<p data-end="568" data-start="388">Abadeen has released the whole-floor penthouse crowning its recently completed <a href="https://www.apartments.com.au/buildings/park-residences-cremorne-2-sutherland-street-cremorne-nsw-2090">Park Residences</a> development in Cremorne, bringing the near-300 sqm residence to market for the first time.</p>

<p data-end="803" data-start="570">Occupying the entire top floor of the boutique Lower North Shore development, the penthouse includes 221 sqm of internal living and a 74 sqm wraparound terrace, with a prized north-facing aspect taking in views across Middle Harbour.</p>

<p data-end="1041" data-start="805">The residence has been completed and fully furnished following a collaboration between Abadeen Executive Chairman Justin Brown and internationally recognised interior designer Jack Freeman, Founder and Managing Director of FREEMAN &amp; CO.</p>

<p data-end="1239" data-start="1043"><a href="https://www.apartments.com.au/developers/abadeen">Abadeen</a> and Freeman approached the penthouse as a finished home, sourcing furniture, artwork, lighting and objects from Australia and overseas.</p>

<p data-end="1239" data-start="1043">[smartcode_project:default project_id=114246 project_image_fid=378718]</p>

<p data-end="1459" data-start="1241">Pieces from Parisian design house Pierre Augustin Rose sit alongside contemporary artworks and bespoke lighting, with Freeman drawing on recent visits to PAD Paris and Salone del Mobile Milano for the final collection.</p>

<p data-end="1582" data-start="1461">Brown said the aim was to create a penthouse that felt more like a large-scale private home than a traditional apartment.</p>

<p data-end="1777" data-start="1584">"The experience begins the moment the lift doors open. You're welcomed into an elegant dining room before the home opens into an extraordinary living space framed by sun-drenched harbour views.</p>

<p data-end="2018" data-start="1779">"Every time someone walks through the front door they pause. It's not just the view, it's the incredible sense of space, the warmth created by the northern sunlight that fills the interiors, and the way every room connects so effortlessly.</p>

<p data-end="2245" data-start="2020">"It has all the proportions of a luxury home, while delivering the effortless lifestyle and personalised experience of living in a world-class six-star hotel, combined with the simplicity and convenience of apartment living."</p>

<p data-end="2245" data-start="2020">[smartcode_project:default project_id=114246 project_image_fid=378713]</p>

<p data-end="2438" data-start="2247">A secure lift provides exclusive access to the penthouse level, opening to a dedicated arrival foyer and dining area before the residence expands into its main living and entertaining spaces.</p>

<p data-end="2577" data-start="2440">Floor-to-ceiling glazing runs across the northern side of the home, connecting the interiors with the terrace and Middle Harbour outlook.</p>

<p data-end="2772" data-start="2579">The penthouse also features a fireplace and substantial chef's kitchen, while the wraparound terrace has been designed to accommodate both everyday outdoor living and larger-scale entertaining.</p>

<p data-end="2245" data-start="2020">[smartcode_project:default project_id=114246 project_image_fid=378720]</p>

<p data-end="2245" data-start="2020">Freeman said the interiors had been deliberately kept restrained to complement the scale, natural light and outlook already established by the architecture.</p>

<p data-end="2996" data-start="2932">"The penthouse is a serene study in quiet luxury," Freeman said.</p>

<p data-end="3264" data-start="2998">"The interior pairs soft, sculptural forms with warm timber, pale stone and a restrained neutral palette. Curated artwork and metallic accents add depth, while abundant natural light creates a calm, effortlessly refined atmosphere. In my world, less is always more."</p>

<p data-end="3384" data-start="3266">Freeman said the approach was centred around collecting individual pieces rather than simply decorating the apartment.</p>

<p data-end="3531" data-start="3386">"Every material, every object and every piece of furniture has been curated with intention. I am a true believer in collecting versus decorating.</p>

<p data-end="3823" data-start="3533">"The architecture already provided extraordinary natural light, remarkable volume and an uninterrupted connection to Middle Harbour. Our role was to complement those qualities with unique one-of-a-kind pieces of fine art and collectible design sourced from recent travels around the world."</p>

<p data-end="3823" data-start="3533">[smartcode_project:default project_id=114246 project_image_fid=378694]</p>

<p data-end="3986" data-start="3825">Among the collection are solid bronze sculptures by Lorenzo Quinn, alongside a curated crystalware collection and pieces sourced from international design fairs.</p>

<p data-end="4199" data-start="3988">Park Residences sits opposite Cammeray Golf Club, Cammeray Croquet Club and Grand Slam Tennis Cammeray, around 300 metres from Neutral Bay Village and its established collection of restaurants, cafés and retail.</p>

<p data-end="4370" data-start="4201">Brown said the combination of a whole-floor floorplan, northern aspect and proximity to Neutral Bay was becoming increasingly difficult to find on the Lower North Shore.</p>

<p data-end="4516" data-start="4372">"Completed whole-floor penthouses with a sun-drenched north-facing aspect and sweeping Middle Harbour views are exceptionally rare," Brown said.</p>

<p data-end="4717" data-start="4518">"Add a quiet position opposite golf, croquet and tennis facilities, a level walk to Neutral Bay Village and only minutes to the CBD, and you have a lifestyle that's incredibly difficult to replicate.</p>

<p data-end="4883" data-start="4719">"This is a home that offers the privacy and generosity of a luxury residence together with the convenience of one of Sydney's best-connected harbourside locations."</p>

<p data-end="4947" data-start="4885">The penthouse will be exclusively marketed by SRM Residential.</p>

<p data-end="4947" data-start="4885">[smartcode_project_cta:default project_id=114246]</p>


Joel Robinson

Abadeen unveils penthouse at Park Residences in Cremorne

<p>New Brisbane developer Dalcott has unveiled Marrone, the first of three residential projects it is planning in and around Browning Street in South Brisbane.</p>

<p><a href="https://www.apartments.com.au/new-apartments/marrone-south-brisbane-39-browning-street-south-brisbane-qld-4101">Marrone</a> will comprise 97 predominantly two- and three-bedroom apartments, with larger residences aimed squarely at the owner-occupier market.</p>

<p>The project will sit in a quiet pocket of South Brisbane between South Bank and West End, close to the restaurants, cultural attractions and riverfront amenity that have driven the suburb's continued transformation.</p>

<p>Dalcott is targeting buyers looking for more space and amenity than has traditionally been offered in the inner-city apartment market, particularly downsizers and professionals wanting to remain close to the city.</p>

<p>[smartcode_project:default project_id=149951 project_image_fid=377072]</p>

<p>Resident facilities will be concentrated around an extensive rooftop amenity offering, including a swimming pool, spa, infrared sauna, warm and cold magnesium plunge pools, private lounge, dining room and outdoor entertaining areas.</p>

<p>Dalcott Managing Director Lachlan Cottee said South Brisbane's combination of lifestyle, connectivity and established character had been central to the approach to Marrone.</p>

<p>“South Brisbane offers a combination of lifestyle, connectivity and character that’s difficult to replicate elsewhere in Brisbane,” Cottee said.</p>

<p>“Our focus has been on creating homes that feel connected to that environment while providing the level of design, functionality and quality that today's owner-occupiers expect.”</p>

<p>The residences will feature an expressive material palette. Italian Calacatta Viola marble, known for its deep burgundy veining, will be paired with aged brass tapware, Chestnut engineered timber flooring and Tuscan Oak joinery.</p>

<p><img alt="Marrone" data-entity-type="file" data-entity-uuid="b8d833da-3b30-496a-ae30-07bdff371b50" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-25%20at%2010.52.35%E2%80%AFAM.png?VersionId=P6DAgOfaQzIXljKKK5j3e5NhWtrHIu9G" /></p>

<p>Bathrooms will feature Nara Japanese ceramics and glass bricks, while clay, walnut and brass lighting will be used throughout the apartments.</p>

<p>Dalcott has appointed Realm Projects, led by Managing Director Shane Foley, to handle sales and marketing following previous sold-out collaborations between the groups.</p>

<p>Foley said the Brisbane apartment buyer had become increasingly focused on the quality of the home itself rather than simply securing an inner-city address.</p>

<p>“We expect to see strong demand from buyers who still want all the advantages of inner-city living but aren’t prepared to compromise on the quality of their home,” Foley said.</p>

<p>“Many will be downsizers looking to leave behind the maintenance of a traditional family home without giving up the space they enjoy, while others are likely to be professionals wanting a residence that reflects the way they live today.”</p>

<p>“Marrone responds directly to that demand, with generous floorplans, exceptional resident amenity and a location that places some of Brisbane’s best dining, entertainment and cultural attractions within walking distance.”</p>

<p><img alt="Marrone" data-entity-type="file" data-entity-uuid="61f7b22f-899e-4c0f-940a-7d3ab1bfb93a" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-25%20at%2010.52.44%E2%80%AFAM.png?VersionId=PvN1JYxBgUpyCB7efKo52WGdSDs9nmim" /></p>

<p>Marrone will be the first project delivered as part of Dalcott's broader investment in the precinct.</p>

<p>It will be followed by La Terra, a boutique project comprising penthouse-style, single-level apartments on a northeast corner site with extensive resident amenity and city views.</p>

<p>Cottee said Marrone represented the first stage of the group's longer-term plans for the area.</p>

<p>Dalcott was established in 2025 by Lachlan Cottee and Ben Dalgliesh, combining development and construction capability under an integrated model and focusing on architecturally considered residential projects.</p>

<p>Marrone will initially be offered through a pre-release registration campaign ahead of its broader public launch.</p>


Dalcott targets owner-occupiers with South Brisbane debut Marrone

<p>Parnell Developments is the latest to seek significant uplift through the NSW Government's Housing Delivery Authority on a Strathfield site previously approved for a much smaller apartment development.</p>

<p>Parnell has sought approval for a 32-storey mixed use tower across&nbsp;<a href="https://www.apartments.com.au/new-apartments/7-lyons-street-strathfield-nsw-2135">3-7 Lyons Street and 18 Parnell Street</a>, a&nbsp;1,857 sqm site around 400 metres from Strathfield Station. The building would yield 160 apartments, 15 per cent of which will be dedicated affordable as per the government mandate for buildings seeking additional uplift.</p>

<p>Approved previously was a nine-storey building back in 2022 with just over 30 apartments. That approval came prior to the project being&nbsp;progressively reconsidered as planning policy shifted toward greater density around transport hubs.</p>

<p><img alt="Strathfield" data-entity-type="file" data-entity-uuid="c5af5281-a643-4eb2-b8c4-0081b59c04c7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-25%20at%209.16.48%E2%80%AFAM.png?VersionId=37bd3mI7rHNpThOV_75VO8xsGFwWOi1u" /></p>

<p>Turner has designed the latest building that would replace&nbsp;existing detached homes across the four lots.</p>

<p>The apartment mix comprises 22 one-bedroom apartments, 107 two-bedroom and two-bedroom-plus configurations, and 31 apartments with three or more bedrooms. The scheme also includes 203 car spaces across six basement levels and 58 bicycle spaces.</p>

<p>The proposal has been designed around a three-storey podium addressing Lyons Street, with the tower rising above and stepping toward its upper levels.</p>

<p>Turner said the podium was deliberately scaled to respond to the existing street, while the taller element has been designed as part of the emerging skyline anticipated around Strathfield Town Centre and the wider Homebush transport-oriented development precinct.</p>

<p>The Lyons Street frontage would have a more active, pedestrian-focused character, incorporating the commercial tenancy, landscaping and a brick-framed podium with an awning.</p>

<p><img alt="Strathfield" data-entity-type="file" data-entity-uuid="14b20874-b8c3-4ac7-bc03-92be9a69fb78" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-25%20at%209.17.48%E2%80%AFAM.png?VersionId=av.9TxtqIRTC6v3PkSuu1rL9rreWoe2h" /></p>

<p>Parnell Street, which faces the railway corridor, has been given a different architectural treatment, with double-height breeze blocks, landscaping and communal areas used to soften the interface with the rail infrastructure.</p>

<p>The tower itself uses curved and recessed facade elements, with wave-like indentations across the northern elevation breaking the building into three vertical forms.</p>

<p>A palette of grey concrete, brick and breeze blocks is complemented by clay and terracotta accents, while the upper tower adopts a lighter expression through articulated slab edges, vertical fins and recessed glazing.</p>

<p>Residents would have access to 467 sqm of communal open space spread across three levels. The ground floor would accommodate the more active resident areas, including barbecue and group gathering spaces and an internal communal room capable of being used for working from home.</p>

<p>A more passive viewing deck is proposed at level three, overlooking the ground-level landscaping and neighbouring tennis courts, while a rooftop "sunset deck" at level 30 would provide another social and relaxation space.</p>

<p><img alt="Parnell" data-entity-type="file" data-entity-uuid="c3dce401-a80f-4682-8471-4caa01180880" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-25%20at%209.17.34%E2%80%AFAM.png?VersionId=Xyo8JVqbOhSJXNy6Ih.1cHL.O6i0bGR." /></p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>&nbsp;</p>

<p>Strathfield has been earmarked for substantial change through the Strathfield Town Centre planning work and the nearby Homebush TOD precinct.</p>

<p>Turner's report says the project has been designed to act as a transition between the existing low and mid-rise development surrounding the site and the taller built form expected to emerge across the town centre.</p>

<p>The proposal is being assessed as State Significant Development under the HDA pathway, alongside the concurrent request to amend the Burwood Local Environmental Plan.</p>


First look: New apartment tower pitched for Strathfield Town Centre precinct

<p>An $18 million penthouse has hit the market in Main Beach as construction tops out on La Mer, the $155 million apartment development rising just metres from the beach.</p>

<p>Spanning around 600 sqm across the top two levels of the 29-storey tower on Main Beach Parade, the four-bedroom penthouse is one of the latest eight-figure residences to test the upper end of the Gold Coast apartment market.</p>

<p>Its launch comes amid continued activity at the very top of the market, following the $30 million off-the-plan sale of a Burleigh Heads penthouse earlier this year, which surpassed the Gold Coast's previous $24 million apartment record set in 2023.</p>

<p>The <a href="https://www.apartments.com.au/new-apartments/la-mer-main-beach-3580-main-beach-parade-main-beach-qld-4217">La Mer penthouse</a> has been designed as a private residence in the sky, with 360-degree views spanning the ocean, Broadwater, hinterland and Gold Coast skyline.</p>

<p>[smartcode_project:default project_id=95606 project_image_fid=378731]</p>

<p>All four bedrooms have ensuites, while the ocean-facing master retreat occupies around half of the upper level and includes its own lounge, private balcony, two walk-in wardrobes and an oversized ensuite with a freestanding stone bath positioned to take in the views.</p>

<p>The residence also features a kitchen designed to accommodate a private chef, a 3.6-metre island bench, expansive butler's pantry, wine cellar and integrated bar.</p>

<p>[smartcode_project:default project_id=95606 project_image_fid=378732]</p>

<p>A rooftop pool and substantial outdoor entertaining area with its own kitchen sit above the residence, while a grand staircase connects the two internal levels. The penthouse also has its own express lift.</p>

<p>OTP Group Director James Elliott, who is marketing La Mer, said the penthouse was expected to appeal to high-net-worth buyers seeking either a permanent Main Beach residence or Gold Coast holiday home.</p>

<p>“The La Mer penthouse represents exceptional value, considering its quality design, size, privacy and location, not to mention the 360-degree views capturing the beach and Gold Coast Broadwater,” Elliott said.</p>

<p>“We’re anticipating interest from high-net-worth individuals and couples seeking a residence or holiday home in the sought-after village enclave of Main Beach, taking advantage of the unprecedented growth underway in the area and neighbouring The Spit.”</p>

<p>[smartcode_project:default project_id=95606 project_image_fid=378736]</p>

<p>La Mer is being developed by developer-builder ODUS and Nazero, in partnership with funder Metrics Credit Partners.</p>

<p>ODUS Director Byron Sakha said topping out the tower had provided the opportunity to release the project's most significant residence.</p>

<p>“We’ve worked with internationally-recognised studio Sici Design on the penthouse interiors, with a focus on ensuring it isn’t luxury for luxury’s sake. Every element has been thoughtfully designed to enhance quality of life for those who call it home,” Sakha said.</p>

<p>“The views are the hero of virtually every space, but we’ve given equal attention to the fittings and finishes, so every detail exudes elegance and refinement.”</p>

<p>Sici Design Founder and Director Maria Papadopoulos said the extensive views became an integral part of the interior design rather than simply something the residence was designed around.</p>

<p>“The views weren't something we designed around, they became part of the design itself, with the true luxury of La Mer in its feeling of peace, calm and wellbeing,” Papadopoulos said.</p>

<p>“Luxury isn't defined by how something looks, but how it makes you feel, and we believe a luxurious home should be beautiful to live in, not stressful to maintain.”</p>

<p>The interiors combine Austral Dream Dolomite natural stone and travertine with timber flooring and a restrained coastal palette.</p>

<p>[smartcode_project:default project_id=95606 project_image_fid=378734]</p>

<p>Designed by Plus Studio, La Mer is one of the more boutique additions to the rapidly changing Main Beach apartment market.</p>

<p>The tower comprises just 24 full-floor, three-bedroom plus multipurpose room apartments below the two-level penthouse, giving the project a considerably lower density than many of the larger towers being developed across the Gold Coast.</p>

<p>Residents will have access to a pool and spa, gym, sauna, barbecue facilities, private sun lounges, yoga lawn and outdoor beach shower.</p>

<p>The penthouse has been released as part of the final collection of residences at La Mer, with remaining apartments priced from $4.3 million.</p>

<p>Construction is expected to complete later this year, with a fully furnished display apartment now open on level four.</p>

<p>[smartcode_project_cta:default project_id=95606]</p>


ODUS releases $18 million penthouse crowning La Mer Main Beach

<p><a href="https://www.apartments.com.au/developers/far-east-consortium">Far East Consortium</a> is preparing to commence construction on <a href="https://www.apartments.com.au/new-apartments/640-bourke-street-melbourne-640-bourke-street-melbourne-vic-3000">640 Bourke Street</a> this October, marking the next milestone for the Melbourne CBD development and its higher-end Eliza Collection.</p>

<p>Spanning levels 44 to 68 of the 68-storey <a href="https://www.apartments.com.au/architects/rothelowman">Rothelowman</a>-designed tower, the Eliza Collection has been conceived as a lower-density offering within the broader development, with only five apartments on each floor, dedicated lift access and a collection of resident spaces reserved exclusively for Eliza Collection residents.</p>

<p>The Eliza Collection forms part of Far East Consortium's broader move toward larger-format residences at 640 Bourke Street, where the number of apartments was reduced from earlier plans as apartment sizes increased.</p>

<p>[smartcode_project:default project_id=509 project_image_fid=365685]</p>

<p>"What it's meant for 640 Bourke is we've actually reduced the number of apartments. We've increased the overall size of the apartments. We don't have any studios in here, and what that does for a project is it elevates it," Far East Consortium Director of Sales and Marketing Lauren Sheldon said.</p>

<p>Rothelowman Associate Jun Chang said the design process provided an opportunity to create more generous floorplans.</p>

<p>"We were given the opportunity to be more generous. The apartments became bigger and squarer than any other apartments which had been designed in the CBD before that."</p>

<p>[smartcode_project:default project_id=509 project_image_fid=368869]</p>

<p>That thinking carries through to the Eliza Collection, where the residences have been designed around the space and functionality associated with a larger home, but positioned high above the centre of Melbourne.</p>

<p>Kitchens are equipped with Gaggenau appliances, a butler's pantry, temperature-controlled wine cabinet and sculptural pendant lighting, while engineered timber flooring, stone and porcelain finishes and custom cabinetry feature throughout the broader interiors.</p>

<p>Privacy and security are another point of distinction. Eliza Collection residents have dedicated lift access, while 640 Bourke Street will provide concierge services and secure resident parking. Short-stay accommodation, including Airbnb, will not be permitted within the development.</p>

<p>[smartcode_project:default project_id=509 project_image_fid=365689]</p>

<p>Eliza Collection residents will also have exclusive access to selected amenity spaces across levels one and three of the restored Eliza Tinsley building. These include the Salon with grand piano, an art therapy room, private dining rooms and treatment rooms.</p>

<p>They sit within more than 3,000 sqm of amenity planned across 640 Bourke Street, alongside facilities including a pool, gym, whisky lounge and further social and wellness spaces.</p>

<p>The Eliza Tinsley building itself is central to the wider project's identity. Rather than treating the existing Eliza Tinsley façade as a separate element, Rothelowman used it as a starting point for the architecture of the new tower, with the historic building to accommodate the project's gallery and lobby.</p>

<p>"It's a significant asset and wants to be celebrated and experienced by all residents every single time they go in and out of the building," Rothelowman Principal Stuart Marsland said.</p>

<p>[smartcode_project:default project_id=509 project_image_fid=368872]</p>

<p>The tower will rise behind the retained heritage building at 640 Bourke Street, placing residents within walking distance of Southern Cross Station, Flagstaff Gardens, Queen Victoria Market and the Docklands waterfront.</p>

<p>With construction scheduled to begin in October, Far East Consortium has established an onsite display gallery at 640 Bourke Street, including fully built apartments that allow the project's layouts, materials and finishes to be inspected at full scale.</p>

<p>A fully built Eliza Collection apartment is also available to view at the display suite by appointment ahead of the planned October construction commencement.</p>

<p>Eligible purchasers who buy before construction commences can secure the full available off-the-plan stamp duty savings, subject to eligibility and applicable conditions.</p>

<p>[smartcode_project_cta:default project_id=509]</p>


Far East Consortium brings Eliza Collection to 640 Bourke Street ahead of October construction start

Home Loans

<html><body>
<p class="p1"><span class="s1"><span style="font-size: 12.16px;">While it's possible to borrow money at significantly lower rates than reported here, mortgage rates have nudged higher over the last couple of months. </span></span></p>
<p class="p5"><span style="font-size: 12.16px;">Government bond yields have also crept steadily higher. </span></p>
<p class="p5"><a href="https://www.propertyobserver.com.au/images/2017/02/09/RBA1.png" target="_blank"><span style="font-size: 12.16px;">Click to enlarge</span></a></p>
<p class="p5"><span style="font-size: 12.16px;"><img src="https://www.urban.com.au/images/2017/02/09/RBA1.png" alt=""></span></p>
<p class="p3"><span class="s1">In fact the 10-year bond yield had dropped well below 2 percent in the second half of 2016, but has since staged a strong rebound to sit around 2.70 percent. </span></p>
<p class="p5"><a href="https://www.propertyobserver.com.au/images/2017/02/09/RBA2.jpg" target="_blank">Click to enlarge</a></p>
<p class="p5"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/02/09/RBA2.jpg" alt=""></p>
<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/"><span class="s2">blogger</span></a>.</span></p>
<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
</body></html>

pwargent-M4siyDbqQY

Mortgage rates nudge higher: Pete Wargent

<html><body>
<div>The share of interest-only loans fell sharply towards the 30 per cent proposed regulatory cap in the June 2017 quarter, as bank incentives to switch towards principal and interest products had the desired impact. </div>
<div> </div>
<div>Treasurer Scott Morrison will argue that the "scalpel" approach to cooling this sector of the market has been successful, forcing Aussies to begin paying back their mortgages sooner. </div>
<div> </div>
<div><a href="https://www.propertyobserver.com.au/images/2017/08/30/IO1.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/08/30/IO1.jpg" alt=""></div>
<div> </div>
<div>For ADIs with greater than $1 billion in residential term loans, new loans to investors also dropped back to a 34.5 per cent share of the new lending market, now well down from 42.5 per cent in the June 2015 quarter. </div>
<div> </div>
<div>The share of high loan to value ratio (LVR) loans has also diminished considerably over the past 10 quarters, which makes life tough for first homebuyers, but arguably reduces mortgage exposure risk in aggregate.  </div>
<p><a href="https://www.propertyobserver.com.au/images/2017/08/30/APRA2.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/08/30/APRA2.jpg" alt=""></p>
<div>Despite these changes in the composition of exposures, lending growth remains strong, with total ADI exposures rising by +7.3 per cent over the financial year to $1.54 trillion. </div>
<div> </div>
<div>That's an increase of +$105 billion over the 2017 financial year, ever-so-slightly less than the +$107 billion increase seen in FY2016. </div>
<div> </div>
<div>The growth in ADI exposures to owner-occupiers was particularly strong, rising by +8.1 per cent to beyond $1 trillion for the first time. </div>
<p><a href="https://www.propertyobserver.com.au/images/2017/08/30/APRA3.jpg" target="_blank">Click to enlarge</a></p>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/08/30/APRA3.jpg" alt=""></div>
<div> </div>
<div>Activity in new low-doc loans and other non-standard loans continued to decline, as has consistently been the case now since 2009. </div>
<p> </p>
<div><strong><span style="text-decoration: underline;">The wrap</span></strong></div>
<div> </div>
<div>Overall, there was not much of a slowdown in evidence here, even if the composition of lending has shifted. </div>
<div> </div>
<div>Furthermore, non-banks have been growing their mortgage books apace - the dollar value of Pepper's residential loan originations soared by +17 per cent in H1 2017, for example. </div>
<div> </div>
<div>After accounting for these changes it's questionable that there has been any meaningful slowdown at all in the pace of mortgage lending. </div>
<div> </div>
<div>
<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank"><span class="s2">blogger</span></a>.</span></p>
<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
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ADI home loan exposure pass $1 trillion: Pete Wargent

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<div>The Reserve Bank of Australia (RBA) reported credit growth of +5.3 per cent over the year to July 2017, a fair bit slower than the +6.6 per cent seen a year earlier. </div>
<div> </div>
<div class="separator"><a href="https://www.propertyobserver.com.au/images/2017/09/04/RBA3.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/09/04/RBA3.jpg" alt=""></div>
<div> </div>
<div>The slowdown has partly been a reflection of business credit growth ambling along at an annual rate of +4.2 per cent, although surveys suggest that business investment is set to gather a bit of momentum. </div>
<div> </div>
<div>Growth in credit relating to housing market investors has slowed a touch to +7.4 per cent, now well under the 10 per cent cap, with more slowing to come based on recent monthly figures.</div>
<div> </div>
<div>Owner-occupier credit growth is still powering along, though, and total housing credit growth is still a sprightly +6.6 per cent, unchanged from a year earlier.</div>
<div> </div>
<div><a href="https://www.propertyobserver.com.au/images/2017/09/04/RBA2.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/09/04/RBA2.jpg" alt=""></div>
<div> </div>
<div>Personal credit growth remains negative, as consumers tend towards mortgage buffers and offset accounts instead of of credit cards and personal loans. </div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Shifts at the margin</span></strong></div>
<div> </div>
<div>There's no doubt that it's become more difficult at the margin to gain access to housing credit, particularly for investor loans, and most especially for interest-only mortgages. </div>
<div> </div>
<div>The growth in investor loans is now well below the regulatory 10 per cent cap for each of the major banks, which between them account for most of the mortgage market.<br><br>A couple of minnow lenders have been pinged with a speeding ticket, including the tiny Heritage Bank, so they'll be putting investor loans in the sin bin, perhaps for a month or two. </div>
<div> </div>
<div>But on the flip side, there's plenty of potential for most of the main lenders to loosen standards again for investment loans as we head into spring and beyond. </div>
<div> </div>
<div><a href="https://www.propertyobserver.com.au/images/2017/09/04/APRA2.jpg" target="_blank">Click to enlarge</a></div>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/09/04/APRA2.jpg" alt=""></p>
<div> </div>
<div>Moreover, while APRA's latest ADI monthly statistics hinted at a marginal slowdown, the reality is that non-standard loans have to some extent been picked up by alternative lenders such as Pepper and their ilk. </div>
<div> </div>
<div>The RBA's figures show that over the year to July 2017 the total stock of outstanding housing credit increased by $113 billion to $1.69 trillion.<br><br>In dollar value terms, this is the biggest annual increase ever recorded.</div>
<p><a href="https://www.propertyobserver.com.au/images/2017/09/04/RBA1.jpg" target="_blank">Click to enlarge</a></p>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/09/04/RBA1.jpg" alt=""></div>
<div class="separator"> </div>
<div>So, there may be a 'slowdown' of sorts underway, if you will, but as the above chart shows it looks like a shift in composition too.</div>
<div> </div>
<div>Moreover, every single one of the main lenders continues to increase its stock of mortgages outstanding, even if there has been a move towards home loans and away from investor loans. </div>
<p><a href="https://www.propertyobserver.com.au/images/2017/09/04/APRA.jpg" target="_blank">Click to enlarge</a></p>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/09/04/APRA.jpg" alt=""></div>
<p><strong><span style="text-decoration: underline;"><br></span></strong><strong><span style="text-decoration: underline;">The wrap</span></strong><br><br></p>
<div>Some one-track observers have noted that out of cycle rate hikes has crashed or destroyed demand for mortgage debt.</div>
<div> </div>
<div>I'm not sure what data source they're using to draw that conclusion - none, most likely - but the official RBA figures shows a record annual increase in housing credit, with a slowing in investor credit just beginning to flow through to the annual data.</div>
<div> </div>
<div>Experiences elsewhere in the world have shown that macroprudential measures tend to be effective for a while before borrowers and lenders find ways to get transactions happening again.</div>
<div> </div>
<div>The reality is that, in aggregate, interest rate differentials have only slowed lending slightly at the margin to date, while simultaneously boosting the bottom line and equity of gleeful banks.<br><br>Out of cycle rate hikes were certainly never about funding costs, with the cost of wholesale debt barely having broken a decade-long downtrend.</div>
<div> </div>
<div>What would genuinely change the landscape would be a statement of intent from the RBA in the form of a hike in the cash rate, but in all likelihood that remains far away.<br><br>
</div>
<div>In the event a couple of dozen lenders have already cut their mortgage rates since the beginning of July, most notably Westpac, in anticipation of the spring selling season.<br><br>With the trend unemployment rate declining to its lowest level in more than four years and further improvements expected over the next few ahead by the RBA, it will be intriguing to see how claims of a 'perfect storm' and 'record mortgage stress' are reconciled with what's actually happening on the ground.<br><br>I say that because it looks suspiciously as though mortgage default rates are refusing to rise from benign levels outside Western Australia.<br><br>Naturally, household cash flows may appear weaker if accelerated mortgage repayments have become the norm.<br><br>But the statistics show that although wages growth has been weak, the unemployment rate has been falling, and underutilisation is declining in volume terms.<br><br>Genuinely, I'm intrigued to watch what the media will report having run so hard with the unprecedented mortgage stress meme.<br><br>Not everyone agrees with the improving economy thesis, mind.<br><br>Westpac sees the pullback of Chinese apartment investors leading to a sharp slowdown in residential construction and unemployment heading back towards 6 per cent next year.<br><br>Watch, this, space!!!</div>
<div> </div>
<div>
<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank"><span class="s2">blogger</span></a>.</span></p>
<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
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The record year for house lending: Pete Wargent 

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<p>One of the criticisms of macroprudential measures to cool lending (as opposed to the Reserve Bank lifting the cash rate) has been that they can't "get in all the cracks".</p>
<p>And those sneaky lenders have been up to their old tricks, with mortgage growth accelerating strongly in May, directly contradicting almost all market commentary.</p>
<p>It's hard to get a read on this.</p>
<p>With borrowing capacity increasingly constrained, it may imply higher volumes. </p>
<p>APRA released its Monthly Banking Statistics yesterday which confirmed that banks expanded mortgage books by 0.6 per cent in May, with owner-occupier loans rising by 0.7 per cent. </p>
<p>Respected banking analyst Martin North referred to the growth as "too strong", noting that "home prices will continue to rise", although this wasn't reported anywhere of note, at least as far I could see. </p>
<p>Growth in investor loans also accelerated in May, up from 0.39 per cent to 0.42 per cent. <span style="font-size: 12.16px;"> </span></p>
<p>For more detailed analysis of the individual components, including the speed at which the individual banks are growing their respective investment mortgage books, subscribe for our monthly reports.</p>
<p>Housing credit picks up</p>
<p>It was a busy day indeed for credit-related statistics yesterday, with the Reserve Bank of Australia (RBA) also releasing its Financial Aggregates figures for the month of May. </p>
<p>Credit growth expanded by 5 per cent of the year to May, while broad money growth remained somewhat stronger at 7.3 per cent. <span style="font-size: 12.16px;"> </span></p>
<div id="post-body-5590776051175794007" class="post-body entry-content">
<div class="separator"><a href="https://www.propertyobserver.com.au/images/2017/07/02/RBA2.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/07/02/RBA2.jpg" alt=""></div>
<div> </div>
<div>Drilling into the components of credit growth, housing credit had a stronger month, meaning that the annual rate of housing credit growth has continued to pick up speed from 6.32 per cent in November to 6.59 per cent in May. </div>
<div> </div>
<div>Investor credit grew by 7.5 per cent over the year, but the trajectory up growth looks to be calming as banks jack up investment loan rates to encourage more owner-occupier loans.</div>
<div> </div>
<div>Despite being inherently 'riskier', at least on a historical basis, business credit growth is considered by many to be vital.</div>
<div> </div>
<div>However, stock exchange (ASX) market data records three consecutive months of strong aggregates in initial and secondary capital raisings totalling more than $12.5 billion, showing that business lending is far from the be all and end all for investment.</div>
<div> </div>
<div>Business surveys also saw conditions hit multi-year highs early in 2017, while job surveys point to a broad-based improvement in hiring. </div>
<div> </div>
<div>In other words, you can't just look at total outstanding business credit increasing by 3.1 per cent over the year and dismiss growth as weak. </div>
<br><div class="separator"><a href="https://www.propertyobserver.com.au/images/2017/07/02/RBA1.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/07/02/RBA1.jpg" alt=""></div>
<br><div>Since July 2015 the purpose of some $53 billion of loans has been switched from investment to owner-occupier, following the introduction of an interest rate differential. </div>
<div class="separator"> </div>
<br><div class="separator"><a href="https://1.bp.blogspot.com/-QDNiv_8zbSk/WVapAk7gNgI/AAAAAAAAkts/hsXcGXGu7T8wRxwBnMuv7tg4VAPhhwnswCLcBGAs/s1600/RBA3.jpg"><img src="https://1.bp.blogspot.com/-QDNiv_8zbSk/WVapAk7gNgI/AAAAAAAAkts/hsXcGXGu7T8wRxwBnMuv7tg4VAPhhwnswCLcBGAs/s640/RBA3.jpg" width="640" height="388" data-original-height="831" data-original-width="1366"></a></div>
<br><div>Thus, investor credit may be slowing, but the way the figures dovetail these days, the lines between what is an investment loan and what isn't seem to be increasingly blurred. </div>
<div> </div>
<div>In any event, reported as a total housing now accounts for a record 62 per cent of outstanding credit.</div>
<br><div class="separator"><a href="https://www.propertyobserver.com.au/images/2017/07/02/RBA4.jpg" target="_blank">Click to enlarge</a></div>
<div class="separator"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/07/02/RBA4.jpg" alt=""></div>
<br><div>Finally, and not too surprisingly, through netting off the results we can see that non-bank lending has picked up some of the slack to grow by a faster pace in May. </div>
<br>Total housing lending now sits at some $1.67 trillion.</div>
<div class="post-body entry-content"> </div>
<div class="post-body entry-content">
<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank"><span class="s2">blogger</span></a>.</span></p>
<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
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Mortgage growth displays strength: Pete Wargent

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<div>Personal credit growth was negative again in November 2017, as it was in October 2017, and on an annual basis it has been negative since 2015 as Aussies elect to cut up their credit cards (or at least, apply for fewer cards and personal loans).<br><br>Housing credit continues to swing across from investors to owner-occupiers - in part due to loan switching - but in aggregate the annual rate of growth at 6.4 per cent remains higher than a year earlier when it was 6.3 per cent. </div>
<p> </p>
<div class="separator"><img src="https://1.bp.blogspot.com/-0yCCn4mLAfY/WkdoqRqLgVI/AAAAAAAAnus/pa_QXMs6Mc0Doek8mBChxLX3KX27AzleQCLcBGAs/s640/RBA1.jpg" width="640" height="378" data-original-height="803" data-original-width="1354"></div>
<p><br><span>Annual credit growth was steady year-on-year at 5.4 per cent.</span><br><br></p>
<div class="separator"><img src="https://4.bp.blogspot.com/-ljdXLu8nUFQ/WkdorDaKAvI/AAAAAAAAnu0/4IleZattKeA89bssvZ6Yp07INR016KMHwCLcBGAs/s640/RBA2.jpg" width="640" height="376" data-original-height="803" data-original-width="1365"></div>
<div> </div>
<div>Cross-checking to APRA's monthly figures we can see that ADIs grew their investment loan exposures at just 2.8 per cent, miles below the arbitrary 10 per cent speed limit, so there is plenty of potential capacity for investment loans to pick up again in 2018. </div>
<p> </p>
<div class="separator"><img src="https://2.bp.blogspot.com/-q_3V-T87s3I/Wkdoqtj6aSI/AAAAAAAAnuw/BV3AtDI3h-w22j7p8K64BFth2AOnLL7uwCLcBGAs/s640/APRA.jpg" width="640" height="372" data-original-height="797" data-original-width="1370"></div>
<div>
<br>On the other hand, APRA's figures showed that monthly owner-occupier credit grew by an up-tempo 0.56 per cent to $1.04 trillion, suggesting that non-banks have picked up the slack created by tighter lending standards.<br><br>
</div>
<div><strong><span style="text-decoration: underline;">Low mortgage stress</span></strong></div>
<div> </div>
<div>The unemployment rate contin<span>ued to trend lower in 2017, now down to its lowest level in 4½ years with further declines to come in 2018, and S&amp;P has its 30-day prime mortgage arrears at the lowest level we've seen. Arrears may or may not pick up a bit in 2018, but they are presently tracking at such a remarkably low level it could hardly be a surprise if they did. </span>
</div>
<p> </p>
<div class="separator"><img src="https://4.bp.blogspot.com/-2yg8nUBdByQ/WkdopQzcUuI/AAAAAAAAnuo/5fduST_I4iEZnj-8g1srhqzQhTmDp1mXgCLcBGAs/s640/Arrears.jpg" width="640" height="380" data-original-height="800" data-original-width="1344"></div>
<div> </div>
<div>The Reserve Bank's figures suggest that the ratio of household debt to disposable income will likely tick past 200 per cent in 2018, but serviceability remains very comfortable for most households, with the cost of living indexes very benign and household income growth passed its nadir.</div>
<div> </div>
<div>It was interesting to see that the Bank for International Settlements (BIS) incorporated the two uppermost points I raised at the UBS Conference panel debate, namely on Australia's household debt distribution by quintile and the tremendous growth of mortgage offsets (see borrowers and buffers) in its latest paper on household debt (though it appears to have given the buffers point relatively short shrift!).<br><br>The fact is, though, that mortgages are easier to service than they used to be, and overall households are managing pretty well, while the outlook is improving nicely in the resources states.<br><br>Roll on 2018 and the 'surprisingly resilient' articles...</div>
<div> </div>
<div>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</div>
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Non-banks pick up slack for investment loans: Pete Wargent

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<div>
<em>60 Minutes</em> was an interesting talking point this week, wherein some American geezer claimed that he "could" have got a 95 per cent mortgage using a "fake income" by pretending to be a "gay couple".<br><br>OK. Given that he didn't actually get a mortgage written, it is a little perturbing how often people choose to believe what random punters say in preference to the actual data, but such is the nature of confirmation bias.</div>
<div>
<br>Household debt is high, no doubt, and some lending has been reckless, particularly in mining towns, but by the same token not everything that is claimed on the internet or elsewhere is true.<br><br>For example, some years ago bearish commentators got sucked in to believing erroneous figures which claimed that an incredibly high percentage of lending was 100 per ent mortgages.</div>
<div>
<br>Of course, the data sources quoted advertised loans rather than actual loans written, a rookie error that surely wouldn't pass the sniff test.<br><br>Another favourite trick is to tap a few notional numbers into a mortgage calculator and use this as "evidence" of irresponsible lending, conveniently neglecting to mention the key words "<strong>may</strong> be able to borrow". Clickbait ahoy!</div>
<div> </div>
<div><a href="/images/2016/02/25/Mortgage.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2016/02/25/Mortgage.jpg" alt=""></div>
<div> </div>
<div> </div>
<div>
<div>It's one of the reasons I write blogs - not to get a readership, mainly just so I can stop annoying my missus by regurgitaing every blasted "fact" that I read in the media and on the internet.<br><br><strong><span style="text-decoration: underline;">APRA exposures data</span></strong>
</div>
<div> </div>
<div>Back in the real world APRA released its latest ADI Q4 2015 property exposures data today, which showed that the share of new loans whereby lenders extended a 90 per cent or more loan-to-valuation ratio (LVR) has continued its long and steady decline from more than 18 per cent in the March 2008 quarter to under 10 per cent in the December 2015 quarter.</div>
<div> </div>
<div>The share of loans whereby an 80 to 90 per cent LVR loan was advanced has also declined significantly over the last eight years from 20 per cent to only 14 per cent, meaning that the overwhelming majority of loans see a deposit of 20 per cent or more used. </div>
<div> </div>
<div>I'll just clarify that.<br><br>In aggregate high LVR lending has been in decline for years, while low-doc loans and other non-standard now loans represent just a small and rapidly declining fraction of new loans and total residential mortgage market exposures.</div>
<div> </div>
<div><a href="/images/2016/02/25/APRA2.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2016/02/25/APRA2.jpg" alt=""></div>
<div> </div>
<div>
<div>Within the "big four" major banks 90 per cent plus LVR loans have fallen even more sharply from 21.6 per cent in 2009 to just 9.1 per cent, while 80 to 90 per cent LVR loans have declined from 22 per cent in 2011 to only 14.2 per cent. </div>
<br><div>
<strong><span style="text-decoration: underline;">Lending shifts to homebuyers</span></strong><br><br>If there is anything suspicious in the APRA figures related to lending standards, I believe it is in the incredibly smooth transition from investment loans to owner-occupier loans. </div>
<div> </div>
<div>The market has barely skipped a beat in recording remarkably similar headline quarterly data while the percentage share of loans conveniently swings from investors to homebuyers. </div>
<div> </div>
<div><a href="/images/2016/02/25/APRA1.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2016/02/25/APRA1.jpg" alt=""></div>
<div> </div>
<div>
<span>Draw your own conclusions from that, but I'd hazard that some of these homebuyers may well be would-be investors sneakily veiled behind a Scooby-Doo mask.</span><br><br><span>The </span><em>60 Minutes</em><span> segment claimed that household debt is "exploding", and indeed the above chart shows that the total stock of outstanding credit has more than doubled since 2008.</span><br><br><span>However, the aggregate of outstanding household debt nearly always rises in an inflationary economy with rising household incomes and a strong population growth.</span><br><br><span>The truth is that after accounting for record high mortgage buffers and offset balances, the figures show that the household debt to income ratio is unchanged in Australia since 2008. Australia has a unique mechanism whereby loan repayments often continue at the same level when interest rates fall, as they have been since 2011.</span><br><br><em>60 Minutes</em><span> also claimed that "half" of all loans are interest only.</span><br><br><span>The true figure as revealed in APRA's figures today is 39 per cent - still too high for comfort, granted, but this mostly reflects tax strategy rather than that people "can't afford to pay the debt back", and the interest-only loans figure should theoretically now decline following the crackdown on investor lending.</span><br><br><span>The truth according to the Reserve Bank of Australia (RBA) research is that on average homeowners are miles ahead on home loan repayments, by fully two years which is an unprecedented margin. </span>
</div>
<div><span> </span></div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
</div>
</div>
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High LVR loans have been declining for years: Pete Wargent

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<p>Roy Morgan reported from its survey of over 50,000 households per annum that those at risk of mortgage stress fell by some 78,000 from a year ago to 16.8 percent, to sit well below the decade average.</p>
<p><a href="https://www.propertyobserver.com.au/images/2017/06/26/RM1.jpg" target="_blank">Click to enlarge</a></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/06/26/RM1.jpg" alt=""></p>
<p>Those 'extremely at risk' also fell to the lowest level in well over a decade, which is good to see. </p>
<p>The high risk cohort overwhelmingly comprises lower income households, and is far less represented by households earning $100,000 per annum or more. </p>
<p class="p1"><span class="s1">PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank"><span class="s2">AllenWargent</span></a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank"><span class="s2">blogger</span></a>.</span></p>
<p class="p2"><span class="s3"><em>His latest book is </em><a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank"><span class="s2"><em>Four Green Houses and a Red Hotel</em></span></a><em>.</em></span></p>
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Lower rates reducing mortgage stress

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<p>Just one in 10 cash-strapped borrowers who took a COVID-19 mortgage break from repayments to the big four banks have exited the payment relief program.</p>
<p class="indent">The Australian Banking Association confirmed many Australians are unwilling to make any repayments.</p>
<p class="indent">About 485,000 mortgages have been deferred in Australia with the nation’s largest seven banks, including the Commonwealth Bank, National Australia Bank, Westpac, ANZ, Bendigo and Adelaide Bank, Suncorp and Bank of Queensland.</p>
<p class="indent">But new data released by the big four banks found that in May and June:</p>
<p>• About 75,800 customers on mortgage deferrals had exited the repayment holiday program (9 per cent).</p>
<p>• About 50,000 are making partial repayments and 62,500 are making full repayments (15 per cent).</p>
<p class="indent">The ABA’s chief executive, former Queensland premier Anna Bligh, said there was "a very long road and plenty of hurdles to clear." </p>
<p class="indent">Customers were initially given repayment deferral for up to six months, but banks are set to offer further extensions.</p>
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j.ballantyne1990-6AQqhLzZaK

Most mortgage relief recipients still taking COVID-19 repayment break

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<p>The Australian Bureau of Statistics (ABS) released its Lending Finance data this week, and it was a pretty weak reading after a couple of apparently very strong months for commercial lending.</p>
<p>Total new lending fell by 10.3% in August from the previous month with a sharp 16% drop in commercial lending the driver of the result.</p>
<p>Owner occupier housing loans fell by 2% in the month of August on a seasonally adjusted basis, with most states seeing activity fall in the month (although notably not Queensland).</p>
<p>Note that the ABS classifies property investor loans separately from owner occupier loans and thus these come under the commercial lending header in the chart below.</p>
<p><img src="/images/2014/10/15/1.jpg" alt=""></p>
<p>Year on year total new lending remains 11% higher, which is promising, and the rolling 12 monthly figures about do show that the overall trend has been a good 'un.</p>
<p>However, there is no getting away from the fact that August was a fairly rubbish result for commercial and business lending and quickly quells the enthusiasm of the markets from last month which saw some excitable claims that interest rates will be heading up imminently.</p>
<p>In short: No, they won't be.</p>
<p><strong>Property investor loans</strong></p>
<p>As for those property investor loans, in aggregate, property investor loans were pretty much flat in August on a seasonally adjusted basis.</p>
<p>On a trend basis, investor loans were down in all states, as one might expect. On a rolling 12 monthly basis, however, property investor loans across all of the main states continued to rise, with New South Wales and Victoria marching on to new heights.</p>
<p>New South Wales (read: Sydney) loans are a whopping 42.5% higher year-on-year on a rolling annual basis.</p>
<p><img src="/images/2014/10/15/2.jpg" alt=""></p>
<p>Just looking at the straight raw monthly property investor loan data, New South Wales and Victoria are the clear standouts with 30% and 28% increases respectively.</p>
<p>Elsewhere activity has been softer, although evidently property investors are becoming more active in Queensland. Property investor activity has been solid in Western Australia and flat in South Australia.</p>
<p><img src="/images/2014/10/15/3.jpg" alt=""></p>
<p><strong>Macro-pru</strong></p>
<p>Overall, it's not yet quite clear what this means for so-termed macro-prudential regulation to cool the investor market.</p>
<p>Clearly with property investor loans up very strongly over the past year, macro-prudential measures from the regulator (APRA) are very much in play in order to keep the proportion of lending to investors under some kind of check.</p>
<p>The August data taken by itself was far from alarming so there may be no knee-jerk announcements or reactions while the Reserve Bank and APRA await another month or two of data.</p>
<p>It's impossible to second guess these volatile data sets or indeed the actions of the regulator, although one generally gets the sense that dramatic macro-prudential measures are not really a preferred option.</p>
<p>Wayne Byres of APRA made the point the other day that although "people love the term" there is "nothing really new" about macro-prudential measures, which sort of implied moderation (to me at least).</p>
<p>I do just note in passing that AFG's more timely data for September showed record transactional activity for New South Wales as well as 49.7% investor loans.</p>
<p><img src="/images/2014/10/15/4.jpg" alt=""></p>
<p>The Sydney property market marches on to new heights, and unlike in the previous boom cycle of a decade ago higher interest rates are not anywhere to be seen on the horizon in order to slow the market down (and vacancy rates remain much lower today too) - this cyclical boom will have to die of all age and of its own accord or be slowed by regulation.</p>
<p> </p>
<p> </p>
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Sydney's property market reaches new heights

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<p>EXPERT OBSERVATION </p>
<p>Average loan sizes took a knock back in September 2018, both for investors and owner-occupiers, although the average loan size remained higher than a year earlier (substantially so for first-time buyers), so perhaps this in itself isn't all that surprising under tighter lending conditions.</p>
<p class="separator"><a href="https://3.bp.blogspot.com/-bxxzaICFUWk/W-dWLQiV_iI/AAAAAAAAsyE/LZZIlGnEfz0aTGbUPXMg9XKFHBKyGuutACLcBGAs/s1600/A1.jpg"><img src="https://3.bp.blogspot.com/-bxxzaICFUWk/W-dWLQiV_iI/AAAAAAAAsyE/LZZIlGnEfz0aTGbUPXMg9XKFHBKyGuutACLcBGAs/s640/A1.jpg" width="640" height="364" data-original-height="785" data-original-width="1380"></a></p>
<p><span>It doesn't matter if you're borrowing at a rate of 4 per cent or even lower today, you'll still be assessed at 7¼ per cent, so there's oodles of headroom, but mortgage processing seems to have become a painstaking process and transaction volumes have crashed.</span></p>
<p><strong>Frozen fever</strong></p>
<p>The weak ABS housing finance figures - <a href="http://petewargent.blogspot.com/2018/11/housing-finance-smashed" target="_blank">see here</a> - don't pick up the full extent of this yet, especially since there are still thousands of apartments settling from off-the-plan purchases, but the apartments pipeline has shrunk quite dramatically of late so the line in the chart below will continue to fall through 2019.</p>
<p class="separator"><a href="https://3.bp.blogspot.com/-NSCHgfvGr1w/W-dWLzhUQGI/AAAAAAAAsyI/2pcJj36ptkwCZXstlXjoC_LxGT9q288eQCLcBGAs/s1600/A2.jpg"><img src="https://3.bp.blogspot.com/-NSCHgfvGr1w/W-dWLzhUQGI/AAAAAAAAsyI/2pcJj36ptkwCZXstlXjoC_LxGT9q288eQCLcBGAs/s640/A2.jpg" width="640" height="376" data-original-height="798" data-original-width="1354"></a></p>
<p>It's not all doom and gloom for realtors, or property owners, especially around some of the regional markets. </p>
<p>And the urban services economy is buzzing with people and employment, so some properties with a scarcity value are still faring well with mortgage rates so much lower than they used to be. </p>
<p>There was an auction just across the street from our place <a href="https://www.realestate.com.au/property-apartment-nsw-pyrmont-129585290" target="_blank">in Sydney yesterday</a> with Cooley's auctioneers reporting a whopping 41 bids and a thumping price tag of $2.675 million, implying that borrowers with equity and of high credit quality are being treated with reverence by increasingly twitchy lenders.</p>
<p>I don't go to Melbourne much unless I have to (kidding lol...I'm down there next week), but the <a href="http://www.catebakos.com.au/sundayblog/the-correlation-between-property-scarcity-and-auction-result/" target="_blank">experts in the know down there</a> will doubtless report a similar story about demand and scarcity value. </p>
<p>Make no mistake, though, many parts of the housing market are being smoked, volumes have been crunched, and they'll be plenty of real estate agents seeking alternative forms of employment in 2019, if they aren't already. </p>
<p>Non-bank lenders have alleviated some of the pressure, though volumes were down here too in September. </p>
<p class="separator"><a href="https://1.bp.blogspot.com/-jCv9kDxCafs/W-deCU2gi2I/AAAAAAAAsyg/sz8G6eOtlV89m1Ty6lnVc_-VnK6LjcHRQCLcBGAs/s1600/Nonbanks.jpg"><img src="https://1.bp.blogspot.com/-jCv9kDxCafs/W-deCU2gi2I/AAAAAAAAsyg/sz8G6eOtlV89m1Ty6lnVc_-VnK6LjcHRQCLcBGAs/s640/Nonbanks.jpg" width="640" height="378" data-original-height="803" data-original-width="1357"></a></p>
<p>The Treasurer has evidently become a tad agitated, requesting that banks keep their lending channels open to prevent money growth from seizing up more than it already has. </p>
<p>Financial markets haven't been unduly fazed, on the whole, presumably adopting a benign stance in the belief that an engineered slowdown in lending could be relaxed.</p>
<p>Meanwhile bank stock valuations have largely followed international leads through reporting season, following an initial relief rally after the draft Royal Commission report was released. </p>
<p class="separator"><a href="https://2.bp.blogspot.com/-I-qru6R6i7Y/W-dg9oi5hMI/AAAAAAAAsys/dsfNvbv7jyYnVcWNF_ebCQEh41_rQwhIACLcBGAs/s1600/CBA2.jpg"><img src="https://2.bp.blogspot.com/-I-qru6R6i7Y/W-dg9oi5hMI/AAAAAAAAsys/dsfNvbv7jyYnVcWNF_ebCQEh41_rQwhIACLcBGAs/s640/CBA2.jpg" width="640" height="382" data-original-height="799" data-original-width="1338"></a></p>
<p>Finally, spare a thought for those that bought units off-the-plan in some of the big inner-city tower block developments, with settlement valuations often coming in way short of purchase prices as valuers look nervously over their shoulders. </p>
<p><em>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em></p>
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