The new <a href="https://www.apartments.com.au/new-apartments/yarraville-green-42-stephen-street-yarraville-vic-3013">Yarraville Green</a> development in Melbourne's inner west is showing that landscaping can be just as influential as architecture, with buyers responding strongly to the garden-first approach adopted from the outset by developer Excelon Projects and the project's design team.

Excelon appointed Six Degrees Architects and landscape architects SBLA to work collaboratively on the development, with a brief to create "a sustainable, design-led building with a focus on community."

That approach has resonated with buyers. According to Next Chapter Director Tom Hirini, who is leading the sales campaign, the landscaped communal garden has become one of the project's defining features, alongside its boutique scale and European-inspired cluster housing concept.

Local downsizers, right-sizers and established families already living in Yarraville and surrounding suburbs have accounted for the majority of purchasers.

[smartcode_project:default project_id=144913 project_image_fid=297740]

Yarraville Green will comprise 53 homes, including apartments and townhomes, arranged around the shared central garden to maximise connections to the landscaped open space. Parking has been moved underground, allowing the ground plane to be dedicated to greenery, pedestrian movement and communal spaces.

The landscape extends well beyond passive planting. Productive garden beds, a pergola, communal gathering spaces, garden sheds and a pet wash have all been integrated into the masterplan, creating spaces designed to encourage everyday interaction between residents.

[smartcode_project:default project_id=144913 project_image_fid=297741]

The interiors continue Excelon's focus on craftsmanship, incorporating bespoke elements by Melbourne artisans including leadlight detailing by Adadaz, hand-turned timber hardware by Auburn Woodturning and blown-glass lighting by Ruth Allen.

Sustainability has also been embedded throughout the project, with Yarraville Green targeting an average 7-star NatHERS energy rating through passive design principles, rooftop solar servicing common areas and rainwater harvesting for landscape irrigation.

[smartcode_project:default project_id=144913 project_image_fid=297735]

Construction continues to progress at Yarraville Green, with structural works well underway and framing works approaching completion under builder Balmain &amp; Co. The project remains on track for completion in mid-2027.

Apartments at Yarraville Green are currently priced from $625,000, while townhomes start from $1.4 million.

[smartcode_project_cta:default project_id=144913]

Joel Robinson

Garden-led design drives buyer demand at Yarraville Green

National diversified developer Fortis has officially launched Crest &amp; Walker, its latest Brisbane apartment development, with construction now underway on the 20-storey Newstead project.

Award-winning builder BINAH has commenced construction on the Bureau^Proberts-designed building, which will deliver a limited collection of 65 two and three-bedroom apartments on Kyabra Street.

[smartcode_project:default project_id=145922 project_image_fid=373556]

The project marks Fortis' fourth active residential development in Brisbane, following River House, which is nearing completion, alongside projects in New Farm and Hamilton as the national developer continues to expand its South East Queensland pipeline.

Fortis General Manager – Development Queensland Dan Boman said Crest &amp; Walker reflects the developer's long-term commitment to delivering design-led residential projects in Brisbane's established inner-city suburbs.

"We're proud to be strengthening our presence in Brisbane with Crest &amp; Walker, particularly in such a sought-after lifestyle destination as Newstead," Boman said.

"Every Fortis project is shaped by its context, and we approach each one with the respect and care it deserves.

"Our focus is always on creating places that feel connected to their neighbourhood and elevate the everyday experience for residents. Newstead continues to evolve as one of Brisbane's most sought-after urban communities, and Crest &amp; Walker reflects our ambition to contribute meaningfully to that story."

[smartcode_project:default project_id=145922 project_image_fid=373559]

Positioned between Gasworks Plaza and James Street, <a href="https://www.apartments.com.au/new-apartments/crest-walker-newstead-12-kyabra-street-newstead-qld-4006">Crest &amp; Walker</a> has been designed as a boutique residential address offering privacy and generous living spaces within one of Brisbane's most established lifestyle precincts.

The building features a contemporary brick podium softened by integrated landscaping, while the upper levels are characterised by restrained architecture and enduring materiality. Interiors have been designed to maximise natural light, acoustic performance and long-term liveability.

[smartcode_project:default project_id=145922 project_image_fid=373583]

Residences comprise spacious two and three-bedroom floorplans, with two-bedroom apartments priced from $1.55 million and three-bedroom, half-floor residences from $3.95 million.

Residents will have access to a wellness-focused rooftop featuring a swimming pool, sauna, steam room, landscaped dining spaces and outdoor lounge areas overlooking Newstead and the Brisbane CBD.

[smartcode_project:default project_id=145922 project_image_fid=373571]

Sales are being managed by Slaite Projects, with Fortis expecting strong demand from owner-occupiers seeking a high-quality, design-focused apartment in one of Brisbane's most tightly held inner-city suburbs.

Completion of Crest &amp; Walker is slated for late 2028.

[smartcode_project_cta:default project_id=145922]

Fortis expands Brisbane pipeline with launch of Crest & Walker in Newstead

The enormity of delivering a true skyscraper in Australia's new development market is often overlooked.

It has taken the best part of a decade since plans for Chevron One were first unveiled, but the 41-storey tower is now complete, with residents collecting their keys and moving into what has become one of the Gold Coast's most recognisable new landmarks.

Rising 127 metres above Chevron Island, Chevron One stands almost twice as high as any other building on the island. Its scale places it alongside the trio of towers at Jewel, arguably the last truly significant addition to the central Gold Coast skyline when they were completed around six years ago.

While there are several developments underway around a similar height to Chevron One, they are more concentrated within clusters of the highest towers in the city. The fact Chevron One sits within a developing precinct, looking back at the other high-rise developments in Surfers Paradise and Broadbeach, makes it a different proposition altogether. It will certainly become a reference point on the Gold Coast skyline.

[smartcode_project:default project_id=6515 project_image_fid=68833]

Developer Bensons Property Group is behind the 41-storey tower, which has 229 apartments, along with an exhaustive list of resident amenity spread across what is the largest development site ever assembled on Chevron Island.

The tower has been the talk of the town for years, says Ray White Projects Gold Coast agent Caitlin Rosenboom, who is selling the remaining apartments.

"People have been watching Chevron One go up for years," Rosenboom says, adding that many prospective buyers have been surprised by the scale of the views once they step inside.

"It's only when they walk through a completed apartment that they truly understand the position of the building," Rosenboom says.

"The views are jaw-dropping. Whether you're looking east over the ocean, across Surfers Paradise, along the river systems or out to the hinterland, every level offers something different but equally impressive."

[smartcode_project:default project_id=6515 project_image_fid=360215]

One of Chevron One's defining advantages is its location on the eastern side of Chevron Island on Stanhill Drive, a position which protects the views forever.

"There's only one row of houses between Chevron One and the water, and the height restrictions along the river means views from Chevron One can never be built out,"&nbsp;Rosenboom says.

While new apartment developments continue to emerge across the Gold Coast, Rosenboom says opportunities to secure a completed apartment with this level of outlook are becoming increasingly rare.

"The size of the site is something that would be incredibly difficult to replicate today," she says.

"That's allowed Chevron One to deliver the sort of amenity, open space and resident facilities that very few projects can offer. There are not many completed apartment buildings on the Gold Coast right now that can compete with the combination of scale, quality and amenity."

[smartcode_project:default project_id=6515 project_image_fid=68839]

There's around 2,000 sqm of amenity solely for the use of residents of Chevron One. Club One features a uniquely shaped swimming pool that mirrors the footprint of the building itself, set within a extensively landscaped gardens. There's also an indoor pool and spa, a fully equipped gym with a Pilates room, a yoga garden, a bookable private dining area and lounge that can host up to 30 people, and a 24-hour concierge service.

As for the buyers, Rosenboom is fielding enquiry from everywhere: Sydneysiders and Melburnians looking at the new and off-the-plan market following the changes in the Federal Budget, as well as those looking to relocate, through to South East Queenslanders seeking either a permanent home or a weekender bolthole.

"The Gold Coast lifestyle continues to resonate with people relocating from the southern states, and when they see the views and the quality of what's been delivered at Chevron One, it becomes very easy for them to understand the appeal," Rosenboom says.

A diverse mix of one, two and three-bedroom apartments remain available, with each offering "something a little different", be it the orientation and views, configuration, or level, to suit a wide variety of buyers.

The remaining apartments are ready to inspect in person, by appointment.

[smartcode_project_cta:default project_id=6515]

A decade in the making: Residents to move into Chevron One as construction wraps up

A general rule of thumb in new apartment developments is that the penthouses get the rooftop.

It's a formula that's become commonplace across Australia's apartment market. Residents might have access to a pool, gym or barbecue facilities on a dedicated lower level, but the most desirable outdoor spaces are typically reserved for the highest-priced homes at the top of the building.

<a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Property Group</a> has taken the opposite approach.

Rather than dedicating the rooftop to a handful of buyers, the Gold Coast developer has made it the centrepiece of its Flourish collection, creating expansive shared spaces from the best vantage point in the building.

The philosophy has reached its most ambitious expression at <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> in Palm Beach, where two rooftop precincts connected by a skybridge will deliver one of the most extensive lifestyle offerings seen in a residential apartment project on the Gold Coast.

[smartcode_project:default project_id=150017 project_image_fid=374053]

"We're seeing a clear move toward developments that offer more than just an apartment," Sherpa Group founder Christie Leet said.

"People want spaces that support how they actually live, whether that's working from home, staying active, or spending time with family and friends.

"That's where amenity becomes critical. It's not just about what's included, but how those spaces are designed to be used every day."

[smartcode_project:default project_id=150017 project_image_fid=374052]

The breadth of amenity has already attracted buyers across multiple demographics. Younger first home buyers have been drawn to Soleira's one-bedroom apartments, a product rarely delivered in Palm Beach, while families have responded to practical inclusions such as the shallow children's pool adjoining the main lap pool and the extensive communal recreation areas.

Instead of a single rooftop, Soleira delivers two distinct lifestyle zones.

[smartcode_project:default project_id=150017 project_image_fid=372547]

The southern rooftop has been dedicated to wellness, featuring a gym, yoga and Pilates studio, work-from-home facilities, a wellness centre, spa, and hot and cold plunge pools.

The northern rooftop focuses on recreation and entertaining, incorporating a heated resort-style pool, private dining rooms, pizza ovens, barbecues, a golf simulator, children's recreation areas, and what is expected to be the Gold Coast's first rooftop basketball court, which will also double as a squash court.

[smartcode_project:default project_id=150017 project_image_fid=374054]

Beyond the rooftops, Soleira will introduce 1,500 sqm of curated retail beneath the towers, creating one of Palm Beach's first genuinely mixed-use lifestyle precincts where cafés, restaurants and convenience retail become part of residents' everyday lives.

Sherpa has also retained management rights across the development, allowing it to oversee the long-term operation of the building through a 24-hour concierge model. The developer is also exploring additional revenue streams within the precinct aimed at helping offset ongoing body corporate costs for residents.

[smartcode_project:default project_id=150017 project_image_fid=370962]

While Soleira is the largest project Sherpa has delivered, the rooftop-first philosophy has been evolving for several years.

It began with <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>, the first project released under the Flourish brand. Rather than competing at the ultra-luxury end of the market with oversized half-floor and full-floor residences, Sherpa focused on creating lifestyle-driven apartments supported by resort-style shared spaces.

Amargo introduced more than 800 sqm of rooftop amenity, combining wellness facilities, heated pools, entertaining areas, cabanas, pizza ovens and private dining spaces into what was designed as an extension of residents' homes rather than a facility used only occasionally.

[smartcode_project:default project_id=146527 project_image_fid=366550]

That approach continued with Flourish Oasis, where the same amenity-led philosophy was refined into a more boutique development. Strong demand from Sherpa's growing VIP database saw much of the project sold before it reached the broader market, reinforcing buyer appetite for apartment communities centred around shared lifestyle experiences.

Flourish Amargo is slated for completion mid-way-through next year, with Oasis to be delivered by late 2027. Flourish Soleira is expected to complete in 2030.

[smartcode_project_cta:default project_id=150017]

Sherpa takes amenity to the sky as Flourish Soleira captures booming Palm Beach demand

As apartment living continues to evolve across Sydney's growth corridors, the quality and distribution of shared spaces is increasingly shaping how residents experience home. Rather than functioning as add-ons, amenities are being embedded into the daily rhythm of a building, supporting everything from quiet retreat to social interaction, often within a single vertical community.

At <a href="https://www.apartments.com.au/new-apartments/aeris-melrose-park-nursery-street-melrose-park-nsw-2114">Aeris</a> in Melrose Park, this approach is resolved through a layered amenity offering that unfolds from ground level through to its upper podium. Developed by <a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a> in partnership with Hankyu Hanshin Properties, the project introduces 468 apartments across two towers and a mid-rise building, positioned at the highest point of the broader masterplan.

[smartcode_project:default project_id=426 project_image_fid=359199]

The amenity experience begins at street level, where two courtyards sit within a landscaped setting that connects residents to the wider network of parks and green spaces. These green spaces are not isolated pockets but part of a wider pedestrian network that links Aeris to the surrounding <a href="https://www.apartments.com.au/developments/melrose-park-nsw-2114">Melrose Park</a> precinct, including Central Park, future schools, and the Town Centre opening in July 2026. The result is a transition that moves from public to private without abrupt boundaries, allowing residents to pass through shaded, tree-lined environments before reaching the building itself.

Moving upward, the focus shifts to the level five podium, where the primary communal facilities are concentrated. This space brings together a 16-metre swimming pool, outdoor seating areas, and a communal BBQ zone arranged to take advantage of elevated outlooks. Seating is positioned beneath pergolas, creating pockets of shade that extend the usability of the space throughout the day. The pool edge aligns with views toward the wider district, reinforcing the sense of elevation that defines the project’s positioning.

In the adjacent building, this is complemented by quieter, more contemplative spaces, including an outdoor cinema set within the same level. Positioned to operate primarily in the evening, it introduces a different tempo to the shared environment, shifting from daytime activity to after-hours use without requiring separate zones.

[smartcode_project:default project_id=426 project_image_fid=360299]

The podium also accommodates an intimate private resident gym. Located on the lower levels, it gives residents convenient access to fitness facilities without leaving the building.

Above, the elevated podium sky deck extends the amenity offering, providing additional open-air spaces with elevated outlooks across the surrounding landscape. While more restrained in program, this upper level reinforces the project’s vertical progression, from ground-level greenery to elevated outlook, allowing residents to move between distinct spatial conditions within a single address.

This distribution of amenities reflects a deliberate response to how residents use space across the day. Sekisui House Australia Sales and Marketing Director Peter Kalaf points to the role these shared areas play in shaping buyer demand. Aeris has been conceived as more than a collection of apartments, with the podium pool, gym and outdoor cinema forming part of a broader lifestyle offering that extends the home beyond each individual residence.

[smartcode_project:default project_id=426 project_image_fid=360300]

What distinguishes Aeris is not the inclusion of these elements individually, but how they are arranged in relation to one another. Active, social, and passive spaces are layered vertically rather than separated, allowing residents to choose between them without leaving the building or moving far from their apartment. This proximity supports both routine use, such as a morning swim or evening workout, and more occasional gatherings, whether around the BBQ area or within the cinema setting.

The amenity design also sits within a broader framework of connectivity across Melrose Park. The Melrose Park Town Centre, anchored by Coles and Dan Murphys, features a mix of retail, dining, health and lifestyle offerings, bringing everyday convenience closer to residents. By the end of the year, more than five hectares of parks and open space, equivalent to around seven football fields of green space on residents' doorstep, will further enhance the precinct, allowing the internal facilities at Aeris to operate as an extension of the wider neighbourhood rather than a substitute for it.

Construction at Aeris continues to gather momentum, with ground floor slabs expected to be completed in late 2026 before the first sections of the buildings begin to rise above ground.

[smartcode_project_cta:default project_id=426]

Elevated amenity anchors daily life at Aeris, Melrose Park

Housing Affordability

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Guest observation
In a recent article on Property Observer (<a href="/expert-insights/buying/lies-damned-lies-and-housing-statistics">Lies, damned lies and housing statistics</a>) commentator Arek Drozda discusses Australian property statistics. He tells the reader many commentators write stories around property numbers that can't be relied on.
Drozda claims that "data does not lie". However, data is just a collection of facts and statistics for reference or analysis and, as Janine Skorsky of House of Cards says, "There is no arrangement of facts that is purely objective."
Drozda provides his own narrative around the data he uses in the article, as I do in any article I write (including this one). We are all human, we all experience different events over our lives that shape how we see the world, how we interpret things and so when we go to present data or share an opinion, it is always loaded with that bias. 
To suggest that data can't be manipulated to fit various views is disingenuous. Data can be made to lie in various ways, for example in it's initial collection (biased sampling), through its visualization (how it's presented to the reader) or by using it selectively. 
Drozda uses his narrow selection of data to try and show that Sydney property is not suffering from rampant speculation as it's only "catching up" to the other capital cities:
<img src="/images/2014/10/10/relative_chane_in_median_prices.png" alt="">
Source: Arek Drozda using ABS statistics
But presenting data like this can be used to mislead as there is no supporting evidence provided to show that the cities were equally valued (relative to each other) at the point the data starts, despite his insistence that the capital city median prices "being in a tight range" during the mid 1980s suggests they were.
Drozda has used data to support his opinion that Sydney is not experiencing a high level of speculation or is overvalued, but it's the data he leaves out of his story that suggests it could be otherwise. For example rental yields are lowest in Sydney and Melbourne, substantially lower than in the rest of Australia.
<img src="/images/2014/10/14/Table-1-August-Statistics.jpg" alt="">
Source: Residex
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Other data that suggests Sydney (and Melbourne) are seeing a higher level of speculation and overvaluation relative to the rest of the capitals includes investor finance which has soared (via <a href="https://petewargent.blogspot.com.au/2014/09/housing-finance-challenging-received" target="_blank">Pete Wargent</a>).
<img src="/images/2014/10/14/investorloansbystate.jpg" alt="">
Source: Pete Wargent
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The above chart is not indexed (and is state rather than capital), but it's clear that New South Wales and Victoria are experiencing a greater level of speculation with rolling investor loans far higher than their previous nominal peaks, whilst the other states barely tread water.
I could go on with other examples indicating a higher level of speculation in Sydney, but the above does well enough given the limited content of the article it was addressing. Of course the above is my view based on the data available. Have a look at Drozda's presentation of the data and mine, and make up your own mind.
This article continues on the next page. Please click below.
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When I queried (<a href="https://www.propertyobserver.com.au/https://twitter.com/BullionBaron/status/520472672375828480" target="_blank">on Twitter</a>) another of the charts Drozda had presented purporting to show Sydney (and Australia) having relatively "affordable" property (below), he pointed me toward an older post where he explained his position in more detail.
<img src="/images/2014/10/14/ev.owa.jpg" alt="">
Source: Arek Drozda
In <a href="/expert-insights/australian-property-prices-explained-independent-analyst">this article</a> Drozda dismisses "simple" ratios of prices-to-rents or prices to household disposable incomes and instead presents his own simple argument that when it comes to affordability price doesn't matter, only serviceability (and interest only at that).
He says that principal is omitted because it's savings:
"Paying off the loan principal is omitted in the analysis since it equates to savings and is therefore deemed irrelevant (i.e. every dollar that is paid off becomes owner’s equity that can be drawn upon in the future)."
The claim is preposterous, given that these "savings" have to be borrowed back (with interest payable) or only retrieved in full by selling the property.
Drozda writes about a metric referred to as the "cost of buying", which measures only the cost of interest on the loan and then uses that as his basis of "housing affordability". As I've only recently written on this topic, I'll quote from my previous piece (<a href="https://www.bullionbaron.com/2014/09/why-serviceability-affordability" target="_blank">Why Serviceability ≠ Affordability</a>):
"Even if interest rates had remained elevated the entire period of the loan, it still ends up more affordable over the long run to have double the interest rate, but lower price to income ratio. Not only that but it would be faster to save the deposit given that it's a lower amount (relative to income) and I haven't taken into account the higher interest rate on saving for the deposit which would have benefited the 1992 scenario. 
"Costs such as stamp duty which are tied to the price paid would be lower too. Finally, higher interest rates tend to come with a higher rate of inflation, so the real value of the debt would be reduced faster as wages increased, meaning the buyer in 1992 would have found it easier to ramp up the level of repayment.
"...When considering affordability, we need to take a holistic approach and not use a simple snapshot of a single repayment as the basis to make judgement calls on whether house prices or a mortgage used to purchase them is affordable. A mortgage is a long term commitment and shouldn't be treated so trivially by market commentators."
Drozda's argument in this article does show how buyers have been able to service mortgages at these higher prices (as he puts it, "rediscovered their true financial capacity"), mostly a result of "structurally" lower interest rates, but as I've shown that doesn't make them affordable unless you're of the opinion that serviceability is the same as affordability.
He finishes the article on this note:
"We can afford current prices – and we can afford them more than in 1986. The only hurdle is that it requires accepting a level of debt that many may not feel comfortable with."
It's clear that Drozda is devoted to the first rather than second definition of 'afford' below:
Afford: To have the financial means for; bear the cost of.
Afford: To manage or bear without disadvantage or risk to oneself.
The data he presents is shaped to support this angle.
Is it a lie? Well I guess that's subjective. I'll leave it for the reader to decide.
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Joseph (also known as Bullion Baron) is an independent Australian investor who <a href="https://www.BullionBaron.com">writes</a> and <a href="https://twitter.com/bullionbaron">tweets</a> on various topics including precious metals, finance, property &amp; the monetary system.
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jrichardson-uRX5hFdKfN

Subjectivity, damned subjectivity and housing statistics

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Debates on housing affordability typically centre on demand factors but the Reserve Bank of Australia (RBA) has urged government to give due attention to housing supply in any policy responses to the challenge.
The call comes amid record building approval levels and high auction clearance rates, but low numbers of residential properties for sale.
RBA assistant governor Malcolm Edey told the Senate inquiry into housing affordability last week that while demand factors such as household incomes and the cost and availability of finance had the biggest influence on house prices in the short to medium term, the supply of homes was critical to long-term prices and affordability.
"The reason for that is that the supply side of the market is dominated by a large existing stock of dwellings, and new supply takes time to come on stream... It is the supply response that determines the extent to which additional demand results in higher prices over time," Edey says.
The total number of dwellings approved for construction rose in trend terms by 1.2% in August compared with the previous month, Australian Bureau of Statistics (ABS) data shows. At 16,273 dwellings, the number of approvals was a 6.8% higher than in August 2013, according to the ABS.
Housing Industry Association economist Geordan Murray says 197,571 new homes were approved for construction in the 12 months to August, a record high in any 12 month period.
The strong result shows that low interest rates are helping to create a sustained recovery in new home building, Murray says. However, residential construction levels have been too low over the past decade, which has lead to an accumulated deficit of housing that will take time to rectify.
"Having one year of strong building is not going to eradicate that undersupply ... Looking forward we would need to see that level of building sustained for a number of years. We estimate 180,000 to 185,000 [new homes built] on average per year through to 2020 is likely to justmeet population growth," Murray says.
He adds some approvals are for sites where an existing home will be demolished and replaced by a new building, which does not add to the total number of homes. Other newly built residences will be used as second homes or holiday houses by wealthier Australians, which will also not add to the number of available properties.
Edey told the Senate inquiry that challenges to lifting the supply of housing included regulatory and zoning constraints, inherent geographical barriers and the cost structure of the building industry.
"There are also obstacles to affordable housing created by Australia's unusually low-density urban structure, though this is gradually changing," he says.
The RBA did not put forward any suggestions on what actions should be taken to boost housing supply.
"The general point I would make is that we can't improve housing affordability simply by adding to demand," Edey said.
"Targeted assistance can certainly help particular groups such as first home buyers, but without a supply-side response, any generalised increase in demand will just be capitalised into prices."
Property prices in Sydney and Melbourne in particular have been skyrocketing and auction clearance rates have consistently been above 70%, RP Data's figures show.
House prices in Sydney jumped by 14.9% in the year to September 30 and unit prices rose by 11.5%, according to the RP Data CoreLogic Daily Home Value Index.
Melbourne house prices gained 8.5% and unit prices rose by 5.2% in that period, the Index indicates.
But while prices have been rising, the number of properties on the market has reduced.
The number of properties listed for sale around the country was 5.4% lower in the week ending September 28, 2014 than at the same time last year, according to RP Data. In Sydney, the total number of listings was down by 16.6% compared with the previous year. In Melbourne listing numbers were down 7.8%.
New building approval rates were also weaker in Sydney and Melbourne than elsewhere in the country.
In NSW the total number of units approved rose by 0.4% in August in trend terms after falling for seven months, ABS data shows. Approvals for houses rose by 1.8% following four months of increases.
ABS data shows unit approvals in Victoria rose 0.6% in August after being flat in July, while the number of houses approved fell 0.5%, following five months of declines.
Queensland has been the strongest state for new building with the ABS reporting a 2.7% rise in approvals for units in August following four months of increases, and a 0.8% lift in approvals for houses after 19 months of rises.
Murray says each capital city has a plan to increase its supply of housing to meet population growth.
"It's just when it comes to implementing those plans that the industry runs into problems," he says.
 
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zfielding-GvX3Uq9KTa

Can housing supply keep up with population growth?

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Australia’s low-income residents are expected to take on a colossal amount of private debt just to put a roof overhead in our rentier economy, and the only explanation they are being offered is that Australia is suffering from a ‘housing shortage’.
Speaking at the 2014 <a href="https://topics.bloomberg.com/bloomberg-australia-economic-summit/">Bloomberg Economic Summit in Sydney</a>, where the investor share of the market is close to 50% and finance commitments have sky rocketed some 44% higher than July 2013. Treasurer Joe Hockey, denied that prices were ‘credit fuelled’ because: "Fundamentally we don’t have enough supply to meet demand (and) that doesn’t suggest a bubble.”
<img src="/images/2014/09/22/cashmore%20sept%2022%20one.jpg" alt="">
His views were supported by David Cannington, senior property analyst at Australia &amp; New Zealand Banking Group Ltd (ANZ), who referenced an apparent shortage of ‘300,000 homes’, while at the same time welcoming an elevated level of foreign speculation “as adding about $4.5 billion every quarter to total dwelling construction”.
The shortage Cannington refers to, is derived in part from research put together by the National Housing Supply Council (NHSC) established in May of 2008, just prior to the last Senate inquiry into housing affordability, yet promptly disbanded by the incoming Abbot government who are now only too willing to use its findings to support their populist view.
Using ABS data, the NHSC assessed what is known as ‘underlying demand’ - the amount of extra housing needed per annum over the last decade for all residents in Australia (not just active buyers) - ‘if’ we had continued to produce enough homes for an increasing population based on existing household composition figures.
The supply side findings of the report were hotly debated and justifiably so.
Planning for population growth is not an easy task, it is predictive in nature and makes many assumptions and revisions along the way.
However, this was not the NHSC’s only role.
It was also commissioned to produce a comprehensive evaluation of Australia’s affordability problems, which included the status of those impacted most – homeless, renters, first home buyers, low wage families and tenants in the public and social housing system, which helped clarify its findings.
For example, the reports showed utility costs such as electricity, gas, water, and sewerage, have been increasing at more than 10% per annum – yet they are not typically calculated as part of current analysis of housing affordability constraints.
They gave a good statistical overview to show a dramatic shortfall of affordable rental accommodation for low-income families. And clear evidence that our housing crisis is not that we do not produce enough homes ‘per se’ – but that we do not produce enough affordable and feasible options across the sector as a whole – in both the public and private sphere.
For example - the report noted a “shortage of housing for lower-income people  (specifically families) that results from a mismatch of housing prices relative to income”.
It made a point of stressing that Australia’s supply challenges cannot be met by ‘simply adding to the housing stock’. And further elaborated on the inability of apartment construction to meet both need and price for the majority of family residents - the value of the land and associated costs being too high, and the size of apartments being too small to adequately fulfil the task.
This places Cannington’s second comment – regarding the level of foreign investment pushing an unprecedented inner city boom in apartment construction, into context.
For individual renters, students and a small percentage of couples living downtown, the increase in high-density accommodation will assist in placing downward pressure on rents.
It cannot however assist in addressing Australia’s real housing shortage or accommodating the growing number of family and low-to-middle income residents, that want to buy – not just rent - and in the face of declining wages, find it increasingly difficult to do so.
This is not because we have booming population growth and a shortage of roof space, as our ministers are fond of sermonizing. But because our tax policies work directly against it, subverting supply side policy and negatively affecting wage growth by pushing up the price of land and the associated costs of doing business.
They encourage a system of false scarcity, in which land and dilapidated housing is hoarded and not effectively utilised, forcing a process of social polarisation, as low income residents are forced to ‘hop’ both the middle and outer rings, in search of cheaper options further afield.
They distort the use of the nation’s savings, encouraging speculation on rising land values.  This negatively affects the financing of new supply, as investors chase the capital gains associated with established stock, over and above rental income.
<img src="/images/2014/09/22/cashmore%20sept%2022%20two.jpg" alt="">
The behavioural impacts are profound, amplifying the boom and bust swings of the market cycle.
The financial sector accommodates, with property prices dependent on how much ‘endogenously’ created credit a bank chooses lend, subject once again, to our dysfunctional tax system.
Negative gearing, depreciation and lower land taxes, leave more economic rent available to be pledged to the banks in the form of higher prices, producing a rentier economy which prioritises ‘creating wealth’ through asset inflation and rising levels of private debt - rather than improving living standards by supporting tangible investment into value adding activities.
<img src="/images/2014/09/22/cashmore%20sept%2022%20three.jpg" alt="">
Article continues on the next page. Please click below.
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The distortion that inflated values have on the economy acts to subvert housing policy as any danger of a marked decline in prices, places an associated risk on financial stability.
Affluent neighbourhoods are therefore protected from ‘over development’, while inelastic responses to market conditions, allow professional land-bankers to squat on sites at low cost and secure windfall gains when they are later rezoned for residential development.
Stamp duty further restricts labour mobility and the regular turnover of housing stock.
The resulting effect is illustrated on the <a href="https://www.natsem.canberra.edu.au/publications/?publication=the-great-australian-dream-just-a-dream">maps below</a> that show where affordable options were located in 2001 for low-to-middle income buyers, compared to 2011, in all of our major capitals.  
The yellow patches being affordable, and blue patches unaffordable.
<img src="/images/2014/09/22/cashmore%20sept%2022%20four.jpg" alt="">
<img src="/images/2014/09/22/cashmore%20sept%2022%20five.png" alt="">
<img src="/images/2014/09/22/cashmore%20sept%2022%20six.png" alt="">
<img src="/images/2014/09/22/cashmore%20sept%2022%20seven.png" alt="">
<img src="/images/2014/09/22/cashmore%20sept%2022%20eight.png" alt="">
Source: <a href="https://www.natsem.canberra.edu.au/publications/?publication=the-great-australian-dream-just-a-dream">NATSEM</a> Income and Wealth Report Issue 29 - The Great Australian Dream - Just a Dream?
Prior to the 1970s, infrastructure financing was funded in part through the capture of economic rent from the land that directly benefited from the accompanying improvements. 
Now, infrastructure costs are financed through deadweight taxes on productivity from residents who derive no benefit in their own local neighbourhood, or loaded onto the upfront cost of new dwellings and promptly passed to the buyer.
The banking lobby loves minsters like Joe Hockey that offer no threat to their profits and instead, waft away any necessary concern over rising prices with simplified responses that fail to identify the root cause. 
It has driven up the cost of housing – damaging the potential of future generations, with a lifetime worth of debt sold as “forced savings”, while the interest is re-packaged an into an array of obscure financial instruments, allowing the country’s wealth to gravitate into an elite nuclei of financially strong hands.
Notwithstanding, all the above points were highlighted in the last <a href="https://www.propertyoz.com.au/library/A%20good%20house%20is%20hard%20to%20find%20report%20JUNE%202008.pdf" target="_blank">Senate inquiry</a> into housing affordability, as well as being set out clearly in the <a href="https://taxreview.treasury.gov.au/Content/Content.aspx?doc=html/home.htm" target="_blank">Henry Tax review</a>.  Yet studiously ignored in a budget that surgically set about reducing the living standards of Australia’s low to middle-income earners, the most productive sectors of our economy, rather than collecting the tax revenues from resource rents and monopoly profits.
Joe Hockey has reaped substantial unearned gains from an <a href="https://blog.australiaboomtobust.com/2014/08/propertied-federal-political-class/" target="_blank">impressive portfolio</a> of property investments - reportedly, picking up his Canberra home <a href="https://www.dailytelegraph.com.au/news/nsw/taxpayers-footing-bill-on-treasurer-joe-hockeys-15-million-canberra-house/story-fni0cx12-1227026624945">“for a song”</a> in 1997 at $320,000, and watched that land value more than triple in nominal terms to an estimated  $1.5 million today.
In light of the above evidence, it can only be assumed that Hockey’s comments are based on a vested interest to protect his own back pocket and seat in power, rather than the urgent need to invest in Australia’s future by eliminating the losses inflicted by our current system of taxation that forces up the cost of land and associated levels of private debt.  
Instead we need to move toward a system that finances society’s needs and infrastructure requirements, from capturing the <a href="https://www.macrobusiness.com.au/2013/11/land-tax-must-kill-negative-gearing-stamp-duty/" target="_blank">economic rents</a> currently capitalised into the price that buyers negotiate when they purchase a home, which would eventually act to improve the living standards of all, not just the privileged few.
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catherinecashmore-6LXia3pPQj

Supply v demand: A political game of smoke and mirrors

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GUEST OBSERVATION
Data released early in 2014 highlighted that the average Australian house price had risen by 10% in 2013, and by closer to 15% in Sydney. With results like that, expect the debate about housing affordability to hot up as 2014 unfolds.
Indeed with first home buyers accounting for the lowest level of overall demand in many years, there are many now talking about the fact that housing may represent an inter-generational equity issue, with calls to scrap negative gearing and the like.
What is hard to dispute is that the current climate of low interest rates and constricted supply provide the perfect environment for investors, whilst younger Australians, who are facing lower rates of income growth, higher levels of unemployment and a more uncertain job market in general are effectively being priced out of the market, finding it impossible to save a deposit in the first place, let alone service a mortgage.
Despite this, there are many that claim that housing ‘has never been more affordable’, pointing to record low interest rates which imply that servicing a mortgage is easy.
Whilst it’s impossible to argue with the fact that lower rates improve mortgage serviceability, it’s a mistake to just look at today’s interest rates as mortgages are typically taken out for 25-30 years.
With that in mind, let’s look at how affordable housing really is, using 30 years on interest rate data from the Reserve Bank of Australia (codes FILRHLBVS and FILRHLBVD), starting in January 1984 and ending in December 2013.
The following graph shows the monthly changes in the standard variable home lending rate, as well as the discounted rate. Note that the discounted rate has  only been published since June 2004 by the looks of things, but since then, the average gap between it and the standard variable rate has been 0.65%.
With that in mind, we’ve used an average gap of 0.65% all the way back to 1984 as a way of estimating a discounted rate over the entire 30 year time period.
<img src="/images/2014/09/08/chart-one-sept-8.jpg" alt="">
As is evident from the above chart, after spiking in the late 1980s, interest rates have been in a downward trend for over two decades, helping facilitate the huge explosion in private sector debt and subsequent increase in Australian housing prices across this period.
The following table below summarises some of the major data points that are highlighted in the above chart. 
<img src="/images/2014/09/08/chart-two-sept-8.jpg" alt="">
As you can see, whilst the standard variable rate has been lower by 0.20% in the past (ever so briefly in 2009), we are near record lows on that front and we are at a record low of 5.10% for the discounted variable rate. Loans are cheap today!
What’s also clear from the table is that there is considerable upside in potential borrowing costs from here, even if interest rates don’t overshoot to the upside like they have in the past, which would involve a near tripling from here if looking at the standard variable rate alone.
Indeed, a normalisation of rates would see borrowing costs rise by 60-75% depending on which metric we are referring too, adding 3.54% to 3.74% to the annual costs of a mortgage.
This is important for anyone looking to buy a house today, as whilst current low rates might make the idea of purchasing a home attractive, the reality is that in all likelihood a home loan will have a term of circa 30 years, so this kind of volatility (and higher average cost) should be factored in.
But what does this mean to an everyday Australian? 
Article continues on the next page. Please click below.
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In terms of what this means to an everyday Australian, lets consider say a newlywed couple earning the median Australian wage, wanting to buy the median Australian home.
According to an article In January of last year (which used ABS data), the median weekly total cash earnings for all full time employees was $65,000 pear year.
Admittedly, this was using May 2012 data, so lets be generous and assume a near 10% pay rise for both, so that they’re now earning $70,000 a year each.
According to the online tax calculator, they’re both up for a total of $14,297 in taxes and a $1,050 Medicare levy, meaning they’ll each pay a total tax bill of $15,347.
After taxes and Medicare, the average couple have $109,306 combined to spend each year.
According to RP Data, the capital city aggregate for the median Australian home is now $540,000, equivalent to just shy of five times the average couple’s post tax wages.
But before we look at how sensitive they are to rates, and how affordable housing is, we should also work out what they might spend in day-to-day life too.
Standard ‘lifestyle’ bills, like a mobile phone, private health cover, a train or bus ticket, and maybe a gym membership will probably set each of them back $100 a week. There goes $10,400 per annum.
The electricity, water, and gas bills, plus council rates are probably another $100 a week in total, costing another $5,200 per annum.
Let’s say they try to limit their social life to $200 of recreational spending per week each, plus $200 at the supermarket per week, and there goes another $31,200.
They also have one child, and as they are a middle-income family, that sets them back $458 a week (or just shy of $24,000 a year), a cost that has jumped more than 50% since 2007.
Finally, let’s assume that once a year they like to get away for a holiday and that costs $5,000 too.
Add all those expenses together and you get to $75,616 in total spending, meaning that their total post tax, post-spending pool of money which can be directed toward a mortgage is $33,690.
Lets now take a look at how much an interest-only loan will cost them today, using the current discounted standard variable mortgage rates.
I’ve done two calculations, one assuming that they have to borrow 80% of the value of the property, and one assuming they’ve only saved a 10% deposit, ignoring lenders mortgage insurance which you need if you borrow more than 80% of the properties value.
The table below summarises the findings:
<img src="/images/2014/09/08/chart-three-sept-8.jpg" alt="">
As you can see, without even reducing the principal amount they owe on their property, the average couple will pay between $22,032 and $24,786 a year to ‘rent the house’ from the bank, in all likelihood leaving only between $9,000 -$12,000 in leftover cash each year.
But if rates normalise to their long-term averages, then the situation is going to get substantially worse, as the next table makes painfully clear:
<img src="/images/2014/09/08/chart-frousept-8.jpg" alt="">
As you can see, if interest rates went back to their long-term averages, then even assuming they were on an interest only loan, and assuming they had only borrowed 80% of the value of the home, they’d have an annual shortfall of somewhere around $4,500.
A higher loan amount would only exacerbate the imbalance, and could see them as much as $9,272 a year short, meaning they’d have to severely tighten their belts elsewhere, or more likely, simply sell the house (possibly at a loss as higher rates will in all likelihood stop the current rate of house price growth) and move back into some kind of rental accommodation.
I think it’s fair to say that neither of these are ideal outcomes, and have a range of negative flow through effects on the rest of the economy.
Summary
The bottom line is that housing in Australia is not at all cheap today and affordability only ‘looks good’ through the very narrow, and I would say dangerous, prism of today’s unsustainably low interest rates.
And whilst we can’t be sure over the next 30 years that interest rates will display the same volatility and average the same amount they have in the past (many would argue the RBA won’t let it happen) none of us can be 100% sure either way.
What’s more, we all know that markets move in cycles, indicating that the next major, multi-decade move in interest rates in all likelihood will be up. It is highly unlikely rates will stay low forever, that’s for certain.
With that in mind, all Australians should be cautious about housing entering 2014 and beyond. First home buyers and younger Australians in particular are unsurprisingly finding it harder and harder to get on the property ladder as it stands and are taking an enormous risk in doing so, especially as potentially higher rates in the future will both reduce mortgage serviceability and potentially lead to capital losses on the value of their home.
Considering that today, an Australian couple could rent the median house for less than or roughly equal to what it would cost them for the interest only payment on the mortgage, even with rates this low, it’s no wonder more and more Australians are making that choice.
Jordan Eliseo is chief economist with <a href="https://www.abcbullion.com.au/" target="_blank">ABC Bullion</a>.
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po-LsXgBTHBmX

Don't be fooled by low interest rates, affordability is a big problem for the average Australian

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Many Australian’s would like to live in the inner city areas of their capital city where the amenities are most abundant, but sadly the cost of housing is generally restrictive.
According to the RP Data Home Value Index results for July 2014, combined capital city home values increased by 10.2% over the 12 month period. The greatest annual increases in values have been recorded in Sydney (14.8%) and Melbourne (11.0%). In all other capital cities the total value growth over the past year has been less than 7%.
A familiar trend we are witnessing across most cities is that demand for housing is particularly strong across the inner city areas of the city. With mortgage rates low, buyers are battling it out to purchase those homes close to the city centre. Of course areas closer to the CBD tend to be much more expensive than those areas further away. Inner city suburbs are also generally better serviced by both essential and desirable amenities such as: schools, medical services, shopping centres, social amenity, roads and public transport infrastructure.
In certain capital cities the cost of housing is restrictive in these areas due to a high level of demand which has pushed housing costs out of the reach of many perspective buyers. Coupled with high demand is inherently low levels of supply; it is much more challenging to release new detached close to the city due to the limited availability of developable land. Of course there remain alternative options such as units however even units in certain cities have restrictive price points.
Looking at those suburbs with the most affordable median value within a 10 kilometre radius of the CBD across the cities we can see a large divergence in results. For example, in Sydney <a href="/news">Wolli Creek</a> has the lowest median house value at $710,303 (not very affordable) and in Melbourne the most affordable suburb is <a href="/news">Bellfield </a>at $533,252. In most other capital cities, except for Darwin the starting point for a house is significantly lower. Of course, in many cities these areas are less desirable than other inner city suburbs however, they remain close to the city and potentially have scope for urban renewal over the coming years.
Turning to the unit markets, home values are typically much more affordable closer to the city centre than they are for houses. Again, this doesn’t mean that they are affordable or practical for everyone. It is also interesting to note that the divergence in results from city-to-city. For example <a href="/news">Kilburn</a> is the fifth most affordable suburb for houses in Adelaide with a median of $349,925. The most affordable suburb for units in Sydney’s inner city is <a href="/news">Eastlakes </a>with a median of $452,776 which is significantly higher than the median house value of Kilburn. Nevertheless, the median value of units is much lower than the median house values across most cities. No wonder we are seeing such a rise in inner city unit construction with so much demand and a lower price point compared to comparable houses.
RP Data anticipates that home values in inner-city areas are likely to continue to increase, particularly as mortgage rates remain at such low levels. As a result more and more potential buyers are likely to be priced out of the inner city housing market. This creates some good opportunities for other areas of the city to see increased demand.
If buyers can’t afford to purchase a home within the inner city, they will most likely look to those locations that tick as many of the inner city boxes, just at a lower price point than the inner city areas. Given this, suburbs with features such as: quality public transport connections, abundant retail and social amenity, quality schools and medical amenity will likely see renewed interest as inner city buyers look to these more affordable alternatives.
<img src="https://image.e.rpdata.com/lib/fe591570776d03757d17/m/7/2014-08-15--most-affordable-inner-suburbs.jpg">
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ckusher-ujnxiKuFQs

Australia's most affordable inner city suburbs

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Rising home values across most capital city regions has meant that it’s now becoming even more difficult to find capital city homes under $400,000.
Across the combined capital cities, 28% of homes sold over the 12 months to June 2014 were priced below $400,000. In regional areas, the figure was a much higher at 63.9%. Over the past decade, the property market experienced a substantial reduction in housing under $400,000. 10 years ago, 69.3% of capital city home sales and 86.4% of regional home sales were below $400,000.
Over the three months to June 2014, the combined capital city median house price was $550,000 while the median unit price was $475,000. Given the median is the middle sale price over the period, this indicates that over the three month period, an equal number of homes sold above this figure.
<img src="/images/2014/08/28/kusher-aug-28-one.jpg" alt="">
A rise in capital city home values of 10.1% over the 12 months to June 2014 indicates the difficulty being experienced by price-sensitive purchasers looking to enter the housing market - this is most felt in Sydney and Melbourne where home values have increased by 15.4% and 9.4% respectively over the year to June.  
And while properties in Australia’s regional areas may be more affordable, the downside is a lack of employment.  Recent employment data from Australian Bureau of Statistics (ABS) confirmed that across most states, unemployment is lower in the capital cities than in regional markets. The exceptions are Queensland where the unemployment rate is 6.4% in both Brisbane and regional Queensland, and in SA where Adelaide’s unemployment rate is 6.8% compared to 6.4% in regional SA. Although housing might be much more affordable outside of capital cities, job prospects are not as strong.
If we consider the growth in home values and the selling prices of homes, it indicates a shortening supply of more affordable homes.
Looking at the proportion of capital city homes selling below $400,000 over the 12 months to June 1999, in each city the vast majority of homes sold within that price point.  
Five years on, the June 2004 results show a decline in home sales under $400,000. Despite the decline, Sydney houses were the only city and property type with less than half of all sales occurring under $400,000. According to the RP Data Home Value Index, combined capital city home values increased by a total of 87.9% over the five years to June 2004.
Between June 2004 - 2009, combined capital city home values increased by a total of 27.4%.  Although overall value growth was much more moderate than the previous five years, a sharp decline in sales of homes under $400,000 was recorded by June 2009.  Less than half of all house sales in Sydney, Brisbane, Perth, Darwin and Canberra were below $400,000 over the year. In each city a majority of unit sales were under $400,000.
Over the 12 months to June 2014, Hobart was the only city with a majority of house sales under $400,000.  Within the unit market, a majority of sales in Brisbane, Adelaide and Hobart were below $400,000.  According to the RP Data July Home Value Index results, combined capital city home values increased by a total of 22.1% over the five years to June 2014.
Although home value growth has moderated over each of the past two five year periods, the supply of homes selling at lower price points (i.e. less than $400,000) has also fallen.  
Housing is Australia’s single largest asset class and for most people, it’s where they store the majority of their wealth. For those who don’t own their home, it’s a very different story.
In a rising market where home values are increasing, all this is great news for those that own a home but makes entering the housing market more difficult for those that don’t.
Affordable housing is the way that most first time buyers enter the market.  With the supply of affordable homes within capital cities shortening significantly, the prospects for first home buyers entering the market are also diminishing. Based on these conditions, we’re expecting the typical age of first home buyers to increase and first home buyer purchasing to remain at below average levels.
<img src="/images/2014/08/28/kusher-aug-28-two.jpg" alt="">
<img src="/images/2014/08/28/kusher-aug-28-three.jpg" alt="">
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The rapidly shrinking pool of affordable housing

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GUEST OBSERVATION
A poster in the head office of a state planning agency claims: “Highest Housing Approvals in a decade: Keeping homes more affordable”. Indeed, the <a href="https://www.propertyobserver.com.au/https://www.abs.gov.au/ausstats/abs@.nsf/mf/8731.0" target="_blank">latest figures</a> show national housing approvals rose 16% between June 2013 and 2014. Given ongoing concern about housing affordability and supply in Australia, this sounds like good news. But that assumes increasing supply will fix affordability.
Some people liken houses to bananas. When the supply of bananas drops, prices rise. The Property Council of Australia has called this <a href="https://www.propertyoz.com.au/library/MR%20RDC%2007%20Banana_nomics%20housing.pdf" target="_blank">“banana-nomics”</a>. In 2007 it sent plastic bananas to state and federal MPs with a crib sheet on housing affordability. Recalling Cyclone Larry, which devastated fruit farms in Northern Queensland, its <a href="https://www.propertyoz.com.au/Article/NewsDetail.aspx?p=56&amp;mid=302" target="_blank">message</a> was simple – when there is a shortage of bananas, the price goes up. With housing, the disaster wasn’t a cyclone but rather “excessive delays”, “inconsistent planning” and inadequate land supply.
Banana-nomics does seem to explain the behaviour of fruit markets. When the next cyclone hit Northern Queensland (Yasi in February 2011) the price of bananas again <a href="https://www.woolworths.com.au/wps/wcm/connect/website/woolworths/about+us/woolworths-news/banana+prices+following+cyclone+yasi" target="_blank">skyrocketed</a> because of a shortage of supply. As predicted, when banana supply recovered (doubling from 200,000 cartons in week 44 of 2011 to 400,000 cartons in week 48 of 2011) net prices <a href="https://abgc.org.au/article-title-3/" target="_blank">reduced</a> for farmers by 61%.
But by way of contrast, between 2010/11 and 2013/14 when Sydney dwelling completions doubled from 14,000 to 28,000 dwellings, housing prices went up by 21%. In other words, a “just make more” strategy will fix the problem of expensive bananas, but not expensive houses.
Houses are not like bananas
Here are some reasons why.
<ul>
<li>Prices for housing are set by the total housing market, not just the 1-2% that are built every year.</li>
<li>When the price of bananas goes up, consumption goes down, and vice versa. Not so with housing markets – perversely, demand for houses in the short term often increases along with prices, due to expectations that prices will continue to rise and the fact that we all need somewhere to live. Aspiring homeowners and investors want to get into the market before it lifts further, both to minimise housing payments and to enjoy capital gains.</li>
<li>A rise in house prices is often accompanied by a decrease in interest rates. Home purchasers focus on the repayments they have to make and hence are not discouraged by rising prices, in some cases because they see their repayments reduce because of interest rate decreases.</li>
</ul>
 
Increasing housing supply is very important and price increases over the last few years would have been more severe if we hadn’t been able to double the supply of new stock in Sydney. The boom in inner-city apartments in Brisbane, Melbourne and Sydney is also leading to rents decreasing in some suburbs. And in some suburbs if we keep building high rise apartments, prices will correct.
But a simple policy of “let’s just build more housing” is not enough to meet the pressures falling on the shoulders of low and moderate income households.
Article continues on the next page. Please click below.
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The problem with industry-led policy
Industry <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Affordable_housing_2013/Submissions" target="_blank">submissions</a> to the pending Senate inquiry into housing affordability don’t seem to get this point. They continue to emphasise a supply-based response to the problem of housing affordability, calling for planning reform as the way to achieve this.
Where specific reforms have demonstrated impacts on housing supply, there are good arguments for wider replication.
One example is permitting accessory dwellings (a.k.a granny flats) as of right, on suburban lots in NSW. This enormously popular measure has resulted in a notable spike in dwelling approvals (around 1000 per year since its introduction in late 2009). Certainty has enabled manufacturers to prefabricate designs, bringing down costs and helping diversify and intensify housing options in existing neighbourhoods.
Another recent reform in NSW greenfield growth centres codifies integrated townhouse and other low-rise medium-density designs in new-release areas, over-riding the stagnant mono-zoning that has imprisoned Australian suburbia since the 1970s.
But the objective behind these and other planning strategies to increase housing supply – particularly through new medium- and high-density homes near public transport – is not really about lowering house prices. Rather, the policies aim to transform and expand the existing housing stock in response to changing demand.
Structural issues remain
More is needed to address the structural affordability barriers faced by low and moderate income earners. These barriers reflect unprecedented price rises enabled by financial deregulation in the 1980s, falling interest rates and rising household incomes in the 1990s, and, in the latter period, increased capacity for home owners to leverage this wealth in a competitive housing market.
Despite this demand-fuelled price inflation, Australia has generally avoided the speculative over-building that infected the US, Ireland and Spain before the global financial crisis. That’s a good thing, since in those countries oversupply weakened the housing industry overall and has undermined economic recovery. Worse, the crash didn’t correct affordability problems facing low and moderate income earners (hit particularly hard by the crisis).
Australia’s housing and development industry have (in general) moderated output to match changing market trends. That’s why we see increased housing production at the same time as rising prices.
Rather than pretending that more apartments in the inner city and greenfield estates on the fringe will correct the affordability barriers faced by low and moderate income earners, we need a commitment to increasing the supply of dedicated affordable housing – including approaches like the aborted <a href="https://theconversation.com/rental-affordability-scheme-fears-are-misplaced-24338">National Rental Affordable Housing Scheme</a>, and serious capital funding for social housing. Several of the submissions to the parliamentary inquiry call for these measures, including submissions by the Property Council and other industry representatives.
However, without widespread provisions to ensure social, rental and low-cost home purchase options are incorporated within major housing developments, particularly developments involving government land, our deepening affordability problems won’t go away.
Looking at recent projects such as Barangaroo in Sydney where affordable housing requirements are only 2.5% of total residential floorspace (and the developer is now trying to shift them off-site) provides reasons not to be optimistic. However, the public mood could be changing about this issue.
John Howard once said no one was going to complain about their house prices going up. Many parents in capital cities in Australia are realising that instead of using this housing windfall to fund their retirement, they are now going to have to use it to fund the housing and careers of their children. They are not happy about this. Their children are just as angry. The family coalition is looking for someone to blame. They want some action: not just glib slogans on posters or banana-nomics.
Nicole Gurran is associate professor at <a href="https://sydney.edu.au/" target="_blank">University of Sydney</a>.
Peter Phibbs is chair of urban planning and policy at <a href="https://sydney.edu.au/" target="_blank">University of Sydney</a>.
Nicole Gurran has received funding from the Australian and Housing Research Institute and the Australian Research Council.
Peter Phibbs has received funding from AHURI on related research.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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It's bananas! Increasing supply isn't enough to satisfy hunger for affordable housing

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Nick Xenophon (along with other groups, such as the <a href="https://reia.asn.au/wp-content/uploads/2014/08/Super_Homes.pdf">REIA</a>), is advocating a policy that will be responsible for making housing affordability worse. 
He is using the Canadian "Home Buyer Plan" as an example to promote a similar idea in Australia. That is - allowing first home buyers to raid their <a href="https://en.wikipedia.org/wiki/Superannuation_in_Australia" target="_blank">superannuation</a> account – sold under the pretext of ‘helping them get onto the property ladder’. 
The theory goes that to progress up this mythological ladder, buyers must bet their income and in this case, future savings, on a speculative process that translates into higher house prices, without thought for the next generation of required ‘property ladder’ participants, who will no doubt fall dependant on similar schemes, to keep the tide rising.
The procedure in Canada allows eligible buyers to withdraw up to C$25,000 tax-free from their <a href="https://en.wikipedia.org/wiki/Registered_Retirement_Savings_Plan">retirement fund</a>, on the condition that they pay it back over a 15-year period.
If they fail to do this, the amount withdrawn will be taxed as per the income earner's tax bracket. Currently, 35% of Canadians fall into this category however, according to the <a href="https://www.cra-arc.gc.ca/menu-eng">CRA</a>, roughly one out of two – that is, 47% – contributed less than the required repayment amount over the 2011 tax year. 
These means, while the government picks up the added income revenue windfall, buyers, buoyed on by a rent seeking culture that fools the public into believing such policies are designed to be ‘helpful’, overstretch their budget and in weak economic conditions are left to carry the can.
In short - you borrow money from yourself at 0% interest and in doing so; lose 15 years of compounding 'tax free' interest with average returns in the order of 7%. 
It’s notable that many low to middle-income individuals have inadequate funds to draw upon, therefore even assuming the scheme were to be effective, it’s limited in the difference it can make.
But the real ‘nub’ of the issue, which Nick Xenophon has failed to acknowledge, is that the Canadian Home Buyer Plan was never intended to aid affordability. 
It was <a href="https://annualreport.crea.ca/2012/advocacy.php">promoted by the real estate industry</a> as a temporary measure, following the recession in the late 1980s, to stimulate land values and benefit the FIRE sector, along with it's economic offshoots - renovations, furniture, appliances, moving costs, tax revenue to government and so forth.
The FIRE sector has lobbied to keep in place ever since and also pushed for the threshold to be raised.
This is because most Western economies have constructed their tax and supply policies to reward real estate speculation over and above productive enterprise.
The process is assisted and abetted by a banking industry that seeks to lend against land as collateral, favouring the extraction of economic rent, over and above extending loans for the purpose of productive enterprise 
<img src="/images/2014/08/06/cashmore%20aug%206%20one.png" alt="">
Canadian residential real estate tripled from an estimated C$1.3 Trillion in 2000, to <a href="https://in.reuters.com/article/2014/06/19/canada-economy-debt-idINL2N0P00FG20140619" target="_blank">C$3.8 trillion in 2014</a>, however, only C$550 billion of this was for renovation projects or new home building - the rest was pure inflation.
By the end of 2011, the Home Buyer plan had been used <a href="https://www.theglobeandmail.com/globe-investor/personal-finance/retirement-rrsps/why-the-home-buyers-plan-should-be-wound-down/article8211010/">2.6 million times</a>, with total withdrawals adding up to around $27.9-billion – that’s $27.9 billion of additional credit, feeding into existing house prices.
Between 2005 and 2011, Canadian house prices rose 58%, while average income for 25-34 year olds, increased by just 6%.
The <a href="https://www.rbc.com/economics/economic-reports/pdf/canadian-housing/house-november2013.pdf" target="_blank">Royal Bank of Canada</a> reports that detached housing now requires more than 80% of the median household income for mortgage payments in some of the country’s major cities.
Household debt to disposable income in Canada is currently 163.2%, up from 129% at the peak of the boom in 2006 and sitting only a few degrees lower than the recorded level in Australia. 
SIZE OF HOUSEHOLD DEBT COMPARED WITH ANNUAL INCOME in Australia, Canada, France and Italy. (ABS)   <img src="/images/2014/08/06/cashmore%20aug%206%20two.png" alt="">
Mainstream economists like to focus on government debt as a barometer of the heath of the economy. However, high and rising levels of private debt, as a consequence of such policies, <a href="https://www.propertyobserver.com.au/https://www.amazon.com/The-Next-Economic-Disaster-Coming/dp/0812247043">constrain demand</a> and eventually exceed the income and economic activity they helped create.
Nick Xenophon cites the <a href="https://www.demographia.com/dhi.pdf" target="_blank">Demographica Housing Affordability Report</a> in his press release, however it’s clear he has not read it. 
If he had, he would know that like Australia, Canada's largest major markets are also rated as “severely unaffordable” – and by studying the ‘affordable markets’ such as <a href="https://www.macrobusiness.com.au/2014/04/australian-property-through-foreign-eyes/">Texas</a>, or areas of <a href="https://www.bizjournals.com/pittsburgh/news/2014/07/28/pittsburgh-recovers-from-recession-better-than">Pittsburgh</a> for example, Mr Xenophon would have a better understanding why these states avoided the harsh consequence of the GFC, and continue to generate healthy levels of economic growth. 
Significantly, both cities have land tax and liberal supply policies that deter speculation – helping to keep real estate affordable, while investment is channelled into other areas of the local economy.
While, Australia rewards speculation, allowing the geo-rent (the unearned gains) from rising land values to capitalise into the land price, year upon year, taxing income earners, instead of resource rents, which by design, distorts economic activity, housing supply policy, and subverts social justice.
<img src="/images/2014/08/11/cashmore%20aug%2011%20one.png" alt="">
(90% of taxation revenue has distortionary effects, pushing up prices 23% higher than need be, while economic rents from land and natural resources have no such deadweight loss.)
Never, throughout the course of history, has such a policy been sustainable. 
At some point the productive capacity of the economy can no longer support the boom and the consequences, particularly for first home buyers, can be particularly severe, as <a href="https://www.worldeconomicsassociation.org/files/Bubble_Economics_Egan_Soos.pdf" target="_blank">Australia’s history of land induced financial crises reveal</a>.
However, when you appreciate how <a href="https://blog.australiaboomtobust.com/2014/08/propertied-federal-political-class/" target="_blank">lucrative</a> and wide spread this activity can be, it is very easy to see how policy fails us, and it’s additionally easy to see why a country with a plentiful supply of land like Australia, submits its younger generation to a life time worth of debt slavery, just to get onto the ‘property ladder’.
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Not a super idea: Raiding superannuation accounts will make affordability worse

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I feel some sympathy for the people conducting the Senate inquiry into affordable housing.
Based on the media reports I’ve seen, they’re being served up a motley mixture of propaganda, misinformation and outright lies by organisations pushing their private agendas.
How will they sort the wheat from the chaff, given that most of what they’re being fed is chaff?
The representative bodies of elements of the real estate industry are simply presenting their wish lists on behalf of their members. Each one of them would have us believe that the solution to the problem is to give their members everything they’ve ever wanted.
Apparently first home buyers around the nation will rejoice if real estate agents can be helped to earn more commissions or developers can make more money faster.
Firstly, what is the problem? Or, more pertinently, is there a problem?
The premise of the inquiry is that young adults can’t afford to buy a dwelling. I’m quite certain that’s a false premise. It contradicts all the available evidence.
First home buyers appear to be less active than before. And it has been assumed – incorrectly, I’m quite sure – that this is solely because they can’t afford to buy. No one has considered that there might be another explanation, or several other explanations.
Last Friday I was guest speaker at a business luncheon. I addressed a number of topics under the heading – “Residential Property – the market no one really understands” – and there followed a long discussion of the issues.
The hottest topic was the motivation of young Australians with regards to home ownership. Many of those present – who have adult children and/or work with young adults – observed that most twenty-something Australians have little or no interest in buying real estate.
Affordability is not the issue. They simply have other priorities. I was interested to hear those comments, but not surprised because this has been revealed in several surveys in the past 12 months. Young adults, generally speaking, don’t want to repeat the life path of their parents, which included being married with kids and a mortgage before 30.
They want lifestyle and travel. They’re more inclined to invest in themselves than in real estate. One view expressed at the luncheon was that many would rather start a business than buy property.
There’s another factor. I think there’s more first home buyer activity that the figures show, because most state and territories have changed their grants system. Grants are available now for new homes only. But the research shows that most first timers buy established properties, because they’re considerably cheaper and often better located.
There are first home buyers out there slipping under the radar because they’re not claiming grants.
All of that is an inconvenient truth to builders, developers and real estate agents. They want politicians to believe there’s a crisis and they have to act to fix the perceived problem.
And the solution they’re presenting to the Senate inquiry is: give us what we want and the problem with go away.
The <a href="/expert-insights/investing/five-supply-reforms-that-will-assist-affordability-master-builders-australia">solution presented by Master Builders Australia</a> is to release more land, make approvals easier and faster, and reduce or eliminate infrastructure charges to developers – with penalties for governments that don’t toe the MBA line.
That’s not a solution. That’s the lifetime wish list of builders and developers across the nation.
The attitude of the Real Estate Institute of Australia is particularly interesting, because their statements contradict their own research. The REIA co-publishes a quarterly affordability index that shows that affordability is the best it’s been in over a decade. But it’s telling the Senate inquiry that there’s a big affordability problem and the government must act to fix it.
Either the REIA index is nonsense or their submission to the inquiry is. I’d love to know which they think it is.
The REIA claims there’s a national housing shortfall of 100,000 dwellings. Developer bodies make similar claims. But they don’t justify the claim. They demand that we accept it as fact, without presenting any evidence. I think it is real estate’s greatest myth (and have presented my evidence many times in this column).
So, the <a href="/expert-insights/buying/government-needs-to-stem-exodus-of-first-home-buyers-reia">REIA’s solution to the problem</a> their own index says doesn’t exist is to make lots of changes to ensure more property deals happen: assistance to first home buyers, access to superannuation to make buying property easier, retention of negative gearing for investors, abolition of stamp duties and release of more land.
It’s pure coincidence that all these measures are likely to line the pockets of REIA members around Australia.
At some point in time, developers, agents and other servants of the property industry will have to accept that this generation of young adults will never adopt the priorities of their parents. They have better things to do with their lives.
You can contact Terry via  <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email</a> or on <a href="https://www.twitter.com/hotspotting" target="_blank">Twitter</a>.
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Real estate industry bodies more concerned with lining their own pockets than easing affordability

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It comes as little surprise that Master Builders Australia’s submission to the Senate Inquiry into affordable housing looks at the ‘supply’ side of the equation.
They say that boosting the national housing supply is the key to increasing affordability, particularly due to the current shortages.
“Reducing the massive shortfall in new housing is the major challenge the nation faces in maintaining home ownership as a realistic aspiration rather than an unaffordable dream,” said Master Builders Australia CEO Wilhelm Harnisch.
“Supply side reforms must include measures to generate appropriate funding for social housing,” he said.
Here are the five points that they have suggested will help with housing affordability:
<ol>
<li>National competition style payments to local councils that improve supply of adequate releasable land (both greenfield and brown field’) and implement more efficient building and planning approvals. 
</li>
<li>Agreed ‘master plans’ to deliver positive housing outcomes that cover urban consolidation and urban and regional infrastructure plans to deliver a housing mix to meet the needs of different demographics. 
</li>
<li>All local councils to develop Land Release Plans which identify  and provide an indicative forward schedule of ‘greenfield’ and ‘brownfield’ land over a rolling 10 year horizon which could be made available for housing development. 
</li>
<li>Make state and territory infrastructure charges subject to a housing affordability assessment to ensure that the supply of adequate housing stock is not being undermined. The Commonwealth should penalise states and territories which impose excessive developer charges should be penalised through a reduction in transfer payments. 
</li>
<li>An online ‘InfoHub’ should be established by the Commonwealth to allow ready comparison local councils and state and territory jurisdictions and the efficiency of their processes, developer charges and progressive land release schedules.</li>
</ol>
Source: Master Builders Australia
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