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.

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;

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;

“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;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

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;

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;

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.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

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;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

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.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“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;

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.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

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;

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;

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”.

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;

Joel Robinson

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

<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.

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.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“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.”

<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" />

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.

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.

“We are DA approved now which is very exciting,” Sammut said.

“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.”

<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" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“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.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“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.”

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.

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.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

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.

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.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“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.”

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.

“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.”

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.

“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.”

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.

“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.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“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.

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.

&nbsp;

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

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.

The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.

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.

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.

“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.

“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.”

<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" />

GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.

“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.”

Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.

“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.

<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" />

&nbsp;

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.

Green praised local policy settings.

“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.”

One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.

“The way we will be able to achieve economies of scale is through size,” Green added.

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

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.

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.

Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be

"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.

"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."

[smartcode_project:default project_id=134646 project_image_fid=6109]

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.

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.

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.

[smartcode_project:default project_id=134646 project_image_fid=6110]

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.

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.

[smartcode_project:default project_id=134646 project_image_fid=6116]

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.

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.

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.

[smartcode_project_cta:default project_id=134646]

WM Residences fills gap in Mordialloc townhouse market

Housing Affordability

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GUEST OBSERVER
A key goal of the City of Sydney, one of Australia’s wealthiest local governments, is to deliver “a range of affordable and social housing options that reﬂects the diversity of ages, family relationships, socio-economic backgrounds and employment ﬁelds in the local population”. Our research includes in-depth analysis of the experiences of local governments with housing, among them the City of Sydney. This article examines what the city council is doing to provide more affordable housing and the obstacles, which include federal and state government policies, to achieving its targets.
The city council has committed to ensuring that “by 2030, of all housing in the [Local Government Area] 7.5% will be social housing and 7.5% will be affordable housing delivered by ‘not-for-proﬁt’ or other providers”. In absolute numbers this translates to 10,500 social housing units and 10,500 affordable homes.
The major challenge is providing affordable rental housing. It is projected that by 2030 there will be at least 138,000 dwellings in the inner-city area administered by the City of Sydney. That’s an increase of nearly 40,000 from 98,012 dwellings in 2014. To achieve the 7.5% affordable housing target, another 9,700 affordable rental homes need to be built by 2030.
Despite the city council’s best intentions, the affordable and social housing stock has hardly grown over the last decade. The social housing stock has increased from 9,397 in 2007 to 9,561 dwellings in June 2017. Affordable rental housing has gone from 447 to 835 dwellings.
The council recognises the constraints of the policy environment in which it is working. Its documents often refer to how federal and state government policies limit the local government’s capacity to improve housing affordability. The city clearly realises that: "The Commonwealth government and the state governments … control the macro-economic and taxation policies that most affect the cost of housing."
Another document emphasises: "State planning laws affect the ways that local governments can supply housing."
The City of Sydney uses the following overlapping mechanisms to increase the affordable housing supply: levies on developers; voluntary planning agreements; and selling land “at a subsidy”.
Developer levies
Developer levies are the key mechanism the council uses to increase the number of affordable homes.
State law enables the use of an affordable housing levy. The city notes that Section 94F of the Environmental Planning and Assessment Act 1979 “allows for the collection of contributions for affordable housing”. The provisions allow for either land or monetary contributions for affordable housing.
To date, the state government has allowed the city to levy developers in only three localities – Green Square, Ultimo-Pyrmont and “southern employment lands”. Over time it is expected the levies in these three areas will yield 2,300 affordable homes.
The levy rate in Green Square and the southern employment lands is set at 3% of total residential floor space and 1% of non-residential floor space. For Pyrmont-Ultimo it is 0.8% of residential floor space and 1.1% of non-residential floor space.
Sydney Lord Mayor Clover Moore has urged the state government to extend the developer levy. She has argued that not allowing the levy city-wide was a “tremendous missed opportunity”.
Moore has advocated for a 30% affordable housing target for public land and 15% for developments on private land. It is evident that restricting the developer levy to just a few locations and to 3% makes this target impossible to attain.
Voluntary planning agreements
A voluntary planning agreement (VPA) is “an agreement entered into by a planning authority and a developer”. Under this agreement a developer can agree to fund affordable housing. This can be done through “the dedication of land, monetary contributions, construction of infrastructure [and] provision of materials for public benefit and/or use”.
The City of Sydney uses such planning agreements “to negotiate affordable housing provision through major developments”.
For example, a VPA for a A$1.1 billion development, 1,250 units in Forest Lodge, involved the developer agreeing to supply land for affordable rental apartments for low and moderate income earners. The city then sold the land to City West Housing, a community housing provider, at a discounted price. City West plans to build 76 affordable housing units on this land.
The money from the land sale goes into a “city fund dedicated to delivering more affordable developments across the local area”.
Discounted land sales to community housing providers
Selling land at a subsidised price to community housing providers is a key strategy. The City of Sydney sells the land on the proviso that it is used solely for affordable housing in perpetuity.
<img src="https://images.theconversation.com/files/211657/original/file-20180323-54887-1k8sdva.JPG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=237&amp;fit=clip" alt="">
The Exordium Apartments were built on part of the old South Sydney Hospital Site, which Sydney City sold to City West Housing. Alan Morris, Author provided
In 2014, a disused hospital site was sold to City West Housing. City West built just over 100 affordable housing units there. The development was completed in 2016.
More recently, the City sold 8,900 square metres of land in Alexandria, an inner-city suburb, to community housing providers. The major buyer, City West Housing, plans to build 200 homes there.
A major barrier to affordable housing supply in the inner city has been the state government’s reluctance to agree that affordable housing should be a sizeable proportion of the housing to be built on state owned or controlled land that is being renewed.
UrbanGrowth NSW, the state’s primary urban transformation agency, is redeveloping significant tracts of state land in the Sydney City area. However, almost all of the envisaged new housing on UrbanGrowth sites at this stage appear to be geared towards middle-class households. A highest-return-for-the-land motif is driving planning decisions.
The conclusion is clear: if local government is to create a sizeable affordable housing sector it is vital that the state and federal governments play a major role. Local governments, however powerful and well resourced, cannot do it by themselves.
Alan Morris, Research Professor, University of Technology Sydney
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/mission-nearly-impossible-the-city-of-sydneys-efforts-to-increase-the-affordable-housing-supply-93366" target="_blank">original article</a>.
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j.ballantyne1990-6AQqhLzZaK

The City of Sydney's efforts to increase the affordable housing supply is mission nearly impossible: Alan Morris

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GUEST OBSERVER
Governments can encourage more affordable housing by targeting first home buyer subsidies to specific locations and housing types, a new report finds. It also suggests incentivising developers and builders to create smaller houses with more cost-efficient designs.
The report is based on the housing market in Perth, Western Australia, and shows that historically building single houses as opposed to units or town houses is a more effective way of delivering affordable housing on the city fringes.
The report examined housing affordability through individual transaction records over a six year sample period. It compared prices between established and new housing, showing that new land and building developments play important roles in supplying affordable housing options.
New dwellings comprise 13% of single house transactions and 33% for dwellings such as apartment or townhouses. Although new dwellings like apartments provided some affordable housing options, in general they are selling at a premium over existing houses.
Australia’s largest cities, like Perth, are stretched to the limit of land supply and infrastructure for affordable housing. The most infrastructure exists in city centres where houses are expensive.
Over the past two decades Perth has grown rapidly. Between 2001 and 2016 the population increased by 46.7%, the largest proportional increase of any Australian capital city. The make-up of the housing market is similar to other capitals: 68% of the housing stock is single houses, 20% other dwellings and 11% vacant.
Levels of home ownership are generally consistent with the national pattern: 62% of housing is owned outright or mortgaged, and 24% rented.
House prices have grown rapidly. From 1999 to 2016 house prices grew at an average annual rate of 8.4%; other dwellings grew 9%. Both sectors report the highest annual increases for all Australian capital cities over this period.
How can governments help?
The challenge in Australia’s housing market is supplying an adequate range of affordable new dwelling types within a range of suitable locations – both inner city and outer suburban choices.
Clusters of cheaper housing on the urban fringe and more expensive inner-city development suggest new building activity is confined to specific locations. These are defined by the price the constructor or buyer is willing to pay.
Housing policy in Australia has relied on market outcomes to determine aesthetic and economic characteristics of housing in our cities. Government intervention has mainly been through zoning, predominantly at local levels. More recently there’s also been stimulus at state and federal levels for first home buyers through various deposit subsidy schemes.
Subsidy schemes have been important in helping first home buyers bridge the deposit gap. Incentives have included cash payments and stamp duty relief.
In some states additional payments have been made for new building and for purchases in specific locations. But the Perth study indicates that some of these subsidies are becoming ineffective.
Standard “one type fits all” subsidies are limiting first home buyers’ choices of location and housing type.
The solution to this problem is to make subsidy schemes more flexible to nudge first home buyers towards affordable locations. This would even out the supply of affordable houses from areas where housing is densely clustered in certain locations.
Policy would also need to take into account the needs of different demographics in certain locations. Housing requirements of young singles are obviously different than for young families.
Effective policy would also need to take into account the types of housing finance available for first home buyers. One example is the WA government’s Keystart loans which help eligible people to buy their own homes through low deposit loans and shared equity schemes.
These types of schemes include shared ownership with the government owned housing authorities and include existing and newly built homes in a variety of locations.
<img src="https://counter.theconversation.com/content/93841/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">But it’s not all up to state governments. The problems of lack of land supply and infrastructure are the same in all Australian capital cities. The federal government could play a more prominent role through infrastructure grant funding in changing the location choice of buyers and variation of affordable housing types at a national level.
Greg Costello, Associate Professor, Curtin University
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/what-governments-can-learn-from-perths-property-market-93841" target="_blank">original article</a>.
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What governments can learn from Perth's property market: Greg Costello

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GUEST OBSERVER
Australia has a housing affordability problem. There’s no doubt about that. Unfortunately, one of the reasons the problem has become so entrenched is that the policy conversation appears increasingly confused. It’s time to debunk some policy clichés that keep re-emerging.
Is ‘zoning’ to blame?
It can be tempting to frame the housing affordability problem as all about inadequate new supply. According to this argument, the “demand side” drivers – such as low interest rates and tax incentives for property investment – have combined with population growth in the capital cities to fuel house prices, and new housing construction simply hasn’t kept up.
“Zoning” is often blamed. There is little hard evidence, though, to show systematic regulatory constraint.
Supply is at record highs, and in the right places
Australia’s new housing supply per capita is actually very strong by international standards. Over the past decade, supply of new units and apartments has been flowing in job-rich metropolitan areas with dense populations, which are also higher-value locations.
According to the cliché, this supply response should have cooled prices. Yet dwelling price inflation has surged even in metropolitan areas where new housing supply has exceeded population growth.
The fallacies of ‘filtering’
One of the great hopes underpinning the supply cliché is that new housing stock improves affordability even if these homes are not affordable for lower-income groups. This faith is based on a theory called “filtering” whereby older housing moves down to the affordable end of the market over time.
The empirical data on filtering are thin. Indeed, the academic literature has historically cast doubt on the theory. However, some commentators continue to claim that American rental housing markets provide evidence that “filtering” can occur in practice.
But whatever might happen in the US, in Australia there’s still no evidence to suggest new housing supply has filtered across the housing stock to expand affordable housing opportunities for low-income Australians, or that it will do so any time soon.
Prominent economists continue to produce data that suggest the potential impact of new supply on price is minimal. The shortage of affordable housing opportunities for low-income households in Australia remains persistent. And the evidence indicates that low-income working households in our cities consistently face housing costs well above accepted affordability levels regardless of the quality of the housing they live in.
Sustaining supply in a cooling market?
Some commentators cite cooling house prices as evidence that the supply response is taking effect. Whether or not that is so (above and beyond demand-side factors like higher interest rates for investor loans), expect the pipeline to start slowing down. Private sector development is driven by profit and risk and, as we have seen over many years, is characterised by speculative booms and busts.
Developers can turn off the new supply tap much more quickly than they can turn it on. Falling prices, weak consumer sentiment and economic uncertainty mean many developers will not follow through on building approvals until the market recovers.
This means that high levels of supply output are rarely sustained. Recent housing data in Western Australia provide a case in point. WA recorded rising completions in 2014, 2015 and 2016. But 2017 completion figures are expected to show a drop of around a third as prices have shaded off since the end of the mining boom.
Put simply, the market on its own will never solve Australia’s housing affordability problem. Expecting developers to keep building in order to reduce house prices is pure fantasy.
Planning reform is not an affordable housing strategy
We’ve written before about the political appeal of calling for planning reform instead of real solutions to housing affordability pressures. In fact, Australian states have embarked on more than a decade of planning reforms.
They have aimed to: standardise and simplify planning rules; promote mixed use and higher-density housing near train stations; and overcome local political opposition to development through the use of independent expert panels.
Housing targets for both urban infill and new greenfield areas have been a feature of metropolitan plans to drive dwelling approval rates since at least 2000.
These reforms have been effective in overcoming regulatory constraints. The scale of the recent supply response shows clearly that zoning and development assessment processes are not inhibiting residential development approvals in cities like Sydney and Melbourne.
But trying to accommodate Australia’s population growth in towers around railway stations will fail as an affordable housing strategy – even if “zoning” and height rules were completely scrapped.
Rather than narrow deregulation agendas, bigger picture reforms are needed. Aligning infrastructure funding with metropolitan and regional decentralisation is a critical long-term strategy. Reforms to deliver affordable housing in communities supported by new infrastructure are long overdue.
A bigger affordable housing sector is needed
Australia needs a more realistic assessment of the housing problem. We can clearly generate significant dwelling approvals and dwellings in the right economic circumstances. Yet there is little evidence this new supply improves affordability for lower-income households. Three years after the peak of the WA housing boom, these households are no better off in terms of affordability.
In part, this may reflect that fact that significant numbers of new homes appear not to house anyone at all. A recent CBA report estimated that 17% of dwellings built in the four years to 2016 remained unoccupied.
If we are serious about delivering greater affordability for lower-income Australians, then policy needs to deliver housing supply directly to such households. This will include more affordable supply in the private rental sector, ideally through investment driven by large institutions such as super funds. And for those who cannot afford to rent in this sector, investment in the community housing sector is needed.
<img src="https://counter.theconversation.com/content/92993/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">In capital city markets, new housing built for sale to either home buyers or landlords is simply not going to deliver affordable housing options unless a portion is reserved for those on low or moderate incomes.
Nicole Gurran, Professor of Urban and Regional Planning, University of Sydney 
Bill Randolph, Director, City Futures Research Centre, Faculty of the Built Environment, UNSW 
Peter Phibbs, Director, Henry Halloran Trust, University of Sydney 
Rachel Ong, Professor of Economics, School of Economics and Finance, Curtin University 
Steven Rowley, Director, Australian Housing and Urban Research Institute, Curtin Research Centre, Curtin University
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/affordable-housing-policy-failure-still-being-fuelled-by-flawed-analysis-92993" target="_blank">original article</a>.
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Affordable housing policy failure still being fuelled by flawed analysis

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Key workers – such as teachers, nurses, ambulance and fire officers and the police – perform essential services.
Across the Sydney some 156,000 workers are employed in these occupations, equating to some six per cent of the workforce.
However, high property prices and high rents are placing barriers to their home ownership which were not experienced by previous generations. 
There is now a serious mismatch between where key workers live and work, according to an important report prepared by Sydney University researchers for the Teachers Mutual Bank, Firefighters Mutual Bank, Police Bank and My Credit Union.
The report found that in the decade to 2016, key areas in Sydney lost up to 20 percent of teachers, nurses, policy and emergency service workers to outer and regional areas, while areas including the Illawarra, Southern Highlands and the Hunter Valley had net gains.
In 2006 more than 20 local government areas were affordable to a police senior constable. By 2016, that number had declined to four. 
The majority of key workers now reside in outer ring suburbs, which the report advised was unlike other world cities, such as London, New York, or San Francisco.
The problem begins with the shortage of affordable rental homes near employment as this undermines the capacity to save for a deposit.
An enrolled nurse with five years experience on $57,000, requiring a one bedroom rental property, would be able to afford a median property in only 9 per cent of middle ring suburbs and in no inner ring suburbs. 
As a consequence, many key workers are commuting long distances to get to work, or are living in unaffordable rental accommodation. 
There's no doubting Sydney needs its Macquarie Street policy makers to improve key worker access to home ownership given the lack of affordable and appropriate homes.
But the report also identified one way to help restore housing options that requires innovative consideration of the plight of challenged home buyers bu the banking and superannuation sectors.
A key suggestion was the implementation of shared equity models that have long been used in the United Kingdom to help low and moderate income earners enter home ownership. 
According to the UK Council of Mortgage Lenders, there are around 200,000 shared ownership homes in the UK where eligible households can purchase a minimum of 25 per cent of a property (and up to 75 per cent) and pay a rent of 3 per cent on the remaining share.
Over time the household can purchase the remaining equity in the property from the affordable housing provider partner (who owns the balance), or repay it when the house is sold. 
We need mortgage lenders to embrace shared ownership.
It needs superannuation funds to joint venture with banks in this product. 
This article was first published in the Saturday Daily Telegraph.
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jchancellor-FAypfDUnLy

Banks need to embrace shared ownership concept as way forward for home affordability

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GUEST OBSERVER
The nature of the centrepiece of the Australian housing system – owner occupation – is quietly undergoing a profound transformation. Once taken for granted by the mainstream, home ownership is increasingly precarious. At the margins, which are wide, it is as if a whole new form of tenure has emerged.
Whatever the drivers, significant and lasting shifts are shaking the foundations of home ownership. The effects are far-reaching and could undermine both the financial and wider well-being of all Australian households.
Over the course of 100 years, Australians became accustomed to smooth housing pathways from leaving the parental home to owning their house outright. However, not only did the 2008-09 global financial crisis (GFC) underline the risk of dropping out along the way, but more recent Australian evidence has shown that the old pathways have been displaced by more uncertain routes that waver between owning and renting.
The Household, Income and Labour Dynamics in Australia (HILDA) Survey indicates that, during the first decade of the new millennium, 1.9 million spells of home ownership ended with a move into renting (one-fifth of all home ownership spells that were ongoing in that period). It also shows that among those who dropped out, nearly two-thirds had returned to owning by 2010. Astonishingly, some 7% “churned” in and out of ownership more than once. Many households no longer either own or rent; they hover between sectors in a “third” way.
The drivers of this transformation include an ongoing imperative to own, vying with the factors that oppose this – rising divorce rates, soaring house prices, growing mortgage debt, insecure employment and other circumstances that make it difficult to meet home ownership’s outlays.
Those who use the family home as an “ATM” are at added risk. This relatively new way of juggling mortgage payments, savings and pressing spending needs makes some styles of owner occupation more marginal – as the tendency is to borrow up, rather than pay down, mortgage debts over the life course.
A retirement incomes system under threat
Since its inception, the means-tested age pension system has been set at a low fixed amount. Retired Australians could nevertheless get by provided they achieved outright home ownership soon enough. The low housing costs associated with outright ownership in older age were effectively a central plank of Australian social policy.
This worked well from the 1950s for nearly half a century. But now growing numbers of people retire with a mortgage debt overhang or as lifetime renters grappling with the costs of insecure private rental tenancies.
Moreover, developments in the Australian housing system could undermine a second retirement incomes pillar – the superannuation guarantee. An important goal of the superannuation guarantee is financial independence in old age. But if superannuation pay-outs are used to repay mortgage debts on retirement, reliance on age pensions will grow rather than recede.
A shrinking asset base for welfare
Home ownership is retreating at a time when income inequalities are the highest in nearly seven decades and governments are eyeing housing wealth as an asset base for welfare.
Such policy interest is not surprising. Housing wealth dominates the asset portfolios of the majority of Australian households, boosted by soaring house prices. If home owners can be encouraged or even compelled to draw on their housing assets to fund spending needs in retirement, this will ease fiscal pressures in an era of population ageing.
However, the welfare role of home ownership is already important in the earlier stages of life cycles. Financial products are increasingly being used to release housing equity in pre-retirement years. This adds to the debt overhang as retirement age approaches. It also increases exposure to credit and investment risks that could undermine stability in housing markets.
A gender equity issue
A commonly overlooked angle relates to gender equity. Australian women own less wealth than men, and they also hold more housing-centric asset portfolios.
Estimates from the 2014 HILDA Survey wealth module show that the family home makes up nearly half of the total assets owned by single women, compared to 39% for single men. Women are also more likely to sell their family home to pay for financial emergencies.
Hence, women are more exposed to housing market instability associated with precarious home ownership. Single women are especially vulnerable to investment risk when they seek to realise their assets.
A neglected economic lever
Housing and mortgage markets played a central role in the GFC. Today, it is widely agreed that resilient housing and mortgage markets are important for overall economic and financial stability. There are also concerns that the post-GFC debt overhang is a drag on economic growth.
However, the policy stance in the wake of the GFC has been “business as usual”. There has been very little real innovation in the world of housing finance or mortgage contract design in recent years. This might change if housing were steered from the periphery to a more central place in national economic debates.
Forward-looking policy response is needed
Growing numbers of Australians clearly face an uncertain future in a changing housing system. The traditional tenure divide has been displaced by unprecedented fluidity as people juggle with costs, benefits, assets and debts “in between” renting and owning.
This expanding arena is strangely neglected by policy instruments and financial products. Politicians cling to an outdated vision of linear housing careers that does little to meet the needs of “at risk” home owners, locked-out renters, or churners caught between the two.
<img src="https://counter.theconversation.com/content/91664/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">The hazards of a destabilising home ownership sector are wide-ranging, rippling well beyond the realm of housing. Part of the answer is a new drive for sustainability, based on a housing system for Australia that is more inclusive and less tenure-bound.
Rachel Ong, Professor of Economics, School of Economics and Finance, Curtin University
Gavin Wood, Emeritus Professor of Housing and Housing Studies, RMIT University
Susan Smith, Honorary Professor of Geography, University of Cambridge
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/home-ownership-foundations-are-being-shaken-and-the-impacts-will-be-felt-far-and-wide-91664" target="_blank">original article</a>.
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Home ownership foundations are being shaken, and the impacts will be felt far and wide

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GUEST OBSERVER
So much of Australia’s history and success is built on immigration. Migrants have benefited incumbent Australians by raising incomes, increasing innovation, contributing to government budgets, smoothing over population ageing and diversifying our social fabric. But it is also true that immigration is affecting house prices and rents.
Australian governments are squandering the gains from migration with poor housing and infrastructure policies. Our new report, Housing affordability: re-imagining the Australian dream, shows what’s at stake. Unless the states reform their planning systems to allow more housing to be built, the Commonwealth should consider tapping the brakes on Australia’s migrant intake.
Immigration has increased housing demand
Australia’s migration policy is its de-facto population policy. The population is growing by about 350,000 a year. More than half of this is due to immigration.
Since 2005, net overseas migration – which includes the increase in temporary migrants – has averaged 200,000 people per year, up from 100,000 in the previous decade. It is predicted to be around 240,000 per year over the next few years.
Immigrants are more likely to move to Australia’s big cities than existing residents, which increases demand for scarce urban housing. In 2011, 86% of immigrants lived in major cities, compared to 65% of the Australian-born population.
Chart 1. Migration has jumped, and so have capital city populations
<img src="https://images.theconversation.com/files/208204/original/file-20180228-36677-18v4x0p.PNG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="">Grattan Institute, Author provided
Not surprisingly, several studies have found that migration increases house prices, especially when there are constraints on building enough new homes.
The pick-up in immigration coincides with Australia’s most recent housing price boom. Sydney and Melbourne are taking more migrants than ever. Australian house prices have increased 50% in the past five years, and by 70% in Sydney.
Chart 2: Net overseas migration into NSW and Victoria is at record levels
<img src="https://images.theconversation.com/files/208207/original/file-20180228-36674-1htxzby.PNG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="">
Grattan Institute (Data source: ABS 3101.0 – Australian Demographic Statistics), Author provided
Of course immigration isn’t the only factor driving up house prices and rents. Housing also costs more because incomes rose, interest rates fell and banks made it easier to get a loan. But adding 2 million migrants in the past decade has clearly increased how many new homes are needed.
We haven’t built enough homes
Housing demand from immigration shouldn’t lead to higher prices if enough dwellings are built quickly and at low cost. In post-war Australia, record rates of home building matched rapid population growth. House prices barely moved.
But over the last decade, home building did not keep pace with increases in demand, and prices rose. Through the 1990s, Australian cities built about 800 new homes for every extra 1,000 people. They built half as many over the past eight years.
We estimate somewhere between 450 and 550 more new homes are needed for each 1,000 new residents, after accounting for demolitions. And because more families are breaking up and the population is ageing, more homes are needed to accommodate households with fewer members.
The imbalance between demand and supply has consequences. Younger and poorer households are paying more for housing, and owning a home depends more on who your parents are, a big change from the early 1980s.
Chart 3: Housing construction lagged population in the last decade, but has picked up
<img src="https://images.theconversation.com/files/208209/original/file-20180228-36706-uqc0wa.PNG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="">
Grattan Institute, Author provided
Only in the past couple of years has construction started to match population growth, especially in Sydney. It’s no coincidence that Sydney house prices have finally moderated in the past six months.
But the backlog of a decade of undersupply remains. Development at today’s record rates is the bare minimum needed to meet record population growth built into Sydney’s and Melbourne’s housing supply targets over the next 40 years.
Chart 4: Strong housing construction will need to be maintained to meet city plan housing targets
<img src="https://images.theconversation.com/files/208433/original/file-20180301-152569-jezm0a.JPG?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="">
Grattan Institute
So what should governments do?
Building more housing will improve affordability the most – but slowly. Even at current record construction rates, new housing increases the stock of dwellings by only 2% each year. But building an extra 50,000 homes a year nationwide for a decade would lead to national house prices between 5% and 20% lower than otherwise. Do it for longer and prices will fall even further.
State governments need to fix planning rules to allow more housing to be built in inner and middle-ring suburbs. More small-scale urban infill projects should be allowed without council planning approval. And state governments should allow denser development “as of right” along key transport corridors. The Commonwealth can help with financial incentives for these reforms.
But the politics of planning in our major cities is fraught. Most people in established middle suburbs already own their houses. Prospective residents who don’t already live there can’t vote in council elections, and their interests are largely unrepresented.
If we want to maintain current migration levels, along with their economic, social and budgetary benefits, we need to do better at planning to allow more housing to be built.
What does this mean for the migrant intake?
The Australian government should develop a population policy, as the Productivity Commission recommended. It should articulate the appropriate level of migration given its economic, budgetary and social benefits and costs. This should include how it affects the Australian community living with the reality of land use planning policy – and contrasting this with the effect of optimal planning policy.
If planning and infrastructure policies don’t improve, the government should consider cutting the migration intake. This would reduce demand for housing, but would also reduce the incomes of existing residents.
The best policy is probably to continue with Australia’s demand-driven, relatively high-skill migration and to build enough homes for the growing population. But Australia is in a world of third-best policy: rapid migration and restricted housing supply are imposing big costs on people who don’t already own their homes. If the states are not going to reform planning rules to increase the number of homes built, then the Australian government should consider whether reducing migration is the lesser evil.
Any reduction should be modest and targeted at the parts of the migration program that provide the smallest benefit to Australian residents and migrants themselves. Balancing these interests is difficult, because each part of the program has different economic, social and budgetary costs and benefits.
Cutting back family reunion visas would have substantial social costs. Limiting skilled migration would hurt the economy and many businesses. Restricting growth in international students would reduce universities’ incomes.
There are also broader costs to cutting the migrant intake. It would hit the Commonwealth budget in the short term. Most migrants are of working age and pay full rates of personal income tax. And many temporary migrants, such as 457 visa holders, can’t draw on a range of government services and benefits, including welfare and Medicare. More importantly, cutting back on younger, skilled migrants is likely to hurt the budget and the economy in the long term.
<img src="https://counter.theconversation.com/content/92502/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">But there is no point denying that housing affordability is worse because of a combination of rapid immigration and poor planning policy. Rather than tackling these issues, much of the debate has focused on policies that are unlikely to make a real difference. Unless governments own up to the real problems, and start explaining the policy changes that will make a real difference, Australia’s housing affordability woes are likely to get worse.
John Daley, Chief Executive Officer, Grattan Institute 
Brendan Coates, Fellow, Grattan Institute
Trent Wiltshire, Associate, Grattan Institute
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/how-migration-affects-housing-affordability-92502" target="_blank">original article</a>.
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How migration affects housing affordability: Grattan Institute

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GUEST OBSERVER
Australia should cut its immigration intake, according to Tony Abbott in a recent speech at the Sydney Institute. Abbott explicitly cites economic theory in his arguments: “It’s a basic law of economics that increasing the supply of labour depresses wages; and that increasing demand for housing boosts price.”
But this economic analysis is too basic. Yes, supply matters. But so does demand.
While migration has increased labour supply, it has done so primarily in sectors where firms were starved of labour, and at a time of broad economic growth.
Immigration has put pressure on infrastructure, but our problems are more a function of governments failing to upgrade and expand infrastructure, even as migrants pay taxes.
And while migrants do live in houses, the federal government’s fondness for stoking demand and the inactivity of state governments in increasing supply are the real issues affecting affordability.
The economy isn’t a fixed pie
Let’s take Abbott’s claims about immigration one by one, starting with wages.
It’s true that if you increase labour supply that, holding other factors that affect wages constant, wages will decline. However, those other factors are rarely constant.
Notably, if the demand for labour is increasing by more than supply (including new migrants), then wages will rise.
This is a big part of the story when it comes to the relationship between wages and migration in Australia. Large migrant numbers have been an almost constant feature of Australia’s economy since the end of the second world war, if not earlier.
But these migrants typically arrived in the midst of economic growth and rising demand for labour. This is particularly true in recent decades, when we have had one of the longest periods of unbroken growth in the history of the developed world.
In our study of the Australian labour market, we found no relationship between immigration rates and poor outcomes for incumbent Australian workers in terms of wages or jobs.
Australia uses a point system for migration that targets skilled migrants in areas of high labour demand. Business is suffering in these areas. Migrants into these sectors don’t take jobs from anybody else because they are meeting previously unmet demand.
These migrants receive a higher wage than they would in their place of origin, and they allow their new employers to reduce costs. This ultimately leads to lower prices for consumers. Just about everybody benefits.
There’s an idea called the “lump of labour fallacy”, which holds that there is a certain amount of work to be done in an economy, and if you bring in more labour it will increase competition for those jobs.
But migrants also bring capital, investing in houses, appliances, businesses, education and many other things. This increases economic activity and the number of jobs available.
Furthermore, innovation has been shown to be strongly linked to immigration. In the United States, for instance, immigrants apply for patents at twice the rate of non-immigrants. And a large number of studies show that immigrants are over-represented in patents, patent impact and innovative activity in a wide range of countries.
We don’t entirely know why this is. It could be that innovative countries attract migrants, or it could be than migrants help innovation. It’s likely that the effect goes both ways and is a strong argument against curtailing immigration.
Abbott’s comments are more reasonable in the case of housing affordability because here all other things really are held constant. Specifically, studies show that housing demand is overheated in part by federal government policies (negative gearing and capital gains tax exemptions, for instance) and state governments not doing enough to increase supply.
Governments have responded to high housing prices by further stoking demand, suggesting that people dip into their superannuation, for instance.
In the wake of Abbott’s speech there has been speculation that our current immigration numbers could exacerbate the pressures of automation, artificial intelligence and other labour-saving innovations.
But our understanding of these forces is nascent at best. In previous instances of major technological disruption, like the industrial revolution, the long-run effects on employment were negligible. When ATMs debuted, for example, many bank tellers lost their jobs. But the cost of branches also declined, new branches opened and total employment did not decline.
In his speech, Abbott said that the government needs policies that are principled, practical and popular. What would be popular is if governments across the country could fix our myriad policy problems. Abbott identified some of the big ones – wages, infrastructure and housing affordability.
What would be practical is to identify the causes of these problems and address these directly. Immigration is certainly not a major cause. It would be principled to undertake evidence-based analysis regarding what the causes are and how to address them.
<img src="https://counter.theconversation.com/content/92255/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">A lot of that has already been done, notably by the Grattan Institute. What remains is for governments to do the politically difficult work of facing the facts.
Robert Breunig, Professor of Economics, Crawford School of Public Policy, Australian National University.
Mark Fabian, Postgraduate student, Australian National University.
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/blaming-immigrants-for-unemployment-lower-wages-and-high-house-prices-is-too-simplistic-92255" target="_blank">original article</a>.
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Blaming immigrants for high house prices is too simplistic

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A housing affordability report has found WA is the most affordable state in the country for tenants and home-buyers. Only the two Territories - the ACT and Northern Territory - are more affordable.
It’s one piece of a multi-faceted equation which equals recovery in the Perth property market.
While media continues to obsess over Sydney and has extrapolated the wind-down in its market into a national downturn, other scenarios are playing out in different parts of this complex nation.
Perth has been running counter-cyclical to Sydney for the past five or six years and this continues. In 2012, when Perth prices were rising strongly, Sydney was doing very little; as Sydney got on its growth path from 2013 onwards, Perth was heading into reverse; and now, as Sydney runs out of steam, Perth is recovering and moving forward.
Improved affordability after four years of price decline is one of the factors giving Perth momentum.
The Real Estate Institute of Australia and Adelaide Bank, in their latest Housing Affordability Report, have found that affordability in WA’s housing and rental markets has improved markedly.
According to the report, the proportion of income required for tenants to pay their rent had decreased from 19.2% in late 2016 to 17.4% in late 2017.
For those looking to buy their first home, the proportion of income required to meet home loan repayments decreased from 23.8% in 2016 to 22.4% in 2017.
The result reflects the decline in property values and rentals in Perth and other parts of WA in recent years, exacerbated by the end of the resources investment boom, which pushed up residential vacancies.
But the Perth property market generally ended 2017 on a positive note, with December Quarter data from the REIWA showing improvements in median prices, sales activity, listing levels and average selling days.
Supporting that is Domain figures for the December Quarter, which show small quarterly rises in the median prices for both houses and apartments, although the annual figures are still a little negative.
In addition, the latest SQM Research figures show small monthly rises although, again, the annual data is still in the negative.
All this is making Perth “the land of opportunity” and it’s the main reason I’m heading to Perth to do a seminar presentation on 15 March.
REIWA president Hayden Groves says it bodes well for Perth that all key indicators improved over the latest quarter.
“The Perth market found its floor and stabilised in the back half of 2017,” he says. “We now appear to be entering a recovery phase, though REIWA remains cautious about expectations of rapid growth in the next 12 months.”
Perth’s preliminary median house price increased 1.2% to $516,000 in the December Quarter - but once all sales have settled, REIWA expects the final December Quarter median to lift to $520,000, which would be a notable rise on the September Quarter median of $510,000.
Perth’s median unit price is $405,000 for the December Quarter which is a 1.3% increase on the September Quarter.
There were 4,946 dwelling sales in Perth in the December quarter. Groves says this figure is expected to lift to 6,700 once all sales have settled, putting it significantly above the September Quarter sales figure.
“Traditionally, the September Quarter outperforms the December Quarter, but that wasn’t the case in 2017. The December Quarter is on track to record 14% more sales than September,” Groves says.
The primary reason for the revival in the Perth property market is the recent improvement in the state economy.
Further confirmation of WA’s revival comes from Reserve Bank governor Philip Lowe, who says the state economy has “turned the corner”.
Lowe says while the national economy is gaining strength, WA is not being left behind, with signs of a lift in mining investment through the State.
“We’re starting to see more self-sustaining investment growth in WA in the mining sector and that’s picking up conditions in Perth,” Lowe says. “It’s not a boom again but there’s more sustainable investment going on and that’s helping the WA economy.”
Outside the mining sector, Lowe cites the lift in public infrastructure projects as one of the reasons the economy is improving.
 
Terry Ryder is the founder of hotspotting.com.au
<a href="https://mailto:ryder@hotspotting.com.au">ryder@hotspotting.com.au</a>
twitter.com/hotspotting
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terryryder-YECXbqmri2

Perth's counter cyclical property market is now moving forward: Terry Ryder

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A suitable construction funding model is the critical missing ingredient needed to deliver more affordable housing in Australia. Aside from short-lived programs under the Rudd government, we have seen decades of inconsistent and fragmented policies loosely directed at increasing affordable housing. These have failed to generate anything like enough new supply to meet <a href="https://www.propertyobserver.com.au/https://www.ahuri.edu.au/research/final-reports/241" target="_blank" style="font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12.16px;">outstanding needs</a>.
<a href="https://www.propertyobserver.com.au/http://www.ahuri.edu.au/research/final-reports/293" target="_blank">Our latest research</a> looked at recently built, larger-scale affordable housing projects in contrasting markets across Australia. We examined each scheme’s cost, funding sources and outcomes. We then developed a housing needs-driven model for understanding the financial and funding requirements to develop affordable housing in the diverse local conditions across the country.
Up to now, the key stumbling block has been the “funding gap” between revenue from rents paid by low-income tenants and the cost of developing and maintaining good-quality housing. The <a href="https://static.treasury.gov.au/uploads/sites/1/2017/06/C2016-050_Final_report.pdf" target="_blank">Commonwealth Treasury</a> acknowledged this problem last year. And the problem is greatest in the urban areas where affordable housing is most needed.
<h2>What does the new model tell us?</h2>
The Affordable Housing Assessment Tool (AHAT) enables the user to calculate cost-effective ways to fund affordable housing to meet specified needs in different markets. It’s a flexible interactive spreadsheet model with an innovative feature: it enables users to embed housing needs as the driver of project and policy, rather than project financial feasibility driving who can be housed.
Affordable housing developments have recently been relatively sparse. However, our research highlighted the varied and bespoke funding arrangements being used.
Despite this variety, too often project outcomes are driven purely by funding opportunities and constraints, rather than by defined housing needs. One notable constraint is the fragmented nature of affordable housing subsidy frameworks both within and across jurisdictions.
Our case study projects generated a diversity of housing outcomes. This can be seen as an unintended positive of the bespoke nature of affordable housing provision as a result of the need to “stitch together” gap funding from multiple sources on a project-by-project basis.
Equally though, the lack of policy coherence and fit-for-purpose funding added cost and complexity to the development process. By implication, this leads to a less-than-optimal outcome for public investment. Despite providers’ best efforts, current approaches are not the most efficient way to deliver much-needed affordable housing.
What are the lessons from this research?
We applied the model to typical housing development scenarios in inner and outer metropolitan areas and regions. By doing so, we identified six key lessons for funding and financing affordable housing delivery.
1) Government help with access to land is central to affordable housing development and enhances long-term project viability.
Especially in high-pressure urban markets, not-for-profit housing developers cannot compete with the private sector for development sites. High land costs, particularly in inner cities where affordable housing demand is most extreme, can render financial viability near impossible. Having access to sites and lower-cost land were two of the most important components of feasible projects.
2) Government equity investment offers considerable potential for delivering feasible projects and net benefit to government.
How governments treat the valuation of public land with potential for affordable housing development must be reviewed. Conventionally, even where affordable housing is the intended use, governments typically insist on a land sale price based on “highest and best use”.
It would be preferable in such cases to treat the below-market value assigned to public land as a transparent subsidy input. This would mean the sale price reflects the housing needs that the development seeks to meet. That is, the land value should be priced as an affordable housing development for a specific needs cohort.
By retaining an equity stake, government could account for its input as an investment that will increase in value over time as land values appreciate.
3) Reducing up-front debt load and lowering finance costs are critical to long-term project viability.
Debt funding imposes a large cost burden over a project’s lifetime. This is ultimately paid down through tenant rents. Reducing both the cost and scale of private financing can have a significant impact on project viability.
The analysis reinforces the rationale for the Australian government’s “<a href="http://www.budget.gov.au/2017-18/content/glossies/factsheets/html/HA_18.htm" target="_blank">bond aggregator</a>” facility for reducing financing costs for affordable housing projects. But this must come in tandem with other measures to reduce up-front debt.
4) Delivery across the range of housing needs helps to meet overall social and tenure mix objectives. This also can help improve project viability through cross-subsidy.
Mixing tenure and tenant profiles can enable affordable housing providers to produce more diverse housing that meets the full range of needs.
Cross-subsidy opportunities arising from mixed-tenure and mixed-use developments can also enhance project feasibility. By improving a provider’s financial position, this helps advance their long-term goal of adding to the stock of affordable housing. And, by providing welcome flexibility, this enables organisations to better manage development risk across different markets and cycles.
5) The financial benefit of planning bonuses is limited
Inclusionary zoning mechanisms impose affordable housing obligations on developers through the planning system. This approach potentially offers a means of securing affordable housing development sites in larger urban renewal or master-planned areas.
However, our research demonstrated that planning bonuses allowing increased dwelling numbers in return for more affordable housing have little beneficial impact on project viability. This is because the additional dwellings allowed generate additional land and/or construction costs but no matching capacity to service a larger debt.
However, planning bonuses can be useful as part of a cross-subsidy approach. In this case, they may support project viability, without necessarily resulting in any additional affordable dwellings.
6) Increasing the scale of not-for-profit provision offers financial benefits that help ensure the long-term delivery of affordable housing.
Our analysis supports the case for targeting public subsidy to not-for-profit developers (government or non-government) to maximise long-term social benefit. Investing in permanently affordable housing ensures the social dividend of affordable housing can be continued into the future.
Comparable subsidies are not preserved when allocated to private owners. They will seek to trade out at some stage, capitalising the subsidy into privatised gain.
The results of our case study analyses and modelling highlight the need to develop comprehensive funding and subsidy arrangements that account for different costs in different locations. These arrangements also must be integrated nationally to support affordable housing delivery at scale.
<img src="https://counter.theconversation.com/content/91072/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">This study reiterates the common finding of research over the last decade: both Commonwealth and state/territory governments need to develop a coherent and long-term policy framework to provide housing across the full spectrum of need.
<a href="https://theconversation.com/profiles/laurence-troy-2403" target="_blank">Laurence Troy</a>, Research Fellow, City Futures Research Centre, <a href="http://theconversation.com/institutions/unsw-1414" target="_blank">UNSW</a>; <a href="https://theconversation.com/profiles/bill-randolph-147968" target="_blank">Bill Randolph</a>, Director, City Futures - Faculty Leadership, City Futures Research Centre, Urban Analytics and City Data, Infrastructure in the Built Environment, <a href="http://theconversation.com/institutions/unsw-1414" target="_blank">UNSW</a>; <a href="https://theconversation.com/profiles/ryan-van-den-nouwelant-199969" target="_blank">Ryan van den Nouwelant</a>, Senior Research Officer - City Futures Research Centre, <a href="http://theconversation.com/institutions/unsw-1414" target="_blank">UNSW</a>, and <a href="https://theconversation.com/profiles/vivienne-milligan-147970" target="_blank">Vivienne Milligan</a>, Visiting Senior Fellow - City Futures Research Centre, Housing Policy and Practice, <a href="http://theconversation.com/institutions/unsw-1414" target="_blank">UNSW</a>
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/six-lessons-on-how-to-make-affordable-housing-funding-work-across-australia-91072" target="_blank">original article</a>.
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How to make affordable housing funding work across Australia

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Lord Mayor of Sydney, Clover Moore, will officially launch the start of construction of City West Housing’s latest affordable housing development today.
The development is part of the Cowper Street Glebe redevelopment precinct. The apartment complex, located on the corner of Wentworth and Bay Street in Glebe, is the latest development in City West Housing’s offering of affordable housing in the Sydney LGA. The new development will offer 99 affordable housing units in a mix of one, two and three-bedroom configurations. The project is due for completion in mid-2019. The development will feature basement car park facilities and bike storage, ground floor commercial premises and two large communal areas including a lush communal roof terrace.
The roof terrace has been designed as an open environment for communal gathering, with the views from the terrace reinforcing the connection to Wentworth Park and the Sydney city skyline.
The NSW Government vested the land to City West Housing.
The City of Sydney Council has also demonstrated its commitment to the project through ongoing support of City West Housing’s development activity. Sydney Lord Mayor Clover Moore said the cost of housing is at crisis point across metropolitan Sydney and especially in inner Sydney.
"We are committed to tackling this crisis with every mechanism available to us, particularly in partnership with housing providers like City West Housing as well as state and federal governments. “This development in the Cowper Street precinct, Glebe, will provide long term affordable rental housing to city workers who would otherwise be unable to live close to their place of work.
"Identified in our long-term strategy Sustainable Sydney 2030, the Cowper Street development represents a good case study of a cooperative approach between the City, State Government and community housing providers like City West Housing, that will deliver direct social benefits, increase the supply of market housing and provide a diversity of housing options.
Leonie King, CEO of City West Housing, welcomed the commencement of this project.
“The team at City West Housing is extremely pleased to launch construction for our latest affordable housing development within the Sydney LGA.
Kane Construction is leading the development of the complex, with work beginning after the official sod turning.
 
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