of hiking rates to deter certain buyers," she said.
“What we learnt from the 2014/15 APRA intervention is that while a rate rise spooked investors initially, they took less than six months to decide that paying extra was worth their while.
“The real test for investors will be whether they are willing to meet their bank’s demands for higher LVR’s if they want to pay interest-only.
“Owner-occupiers opting to pay interest-only are also being hit with slightly higher rates, however it pales in comparison to the bill they eventually have to pay as a result of not paying down their principal without the benefit of any tax concessions.
“The average mortgage holder with a $350,000 loan will pay $45,822 more to their bank if they opt for interest-only repayments for the first five years.
“That’s a pretty big deterrent right there."
The research showed that people with a deposit of just 5 percent were paying, on average, 0.18 percentage points more than people with a deposit of 30 percent.
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Interest only investors hit hardest by rate hikes

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Expert Observer
It was announced in the 2017 Budget speech that the regulator APRA will explicitly be allowed to differentiate loan controls by location.
This is another move signalling that politicians and regulators don't trust banks to lend responsibly, while simultaneously inferring that they know better than the market what 'should' be happening in terms of property markets and lending activity (which may be a positive thing or a very worrying development depending on your outlook!).
Practically speaking this means that APRA might look to restrict the flow of credit into 'hot' housing markets - basically, Sydney - while presumably steering clear of intervention in markets where prices and rents are in a multi-year freefall (such as Darwin, Gladstone, or indeed any number of of Australia's resources regions).
This all sounds jolly good on paper, until you think about all of the potential ramifications of regulatory intervention. There isn't the space here to go into detail on this point, but it's a concern!
Lending finance rebounds
The March 2017 Lending Finance figures, which strangely never seem to get any media coverage, saw total lending jump tidily from $67.6 billion to $72.9 billion in seasonally adjusted terms.
<a href="https://1.bp.blogspot.com/-2f6hTXVdfZA/WR4AGIWCN3I/AAAAAAAAj6o/BW7FQ9Afn98N7wzbfoN5JlhkrJZtkOgQgCLcB/s640/A1.jpg" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/19/rsz_lendingfinace.png" alt="">
Lending to homebuyers was relatively steady in the lead-up to APRA's latest round of macroprudential curbs, while nationally there was a moderate increase in lending to property investors (classified below under commercial lending).
It's generally reported that lending for real estate is unproductive and risky, while lending to business is productive and a good thing. This may be true to an extent, though there are many sub-trends to take into account.
Overall commercial lending saw a neat increase in the month of March to be solidly higher year-on-year, even if the recent trend series is flat.
Renovations rose to a 6.5 year high in March 2017, as Aussies apparently shunned stamp duties and trading up for staying put and renovating instead, though looking at the numbers in their historical context the 'renovation boom' story seems a bit less enticing.
Splitting out commercial finance fixed loans by industry shows how lending into the mining sector has all but evaporated, declining by a further 46 per cent over the year to March. Commercial lending to the mining industry has fallen to about a quarter of the level seen at the peak as the resources construction cliff now approaches its nadir.
Despite this massive contraction, annual lending for construction continues to expand at a sprightly double digit pace, a trend which belies Australia's over-reliance on the residential building sector.
Investor loans diverge
Carving up loans to property investors by state, it's clear that Sydney investors don't believe in the apartment oversupply and have been doubling down on harbour city real estate with a vengeance.
Lending for investment in New South Wales surged to $6.2 billion in March - 39 per cent higher than for the same month last year - signalling a huge rebound since APRA's first round of macroprudential restrictions.
There was also something of an increase in investor lending in Victoria which will warrant careful observation.
<a href="https://4.bp.blogspot.com/-FvHnxzfoySg/WR4AGTk0z8I/AAAAAAAAj6s/fAgDQzINy_seIhISKqHG962BVPuXvel_ACLcB/s640/A3.jpg" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/19/rsz_investorloansbystate.png" alt="">
The massive divergence in fortunes across the states in the prevailing low interest rate environment is ultimately what led to APRA's new powers to target lending in specific neighbourhoods.
While Sydney property has been burning up, property investor loan volumes in the Northern Territory have collapsed to their lowest level in 11 years as prices and rents in Darwin continue to fall.
The wrap
Overall, it was a stronger month for lending finance in aggregate, with a sizeable lift in commercial finance.
The housing market figures pre-date APRA's announcement at the end of the month of March that new restraints would be applied to interest-only lending.
What the figures do show is the massive divergence in investor sentiment between the resources states and Sydney, and, to a lesser extent, Melbourne.
If this continues APRA may be called upon to use its new powers sooner rather than later.
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>.
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>.
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pwargent-M4siyDbqQY

APRA may deploy its 'special powers': Pete Wargent

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APRA's cooling measures and restrictive lending practices by banks has driven the REA Group Property Demand Index down by 4.3 percent for April month on month.
New South Wales saw the biggest drop in buyer demand in Australia in April, driven by unaffordability cutting buyers out in Sydney according to Nerida Conisbee, REA Group chief economist.
She said demand is still well above the same time last year and higher than the previous peak in November 2016, adding in December 2016, demand also dropped slightly when the banks increased interest rates independently of the RBA however, buyers ploughed back into the market in January and by March we hit another peak in demand.
<a href="https://www.propertyobserver.com.au/images/2017/05/03/Screen%20Shot%202017-05-03%20at%2010.48.24%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/03/Screen%20Shot%202017-05-03%20at%2010.48.24%20AM.png" alt="">
"It’s impossible to predict if this will happen again and if buyers are purely reacting to the changes. Time will tell as we head into winter," she said.
"New South Wales saw the biggest drop in buyer demand in Australia in April, driven by unaffordability cutting buyers out in Sydney.
"So are we finally at the peak? It’s unlikely in Sydney, but lower levels of demand means that price growth will moderate and April median national house price data suggests the market slowed considerably during the month.
<a href="https://www.propertyobserver.com.au/images/2017/05/03/Screen%20Shot%202017-05-03%20at%2010.51.54%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/03/Screen%20Shot%202017-05-03%20at%2010.51.54%20AM.png" alt="">
"Rental demand also saw a decline in April, suggesting that high levels of investor activity has now provided su cient rental housing. It’s likely that rental rates will also continue to moderate as a result.
"Given relatively low levels of development compared to Queensland and Victoria, New South Wales apartment demand has surprisingly declined significantly in 2017.
"Overall demand levels remain well above where they were 12 months ago, suggesting that it’s too early to say if the market has peaked.
"New South Wales also saw a drop in rental demand over the past 12 months suggesting that rental unaffordability is leading to fewer people being able to live Sydney.
<a href="https://www.propertyobserver.com.au/images/2017/05/03/Screen%20Shot%202017-05-03%20at%2010.52.43%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/03/Screen%20Shot%202017-05-03%20at%2010.52.43%20AM.png" alt="">
"Due to the high house prices, Sydney buyers are most sensitive to banks increasing rates, which are expected to continue to rise.
"Despite very high levels of supply, Victoria saw only a relatively small drop in buyer demand in April. Rental demand also declined suggesting the investor activity is now providing sufficient rental housing for tenants.
"These drops suggest that price growth for buyers and renters will continue to slow.
"Although drops were experienced over the month, year-on-year demand continues to be positive and levels are well above what was experienced at the same time last year.
"Queensland experienced the second highest drop in buyer demand in April after New South Wales, however demand is still higher than it was 12 months ago.
"Rental markets are showing worsening conditions driven by high levels of supply but also relatively slow jobs growth. Rental demand is lower than it was 12 months ago.
"The situation in Brisbane is very different to on the Gold Coast. Gold Coast suburbs continue to see high levels of demand from buyers and renters due to lower levels of supply, the Commonwealth Games and other spending on infrastructure supporting jobs growth.
"Buyer demand in South Australia saw a decline in April, consistent across most states and territories, however demand remains slightly higher than it was 12 months ago. High levels of apartment development have led to poorer demand conditions for this type of housing and demand is now down year-on-year.
"Rental demand remains resilient with only a small drop over the month and growth continuing year-on-year. This suggests that jobs growth is solid in South Australia given the disconnect between buyer and  renter demand.
"There is still very strong buyer demand in Tasmania, but the index fell slightly in April.
"Demand for houses continued to rise however the index fell for units, while renter demand also showed a decline. Even with the decline, there is no guarantee that prices will fall, with the index continuing to be well up on the same time last year.
<a href="https://www.propertyobserver.com.au/images/2017/05/03/Screen%20Shot%202017-05-03%20at%2010.53.33%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/03/Screen%20Shot%202017-05-03%20at%2010.53.33%20AM.png" alt="">
"With the rest of the country stumbling, Western Australia showed increasing demand from both buyers and renters over the month of April.
"It’s still too early to tell whether the West Australian residential market has turned a corner given that year-on-year declines are still occurring.
"If national cooling measures were not in place and banks were more closely following RBA behaviour on rates, it’s conceivable that Western Australia would be close to turning a corner. These measures, which are largely in place for the Sydney and Melbourne markets, are likely to continue to dampen demand in the West.
<a href="https://www.propertyobserver.com.au/images/2017/05/03/Screen%20Shot%202017-05-03%20at%2010.54.23%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/03/Screen%20Shot%202017-05-03%20at%2010.54.23%20AM.png" alt="">
"Australian Capital Territory was a standout in April, one of the few markets to see an increase in demand from buyers, with the index up year-on-year as well as over the month.
"Despite high buyer demand, rental demand took a hit, perhaps driven by changes to employment in the territory, as well as relatively strong levels of investor activity. Despite the April drop, year-on-year growth remains strong.
"Northern Territory saw a drop in buyer demand over the month, however the annual rate is still positive, suggesting the housing market is in the early stages of recovery. Rental demand declined on the back of weak jobs growth in the Northern Territory. 
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Property demand slows in April: REA Group's Nerida Conisbee

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Remarks at CEDA’s 2017 NSW Property Market Outlook Sydney 
Thank you for the opportunity to be part of today’s event. My remarks today come, unsurprisingly, from a prudential perspective. Property prices and yields, planning rules, the role of foreign purchasers, supply constraints, and taxation arrangements are all important elements of any discussion on property market conditions, and I’m sure the other speakers today will touch on most of those issues in some shape or form. But I’ll focus on APRA’s key objective when it comes to property: making sure that standards for property lending are prudent, particularly in an environment of heightened risk. 
Sound lending standards 
Our recent activity in relation to residential and commercial property lending has been directed at ensuring banking institutions maintain sound lending standards. Our ultimate goal is to protect bank depositors – it is, after all, ultimately their money that banks are lending. Basic banking – accepting money from depositors and lending to sound borrowers who have good prospects of repaying their loans – is what it’s all about. Of course, banking is about risk-taking and it is inevitable that not every loan will be fully repaid, but with appropriate lending standards and sufficient diversification, the risk of losses that jeopardise the financial health of a bank - and therefore the security offered to depositors - can be reduced to a significant degree. The banking system is heavily exposed to the inevitable cycles in property markets, and our goal is to seek to make sure the system can readily withstand those cycles without undue stress. 
Our mandate goes no further than that. We also have to take many influences on the property market - tax policy, interest rates, planning laws, foreign investment rules – as a given. And there are credit providers beyond APRA’s remit, so a tightening in one credit channel may just see the business flow to other providers anyway. For those reasons, there are clear limits on the influence we have. Property prices are driven by a range of local and global factors that are well beyond our control: whether prices go up or go down, we are, like King Canute, unable to hold back the tide. 
Of course, that is not to ignore the fact that one determinant of property market conditions is access to credit. We acknowledge that in influencing the price and availability of credit, we do have an impact on real activity - and this may feed through to asset prices in a range of ways. But I want to emphasise that we are not setting out to control prices. Property prices will go up and they will go down (even for Sydney residential property!). It is not our job to stop them doing either of those things. Rather, our goal is to make sure that whichever way prices are moving at any particular point in time in any particular location, prudentially-regulated lenders are alert to the property cycle and making sound lending decisions. That is the best way to safeguard bank depositors and the stability of the financial system. 
Residential property lending 
APRA has been ratcheting up the intensity of its supervision of residential property lending over the past five or so years. Initially, this involved some fairly typical supervisory measures: 
<ul>
<li>in 2011 and again in 2014, we sought assurances from the Boards of the larger lenders that they were actively monitoring their housing lending portfolios and credit standards; </li>
<li>in 2013, we commenced more detailed information collections on a range of housing loan risk metrics; </li>
<li>in 2014, we stress-tested around the largest lenders against scenarios involving a significant housing market downturn; </li>
<li>also in 2014, we issued a Prudential Practice Guide on sound risk management practices for residential mortgage lending; and  </li>
<li>we have conducted numerous hypothetical borrower exercises to assess differences in lending standards between lenders, and changes over time. </li>
</ul>
These steps are typical of the role of a prudential supervisor: focusing on the strength of the governance, risk management and financial resources supporting whatever line of business is being pursued, without being too prescriptive on how that business should be undertaken. 
But from the end of 2014, we stepped into some relatively new territory by defining specific lending benchmarks, and making clear that lenders that exceeded those benchmarks risked incurring higher capital requirements to compensate for their higher risk. In particular, we established quantitative benchmarks for investor lending growth (10 per cent), and interest rate buffers within serviceability assessments (the higher of 7 per cent, or 2 per cent over the loan product rate), as a means of reversing a decline in lending standards that competition for growth and market share had generated. 
I regard these recent measures as unusual, and not reflective of our preferred modus operandi. We came to the view, however, that the higher-than-normal prescription was warranted in the environment of high house prices, high household debt, low interest rates, low income growth and strong competitive pressures. In such an environment, it is easy for borrowers to build up debt. Unfortunately, it is much harder to pay that debt back down when the environment changes. So re-establishing a sound foundation in lending standards was a sensible investment. 
Since we introduced these measures in late 2014, investor lending has slowed and serviceability assessments have strengthened. But at the same time, housing prices and debt have got higher, official interest rates have fallen further and wage growth remains subdued. So we recently added an additional benchmark on the share of new lending that is occurring on an interest-only basis (30 per cent) to further reduce vulnerabilities in the system. 
Each of these measures has been a tactical response to evolving conditions, designed to improve the resilience of bank balance sheets in the face of forces that might otherwise weaken them. We will monitor their effectiveness over time, and can do more or less as need be. We have also flagged that, at a more strategic level, we intend to review capital requirements for mortgage lending as part of our work on establishing ‘unquestionably strong’ capital standards, as recommended by the Financial System Inquiry (FSI). 
Looking at the impact so far, I have already noted that our earlier measures have helped slow the growth in investor lending (Chart 1), and lift the quality of new lending. Serviceability tests have strengthened, although as one would expect in a diverse market there are still a range of practices, ranging from the quite conservative to the less so. Lenders subject to APRA’s oversight have increasingly eschewed higher risk business (often by reducing maximum loan -to -valuation ratios (Chart 2)), or charged a higher price for it. For example, there is now a clear price differential between lending to owner -occupiers on a principal and interest basis, and lending to investors on an interest -only basis (Chart 3) . And as a result of our most recent guidance to lenders, we expect some further tightening to occur. 
<img src="https://www.urban.com.au/images/2017/04/28/APRAChart1.png" alt="">
<img src="https://www.urban.com.au/images/2017/04/28/APRAChart2.png" alt="">
<img src="https://www.urban.com.au/images/2017/04/28/APRAChart3.png" alt="">
Looked at more broadly, the most important impact has been to reduce the competitive pressure to loosen lending standards as a means of chasing market share. We are not seeking to interfere in the ability of lenders to compete on price, service standards or other aspects of the customer experience. We do, however, want to reduce the unfortunate tendency of lenders, lulled by a long period of buoyant conditions, to compete away basic underwriting standards. 
Of course, lenders not regulated by APRA will still provide competitive tension in that area and it is likely that some business, particularly in the higher risk categories, will flow to these providers. That is why we also cautioned lenders who provide warehouse facilities to make sure that the business they are funding through these facilities was not growing at a materially faster rate than the lender’s own housing loan portfolio, and that lending standards for loans held within warehouses was not of a materially lower quality than would be consistent with industry-wide sound practices. We don’t want the risks we are seeking to dampen coming onto bank balance sheets through the back door. 
Commercial real estate lending 
For all of the current focus on residential property lending, it has been cycles in commercial real estate (CRE) that have traditionally been the cause of stress in the banking system. So we are always quite interested in trends and standards in this 5 area of lending . And tighter conditions for residential lending will also impact on lenders’ funding of residential construction portfolios – we need to be alert to the inter - relationships between the two. 
Overall, lending for commercial real estate remains a material concentration of the Australian banking system . But while commercial lending exposures of APRA - regulated lenders continue to grow in absolute terms, they have declined relative to the banking system’s capital (partly reflecting the expansion in the system’s capital base ). Exposures are now well down from pre -GFC levels as a proportion of capital, albeit much of the reduction was in the immediate post -crisis years and, more recently, the relative position has been fairly steady (Chart 4) . 
<img src="https://www.urban.com.au/images/2017/04/28/APRAChart4.png" alt=""> 
The story has been broadly similar in most sub -portfolios, with the notable exception of land and residential development exposures (Chart 5). These have grown strongly as the banking industry has funded the significant new construction activity that has been occurring, particularly in the capital cities of Australia’s eastern seaboard. At the end of 2015, these exposures were growing extremely rapidly at just on 30 per cent per annum , but have since slowed significantly as newer projects are now being funded at little more than the rate at which existing projects roll off (Chart 6). 
<img src="https://www.urban.com.au/images/2017/04/28/APRAChart5.png" alt="">
<img src="https://www.urban.com.au/images/2017/04/28/APRAChart6.png" alt="">
(As an aside, this is one reason why we opted not to reduce the 10 per cent investor lending benchmark for residential lending recently. There is a fairly large pipeline of residential construction to be absorbed over the course of 2017, and there is little to be gained from unduly constricting that at this point in time.) 
In response to the generally low interest rate environment, coupled with relatively high price growth in some parts of the commercial market , low capitalisation rates 6 and indications that underwriting standards were under competitive pressure, we undertook a thematic review of commercial property lending over 2016. We looked at the portfolio controls and underwriting standards of a number of larger domestic banks, as well as foreign bank branches which have been picking up market share and growing their commercial real estate lending well above system growth rates. 
The review found that major lenders were well aware of the need to monitor commercial property lending closely, and the need to stay attuned to current and prospective market conditions. But the review also found clear evidence of an erosion of standards due to competitive pressures - for example, of lenders justifying a particular underwriting decision not on their own risk appetite and policies, but based on what they understood to be the criteria being applied by a competitor. We were also keen to see genuine scrutiny and challenge that aspirations of growth in commercial property lending were achievable, given the position in the credit cycle, without compromising the quality of lending. This was often being hampered by inadequate data, poor monitoring and incomplete portfolio controls. Lenders have been tasked to improve their capabilities in this regard. 
Given the more heterogeneous nature of commercial property lending, it is more difficult to implement the sorts of benchmarks that we have applied to residential lending. But that should not be read to imply we have any less interest in the quality of commercial property lending. Our workplan certainly has further investigation of commercial property lending standards in 2017, and we will keep the need for additional guidance material under consideration. 
Concluding remarks 
So to sum up, property exposures – both residential and commercial – will remain a key area of focus for APRA for the foreseeable future. Sound lending standards are vital for the stability and safety of the Australian banking system, and given the high proportion of both residential mortgage and commercial property lending in loan portfolios, there will be no let-up in the intensity of APRA’s scrutiny in the foreseeable future. But despite the fact the merit of our actions are often assessed based on their expected impact on prices, that is not our goal. Prudence (not prices) is our catch cry: our objective is to make ensure that, whatever the next stage of the property cycle may bring, the balance sheet of the banking system is resilient to it.
Wayne Byres is Chairman of the Australian Prudential Regulation Authority
 
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Prudential perspectives on the property market: Wayne Byres

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There will be no let up in the prudential regulator’s scrutiny of lending practices by banks as it wants to prevent a shock to their balance sheets and the economy in the event of a property market downturn. That is the clear message from Wayne Byres, the chairman of the Australian Prudential Regulation Authority.
In his remarks at CEDA’s 2017 NSW Property Market Outlook in Sydney, Byres said APRAs moves to put brakes on investor lending and other measures were meant to ensure that “standards for property lending are prudent, particularly in an environment of heightened risk”.   
He said sound lending standards are “vital for the stability and safety of the Australian banking system, given their high exposure to both the residential mortgage and commercial property markets. 
APRA’s intense scrutiny of lending practices would continue in the foreseeable future, he said.
Stressing that the ultimate goal was to protect bank depositors, because its their money that banks are lending, Byres said risk was an inherent part of lending.
He said while “the banking system is heavily exposed to the inevitable cycles in property markets… our goal is to seek to make sure the system can readily withstand those cycles without undue stress”.
Home loans account for about 60 per cent of banks' loans.
Byres said that the regulator’s moves to cap investor lending and other measures were “unusual”, but that they were driven by the view that “the higher-than-normal prescription was warranted in the environment of high house prices, high household debt, low interest rates, low income growth and strong competitive pressures”. 
“In such an environment, it is easy for borrowers to build up debt. Unfortunately, it is much harder to pay that debt back down when the environment changes,” he said.
APRA has set a 10 percent annual growth for banks on lending to investors and and also set interest rate buffers when looking at loan approvals (the higher of 7 per cent, or 2 per cent over the loan product rate).
It recently also announced a limit of 30 percent on interest-only loans and warned that lenders exceeding its benchmarks risked incurring higher capital requirements to compensate for their higher risk. 
He said those measures are having an impact now and have helped slow the growth in investor lending, and lift the quality of new lending. 
Byres also noted that lenders not regulated by APRA “will still provide competitive tension in that area and it is likely that some business, particularly in the higher risk categories, will flow to these providers”. 
And alluded to the warning to lenders that provide warehouse facilities to make sure that the business they are funding through these facilities was not growing at a materially faster rate than the lender’s own housing loan portfolio.
“We don’t want the risks we are seeking to dampen coming onto bank balance sheets through the back door.”
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prateek24-ezbwHMbNAk

No let up in APRAs scrutiny of banks' lending practices, says Wayne Byres

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Rising household debt levels, the hot Sydney property market and continued low interest rates has made Australian Prudential Regulation Authority Wayne Byres uneasy.
It seems he especially fears a market propped up by artificially low, interest-only borrowing rates.
Last month he decided the trend to over borrow, and then not to repay home loans in the conventional manner of interest and principal, was a likely recipe for a economic uncertainty.
To preserve financial stability, the prudential regulator decided in its latest macro-prudential measure that the interest-only loans fad need to be constrained.
The banks were told that less than 30 per cent of their new mortgages can be interest-only, well below the 38 per cent of total loans currently taken.
With borrowers realising paying interest-only freed up cash-flow, they've dived into interest-only loans which haven't been below 30 per cent since around 2008.
Interest-only loans typically have a period of five years, and then the loan will revert to the normal P&amp;I repayments, with the recent accompanying price growth seeing the investor nicely placed to cope with the higher repayments.
The tax deduction of interest payments in the meantime on these investor loans will have been a big incentive for the investor.
Investors have accordingly snapped up the bulk of interest-only loans, but owner occupied borrowers have been a worrying large 40 per cent share.
As Sydney house prices have surged since 2012, house loan sizes have grown, and for most households who've have experienced limited wage growth, the upsizing to the bigger home has only really worked with getting an interest only loan.
On a $300,000 mortgage over 25 years at a 5% p.a. interest rate, the usual monthly repayment would be $1,754 a month. But if you were making interest-only payments, the monthly cost would be $1,250 a month.
For a $750,000 home loan the monthly repayment of $4,174 drops to $3,325 if only the interest is repaid – which for many Sydney families is the difference between owning a bigger home or not.
The push hasn't just come from borrowers as mortgage broker's commissions are calculated on the size of the loans so they are incentivised to write interest only loans.
ASIC advised this week while interest-only loans may be a reasonable option for some borrowers, for the vast majority of owner-occupiers in particular, an interest-only loan will not make sense.　
The Reserve Bank of Australia has warned for two years that the rise in interest-only loans could amplify the housing price cycle, increase the risk of significant price falls, and may result in households overburdened in debt. 
If house prices do drop, the borrower will likely end up owing more than the house is worth, paying much more interest than they would have otherwise paid, and then coping with the many ensuing dramatic problems.
This article first appeared in the Daily Telegraph.
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jchancellor-FAypfDUnLy

Three housing market factors making APRA's Wayne Byres uneasy

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APRA is reviewing property lending practices of banks, and could ask them to raise more capital because of too much concentration into the housing sector, which is being seen as a risk now.
Wayne Byres, the chairman of the Australian Prudential Regulation Authority, said the watchdog needed to resolve the way the banks' allocate capital to home loans.
"If we are going to put an increasing number of eggs into a single basket, we'd better make sure that basket is an unquestionably strong one," Byres said at The Australian Financial Review's Banking &amp; Wealth Summit.
The exposure of Australia's banks to home loans against total loans has grown to between 50 and 60 percent from between 10 and 30 percent in 1989, accelerating after the financial crisis as a shift to lower risk mortgage lending helped banks increase their capital ratios.
Byres said the "bigger issue" was how to address the build-up of housing debt in the system, potentially by requiring the banks to hold more capital against their home loan books, Fairfax Media reported.
His comments come within days of the APRA asking banks to cap interest-only loans at 30 percent of new residential mortgage loans. Interest-only lending represents nearly 40 percent of the stock of residential mortgage lending by banks, which APRA has called "quite high" by global standards.
CLSA analyst Brian Johnson said on the sidelines of the Summit that the big four had a $20 billion shortfall of capital at December 2016 and that for every additional 10 per cent increase in risk weights on investor lending, the capital required increased by a further $5.2 billion.
Australia's bank executives reacted by pleading for time to adjust to potential capital increases.
"There's probably some adjustment but it's not something we wouldn't be able to do over a reasonable amount of time," Westpac chief executive of consumer banking George Frazis told the Summit.
A move to force banks to increase the amount of capital they must hold against their mortgage books would hit their profit margins if they were unable to sufficiently reprice home loans.
Higher capital requirements could also slow mortgage lending or provide more of an incentive for banks to lend to other parts of the economy.
The examination of housing capital will be part of APRA's wider push to make Australia's banks "unquestionably strong" in terms of their capital levels, a target set for them by the 2014 Financial System Inquiry that required them to be among the top quartile of highly capitalised banks globally.
APRA will release its review of the sector's strength in the middle of the year, ahead of any global agreement on capital levels under the Basel regulatory framework.
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APRA reviewing size of banks' home loan inventory as it fears too much in one basket

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The chief of the Australian prudential regulator has said its recent measures to restrict interest-only loans by banks was in response to heightened risks from the hot property market and to ensure that banks maintain adequate capital.
APRA chairman Wayne Byres’ remarks came during the keynote address at the AFR Banking &amp; Wealth Summit 2017, and follow RBA Governor Philip Lowe's speech on Tuesday night when he expressed concern at the high proportion of interest-only loans and the taxation framework for property investors that has contributed to high home prices.
"Put simply, the capital adequacy framework needs to address the concentration in housing lending that has built up in the banking system over time: if we are going to put an increasing number of eggs into a single basket, we'd better make sure that basket is a (unquestionably) strong one,” Byres said.
He said the APRA will issue an information paper around the middle of the year, "which will set out the extent of further strengthening required, and the timeframe over which that can be achieved in an orderly manner”.
While it was not APRA's mandate to determine home prices, it had to act in response to market conditions, Byres said.
“Our role in the current environment is to promote a higher-than-normal degree of prudence – definitely by lenders and, ideally, also borrowers – in both credit decisions and balance sheet strength. On this occasion, we have focussed on interest-only lending to complement our earlier measures. 
Byres said that housing lending risks and bank capital adequacy are not independent issues.
“Beyond the recently-announced tactical responses to current conditions in the housing market, making sure the system is on a sound footing for the longer term is even more important."
He reiterated the pro-active stance of the regulator, saying it “can and will do more (or less) as conditions evolve".
Outlining the recent flurry of regulatory action, Byres noted that while measures such as the annual cap on investor lending growth of 10 percent and restrictions on interest-only loans have had and will continue to have a positive impact, at the same time the risks   haven’t moderated:
<ul>
<li>house prices remain high;</li>
<li>household income growth remains subdued;</li>
<li>the already high ratio of household debt to income has got higher;</li>
<li>the already low official cash rate has got lower (although not all of this reduction has flowed to borrowers, particularly investors - Chart 2); and </li>
<li>competitive pressures haven’t diminished.</li>
</ul>
He concluded by saying that APRA will be looking at many components of the capital adequacy framework, but "given its position as the dominant asset on the balance sheet of the banking system, the adequacy of capital requirements for housing-related risks will be a critical part of that assessment". 
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APRA chair says latest lending curbs to ensure banks have adequate capital

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The Australian Prudential Regulation Authority is trying to curb non-bank lending to investors as part of its latest moves to cool down the hot property market, says the country's biggest non-bank lender, Firstmac.
The "invisible hand of APRA" is trying to rein in non-banks to property investors, according to Firstmac CEO Kim Cannon and CFO James Austin, during an interview with The Australian Financial Review. The Firstmac executives were referring to APRA's comments on "warehouse facilities" provided by banks to other lenders.
APRA said last week it had advised authorised deposit-taking institutions (ADIs) that it was “monitoring the growth in warehouse facilities provided by ADIs to other lenders”. 
These facilities allow lenders to build a portfolio of loans that would eventually be securitised. Non-banks such as Firstmac, Liberty Financial, Pepper and some of the smaller use this window to write home loans, which they then securitise and sell to overseas investors.
“APRA would be concerned if these warehouse facilities were growing at a materially faster rate than an ADI’s own housing loan portfolio, or if lending standards for loans held within warehouses are of a materially lower quality than would be consistent with industry-wide sound practices,” APRA Chairman Wayne Byres had said.
The prudential regulator had announced new bank lending limits on interest-only loans last week. The regulator said interest-only loans must be restricted to 30 per cent of new residential mortgage loans.
Cannon and Austin said these remarks were APRA's attempt to cool down parts of the lending market it does not regulate, Fairfax Media reported.
But Cannon, a 35-year non-bank lending veteran, said Firstmac was more conservative in its lending than the major banks. 
"We have to be. Every dollar we lose comes out of my back pocket," he said.
Firstmac, which is reportedly seeking a banking licence, does not lend above loan-to-value ratios of 80 percent and quit lending to high-rise apartment investors two years before the major banks pulled back.
It writes a similar proportion of interest-only loans as the major banks – about 40 percent, according to APRA.
"It's crazy times, but we're not doing five or 10 percent deposits," said Cannon.
Firstmac has restricted its lending, especially in Sydney and Melbourne, which Cannon called as “extended” housing market. 
He played down concerns about a housing crash.
"There's very little speculation in the Australian housing market. People buy property here for their kids or as [long-term] investments. Also, Australians are among the highest quality borrowers in the world," he said.
Last year, Australian lenders issued about $18 billion of residential mortgage-backed securities (RMBS), compared with over $30 billion prior to the global financial crisis.
Firstmac manages an $8 billion home loan portfolio and has issued more than $16 billion in RMBS bonds since 2003.
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