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
People have been spending more in New South Wales in recent years, followed by Victoria, South Australia, Queensland and Western Australia, according to a new report. And while real household spending has climbed by 14% in NSW between 2009-10 and 2015-16, it only rose by 4% in WA over the same period.
While spending soared, the price of goods also rose over the same period. The consumer price index (CPI) in Sydney rose by 16.4% - again the highest among all capital cities - followed by Melbourne, Brisbane, Perth (15.1%), and Adelaide.
But the preceding six-year period tells a very different story. Between 2003-04 and 2009-10, growth in real household spending spiked at 25% in WA and Queensland, but other population centres experienced much slower spending growth.
These state and territory differences reflect the workings of a “two-speed economy”, where people’s spending levels are more sensitive to the ups and downs of the economic cycle in the resource-rich states of WA and Queensland.
The report compares prices and spending across Australian states and capital cities, drawing on a range of data sources.
<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/2017/12/8/chart1.jpg" alt="">
What drives cost of living in the most and least expensive cities?
There’s also similarly wide disparities in cost-of-living patterns across our major capital cities. Sydney ranks as the most expensive, followed by Melbourne, Brisbane, Adelaide and Perth.
Perth’s ranking jars against the popular perception that it is one of the most expensive cities in Australia.
Sydney’s ranking as the most expensive city is mainly driven by increases in housing and education costs, which have risen by 5.7% and 5%, respectively, between 1995 and 2017.
Housing makes up one-quarter of households’ spending – the dominant share. So it’s no wonder that rises in housing prices in Sydney are so keenly felt.
Price increases have been much slower in Perth relative to other capital cities, in the areas of food and non-alcoholic beverages, transport and communication. Growth in wages has outpaced the growth in prices of goods in WA, more than in any other state and territory over the past 15 years.
Financial stress acute for some in WA
While people in WA might be spending less, there are still segments of the population that are vulnerable to intense cost-of-living pressures.
It’s clear that households in severe financial hardship are having to divert increasing shares of their household budgets to meet housing needs and utility costs. We define households in severe financial hardship as those who have had to seek financial assistance from family, friends or welfare institutions and those that could not eat or heat due to money shortages in the last year. During 2015-16, these households diverted around 39% of their budget to housing alone. This was higher than the 25% typical WA household spend on housing.
In order to spend more on housing, households in severe financial hardship are cutting back on other discretionary spending. These households are trading off transport and health spending to meet housing needs.
We found the cutback on transport spending becomes more prominent over time. During 2015-16, the budget share that stressed households diverted towards transport was only 4%, compared with 11% for a typical WA household.
<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/2017/12/8/chart2.jpg" alt="">
Housing costs comprise an even bigger share for WA households seeking financial counselling (around half), than the broader group of households in severe financial hardship (39%). For households seeking financial counselling, the size of a mortgage is likely to be the reason they are in financial trouble.
WA households seeking financial counselling spend on average well over half (55%) of their weekly budget on housing alone (versus 44% spent by the renters). Housing costs are clearly the largest cost and biggest risk factor for financial hardship, well ahead of food (18%), transport (10%) and utilities (5.5%).
Households who sought financial counselling spend even less of their budget shares on health (3.6%) than the broad group of households in severe financial hardship (4%).
<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/2017/12/8/chart3.jpg" alt="">
Overall, the typical WA household has continued to fare reasonably well in recent years, with incomes rising much faster than living costs. Yet the same is clearly not true for vulnerable groups within our community.
Those on low incomes have struggled in recent years to keep up with the cost of living. The cost of housing has emerged as the greatest single living cost for most Australian households and the most critical factor in the risk of financial hardship, poverty and inequality within our community.
<img src="https://counter.theconversation.com/content/88168/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">Policy makers need to tackle the vexed issue of housing affordability if they wish to have an impact on poverty and financial resilience and ensure fewer vulnerable members of our community are left behind.
Rachel Ong, Deputy Director, Bankwest Curtin Economics Centre, Curtin University.
Alan Duncan, Director, Bankwest Curtin Economics Centre and Bankwest Research Chair in Economic Policy, Curtin University.
Chris Twomey, Senior Industry Fellow, Curtin University.
Ken Leong, Researcher, Curtin University.
Silvia Salazar, Research fellow, 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/sydney-the-most-expensive-capital-in-australia-perth-comes-in-fifth-new-report-88168" target="_blank">original article</a>.
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j.ballantyne1990-6AQqhLzZaK

Sydney the most expensive capital in Australia, Perth comes in fifth: new report

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South East Queensland’s affordability is attracting record levels of interstate migration along with investors and first home buyers, says property expert John McGrath in his Switzer blog.
The housing market continues to produce solid results despite a sluggish economy, said the recently released McGrath Report 2018.
Brisbane’s median house price increased by 3.0% to $520,000 in the 12 months to June 2017, CoreLogic data shows. The apartment market was a different story, with its median price falling 2.4% to $410,000, reflecting the inner city oversupply.
But Brisbane’s housing affordability compared to Sydney and Melbourne is its main calling card for home owners, investors and first home buyers alike.
“A significant price gap between the cities will underpin rising demand over the next few years,” writes McGrath.
Queensland also has the strongest first home buyer market in Australia, with loans to first time buyers hitting a high of 20% of all owner occupier loans in June – the highest proportion since 2009, according to data from Domain.
Earlier this year, the state government had extended the $20,000 First Home Owner Grant Boost to December 2017 for the purchase of new homes up to a value of $750,000. About 4,900 applications have been received for the grant so far, according to the state government.
McGrath also said his agency’s agents are reporting far more interest from Sydney and Melbourne investors this year.
“Brisbane's prospects for capital growth, plus superior rental yields of 4.1% for houses and 4.9% for apartments, continues to make it an attractive option for investors,” he writes.
South East Queensland has become a major hotspot for internal migration, according to the Australian Bureau of Statistics (ABS).
Queensland welcomed 11,581 new interstate residents in the year ending June 2016 – a marked increase on 6,417 the year before. In addition, Brisbane recorded its highest internal migration in at least a decade.Among regional centres, the Gold Coast and the Sunshine Coast led the country with 6,428 and 6,200 new residents respectively.
In fact, Gold Coast’s internal migration was the highest ever recorded by the ABS since they began this data series in FY07. Compared with FY15, the Gold Coast’s internal migration was up 39%.
“We see a once in a lifetime opportunity for young families to transform their lives with a move to South East Queensland. The massive new equity that home owners in Sydney and Melbourne have gained could buy them an amazing new lifestyle and far less mortgage stress,” writes McGrath. 
The 2018 Commonwealth Games (GC2018) in Gold Coast is also expected to inject billions of dollars into the economy, with 6,600 athletes and officials and 100,000 visitors attending the event and a global TV audience of more than 1.5 billion anticipated to watch it.
The push to infrastructure due to the games, including the light rail, will boost the economy in the long term, and property prices are responding and increasing at a healthier rate than Brisbane, adds McGrath.
The median house price increased 7.3% to $620,000 in the 12 months to June 2017, according to CoreLogic data. The apartment market was significantly stronger than Brisbane's, with a median price rise of 5.1% to $415,000. 
On the Sunshine Coast, major new infrastructure projects are also driving the property market. Among them is the redevelopment of Maroochydore city centre; the expansion of the Sunshine Coast Airport; and a new business, technology and retail precinct adjacent to the University of the Sunshine Coast.
Median house prices in Sunshine Coast increased 5.1% to $552,000 in the 12 months to June 2017, while its median apartment price increased 3.4% to $390,000.
In conclusion, McGrath says that South East Queensland remains “the most compelling market in the country for both investors and young families”.
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jonathanchancellor-7SQnKwU6yx

Affordability is South East Queensland’s drawcard: John McGrath

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Price growth for any given suburb, capital city or the nation is a complicated process relating to many positive and negative factors.
But there has been an emerging mantra for some time, especially among politicians, that any increased supply of the housing makes a big difference to affordability and improved access to the property market.
The 2004 Productivity Commission report into First Home Ownership suggesting that rising house prices indicate ‘demand has been outstripping supply’ laid the basis for this simple assumption.
A new research paper however suggests that a housing shortage in any given region does not necessarily cause price increases and, conversely, that a surplus does not guarantee a decline in house prices.
It seems the fluctuation of house prices is rather more complex and dynamic.
The report on home-building and population growth by ANU academics Ben Phillips and Cukkoo Joseph concludes that increasing the supply of housing can temper price increases, but only to a limited extent.
They concluded that while increasing housing supply has some benefits, it was not likely in isolation to create affordable housing in Australia.
It seems simple supply rules do not apply to property; they added, at least not in the rules applicable to ice-cream or bananas.
In our recent low interest rate environment, price exuberance was always expected. Then there's population growth pushing prices along, local and migrant. Foreign investment, which we are still figuring out, plays a significant role.
A hapless share market has been an influencer too, I'd suggest in our pursuit of property over recent times.
There are a range of potential drivers of price growth through government policy, not the least investors receiving benefits from the tax system through the combined impact of negative gearing and discounted capital gains tax arrangements. First home grants are back in a big way. There's also the exclusion of the family home from pension assets testing.
The report acknowledged the uncertainty surrounding the nature of unoccupied dwellings, but concluded the net additions to the Australian housing stock was greater than required for underlying demand during the period 2001 and 2017.
They suggested by one calculation that Australia built too few dwellings for most of the period between 2007 and 2014, though between 1998 and 2006 we built more than was required. The period after 2014 had been a period of over-building.
The new research compared housing demand and supply at a sub-regional level, with their analysis pinpointing inner Sydney residential building as running well ahead of local household growth for the past few years.
Yet prices have not come back.
There was a deemed significant surplus of stock in inner Sydney, surplus to what they calculated as underlying requirements.
Inner Sydney's surplus of 5,900 dwellings, the largest of the 328 regions covered in the research, equated to 5.2 per cent of the total stock.
Most of the inner-north and inner-south of Sydney was also in surplus, based on their criteria.
The housing shortages of Sydney were found in the mid-west and far-west of Sydney in regions such as Fairfield, Strathfield, Bringelly, and Hurstville.
 
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jchancellor-FAypfDUnLy

Increasing supply to cure housing affordability can temper price increases

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Guest observer
The release of the draft precinct plan for the new community of Wilton North will provide a diverse range of homes and assist housing affordability in Sydney.
The announcement by the Minister for Planning and Housing, Anthony Roberts, of the plans for the new community which will provide 5,600 new homes is fantastic news and will assist in alleviating Sydney’s ongoing housing affordability crisis. 
The plans include a mix of housing types – detached, semi-detached, terraces, townhouses and medium density - so older people, families with children, singles and couples can access housing suitable for their needs.
Provision of infrastructure to this new community is absolutely critical in ensuring Wilton north is an amenable and accessible area
New housing supply is absolutely critical to bringing down home prices and getting families and first home buyers into the property market. 
The NSW Government has recently removed the cap on local infrastructure contributions – an upfront payment which is added onto the cost of a new home. Councils have already indicated that they are looking to increase these contributions to up to $80,000 per dwelling – an astronomical increase which could put homes out of reach of first home buyers and others struggling to enter the property market. 
State and local governments have been keen to take advantage of the property boom by putting extra costs and taxes on property development. This only has the negative effect of ‘killing the goose that laid the golden egg’.
Planning for this new suburb must be streamlined and efficient. Often the planning process can lag for years before there are homes on the ground. Families need homes now and the less red tape and bureaucracy in the planning process, the faster we will see more dwellings put out to the market.
The Urban Taskforce is keen to be involved in discussions with the NSW Government to ensure that planning for this new area takes place in a timely manner and with appropriate densities to accommodate Sydney’s growing population. 
Chris Johnson is the Urban Taskforce CEO.
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jrobinson-rf4aSBido9

New plan for Wilton North is great news for housing affordability but should not come with more taxes on homes

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<h1>
<a href="https://theconversation.com/profiles/hal-pawson-147969" target="_blank" style="font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12.16px;">Hal Pawson</a>, <a href="http://theconversation.com/institutions/unsw-1414" target="_blank">UNSW</a>
</h1>
As everyone supposedly knows, fixing housing unaffordability is simply a matter of <a href="https://thekouk.com/item/413-house-prices-are-surging-because-of-low-supply-it-s-economics-101" target="_blank">boosting housing supply</a>. But wait! With their <a href="http://csrm.cass.anu.edu.au/research/publications/regional-housing-supply-and-demand-australia" target="_blank">just-published report</a> on house-building and population growth, ANU academics Ben Phillips and Cukkoo Joseph have blown yet another hole in <a href="https://www.ahuri.edu.au/evidence-in-action/news/transcript-of-treasurers-address-on-housing-affordability-now-available" target="_blank">that sacred claim</a>.
By comparing housing demand and supply at a sub-regional level, their analysis highlights evidence that <a href="http://www.smh.com.au/business/the-economy/housing-supply-alone-wont-fix-the-affordability-crisis-modelling-shows-20171119-gzobxa" target="_blank">in many parts of Australia</a> – not least inner Sydney, Melbourne and Brisbane – house-building has been running well ahead of local household growth for the past few years. Yet these are hardly areas where prices have dived.
In the City of Sydney, for example, <a href="http://www.housing.nsw.gov.au/about-us/reports-plans-and-papers/rent-and-sales-reports/issue-120" target="_blank">overall median apartment prices rose by 52%</a> in the five years to March 2017. On the ANU analysis, this area has recently been oversupplied relative to population. Yet apartment prices here still rose at the same rate as across Greater Sydney, a region with some areas of undersupply.
<hr>
Further reading: <a href="https://theconversation.com/australias-almost-a-world-leader-in-home-building-so-that-isnt-a-fix-for-affordability-73514" target="_blank">Australia’s almost a world leader in home building, so that isn’t a fix for affordability</a>
<hr>
<h2>Politicians’ worn-out excuse</h2>
Previous commentaries have highlighted <a href="http://www.smh.com.au/business/the-economy/the-government-says-it-has-a-plan-to-fix-the-housing-affordability-crisis-this-chart-suggests-it-doesnt-20160902-gr7sbz" target="_blank">the recently strong positive correlation</a> between rapidly expanding housing supply and property inflation. But these correctives to the popular wisdom have failed to gain traction.
This is partly because of the continuing seductive appeal of the common sense claim that rising prices reflect gross shortage. So, it’s reasoned, expanding house building will moderate the market.
As my Sydney University colleague Peter Phibbs <a href="http://www.huffingtonpost.com.au/peter-phibbs/our-politicians-need-to-read-chapter-1-of-an-economics-textbook_a_21876676/" target="_blank">recently observed</a>, this “supply mantra” works for politicians seeking to connect with voters because “everyone is an economist now and more supply will bring down prices”.
Heaven forbid that anyone might draw attention to the <a href="https://theconversation.com/tackling-housing-unaffordability-a-10-point-national-plan-43628" target="_blank">special features of housing</a> as a commodity. As noted by Ben Phillips, these mean such supply “rules” do not apply; at least not in the simple form applicable to <a href="https://www.propertyobserver.com.au/http://www.smh.com.au/news/National/Aspectacularbackflipwithnotaredfacetobeseen/2005/05/24/1116700714172" target="_blank">bananas</a>.
<hr>
Further reading: <a href="https://theconversation.com/why-housing-supply-shouldnt-be-the-only-policy-tool-politicians-cling-to-72586" target="_blank">Why housing supply shouldn’t be the only policy tool politicians cling to</a>
<hr>
More importantly, though, governments use their unqualified faith in equitable housing market solutions to get off the hook. It absolves them of the responsibility for playing an active role in managing and shaping these markets to deliver housing that meets everyone’s need for shelter. Instead, they facilitate development for speculation.
<h2>Calls for a policy rethink</h2>
This critique is not exclusive to academics and affordable housing campaigners. It is increasingly coming from other stakeholders, including in the finance industry.
In a <a href="http://www.industrysuperaustralia.com/publications/reports/assisting-housing-affordability-discussion-paper/" target="_blank">recent report</a>, Industry Super Australia (ISA) lamented the “haphazard approach [to housing policy] … across all levels of Australian government … What was a serious problem a decade ago is becoming a crisis after a further ten years of policy gridlock”.
We <a href="https://theconversation.com/mounting-housing-stress-underscores-need-for-expert-council-to-guide-wayward-policymaking-84196" target="_blank">recently advocated</a> for a re-established National Housing Supply Council (NHSC). Echoing this, ISA calls for government to set up “a co-ordinating body to identify the extent of regional shortfalls in [affordable] housing”. This would require “reinstatement of a rigorous housing supply forecasting capacity to underpin effective city and municipal level planning”.
<hr>
Further reading: <a href="https://theconversation.com/mounting-housing-stress-underscores-need-for-expert-council-to-guide-wayward-policymaking-84196" target="_blank">Mounting housing stress underscores need for expert council to guide wayward policymaking</a>
<hr>
As advocated by ISA, the body’s membership and functions would closely mirror those of the NHSC. However, again consistent with our proposals, there would be greater emphasis on the position of renters on low to moderate incomes.
No-one disputes that, with continued population growth nationally and especially in our capital cities, maximising new house-building must be part of the policy mix. But the idea that this can be any kind of silver bullet for unaffordable housing – especially for the lower-income renters who are really doing it tough – is fundamentally flawed. <a href="http://www.industrysuperaustralia.com/publications/reports/assisting-housing-affordability-discussion-paper/" target="_blank">As ISA puts it</a>:
<blockquote>
Simply increasing overall housing stock will not ensure that more assisted [affordable] housing becomes available. Instead, increasing the supply of assisted [affordable] housing specifically is required.
</blockquote>
What is needed above all is “a comprehensive, long-term commitment to addressing the supply of affordable rentals for low to moderate earners”.
Australia sailed directly away from this essential goal with the Abbott government’s 2014 <a href="https://cityfutures.be.unsw.edu.au/news-event/news/defining-action-to-secure-institutionally-financed-affordable-housing/" target="_blank">scrapping of the National Rental Affordability Scheme</a>.
<h2>Moves to repair the damage</h2>
Recent policy moves in Canberra just may have set a course towards repairing the damage.
Treasurer Scott Morrison has backed a <a href="http://www.budget.gov.au/2017-18/content/glossies/factsheets/html/HA_18.htm" target="_blank">new mechanism</a> to channel low-cost construction finance to community housing providers. The Commonwealth is also starting to pressure the states and territories to develop “<a href="https://www.legislation.gov.au/Details/C2017B00238/Download" target="_blank">credible housing strategies</a>”. This would be in return for ongoing national funding for public housing and homelessness services.
Crucially, such strategies should include state and territory commitments to the robust use of land-use planning systems to hard-wire affordable rental housing supply into the normal private house-building process. This would emulate and build on <a href="http://blogs.unsw.edu.au/cityfutures/blog/2016/11/sydney-needs-higher-affordable-housing-targets/" target="_blank">recent proposals by the Greater Sydney Commission</a>, which the New South Wales government is considering.
<img src="https://counter.theconversation.com/content/87757/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">For the states and territories, this model could be a major element of “their side of the bargain” in a serious push to secure an enduring affordable housing supply. Only with some form of matching federal “development subsidy”, however, do such strategies stand a chance of making a real difference.
<a href="https://theconversation.com/profiles/hal-pawson-147969" target="_blank">Hal Pawson</a>, Associate Director - City Futures - Urban Policy and Strategy, 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/facts-sink-glib-housing-supply-mantra-the-focus-must-be-on-affordable-rental-87757" target="_blank">original article</a>.
</body></html>

Facts sink glib housing supply mantra – the focus must be on affordable rental

<html><body>
Australia has an oversupply of up to 164,000 dwellings, including parts of the major cities, countering industry and government suggestions that Australia is suffering a housing shortage, a new study by The Australian National University (ANU) has found.
The Regional Housing Supply and Demand in Australia Working Paper, by Associate Professor Ben Phillips and researcher Cukkoo Joseph of the ANU Centre for Social Research and Methods analysed 15 years' worth of Census data and building approvals.
It also found Australia had an oversupply in some markets such as parts of inner city Sydney, Melbourne and Brisbane.
"The surplus is not particularly substantial, but certainly suggest that housing supply in and of itself is probably not the primary driver of house-price growth in Australia. There are other factors that are going on," Phillips said.
"We've looked at factors like changes in household types and dwelling types and unoccupied dwellings which we don't think have been taken into account in other studies in any substantial way in the past, and certainly not at the regional level.
"The standard line of governments and industry seems to be that housing supply is a big problem in Australia. No doubt there are some areas where it is. But overall we don't see the housing shortage that's often talked about - in fact we see that there is a surplus."
In addition to analysing data from the 2001 and 2016 Census, the ANU researchers looked at Australian Bureau of Statistics building approvals and survey of income and housing.
<table border="0" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td colspan="3" nowrap>
TOP 5 SHORTAGE AND SURPLUS REGIONS BY MAJOR STATE
</td>
<td nowrap> </td>
</tr>
<tr>
<td colspan="2" nowrap>
Housing Shortage Regions NSW
</td>
<td nowrap> </td>
<td nowrap> </td>
</tr>
<tr>
<td nowrap>
NSW
</td>
<td nowrap>
Region
</td>
<td nowrap>
Shortage Dwellings
</td>
<td nowrap>
% Stock
</td>
</tr>
<tr>
<td nowrap>
1
</td>
<td nowrap>
Wyong
</td>
<td nowrap>
2,574
</td>
<td nowrap>
3.8%
</td>
</tr>
<tr>
<td nowrap>
2
</td>
<td nowrap>
Fairfield
</td>
<td nowrap>
1,808
</td>
<td nowrap>
3.1%
</td>
</tr>
<tr>
<td nowrap>
3
</td>
<td nowrap>
Shoalhaven
</td>
<td nowrap>
1,700
</td>
<td nowrap>
3.1%
</td>
</tr>
<tr>
<td nowrap>
4
</td>
<td nowrap>
Hurstville
</td>
<td nowrap>
1,612
</td>
<td nowrap>
3.4%
</td>
</tr>
<tr>
<td nowrap>
5
</td>
<td nowrap>
Strathfield - Burwood - As
</td>
<td nowrap>
1,596
</td>
<td nowrap>
2.7%
</td>
</tr>
<tr>
<td colspan="2" nowrap>
Housing Surplus Regions NSW
</td>
<td nowrap> </td>
<td nowrap> </td>
</tr>
<tr>
<td nowrap>
NSW
</td>
<td nowrap>
Region
</td>
<td nowrap>
Surplus Dwellings
</td>
<td nowrap>
% Stock
</td>
</tr>
<tr>
<td nowrap>
1
</td>
<td nowrap>
Sydney Inner City
</td>
<td nowrap>
5,878
</td>
<td nowrap>
5.2%
</td>
</tr>
<tr>
<td nowrap>
2
</td>
<td nowrap>
Richmond Valley - Coastal
</td>
<td nowrap>
2,056
</td>
<td nowrap>
5.5%
</td>
</tr>
<tr>
<td nowrap>
3
</td>
<td nowrap>
Newcastle
</td>
<td nowrap>
1,988
</td>
<td nowrap>
2.7%
</td>
</tr>
<tr>
<td nowrap>
4*
</td>
<td nowrap>
Snowy Mountains
</td>
<td nowrap>
1,869
</td>
<td nowrap>
16.6%
</td>
</tr>
<tr>
<td nowrap>
5
</td>
<td nowrap>
Tweed Valley
</td>
<td nowrap>
1,573
</td>
<td nowrap>
3.7%
</td>
</tr>
<tr>
<td colspan="3" nowrap>
* Subject to non-private dwelling fluctuations eg hotels
</td>
<td nowrap> </td>
</tr>
<tr>
<td nowrap> </td>
<td nowrap> </td>
<td nowrap> </td>
<td nowrap> </td>
</tr>
<tr>
<td colspan="2" nowrap>
Housing Shortage Regions VIC
</td>
<td nowrap> </td>
<td nowrap> </td>
</tr>
<tr>
<td nowrap>
VIC
</td>
<td nowrap>
Region
</td>
<td nowrap>
Shortage Dwellings
</td>
<td nowrap>
% Stock
</td>
</tr>
<tr>
<td nowrap>
1
</td>
<td nowrap>
Mornington Peninsula
</td>
<td nowrap>
1,193
</td>
<td nowrap>
1.3%
</td>
</tr>
<tr>
<td nowrap>
2
</td>
<td nowrap>
Casey - South
</td>
<td nowrap>
1,180
</td>
<td nowrap>
2.1%
</td>
</tr>
<tr>
<td nowrap>
3
</td>
<td nowrap>
Surf Coast - Bellarine Pen
</td>
<td nowrap>
679
</td>
<td nowrap>
1.6%
</td>
</tr>
<tr>
<td nowrap>
4
</td>
<td nowrap>
Casey - North
</td>
<td nowrap>
664
</td>
<td nowrap>
1.4%
</td>
</tr>
<tr>
<td nowrap>
5
</td>
<td nowrap>
Cardinia
</td>
<td nowrap>
380
</td>
<td nowrap>
1.1%
</td>
</tr>
<tr>
<td colspan="2" nowrap>
Housing Surplus Regions VIC
</td>
<td nowrap> </td>
<td nowrap> </td>
</tr>
<tr>
<td nowrap>
VIC
</td>
<td nowrap>
Region
</td>
<td nowrap>
Surplus Dwellings
</td>
<td nowrap>
% Stock
</td>
</tr>
<tr>
<td nowrap>
1
</td>
<td nowrap>
Melbourne City
</td>
<td nowrap>
3,994
</td>
<td nowrap>
5.3%
</td>
</tr>
<tr>
<td nowrap>
2
</td>
<td nowrap>
Whittlesea - Wallan
</td>
<td nowrap>
2,637
</td>
<td nowrap>
3.4%
</td>
</tr>
<tr>
<td nowrap>
3
</td>
<td nowrap>
Banyule
</td>
<td nowrap>
2,297
</td>
<td nowrap>
4.6%
</td>
</tr>
<tr>
<td nowrap>
4
</td>
<td nowrap>
Port Phillip
</td>
<td nowrap>
2,127
</td>
<td nowrap>
3.7%
</td>
</tr>
<tr>
<td nowrap>
5
</td>
<td nowrap>
Monash
</td>
<td nowrap>
2,092
</td>
<td nowrap>
3.1%
</td>
</tr>
<tr>
<td nowrap> </td>
<td nowrap> </td>
<td nowrap> </td>
<td nowrap> </td>
</tr>
<tr>
<td colspan="2" nowrap>
Housing Shortage Regions QLD
</td>
<td nowrap> </td>
<td nowrap> </td>
</tr>
<tr>
<td nowrap>
QLD
</td>
<td nowrap>
Region
</td>
<td nowrap>
Shortage Dwellings
</td>
<td nowrap>
% Stock
</td>
</tr>
<tr>
<td nowrap>
1
</td>
<td nowrap>
Sunnybank
</td>
<td nowrap>
702
</td>
<td nowrap>
4.1%
</td>
</tr>
<tr>
<td nowrap>
2
</td>
<td nowrap>
Buderim
</td>
<td nowrap>
538
</td>
<td nowrap>
2.5%
</td>
</tr>
<tr>
<td nowrap>
3
</td>
<td nowrap>
Ipswich Hinterland
</td>
<td nowrap>
515
</td>
<td nowrap>
2.0%
</td>
</tr>
<tr>
<td nowrap>
4
</td>
<td nowrap>
Bribie - Beachmere
</td>
<td nowrap>
290
</td>
<td nowrap>
1.7%
</td>
</tr>
<tr>
<td nowrap>
5
</td>
<td nowrap>
Sunshine Coast Hinterland
</td>
<td nowrap>
262
</td>
<td nowrap>
1.3%
</td>
</tr>
<tr>
<td colspan="2" nowrap>
Housing Surplus Regions QLD
</td>
<td nowrap> </td>
<td nowrap> </td>
</tr>
<tr>
<td nowrap>
QLD
</td>
<td nowrap>
Region
</td>
<td nowrap>
Surplus Dwellings
</td>
<td nowrap>
% Stock
</td>
</tr>
<tr>
<td nowrap>
1
</td>
<td nowrap>
Brisbane Inner
</td>
<td nowrap>
4,537
</td>
<td nowrap>
12.7%
</td>
</tr>
<tr>
<td nowrap>
2
</td>
<td nowrap>
Townsville
</td>
<td nowrap>
4,259
</td>
<td nowrap>
5.3%
</td>
</tr>
<tr>
<td nowrap>
3
</td>
<td nowrap>
Cairns - South
</td>
<td nowrap>
3,516
</td>
<td nowrap>
8.1%
</td>
</tr>
<tr>
<td nowrap>
4
</td>
<td nowrap>
Gladstone - Biloela
</td>
<td nowrap>
3,384
</td>
<td nowrap>
9.4%
</td>
</tr>
<tr>
<td nowrap>
5
</td>
<td nowrap>
Surfers Paradise
</td>
<td nowrap>
2,878
</td>
<td nowrap>
12.3%
</td>
</tr>
</tbody></table>
"We appear to have built enough dwellings, and there's an oversupply in some markets such as some parts of inner city Sydney, Melbourne and Brisbane, which could have interesting implications for the economy,"  Phillips said.
"If this research is right, it suggests we've built enough dwellings, and there's not likely to be any great gain in building more houses in addition to what's required."
In the regions, many homes were built in mining centres over the past 15 years before the mining boom ended.
"Particularly in outback Western Australia, regional WA and north Queensland, many of these areas have a housing surplus," Phillips said.
"We also find Canberra has a housing surplus, especially among higher-density dwellings in the town centres.
"We've found that we've built more than what population growth would require.
"It doesn't mean that it won't get soaked up in coming years, but it does suggest there won't be as much need for new home building in the near future, which could have knock-on to the broader economy."
The Regional Housing Supply and Demand in Australia Working Paper is <a href="http://csrm.cass.anu.edu.au/research/publications/regional-housing-supply-and-demand-australia" target="_blank">available online</a><a href="https://www.propertyobserver.com.au/Australia%20has%20an%20oversupply%20of%20up%20to%20164,000%20dwellings,%20including%20parts%20of%20the%20major%20cities,%20countering%20industry%20and%20government%20suggestions%20that%20Australia%20is%20suffering%20a%20housing%20shortage,%20a%20new%20study%20by%20The%20Australian%20National%20University%20(ANU)%20has%20found.%20%20The%20Regional%20Housing%20Supply%20and%20Demand%20in%20Australia%20Working%20Paper,%20by%20Associate%20Professor%20Ben%20Phillips%20and%20researcher%20Cukkoo%20Joseph%20of%20the%20ANU%20Centre%20for%20Social%20Research%20and%20Methods%20analysed%2015%20years'%20worth%20of%20Census%20data%20and%20building%20approvals.%20%20It%20found%20Australia%20had%20an%20oversupply%20in%20some%20markets%20such%20as%20parts%20of%20inner%20city%20Sydney,%20Melbourne%20and%20Brisbane.%20%20%22The%20surplus%20is%20not%20particularly%20substantial,%20but%20certainly%20suggest%20that%20housing%20supply%20in%20and%20of%20itself%20is%20probably%20not%20the%20primary%20driver%20of%20house-price%20growth%20in%20Australia.%20There%20are%20other%20factors%20that%20are%20going%20on,%22%20Dr%20Phillips%20said.%20%20%22We've%20looked%20at%20factors%20like%20changes%20in%20household%20types%20and%20dwelling%20types%20and%20unoccupied%20dwellings%20which%20we%20don't%20think%20have%20been%20taken%20into%20account%20in%20other%20studies%20in%20any%20substantial%20way%20in%20the%20past,%20and%20certainly%20not%20at%20the%20regional%20level.%20%20%22The%20standard%20line%20of%20governments%20and%20industry%20seems%20to%20be%20that%20housing%20supply%20is%20a%20big%20problem%20in%20Australia.%20No%20doubt%20there%20are%20some%20areas%20where%20it%20is.%20But%20overall%20we%20don't%20see%20the%20housing%20shortage%20that's%20often%20talked%20about%20-%20in%20fact%20we%20see%20that%20there%20is%20a%20surplus.%22%20%20In%20addition%20to%20analysing%20data%20from%20the%202001%20and%202016%20Census,%20the%20ANU%20researchers%20looked%20at%20Australian%20Bureau%20of%20Statistics%20building%20approvals%20and%20survey%20of%20income%20and%20housing.%20%20%22We%20appear%20to%20have%20built%20enough%20dwellings,%20and%20there's%20an%20oversupply%20in%20some%20markets%20such%20as%20some%20parts%20of%20inner%20city%20Sydney,%20Melbourne%20and%20Brisbane,%20which%20could%20have%20interesting%20implications%20for%20the%20economy,%22%20Dr%20Phillips%20said.%20%20%22If%20this%20research%20is%20right,%20it%20suggests%20we've%20built%20enough%20dwellings,%20and%20there's%20not%20likely%20to%20be%20any%20great%20gain%20in%20building%20more%20houses%20in%20addition%20to%20what's%20required.%22%20%20In%20the%20regions,%20many%20homes%20were%20built%20in%20mining%20centres%20over%20the%20past%2015%20years%20before%20the%20mining%20boom%20ended.%20%20%22Particularly%20in%20outback%20Western%20Australia,%20regional%20WA%20and%20north%20Queensland,%20many%20of%20these%20areas%20have%20a%20housing%20surplus,%22%20Dr%20Phillips%20said.%20%20%22We%20also%20find%20Canberra%20has%20a%20housing%20surplus,%20especially%20among%20higher-density%20dwellings%20in%20the%20town%20centres.%20%20%22We've%20found%20that%20we've%20built%20more%20than%20what%20population%20growth%20would%20require.%20%20%22It%20doesn't%20mean%20that%20it%20won't%20get%20soaked%20up%20in%20coming%20years,%20but%20it%20does%20suggest%20there%20won't%20be%20as%20much%20need%20for%20new%20home%20building%20in%20the%20near%20future,%20which%20could%20have%20knock-on%20to%20the%20broader%20economy.%22%20%20The%20Regional%20Housing%20Supply%20and%20Demand%20in%20Australia%20Working%20Paper%20is%20available%20at%20http:/csrm.cass.anu.edu.au/research/publications/regional-housing-supply-and-demand-australia." target="_blank">.</a>
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Fresh housing supply won't necessarily lead to affordability: ANU study

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Doing something about improving housing affordability, particularly for people on low and moderate incomes, is difficult for Australian politicians. The core of the problem is simple: until those trying to buy a home outnumber those who own one, governments will not adopt policies to bring down house prices. As John Howard once observed, no-one came up to him complaining their house price had increased.
Given the public anxiety about the issue, particularly among young people, governments are showing renewed interests in doing something about housing affordability. So what sort of government interventions are effective? <a href="https://www.propertyobserver.com.au/https://www.ahuri.edu.au/research/final-reports/289">A new report</a> from the Australian Housing and Urban Research Institute (AHURI), released today, explores these issues state by state. And some are clearly doing better than others.
<h2>What have governments been doing?</h2>
In the last six months governments at all levels have released housing affordability plans. The Victorian government released a <a href="https://www.vic.gov.au/affordablehousing/about">broad proposal</a> with interventions <a href="https://theconversation.com/what-a-difference-a-month-makes-but-victoria-can-still-do-more-to-get-housing-and-planning-right-74233" target="_blank">across the housing continuum</a> (see figure 1).
<img src="https://images.theconversation.com/files/188495/original/file-20171003-3124-hqtdt8.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="">Figure 1: A housing continuum. Author provided
The state with the largest housing affordability problem, New South Wales, released a package of measures <a href="https://www.nsw.gov.au/improving-nsw/projects-and-initiatives/first-home-buyers/" target="_blank">in June this year</a>. The cornerstone of the plan is a reduction in stamp duty charges for first home buyers and increasing availability of some grants for the same group.
Most economists agree that these measures are likely to put <a href="https://www.domain.com.au/news/prices-will-rise-for-victorian-firsthome-buyers-following-stamp-duty-cut-experts-say-20170630-gx048c/" target="_blank">upward pressure on prices</a> as first home buyers compete in the property market with more dollars. However, politicians seem to like these sort of measures because they are <a href="https://politicsir.cass.anu.edu.au/content/attitudes-housing-affordability" target="_blank">popular with voters</a>.
The NSW plan also focused on increasing housing supply through changes to the planning system and accelerated provision of infrastructure. The headline goal used to measure the results of the package is an increase in the number of <a href="https://www.nsw.gov.au/improving-nsw/premiers-priorities/" target="_blank">dwelling completions to 61,000 per year</a>.
What’s unusual about this target is that there is no indication of the intended price levels of completed dwellings. Left to the market, the supply will not reach those most in need.
<a href="https://www.propertyobserver.com.au/https://www.ahuri.edu.au/research/final-reports/281" target="_blank">A recent AHURI study</a> found focusing only on supply as a strategy to reduce housing prices was a blunt instrument. The study reported:
<blockquote>
Most of the growth in housing supply has been taking place in mid-to-high price segments, rather than low price segments. There seems to be structural impediments to the trickle-down of new housing supply.
</blockquote>
<a href="https://www.propertyobserver.com.au/https://www.ahuri.edu.au/research/final-reports/281" target="_blank">The same study</a> concluded:
<blockquote>
Targeted government intervention might be needed in order to ensure an adequate supply of affordable housing.
</blockquote>
<h2>How do the states compare?</h2>
Drawing on the new research, Table 1 compares established state and territory schemes designed to deliver affordable housing.
It’s clear some states and territories, by adopting a multi-pronged approach, have been more active and innovative than others.
<a href="https://images.theconversation.com/files/188496/original/file-20171003-14213-1hz3j42.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=1000&amp;fit=clip"><img src="https://images.theconversation.com/files/188496/original/file-20171003-14213-1hz3j42.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt=""></a> Table 1: Established state-level affordable housing programs (excluding the planning system). <a class="source" href="https://www.propertyobserver.com.au/https://www.ahuri.edu.au/research/final-reports/289" target="_blank">https://www.ahuri.edu.au/research/final-reports/289</a>, Author provided
The research focused on a review of state-level affordable housing delivery. To identify what sort of conditions maximised the chances of success, this included an evaluation of two effective strategies – one in the <a href="https://www.planning.act.gov.au/topics/affordable_housing/affordable_housing_action_plan">Australian Capital Territory</a> and the other in <a href="https://www.openingdoorswa.com.au/">Western Australia</a>.
Both strategies delivered thousands of dwellings for households in need of affordable housing across the continuum. Both have clear targets.
<h2>What are the secrets of success?</h2>
Strong and sustained leadership is critical to both the implementation and ongoing delivery of an affordable housing strategy. Leadership is required both within the organisation responsible for the strategy, ideally a single entity, but also at a political level, ensuring a whole-of-government approach.
Both the ACT and WA strategies had the support of the treasurer during development. This ensured implementation was not hamstrung by a lack of resources.
A strategy needs to be resilient; it should not be easy to roll back following a change of government. It also needs to be developed in close consultation with the private sector and relevant areas of government to ensure all stakeholders are on board.
The organisation implementing the strategy needs to be flexible and innovative. This includes taking advantage of poor housing market conditions to develop joint ventures with the private sector.
When unexpected funding sources arise, state government needs to take advantage by using funding to leverage additional outcomes.
These established strategies offer several lessons for a state government seeking to implement an affordable housing strategy.
<img src="https://images.theconversation.com/files/189124/original/file-20171006-25775-1mz5y3s.jpg?ixlib=rb-1.1.0&amp;q=45&amp;auto=format&amp;w=754&amp;fit=clip" alt="">The WA government has worked with private sector joint ventures to expand the stock of affordable housing. Richard Wainwright/AAP
<h2>Land release is a key factor</h2>
Governments have focused on a broad goal of <a href="https://theconversation.com/solutions-beyond-supply-to-the-housing-affordability-problem-67536" target="_blank">increasing supply</a> as an affordable housing solution, (<a href="https://www.nsw.gov.au/improving-nsw/projects-and-initiatives/first-home-buyers/" target="_blank">such as the NSW strategy</a>).
In most cases this is a blunt tool because the government cannot directly influence the amount of land or housing stock made available (which are private sector decisions) or the price at which it is released onto the market.
States with an effective government land agency have an advantage. Land release then becomes an important part of an affordable housing strategy.
The ACT has been able to increase land supply and also to target the supply at a particular price point. WA has used its land effectively within private sector joint ventures to secure affordable housing.
Being able to guarantee increased land supply (and not just planning approvals for land development) as well as the price points of that land is a very powerful tool for a government trying to deliver affordable housing.
<h2>An effective affordable housing strategy</h2>
An effective affordable housing strategy is essential to deliver a range of supply options. At present, blockages along the housing continuum prevent households exiting social housing, which would free up supply for households in greater need.
WA in particular has demonstrated a successful strategy. Having reached its target of 20,000 dwellings <a href="https://www.housing.wa.gov.au/News/Pages/20000-affordable-homes-target-met.aspx" target="_blank">five years early</a>, the government committed to a further 10,000 homes <a href="https://www.propertyobserver.com.au/https://www.abc.net.au/news/2015-07-14/more-affordable-housing-to-be-built-in-wa-after-target-met/6618328">by 2020</a>.
<img src="https://counter.theconversation.com/content/84508/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">Other states in the early stages of strategy implementation could learn much from the multi-pronged approach in the West.
<a href="https://theconversation.com/profiles/steven-rowley-201914" target="_blank">Steven Rowley</a>, Director, Australian Housing and Urban Research Institute, Curtin Research Centre, <a href="https://theconversation.com/institutions/curtin-university-873" target="_blank">Curtin University</a> and <a href="https://theconversation.com/profiles/peter-phibbs-27130" target="_blank">Peter Phibbs</a>, Chair of Urban Planning and Policy, <a href="https://theconversation.com/institutions/university-of-sydney-841" target="_blank">University of Sydney</a>
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/some-states-do-better-than-others-on-affordable-housing-we-can-learn-from-the-successes-84508" target="_blank">original article</a>.
<h1>
The Living Space development in Cockburn, Western Australia, has won praise as an innovative mixed-use social housing project. <a class="source" href="https://www.hhawa.com.au/featured-projects/cockburn-central/" target="_blank">Courtesy of HHA Projects</a> <a href="https://theconversation.com/profiles/steven-rowley-201914" target="_blank">Steven Rowley</a>, <a href="https://theconversation.com/institutions/curtin-university-873" target="_blank">Curtin University</a> and <a href="https://theconversation.com/profiles/peter-phibbs-27130">Peter Phibbs</a>, <a href="https://theconversation.com/institutions/university-of-sydney-841" target="_blank">University of Sydney</a>
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prateek24-ezbwHMbNAk

Some states do better than others on affordable housing – we can learn from the successes

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GUEST OBSERVER
At face value, Australia’s housing market appears to be broadly in balance.
However, we find that this headline result masks the fact that some people are increasingly unable to form new households, primarily due to affordability constraints. As a consequence, we believe a significant level of latent demand for housing still exists in Australia, which will underpin prices and require construction to remain elevated.
Following the release of 2016 Census data, we reviewed our analysis of Australia’s housing balance.
We found the net 780,000 dwellings built over the five years to 2016 has technically been enough to absorb the increase in demand.
This has decreased the shortage of dwellings nationwide.
This is only partially a good news story, however. Since 2011, the headship ratio (propensity of people to form new households) has steadily fallen, with the younger age cohorts the worst affected.
The relative unaffordability of housing, especially in the Sydney and Melbourne markets, means that people are waiting until later in life to form new households, and this artificially lowers demand for housing.
If the headship ratio had not dropped, Australia’s housing shortage would be 117,000 dwellings – much more significant than the 21,000 currently reported.
There are three implications from this finding:
The solid level of underlying demand is likely to provide support to house prices.
Australia’s strong population growth means that construction activity should remain around elevated levels.
There is little to suggest that the affordability picture for potential first-home buyers is going to improve in a meaningful way.  
HOUSING CONSTRUCTION BOOMING, BUT NOT ENOUGH BY ITSELF
<a href="https://www.propertyobserver.com.au/images/2017/09/26/Screen%20Shot%202017-09-26%20at%209.10.28%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/26/Screen%20Shot%202017-09-26%20at%209.10.28%20AM.png" alt=""> 
The five years to 2016 saw Australia’s stock of housing expand strongly, with the net addition (after allowing for demolitions) of 780,000 dwellings since 2011.
The majority of this came from the construction of units and apartments, which now account for a record 27% of Australia’s total housing stock.
 This strong increase in supply was necessary, given the rapid population growth in recent years. Until the end of 2012, this was centred in Queensland and Western Australia as the mining boom was in full swing. New South Wales and Victoria have since taken the population-growth baton, with Victoria’s population increase of 2.4% in 2016 the fastest since at least the early 1980s.  
Rapid population growth is not new – it has been persistent over much of the past decade. Over the 20 years to 2005, Australia’s population growth was relatively stable around 218,000 people each year. Since then, it has accelerated rapidly, reaching a peak increase of 460,000 people in the year to December 2008.
While that rate of growth has not been sustained, an increase of 360,000 people in 2016 is still well above historical levels.  
We can see in Figure 2 that housing construction initially failed to keep up with this sustained increase in population growth.
Indeed, the delayed supply response was quite remarkable. It resulted in a significant shortage of dwellings across most of the country.
<a href="https://www.propertyobserver.com.au/images/2017/09/26/Screen%20Shot%202017-09-26%20at%209.11.36%20AM.png" target="_blank">Click to enlarge</a>
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Although dwelling construction has certainly picked up in recent years, it is largely just playing catch up after a decade of not building enough housing. 
 The increase in construction since 2013 has helped prevent an even worse shortage of housing.
But changing household formation rates has also been a key factor in shaping our apparent transition toward an apparent housing surplus.
We find that Australians are forming new households later in life mostly because younger people are being ‘priced out’ of the housing market. 
 AUSTRALIANS ARE WAITING LONGER TO FORM NEW HOUSEHOLDS  
The 2016 Census shows that the ‘headship ratio’1 continued to fall for the younger age cohorts.
This implies that people are forming new households later in life, which lowers the indicated demand for housing.
This trend is a significant factor behind our estimate that the housing market is broadly balanced.
 Historical data show that falling headship ratios are not a new phenomenon; the national average has been declining since 2001.
But the pace of change has picked up in the past five years, driven by the key ‘household formation’ age group of 20-34 year olds.       
     Figure 3 shows that the headship ratio for the 20–34 age group has been steadily falling since 2001, and the decline accelerated over the most recent Census period.
<a href="https://www.propertyobserver.com.au/images/2017/09/26/Screen%20Shot%202017-09-26%20at%209.12.46%20AM.png" target="_blank">Click to enlarge</a>
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In particular, New South Wales has seen a significant decline and now has the lowest household formation rate of the country.
This means that younger people across the country, but especially in New South Wales, are waiting until later in life to create their own households.
 LATER HOUSEHOLD FORMATION LOWERS INDICATED DEMAND FOR HOUSING  
The implication of falling headship ratios is that on average, there are more people living in each dwelling.
In turn, this means that the implied demand for dwellings is less. We can quantify the impact of falling headship ratios by running the same analysis, but keeping the headship ratios constant at their 2011 levels.
See Figure 4.
 We found that if headship ratios were sustained at their 2011 levels, the added demand for dwellings would imply a much larger shortage at the national level.
In 2017, the shortage would be 117,000 dwellings, compared to the actual result of just 21,000.
The same is true at the state level, where New South Wales and Victoria would have a shortage of 40,000 (instead of 7,000) and 48,000 (instead of 10,000) dwellings respectively. 
<a href="https://www.propertyobserver.com.au/images/2017/09/26/Screen%20Shot%202017-09-26%20at%209.13.48%20AM.png" target="_blank"> Click to enlarge</a>
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WORSENING AFFORDABILITY DELAYS PEOPLE FORMING HOUSEHOLDS  
Given the above analysis, it is important to assess why headship ratios have been falling amongst younger people.
We believe worsening housing affordability is the principal cause.  Recent research by the Reserve Bank of Australia supports this view.
It suggests that the ‘generation rent’ phenomenon - where fewer potential first-home buyers (FHBs) enter the housing market - “is a reflection of higher housing prices rather than a shift in preferences.”2 The RBA found that higher house prices have pushed potential FHBs out of the market.
On the other hand, demographic characteristics, such as education or employment status were not found to have changed the probability of someone becoming a FHB between 2008 and 2014. So, much of the delay in forming households (and falling implied demand for housing) is, in a sense, involuntary.
 The affordability issue has several root causes.
Clearly the strong house price growth in recent years does not help.
But that has been compounded by a fall in wages growth to the slowest rate on record, and lower returns on savings due to falling interest rates.
As a result, the time taken to save a deposit for an average dwelling in Australia has been increasing for the past five years.
 The story is different across the country. Sydney and Melbourne have experienced the worst of the affordability difficulties, in line with their exceptionally strong house price growth in recent years.
For an average income earner in Sydney, the time taken to save a 20% deposit for an average dwelling price is now sitting at over 10 years.
Melbourne is not much better, at 9 years (Figure 5). And this assumes that prices do not grow faster than incomes over that saving period. 
<a href="https://www.propertyobserver.com.au/images/2017/09/26/Screen%20Shot%202017-09-26%20at%209.14.57%20AM.png" target="_blank">Click to enlarge</a>
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 WHAT DOES THIS ALL MEAN?  
In isolation, the housing market balance has little direct impact on price movements.
The housing balance is a long-term, structural measure, whereas prices can move quickly in response to many factors, including sentiment, policy, interest rates and incomes.
The added complication of worsening affordability and falling headship ratios make interpreting the housing balance more difficult.
Our analysis does however provide useful guidance on the outlook for prices, construction, and affordability.
 This strong latent demand (FHBs currently priced out of the market) is likely to provide support to prices.
Any dip in prices may well activate the pool of potential entrants, resulting in additional demand and thereby sustaining prices.
We noted in a recent housing market update that it is hard to see house prices falling (in the absence of sharp interest rates increases), and this research supports that view.
 Australia’s strong population growth needs ongoing supply. We expect dwelling investment will slowly decline over the next two years as the current backlog of construction (primarily of high-rise apartments) clears, but the fundamentals are in place for construction activity to remain historically high over the longer term.  Finally, the outlook for FHBs is not encouraging.
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The probability of strong population growth and the presence of many potential FHBs mean the market is likely to remain extremely competitive. We have previously noted3 that stamp duty incentives are great for a lucky few, but such measures do little to address the underlying issues.
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It is difficult to envisage Australia’s supply-side response suddenly boosting the availability of affordable housing, so it looks like home ownership will remain a challenge for 20–34 year olds.  
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Daniel Gradwell is Senior Economist, ANZ and can be contacted <a href="https://www.anz.com/corporate/research/" target="_blank">here</a>.
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Australia's housing affordability is distorting demand figures: Daniel Gradwell

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Australia’s home loan affordability improved by 4.4 percent over the past 12 months, and was at 32.9 index points in March 2017, according to PRDnationwide’s latest figures.
Topping the Australian Home Loan Affordability Indicator was Australian Capital Territory (ACT) with an index reading of 49.7 points, well above the average of 32.9 points. 
In terms of increase, the Northern Territory led the way with 10.2% improved affordability (47.4 index points), followed by Victoria at 6.6% (30.8 index points), according to the PRDnationwide Key Economic Indicators.
The Q3 2017 Key Economic Indicators are a snapshot of the current state of affairs from an economic and property perspective, according to PRD and includes such statistics as  the number of loans to first home buyers, home loan affordability index, dwelling approvals and standard variable loan among others.
New South Wales, with an index reading of 27.7 index points, was the lowest. However, home loan affordability in NSW also grew by 3.7% over the past 12 months and is on par with Queensland (3.6%).
Consumer sentiment is a key indication of the general population’s confidence in the economy, whereby a higher index point reading suggests consumers are more willing to spend rather than save. 
Consumer sentiment remained under the positive line (100 index points) in August, currently at 95.5 index points. This was 5.5% lower since the last 12 months, and the lowest since then suggesting consumers are cautious, and  more willing to save than spend. 
Among other measures, the standard variable loan fell slightly to 5.2% this quarter, which PRD says should help in building consumer confidence over the next few months.  
Meanwhile, weekly median income also grew 2.2 percent in the 12 months to March to $1,688.
Median income rose in all states, with South Australia leading the way with a 4.1% increase to $1,545 per week. 
Consumer price index has decreased to 1.9 index points, suggesting goods and services are more affordable when compared to the previous quarter. This is good news for household income, and should further assist in increasing consumer sentiment.
However, affordability for first home buyers continues to be a concern, according to the real estate agency.
Over the past 12 months the number of loans to first home buyers in Australia rose to 20,677, an increase of 1.4 percent from 20,401.
Surprisingly the number of first home buyers have decreased the most in Tasmania, by 11.1% over the past 12 months, attributed to the increasing number of interstate investors taking advantage of Tasmania’s lower median property prices.
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Home loan affordability improved in 12 months to March: PRDnationwide

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GUEST OBSERVER
The Minutes of the September Board meeting suggest that the RBA is feeling increasingly comfortable with the domestic economic backdrop.
There is a slight hawkish tilt creeping into RBA commentary of late, although we would characterise the RBA as still maintaining a neutral policy bias.
The marked improvement in the labour market means that baring an economic shock, the next move in the cash rate is up. Market pricing has shifted further towards tightening over the past week. A rate rise is fully priced by August 2018.
<a href="https://www.propertyobserver.com.au/images/2017/09/20/Screen%20Shot%202017-09-20%20at%208.17.17%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/20/Screen%20Shot%202017-09-20%20at%208.17.17%20AM.png" alt="">
The Board continues to apply a positive tone to developments offshore. In particular, it was noted that, “the data received over the prior month confirmed that global economic conditions had strengthened since 2016.” While labour markets continue to tighten, the Board flagged that, “core inflation had eased a little.”
<a href="https://www.propertyobserver.com.au/images/2017/09/20/Screen%20Shot%202017-09-20%20at%208.18.40%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/20/Screen%20Shot%202017-09-20%20at%208.18.40%20AM.png" alt="">
As Governor Lowe flagged a few weeks ago, this month’s “special discussion” was on the Chinese economy. In that context, nothing should be read into the Board’s decision specifically to devote two paragraphs to the Chinese economy. The Board notes that although iron ore prices had risen, in part because of Chinese demand, it expects prices to fall over the period ahead because of a lift in the supply of iron ore. We agree.
The Board continues to sound upbeat on the Australian labour market, noting that the broad-based employment growth across the states signalled the end of the mining boom was nearing completion. And more importantly, “solid growth in employment was expected to continue, which would support household incomes and thus spending.”
Here we note that the Minutes predate the very strong August labour force report (published last week) that indicated employment rose by 54k over the month. It was the sixth robust set of monthly jobs numbers in a row and the detail was impressive (see here). As a result, the Board will be increasingly confident with its forecasts for GDP growth to lift to 23⁄4% in 2017/18.
On the latest quarterly capex survey, the Board notes that “investment expectations pointed to this (a pick-up in non-mining investment) occurring”.
On housing, the Board suggests that, “there had been clearer signs of an easing in conditions in the Sydney market but less so in Melbourne”. That looks to be a fair assessment to us. We expect some continued cooling in the national housing  market given there has been an easing in credit growth to investors, auction clearance rates have come down and consumer sentiment towards housing has  waned. 
Underemployment rate
On the AUD, the Board notes that the appreciation of the exchange rate in recent months was weighing on domestic growth and inflation. In our view, we are likely to see weak reads on tradables inflation over the next few quarters which will weigh on the overall CPI basket. 
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The Outlook 
We retain our long held view that policy tightening won’t arrive until late 2018. But we also acknowledge that the risk has shifted to a rate hike before then because of the remarkable improvement in the labour market. Employment growth has been phenomenal and there has been a gradual tightening in the labour market.
<a href="https://www.propertyobserver.com.au/images/2017/09/20/Screen%20Shot%202017-09-20%20at%208.19.29%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/09/20/Screen%20Shot%202017-09-20%20at%208.19.29%20AM.png" alt="">
 
From a monetary policy perspective, it is about what this improvement means for wages and inflation. And how the RBA responds. In our view, while wages growth should step up in Q3, we don’t expect the underlying pulse to materially lift given spare capacity in the labour market remains elevated. In addition, there are still risks around the consumer given a declining savings rate has been required to generate modest consumption growth. Finally, the AUD looks stuck at around 80 US cents – any further appreciation because of movements in interest rate differentials is undesirable. 
With the housing market cooling, as evidenced by a range of indicators, and residential construction to become a drag on growth from here, the risks around a hike in line with market pricing appear asymmetric. There is a lot to like about the recent data flow, but there is a still a fragility to economic momentum that will not dissipate until non-mining business investment takes off. As such, policy on hold until late 2018 continues to seem the most probable scenario. 
The near term focus from a monetary policy perspective turns to Friday when the RBA Governor Lowe delivers a speech titled, “The Next Chapter”. The heading implies a forward looking perspective from Dr Lowe which means it’s likely to be particularly relevant to market participants. 
 Gareth Aird is economist at Commonwealth Bank and can be contacted <a href="https://www.propertyobserver.com.au/https://au.linkedin.com/pub/gareth-aird/14/790/905">here</a>.
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