<p>Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.</p>

<p>Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;</p>

<p>David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;</p>

<p>“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;</p>

<p>[smartcode_project:default project_id=110291 project_image_fid=302785]</p>

<h2>Affordable product leads, premium demand remains resilient</h2>

<p>Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;</p>

<p>Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;</p>

<p>At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.</p>

<p>Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.</p>

<p>Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;</p>

<p>[smartcode_project:default project_id=148957 project_image_fid=364102]</p>

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

<p>Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.</p>

<p>David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.</p>

<p>“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;</p>

<p>Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.</p>

<p>[smartcode_project:default project_id=108869 project_image_fid=317905]</p>

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

<p>While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;</p>

<p>Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;</p>

<p>However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.</p>

<p>Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;</p>


Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<p><a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.</p>

<p>The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.</p>

<p>Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.</p>

<p>“Brisbane was the right step for Sammut,” Sammut said.</p>

<p>“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”</p>

<p><img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" /></p>

<p>Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.</p>

<p>The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.</p>

<p>“We are DA approved now which is very exciting,” Sammut said.</p>

<p>“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”</p>

<p><img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" /></p>

<p>Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.</p>

<p>“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.</p>

<p>The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.</p>

<p>“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”</p>

<p>The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.</p>

<p>The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.</p>


Sammut secures approval for debut Brisbane apartment development in Toowong

<p>Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.</p>

<p>Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.</p>

<p>The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.</p>

<p>“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.</p>

<p>“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.</p>

<p>“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”</p>

<p>The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.</p>

<p>“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”</p>

<p>From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.</p>

<p>“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”</p>

<p>The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.</p>

<p>“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.</p>

<p>Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.</p>

<p>“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.</p>

<p>“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”</p>

<p>The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.</p>

<p>“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.</p>

<p>Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.</p>

<p>&nbsp;</p>


Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

<p>Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.</p>

<p>The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.</p>

<p>It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.</p>

<p>With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.</p>

<p>“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.</p>

<p>“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”</p>

<p><img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" /></p>

<p>GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.</p>

<p>“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”</p>

<p>Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.</p>

<p>“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.</p>

<p><img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" /></p>

<p>&nbsp;</p>

<p>One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.</p>

<p>Green praised local policy settings.</p>

<p>“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”</p>

<p>One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.</p>

<p>“The way we will be able to achieve economies of scale is through size,” Green added.</p>


One Living enters Sydney's new apartment market with Northern Beaches site acquisition

<p>It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.</p>

<p>Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.</p>

<p>Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be</p>

<p data-end="683" data-start="511">"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.</p>

<p data-end="882" data-start="690">"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."</p>

<p data-end="882" data-start="690">[smartcode_project:default project_id=134646 project_image_fid=6109]</p>

<p>The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.</p>

<p>The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.</p>

<p>Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.</p>

<p>[smartcode_project:default project_id=134646 project_image_fid=6110]</p>

<p>Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.</p>

<p>The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.</p>

<p>[smartcode_project:default project_id=134646 project_image_fid=6116]</p>

<p data-end="247" data-is-last-node="" data-is-only-node="" data-start="0">While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.</p>

<p>WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.</p>

<p>With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.</p>

<p>[smartcode_project_cta:default project_id=134646]</p>


WM Residences fills gap in Mordialloc townhouse market

China

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<p><span>GUEST OBSERVER</span></p>
<p><span>December saw a continuation of the recent trend of softer price growth in tier-1 cities and sustained price gains for tier-2 and 3. </span></p>
<p><span>Of the 70 cities reporting, 46 responded that the price of new dwellings had increased in the month; similarly, 45 cities also saw monthly gains in the secondary market.</span></p>
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<p> </p>
<p><span>While down from their respective peaks of 65 (April 2016) and 60 (September 2016), price growth for new and existing dwellings clearly remains robust and broad based. There has been an increase in the number of cities reporting price declines for new builds, but these remain well below the level seen in 2015. </span></p>
<p><span>Over the year, price growth in tier-1 cities remains strong despite having moderated since April. For new builds, prices are currently up 24.9 percent/yr. Price growth in the existing market is a little stronger at 28.8 percent/yr. </span></p>
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<p><span>As we have outlined on a number of occasions, much of the deceleration in annual price growth in tier-1 cities has come as a result of a material slowdown in Shenzhen, from 62.5 percent/yr in April to 23.5 percent/yr currently (for new homes). </span></p>
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<p>In effect, Shenzhen has come back to the pack, with Beijing and Guangzhou seeing sustained annual growth circa 22 percent/yr over that time and Shanghai having slowed from 32.9 percent/yr (September 2016) to 26.4 percent/yr.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/01/20/Screen%20Shot%202017-01-20%20at%208.26.23%20AM.png" target="_blank">Click to enlarge</a></p>
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<p><span>Price growth in tier-2 and tier-3 cities was also very healthy in December, respectively at 12.0 percent/yr and 8.8 percent/yr for new builds. The outcomes for existing dwellings were similar albeit a little softer, at 9.6 percent/yr and 5.7 percent/yr. </span></p>
<p><span>Authorities will be pleased that momentum has broadened outside of tier-1 in a sustained manner. Looking ahead, additional demand for domestic property is likely to build as a result of households being unable to (legally) invest abroad.</span></p>
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<p><span>Currently the construction and investment data is only available to November. Till then it is apparent that the inventory of unsold homes and current construction projects continued to be worked through. However, we are yet to see new project starts respond. </span></p>
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<p><span>If confidence in the housing market and the broader economy is sustained, then a (likely modest) pick-up in starts is only a matter of time. </span></p>
<p><em>Elliot Clarke is senior economist, Westpac and can be contacted <a href="https://www.westpac.com.au/" target="_blank">here</a>.</em></p>
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jchancellor-FAypfDUnLy

New dwelling price increases for December in China

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<p><img src="https://counter.theconversation.edu.au/content/69863/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1"></p>
<p>GUEST OBSERVER</p>
<p>When it comes to discussions about Chinese real estate investors, we tend to focus on the idea that they are buying up property in places like Australia, pushing up prices – even if that is somewhat questionable.</p>
<p>But it also ignores the other side of the equation. The number of properties built by Chinese developers outside of China has grown significantly, even as residential construction within China slows. </p>
<p>The expansion of Chinese residential development outside China has impacts on a number of levels, from property prices through to regional diplomacy.</p>
<h2>The shift to Asia</h2>
<p>Country Garden, a property development company based in Guangdong, China, is constructing apartment buildings that would add more than half-a-million homes and house 700,000 people in Johor Bahru, in southern Malaysia. This project goes far beyond constructing apartment buildings, however. It is part of an even bigger project named “Forest City” that Country Garden plans to build on four artificial islands. </p>
<p>The idea is that Forest City will be equipped with schools, shopping malls, parks, hotels, office buildings and banks. All ensconced in rich greenery, clean water and a quiet transportation system. </p>
<p>This grand project is just one example of the recent surge of overseas investment by Chinese property developers. Total investment in the Chinese real estate sector was growing at a rate above 10% until 2014, then dropped to less than 1% in 2015. This indicates a significant shift in Chinese real estate investment.</p>
<p>All the while, Chinese investment in the real estate sector overseas has picked up strongly. It has grown from $US0.6 billion in 2009 to US$30 billion in 2015. Several Chinese property developers have identified overseas investment as their main business growth strategy.</p>
<h2>Two reasons for the pivot</h2>
<p>Chinese investors have begun looking offshore for a couple of reasons. </p>
<p>Chinese buyer demand for overseas properties is growing. Since China reformed its economy and started growing at a fantastic rate, households have accumulated significant wealth. They now want to diversify their investment portfolios, and so are seeking property elsewhere. </p>
<p>Volatility in domestic housing prices has intensified this trend, despite various government policies aimed at smoothing out price fluctuations. An oversupply of properties in third and fourth-tier cities such as Ordos and Qinhuangdao created “ghost towns” where property isn’t desirable. In first and second-tier cities, however, prices have skyrocketed. House price-to-income ratios of these cities are ranked highest in the world, making it difficult to invest in properties in China.</p>
<p>In recent years there has been a huge expansion of production capacity. In 2015, China produced 51.3% of the cement and 49.5% of the crude steel in the world. As production capacity grows beyond the demand from the domestic market and runs into overcapacity, it is natural that firms will seek returns overseas. </p>
<h2>The impact of it all</h2>
<p>Taking Country Garden as an example, it is worth noting that the developer is not just building residential property, but designing and constructing the entire infrastructure for a city. Transport, greenery, water and noise control are all being put in place. These are beyond the scope of a conventional property developer. </p>
<p>Therefore, one potential positive impact of this project is to help boost the quality of infrastructure in Johor Bahru and so nurture more business activities in the future. The economic and geographic relationships between Johor Bahru and neighbouring Singapore may develop into one similar to that between Shenzhen and Hong Kong. </p>
<p>It is, however, critical that the local government monitors and enforces strict environmental protection and regulation to ensure the project won’t damage the natural environment or disrupt the local market. </p>
<p>The huge influx of newly built apartments has resulted in the value of residential sales dropping by almost one-third in in Johor Bahru last year. Whether this is a short-run phenomenon and housing prices will rally in the long run depends on whether more business activities and job opportunities can attract population inflow to the city and hence create higher demand for housing. In the short run, the fall in housing prices may lower the cost of living and attract firms and workers into the city.</p>
<p>For the Chinese government, it will be important to nurture more talent with legal and financial expertise to help Chinese property developers go out and invest overseas. This expansion by developers is just one, early facet of China’s new diplomatic efforts to develop infrastructure overseas.</p>
<p><em><span class="fn author-name">Yixiao Zhou is l</span>ecturer in Economics, Curtin University and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/yixiao-zhou-320417" target="_blank">here</a>.</em></p>
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As its economy changes, China is starting to export its real estate ideas too

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<div><span style="color: #212121;">GUEST OBSERVER</span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>If you ask anyone where to find Sydney's true Chinatown, they will tell you "Haymarket." They will be wrong.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>The location of Chinatown has implications for property markets and real estate development. Anyone who invests in real estate should know where these active participants in the housing market prefer to live and work. </span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>It's true that Haymarket used to be Sydney's main Chinatown. It's full of tall buildings and places to buy Asian food, drink, and trinkets. Sydney's real Chinatown, though, has moved up to the Upper North Shore -- that group of suburbs located between Hornsby and Chatswood, mostly in Ku-ring-gai and Hornsby Shire councils.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>Chatswood alone has four times the population of Haymarket ––at more than 20,000 people. Forty-seven percent of Chatswood residents are foreign born.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>It's no surprise that Chinatown has moved from Haymarket to the Upper North Shore. It has happened before. Sydney's first Chinatown, or "Chinese Quarter" as it was then known, was located in the Rocks from about the 1850s. </span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>What has turned the Upper North Shore into Sydney's real Chinatown?</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>Juwai.com's Chinese buyer survey reveals that education motivates 44.6 percent of Chinese buyers in the area. The schools, proximity to ethnic services and retail outlets in Chatswood and quick train connection to the city all make the Upper North Shore a magnet for Chinese families.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>You might be surprised to know that just 27.7 percent of Chinese Upper North Shore purchasing inquiries are motivated by investment goals, meaning nearly three-quarters are owner-occupiers.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>In 2016, the suburb of Wahroonga has been the fastest gainer with Chinese buyers, with 56 percent more inquiries in the third quarter than in the second.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>One other thing you notice about the new Chinatown of Sydney's Upper North Shore is that it's not all cheap apartments and starter homes. Quite the opposite, in fact.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>These suburbs are known as some of the best in Sydney, and there are many premium buyers. Nearly half of all area inquiries are for properties with at least four bedrooms.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>What is the future for real estate in Sydney's new Chinatown? </span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>For one, don't expect prices to fall much. High prices will continue so long as people like living there as much as they now do. Families who love their suburb don't sell their home unless they have to. That's one reason there are about 20% fewer auctions in the area than there were this time last year.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>We also expect the buyer makeup to remain relatively unchanged. Looking at Chinese-background buyers, in particular, almost all are Australian legal permanent residents or Australian citizens. You don’t have as many Chinese flying in from places like Shanghai to buy here.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>Another reason we expect to see a floor under prices is the area's high quality, renewed housing stock. The land in the Upper North Shore is often more valuable than the house sitting on it. After buying, the majority of new owners invest in renovating, expanding and even replacing the older homes. This investment will help maintain or even push up prices when these properties go back on the market in the future.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>Agent James Pratt, who is director of auctions for Raine &amp; Horne and James Pratt Auctions, told me that on Provincial Road in Lindfield, Houses No. 32 and 36 recently fetched more than $3 million at auction. In previous years, he said, they would have obtained a lower price.</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>“It used to be that any property over the $2 million mark would have fewer registered bidders than a $700,000 unit, but it’s been the opposite this year, with 12 to 15 people registered at most houses," he said. </span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div><span style="color: #212121;"><span>"Fifteen registered is traditionally seen in highly sought-after entry-priced units."</span></span></div>
<div><span style="color: #212121;"><span> </span></span></div>
<div>
<div><em>Gavin Norris is head of Australia for Juwai.com, the No. 1 Chinese international property portal and can be contacted <a href="https://list.juwai.com" target="_blank">here</a>.</em></div>
<div><span> </span></div>
<span style="color: #212121;"><span><br></span></span>
</div>
<p><span style="color: #212121;"><span> </span></span></p>
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Where is Sydney's real Chinatown? Juwai.com's Gavin Norris

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<p>Annual net permanent and long term arrivals into Australia increased marginally in September to +267,500, some way up from the nadir of +262,800 in June. </p>
<div id="post-body-5241173402093429277" class="post-body entry-content"><a href="/images/2016/11/15/A1.jpg" target="_blank">Click to enlarge</a></div>
<div class="post-body entry-content">
<br><div class="separator"><img src="/images/2016/11/15/A1.jpg" alt=""></div>
<br><div>A significant driver of the rebound has been permanent settlers from Asia, of which there were 74,300 over the year to September, or 56.6 per cent of the total. </div>
<div> </div>
<div>By contrast, permanent settlers from New Zealand, and from Europe with their weakened currencies, continued to wane significantly.</div>
<br><a href="/images/2016/11/15/A4.jpg" target="_blank">Click to enlarge</a>
</div>
<div class="post-body entry-content"> </div>
<div class="post-body entry-content">
<img src="/images/2016/11/15/A4.jpg" alt=""><br><div> </div>
<div><strong><span style="text-decoration: underline;">8 million &amp; beyond</span></strong></div>
<div> </div>
<div>The rebalancing quietly continues, with the number of short term departures ticking a notch lower for a third consecutive month in September, while short term arrivals smashed new records by a huge margin at 709,700 in the month (+11.7 per cent over the year).</div>
<div> </div>
<div>The chart therefore dovetails into a neat 'pincer' formation, as short term arrivals flew beyond 8 million for the first time, and the pace of increase approaching two decade highs!</div>
<div> </div>
<div><a href="/images/2016/11/15/A5.jpg" target="_blank">Click to enlarge</a></div>
<br><img src="/images/2016/11/15/A5.jpg" alt=""><br><br><div>No surprises for guessing that the increase was driven by the 1.58 million visitors from China, Taiwan, and Hong Kong, which even now are still increasing at an annual pace of more than 20 per cent. Extraordinary!</div>
<div> </div>
<div><a href="/images/2016/11/15/A2.jpg" target="_blank">Click to enlarge</a></div>
<br><div class="separator"><img src="/images/2016/11/15/A2.jpg" alt=""></div>
<br><div>There has also been a huge lift in tourism from the United States, rising at an annual pace of around +18 percent. </div>
<br><div>While tourism is of course a major driver, the role of international education should not be underestimated with a record 506,200 education arrivals over the year to September (+12.7 percent).</div>
<br><div class="separator"><a href="/images/2016/11/15/A3.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"> </div>
<div class="separator"><img src="/images/2016/11/15/A3.jpg" alt=""></div>
<div> </div>
<div>While there are inevitably some back-and-forth trips within these figures, as an indicator this chart matches up quite closely with enrolments data which have also suggested rapid growth in international student numbers, particularly from China and India.</div>
<br><div class="separator"><strong><span style="text-decoration: underline;">The wrap</span></strong></div>
<div class="separator"> </div>
<div class="separator">Quite a solid set of numbers across the board here, with record short term arrivals and increasing immigration. </div>
<div class="separator"> </div>
<div class="separator">Overall, this points to annual population growth tracking at around +350,000, but note how population growth is being driven less by 'permanent' arrivals and more by those arriving on other types of visa. </div>
<div> </div>
</div>
<div class="post-footer">
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
</div>
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Immigration turns up a notch: Pete Wargent

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<p><img src="https://counter.theconversation.edu.au/content/66921/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1"></p>
<p>GUEST OBSERVER</p>
<p>There has been significant suspicion in Australia and elsewhere on the wealth of particular business people, investors and companies from China.</p>
<p>There’s always the suggestion that there is something unacceptable about it, whether it be tax evasion, corruption money, stolen money and illegitimate or illegal business ventures. </p>
<p>However this is because we’re looking at the situation with Western goggles on. When you consider the way things run in China, corruption starts to look very different.</p>
<p>There is a lot of academic, anecdotal and official material to support the suspicions about China. The problem of corruption is now notorious not least because of the Chinese government’s current anti-corruption campaign. </p>
<p>The diversion of state assets is one form of corruption of major concern in China. This is when resources that belong to the state are diverted into private hands. It takes many forms, from direct cash or asset diversion to the selling of land to developers when there is ostensibly no right to sell.</p>
<p>Pirated goods and fake products as a result of illegitimate businesses is another side of many corrupt practices.</p>
<p>Developed rule of law has simply not existed in China since the economy changed at the end of the 1970s. Although arguably changing, the system in China has been that, those who entrepreneurially take advantage of available state resources and generate wealth for themselves and the country are usually allowed to do so. Many of these people are themselves public officials or closely connected to them.</p>
<p>In addition, the evolving system of government has encouraged local state entrepreneurship through vague laws and localised administrative decision-making and competitiveness. Local officials are meant to adapt laws to fit competitive local economic development and they do. </p>
<p>A large section of the new wealthy middle class has become rich on the exploitation of housing allocations. They got these from connections in particular governmental and state owned enterprise posts, in the previous era. This may appear illegitimate but the state is now actively fostering this middle class for political and economic goals. </p>
<p>China generally supports those who took advantage of state assets in the earlier economic era and successfully generated economic activity because of the role they played in the country’s economic transformation.</p>
<p>This means the government doesn’t really see these people as corrupt or tax avoiders. In fact, tight definitions of legitimacy have little to do with China’s current and past reality. </p>
<p>Notably, a large part of the story of China’s successful economic transformation is the story of individuals and officials who violated restrictive regulations and laws on economic activity to positive economic outcomes for the country. </p>
<p>However, this also means an official can be accused of corruption as part of a politically motivated initiative to remove them. A business person can be accused of breaking a business law or tax evasion for a similar purpose.</p>
<p>For example, there are cases where businesses that local officials view as desirable to the local economy are given tax treatment that is far more generous than the law allows. If the relevant local leaders are subsequently the target of a political campaign, this tax deal can be presented as evidence of corruption. The business concerned, on the other hand, may be accused of tax evasion. </p>
<p>That said, there is no doubt that there are true ill-gotten gains in China and truly corrupt people. It’s just that this truth needs to be understood through a more complex and murky institutional prism of legitimacy. </p>
<p>This all raises some significant problems for other countries that seek to attract Chinese capital and business but do not like the idea that this money may not be legitimate. </p>
<p>It would be unfair to argue that it is illegitimate simply because it does not accord with the standards applicable in Western countries. Likewise, it may be unfair not to protect a person accused of corruption, if the truth is that they are actually the target of a politically motivated persecution.</p>
<p><em><span class="fn author-name">Nolan Sharkey is </span>Winthrop Professor of Law, University of Western Australia and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/nolan-sharkey-64745" target="_blank">here</a>.</em></p>
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Corruption looks different in China

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<div>The number of Chinese tourists was up 23 percent to 1.6 million in the year to September, and spending in the year to July was up 27 percent to $8.9 billion according to figures from Tourism Australia.</div>
<div> </div>
<div>Australia now tops China’s rankings of destinations, with a new generation of tourists are seeking immersive experiences, not days spent in tour buses, according to John O’Sullivan, chief executive officer of Tourism Australia.</div>
<div> </div>
<div>He said Tourism Australia has been running a large-scale campaign in China this year, including promotional videos on massive screens at subway lines, in Beijing and elsewhere. </div>
<div> </div>
<div>"There was a boom in Japanese tourism in the 1980s and 1990s, but not on the scale or rapidity of this, aided by the growing number of Chinese cities with direct flights," he said.</div>
<div> </div>
<div>"The “millennial” visitors, a third of the total from China, are also seeking the type of experience they can’t have back home, and that their friends might not yet have had – so they can claim social media bragging rights.</div>
<div> </div>
<div>"This new generation of inbound tourist use their smartphones constantly, expect free WiFi, they use Union Pay to access to cash. They want to be assured that they have access to their staples, congee for breakfast, staff who speak their language and a safe modern hotel.</div>
<div> </div>
<div>"They are seeking out self-drive holidays and learning to surf. The destination has changed, previously they may have gone for a long haul destination, North America or Europe, however, as they have become more confident about booking their own holidays, they have rapidly turned to Australia.</div>
<div> </div>
<div>"This new generation of tourist likes to shop too, they rely on Australia’s clean image, putting faith in the fact that products are authentic in Australia, they are truly modern consumers, they look for the brands. Tasmania has surged in the last couple of years, particularly after a visit by China’s President Xi Jinping and his wife Peng Liyuan. Tasmania’s lavender bear has also become something of a cult sensation, because it can only be bought at the Bridestowe Lavender Estate farm door in Tasmania."</div>
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Chinese tourism boom goes from strength to strength

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<p>Henderson Land Development Co. Ltd's project Double Cove sets a new benchmark for large-scale residential developments.</p>
<p>With panoramic views of two bays and bordered by extensive woodland and coastline, Double Cove’s masterplan features 265,000 square metres of sustainable housing in 21 residential towers ranging in size from 10 to 35 storeys.</p>
<p>It comes with ample green space covering 50 percent of the site. Green roofs, walls and water features are scattered throughout the development to combat the heat island effect.</p>
<p>Double Cove incorporates 3,500 residential units, as well as a shopping mall, clubhouse, kindergarten, car parks, landscaped gardens and a central park which acts as the precinct’s ‘green lung’.</p>
<p>There's more than 80 electric vehicle charge stations at Ma On Shan, at 39 Conduit Road.</p>
<p>Recycled rainwater harvesting captures 1,700 cubic metres of water each year, saving around 70 percent of the precinct’s drinking water.</p>
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Hong Kong's Double Cove energy reduction residential complex sustainable design

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<p><img src="https://counter.theconversation.edu.au/content/63187/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1"></p>
<p>GUEST OBSERVER</p>
<p>China has a debt problem. But research shows that it’s not the industrial sector or state-owned enterprises (SOEs) to blame but the booming private property market.</p>
<p>The global financial crisis illustrated how debt problems in one part of the world (in this case the US and Western Europe) could have widespread negative consequences. As China is now the world’s top goods trader, second largest economy and third biggest credit nation, a debt meltdown there would have harmful effects well beyond its borders. </p>
<p>The latest data from the Bank of International Settlements shows that since 2008 China has been responsible for nearly one in two dollars of new borrowing globally. China’s debt has reached 254.9% of GDP, up from 147% at the end of 2008. That’s even higher than in the US, where per-capita incomes are nearly four times greater. </p>
<p>Two-thirds of China’s debt is accounted for by corporates, while the remainder is in the hands of governments and households. Many commentators blame inefficient and loss-making SOEs for the problem, particularly those in the construction sector and areas of industrial overcapacity such as steel. </p>
<p>Recent research using survey data from China’s National Bureau of Statistics confirms businesses in steel, coal and electricity have indeed got increased debt levels, relative to their own equity and assets. But when expressed as a proportion of GDP this increase has been small and mostly offset by firms in other parts of the industrial sector with falling debt levels. </p>
<p>Relative to GDP, between 2008-2015 the debt of industrial firms rose by just 4.4 percentage points, while those in construction increased by 7.0 percentage points. Towering above both was businesses in the real estate sector, where debt leapt by 29 percentage points. </p>
<p>So while it might be true to say that construction and an over-producing industrial sector are contributing to China’s debt problem, they aren’t the main drivers.</p>
<p>How real estate and private firms are driving debt in China</p>
<p>A recent chapter by economists at the Reserve Bank of Australia (RBA) looked at data from Chinese listed companies and came to similar conclusions. </p>
<p>Industrial firms (manufacturing, utilities and mining) subtracted from rising overall debt levels from 2008-2015. </p>
<p>Between 2008-12 it was construction firms that were mostly responsible. Since then it has been businesses in real estate. </p>
<p>In terms of how debt is held between state and private firms, survey data shows within the debt-laden real estate sector, private developers have been increasing their debt levels, while those of state developers have been falling. </p>
<p>Across all sectors, state-owned or controlled businesses accounted for three-quarters of the increase in overall debt levels between 2008-2012, evidence from listed companies reveals. But since then these businesses have actually subtracted from rising debt levels, leaving private firms entirely responsible. </p>
<p>What China’s government can do about it</p>
<p>China’s overall debt trajectory is unsustainable. Research from the International Monetary Fund (IMF) finds that very few countries have experienced a similar rapid build up of debt and escaped without an eventual bust. </p>
<p>The question for the country is how to reduce the reliance of corporations on borrowing while still maintaining a robust rate of economic growth. </p>
<p>If state banks throwing good money after bad at SOEs in construction, coal, steel and so on is the problem, then the policy prescription is clear. </p>
<p>In August, deputy managing director at the IMF, David Lipton argued: </p>
<p>“To tackle the problem, the Chinese government must, in the words of Premier Li Keqiang, "ruthlessly bring down the knife [on] zombie enterprises”,…It is especially important to restructure SOEs. Many are essentially on life support.“</p>
<p><strong>SOE reform is undoubtedly valuable but alone is unlikely to solve the problem. This is because the big driver, particularly in recent years, appears to be increasingly speculative behaviour by those in the real estate market. </strong></p>
<p>On the supply side, this has often involved private developers, albeit sometimes with minority state shareholders, while the demand side is comprised of households. The fact that the private sector looms large in China’s debt in some ways makes the problem more complicated to deal with. </p>
<p>Direct administrative measures such as forcing a merger between a weak state firm and a stronger one may not be possible with private sector players because the government does not own or control these companies. </p>
<p>At the same time, the unemployment created by the collapse of a large private company would not be attractive for a government obsessed with social stability either. </p>
<p>Adding further complexity for China’s regulators is that sometimes households do not buy real estate assets directly but instead do so via financially engineered wealth management products, sold by financial institutions. </p>
<p>The growing importance of mortgage lending in China also creates a potentially destructive link between any problems in the housing market and the stability of the financial system more generally. </p>
<p>When house prices began to fall in the US in 2006, banks were left with massive bad debts as households defaulted on their mortgages. That said, downpayment requirements in China tend to be high relative to other countries, providing banks with some degree of protection. </p>
<p>In weighing up China’s debt outlook, another positive consideration is that the household debt to GDP ratio in China is only 40.7%, compared with 78.4% in the US and a whopping 125.2% in Australia. </p>
<p>Still, given the central role that real estate and the private sector play in China’s debt challenge, moves by the Chinese government to curb property market speculation should be welcomed. Similarly, tighter rules on wealth management products also make good sense, such as limiting the involvement of smaller banks that have less capital to offset potential losses.</p>
<p><em><span class="fn author-name">James Laurenceson is d</span>eputy director and professor, Australia-China Relations Institute (ACRI), University of Technology Sydney and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/james-laurenceson-203" target="_blank">here</a>.</em></p>
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Private property developers are really driving China’s debt: new research

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<p>GUEST OBSERVER</p>
<p>The latest available China housing data reports that the pick up in house price momentum in August was sustained in September, across both new and existing markets.</p>
<p>For new housing, 63 cities reported price gains in the month, broadly in line with August’s 64 and the recent peak of 65 in April 2016. Emphasising the breadth of the improvement in 2016, a year ago only 37 cities reported price gains.</p>
<p>The secondary market improved further in September with 60 cities reporting price gains in the month. That contrasts to 57 in August 2016; 54 in March 2016; and 40 a year ago. Only 7 cities are currently experiencing price declines – the best result for this metric since end-2013.</p>
<p><a href="/images/2016/10/24/Screen%20Shot%202016-10-24%20at%2012.24.07%20PM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/24/Screen%20Shot%202016-10-24%20at%2012.24.07%20PM.png" alt=""></p>
<p>Investigating annual price growth by tier, 2016’s key themes endured in September. Price growth of near 30 percent/yr continues to be seen on average in tier- 1 cities, across both new (29.4 percent/yr) and existing (33.0 percent/yr) markets.</p>
<p>Also, the tier-2 averages gained further momentum, from 9.1 percent/yr to 11.1 percent/yr for new and 7.6 percent/yr to 9.0 percent/yr for existing. Meanwhile, tier-3 price growth remains fickle, new and existing house prices up 6.6 percent/yr and 4.4 percent/yr respectively.</p>
<p><a href="/images/2016/10/24/Screen%20Shot%202016-10-24%20at%2012.17.44%20PM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/24/Screen%20Shot%202016-10-24%20at%2012.17.44%20PM.png" alt=""></p>
<p>As we have previously highlighted, the most interesting aspect of the price data is not the tier averages, but rather the city-by-city detail.</p>
<p>Herein we continue to see strong evidence of speculative demand, with a wide spectrum of price activity by city.</p>
<p>In tier-1, against the 29 percent/yr average result for new housing: Shenzhen price growth has slowed from near 63%yr in April to 34 percent/yr currently; over the same period, price growth has accelerated from around 17 percent/yr to 27 percent/yr and 23 percent/yr respectively in Beijing and Guangzhou. Shanghai has been stable near 30 percent/yr.</p>
<p>In tier-2, against the 11 percent/yr average: Hefei and Nanjing are currently seeing price growth of 46 percent/yr and 40 percent/yr, while many other cities such as Dalian are broadly flat year on year.</p>
<p>Similarly in tier-3, against its 6.6 percent/yr average for new housing, annual price growth varies between 47 percent/yr in Xiamen to –4.5 percent/yr in Jinzhou.</p>
<p>Clearly, cities with close ties to tier-1 and/or new industry are attracting investors (and owner occupiers); but elsewhere, demand is lacking.</p>
<p><a href="/images/2016/10/24/Screen%20Shot%202016-10-24%20at%2012.19.11%20PM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/24/Screen%20Shot%202016-10-24%20at%2012.19.11%20PM.png" alt=""></p>
<p>Given the disparate conditions across the nation, the divergence between sales and starts is likely to persist as significant inventory of unsold new homes lingers in many jurisdictions.</p>
<p>Indeed, even in areas where price growth has been strong, developers have cause to manage new supply carefully so as to see prices sustained at high levels. This is particularly true if authorities impose further restrictions in ‘overheated’ markets.</p>
<p><a href="/images/2016/10/24/Screen%20Shot%202016-10-24%20at%2012.20.27%20PM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/24/Screen%20Shot%202016-10-24%20at%2012.20.27%20PM.png" alt=""></p>
<p>As a consequence, while it has improved through 2016, growth in real estate investment is likely to remain soft relative to history, providing only modest support to manufacturing and commodity prices.</p>
<p><a href="/images/2016/10/24/Screen%20Shot%202016-10-24%20at%2012.21.44%20PM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/24/Screen%20Shot%202016-10-24%20at%2012.21.44%20PM.png" alt=""></p>
<p>As a final point, note that the strong price gains witnessed over the past year pose a risk to services activity into 2017. Chinese households remain willing to invest in property despite the higher cost, but doing so could crimp their ability and willingness to spend elsewhere. This is particularly true if job creation in the construction sector and related areas disappoints. </p>
<p><a href="/images/2016/10/24/Screen%20Shot%202016-10-24%20at%2012.22.47%20PM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/10/24/Screen%20Shot%202016-10-24%20at%2012.22.47%20PM.png" alt=""></p>
<p> </p>
<p><span>Elliot Clarke is senior economist, Westpac and can be contacted </span><a href="https://www.westpac.com.au/" target="_blank">here</a><span>.</span></p>
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Pick up in China housing data sustained: Westpac's Elliot Clarke

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<p><img src="https://counter.theconversation.edu.au/content/67155/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1"></p>
<p>GUEST OBSERVER</p>
<p>People from cultural backgrounds where getting financial assistance from families is the norm are less likely to default on their mortgages, new research shows.</p>
<p>This includes those from South East Asian countries.</p>
<p>We also found in societies where the culture is to save more and for people to control their desires and instincts, the default on mortgages is lower. The findings are true both in relatively stable economic periods (2010-2013) and during a period of financial crisis (2008-2009).</p>
<p>In analysing the factors behind mortgage delinquencies, we used data on default rates from 42 developed and developing countries. These countries represent about 90% of the world’s gross national income and the world’s outstanding balance of housing mortgages in 2013. The rate of people who defaulted on their mortgage varied from 0.05% in Hong Kong to 17.05% in Greece.</p>
<p>Australia has a low default rate on mortgage, thanks to a strong level of national income, stable growth of the property market and a low unemployment rate. But it ranks high in all cultural dimensions that potentially lead to high default rate, this is accentuated during times of widespread economic hardship. So policymakers should be mindful of unfavourable economic conditions that may trigger default on mortgages. </p>
<p>There are a number of explanations for our findings. Individuals who have a tendency to enhance or protect their self esteem, by taking credit for success and denying responsibility for failure, may overestimate their abilities make enough money to meet their long term financial obligations. They also have relatively weaker self-monitoring skills and may not budget well. </p>
<p>Also, in societies where people are expected to be independent and only take care of their own interests, the rate of default on mortgage is higher. A lack of access to support from extended families and groups may make it difficult to pay back their mortgages during the period of financial hardship.</p>
<p>We found that borrowers in countries exhibiting higher degrees of pragmatism (e.g. having a long-term view to life) are less likely to default on their mortgages. People in these countries have a higher tendency to save. These people are also probably less likely to undertake risky mortgages and therefore default less on their mortgages.</p>
<p>In societies with a strong emphasis on enjoying life there was a higher rate of defaults. These people are more likely to follow their impulses and desires and so might not allocate their financial resources efficiently. They may spend more money than they can afford on leisure activities and have less savings to service their mortgages.</p>
<p>Not surprisingly we found countries with higher levels of household disposable income, lower unemployment rates and higher growth in house prices, would have lower default rates on mortgage. However, national debt rules, regulations and chronic and prolonged illness, aren’t significantly associated with defaults on mortgages in our sample countries. </p>
<p>Housing mortgages account for about 75% and 50% of total consumer lending in the developed and developing economies, respectively. Our findings are of particular importance for multinational financial institutions because they hold mortgage loans as a large portion of their assets and therefore higher default rates may significantly lower their market values. </p>
<p>Our results show that lenders should take into account the cultural backgrounds of borrowers when determining how likely it is that they will default. This is in addition to common economic factors, such as income, unemployment, and house prices, socio-demographic factors like divorce and race and health characteristics of borrowers. </p>
<p>For example, multinational financial institutions could promote their mortgage products more in societies where people receive support from their relatives or members of groups. They could also focus on countries where people have a higher propensity to save for the future and are less interested in leisure activities. This could save these institutions a lot in terms of risk, but would also be much better for their customers.</p>
<p><em><span class="fn author-name">Reza Tajaddini is l</span>ecturer in Finance, Swinburne University of Technology and can be contacted <a href="https://theconversation.com/profiles/reza-tajaddini-308121" target="_blank">here</a>.</em></p>
<p><em><span class="fn author-name">Hassan F. Gholipour is l</span>ecturer in Economics, Swinburne University of Technology and can be contacted <a href="https://theconversation.com/profiles/hassan-f-gholipour-309444" target="_blank">here</a>.</em></p>
<p><em>Both are authors for The Conversation.</em></p>
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