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 Markets

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EXPERT OBSERVER
Australia’s housing market has continued to weaken. Conditions still vary widely across cities but are soft overall, with price corrections underway in the previously strong Sydney and Melbourne markets and Perth's longer running period of price declines also continuing.
The three months to August have seen the Westpac Housing Consumer Sentiment Index (a composite measure based on four housing–related components of the Westpac Consumer Sentiment survey) soften a touch but remain consistent with stabilising demand. The main driver of the lift continues to be less downbeat reads on ‘time to buy’, partly reflecting an improvement in affordability. Small positives around jobs and risk aversion have been offset by weakening price expectations.
Turnover remains very low. Whereas earlier estimates had suggested activity might have been stabilising in the first half of 2018, revised and updated data now show turnover nationally down 6.2% over the year to July. The annual pace of decline has moderated and the most recent monthly figures hint at stabilisation but, without a revival, annual growth is likely to stay negative through to year end.
The continued decline in turnover suggests other factors such as tightening loan criteria and falling investor activity are weighing on activity, essentially preventing what would likely have been a stabilisation in conditions by now.
 <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/2018/8/28/WESTPAC.jpg" alt="">
<div> </div>
<div>Matthew Hassan is a Senior Economist at Westpac.</div>
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Matthew_Hassan-HHWHptmrw4

Housing sentiment stable but markets still weakening: Matthew Hassan

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Perth created $98.1 million in loss making resales accounting for 22.9% of all losses nationally, over the March 2018 quarter.
Its resales of residential properties in Perth created $889 million worth of resale profits which accounted for 6% of resale profits nationally.
<img src="https://www.urban.com.au/images/2018/7/5/PG%20Perth%201.JPG" alt="">
Peppermint Grove had no resales at a loss.
No other council region had fewer than 15% of resales at a loss over the quarter.
The highest proportion of resales at a loss over the quarter was recorded in the Perth, Mandurah and Rockingham council areas.
With the housing market across Perth showing tentative signs of bottoming out, we may start to see loss making sales steady however, both houses and units recorded an increase over the quarter.
Click to <a href="https://www.propertyobserver.com.au/images/2018/7/5/PG%20Perth%202.JPG" target="_blank">enlarge</a>
<img src="https://www.urban.com.au/images/2018/7/5/PG%20Perth%202.JPG" alt="">
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j.ballantyne1990-6AQqhLzZaK

Perth accounted for 23% of all residential resale losses nationally: CoreLogic Pain & Gain report

soliver-smf6LQXgW9

Australian house prices will continue to slide: AMP Capital's Shane Oliver

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GUEST OBSERVATION
Overcrowding is an inevitable and often overlooked result of the affordable housing shortage in our cities.
When a dwelling requires four or more extra bedrooms to reasonably accommodate occupants, the standard commonly used in Australia defines that as severe overcrowding. In 2011, 41,390 Australians lived in severely overcrowded dwellings, an increase of one-third from 2006. This increase occurred mostly in cities where house prices had risen sharply.
Our recent research, to be published soon, examined where overcrowded housing is located in our capital cities. We found:
<ul>
<li>Sydney and Melbourne are most affected by concentrated overcrowding</li>
<li>levels of overcrowding are highest in middle-city areas (except in Adelaide)</li>
<li>overcrowding overlaps strongly with socioeconomic disadvantage.</li>
</ul>
What exactly do we mean by overcrowding?
Pressure in the affordable housing sector has led to increases in overcrowding. Media reports describe situations of “ten people in a two-bed unit”, “58 beds crammed into 19 dirty, makeshift rooms” and “ten people shoehorned into one bedroom, tenants sleeping in bathrooms, and in one case, a pantry”.
Living in severely crowded dwellings has been described as the most common form of homelessness.
Security and safety can be an issue when residents do not have privacy and control of their own space. But people sacrifice space and safety to secure affordable accommodation.
An example of the dangers was a fatal fire in an apartment illegally partitioned to create a fourth bedroom.
Commonly used standards of overcrowding range from simple indicators such as persons per bedroom (e.g. American Crowding Index) to more sophisticated indicators that consider family size and composition (age, gender and marital status).
One such measure, the Canadian National Occupancy Standard (CNOS), is officially recognised in Australia. It assesses a household’s bedroom requirements using the following criteria:
<ul>
<li>no more than two people should share a bedroom</li>
<li>children of different sexes under five years of age may reasonably share a room</li>
<li>children of different sexes should not share a bedroom when aged five or older</li>
<li>children under 18 and of the same sex may reasonably share a bedroom</li>
<li>parents, couples and household members aged 18 or older should have a separate bedroom.</li>
</ul>
Under this standard, households that need at least one extra bedroom are considered overcrowded. A shortfall of four or more bedrooms is severe overcrowding, with greater risks for health and safety.
One standard doesn’t fit all situations
Measuring overcrowding is not straightforward. The age and sex separation thresholds involve assumptions about the age of puberty and adulthood.
CNOS is the preferred measure of the Australian Bureau of Statistics, Statistics New Zealand and the Australian Institute of Health and Welfare (AIHW). This is because it takes the age and sex of occupants into account and matches our values and expectations of how space is used.
In Australia, it is usually acceptable for children of the same sex to share a bedroom before puberty. But we already know CNOS does not account for differing cultural expectations of the numbers of bathrooms and toilets, and the size of kitchens, bedrooms and living spaces. CNOS embeds assumptions that do not hold across ethnically diverse groups in Australia.
For example, a study of migrant suburbs in Sydney and Melbourne found “it is not uncommon to have families with two adults and five children sharing a two-bedroom property”. This is due to large family size and different cultural norms, including intergenerational occupancy of housing. Few properties are designed for this.
Traditional Pacific houses use living spaces rather than separate bedrooms for sleeping. A bedroom with more than two people is compatible with the attitudes of some Pacific and Mäori peoples to having a sense of adequate space.
Similarly, using the Canadian standard, Indigenous Australians are more than five times as likely to live in overcrowded housing as non-Indigenous Australians. This is alarmingly high and likely driven by high rates of socioeconomic disadvantage. We need to disentangle the extent to which values around space and its use versus socio-economic drivers of overcrowding underlie this statistic.
Do we need better measures?
So should we develop Australian-specific culturally sensitive standards? We think that depends on what we want to know.
Physiological stress and disease risk as a result of crowding occur for different ethnic groups regardless of whether they perceive themselves as crowded. Culturally specific standards may not be necessary when broadly examining the relationships between crowding and transmission of infections such as rheumatic fever, colds, asthma, influenza and meningococcal disease. Living in close quarters is relevant regardless of cultural norms of housing or nuances of measurement of crowding. Standard indices, while not perfect, capture this.
However, expectations about shared space might influence impacts on mental health. Social relations and family bonds are key social determinants of mental health. In particular, shared culture has been identified as a positive resource in improving Indigenous health. Current crowding metrics ignore non-bedroom-related uses of housing.
Crowding indices that capture the use of space – for example, incorporating subjective feelings that too many people are around – could be a step forward. Given our climate of wide temperature ranges and the high cost of utilities, such indices might also consider “functional overcrowding” – people sharing small spaces or beds due to concerns about heating/cooling and security.
Research on wellbeing would benefit from integrating a better understanding of the variety of needs of cultural groups and tailoring measures to our climatic conditions. However, such measures would be more subjective than current standard measures, more difficult to collect at a population level and less comparable with international standards.
What can we do about harmful overcrowding?
Cultural preferences mean low levels of overcrowding may not always be problematic. But overcrowding is a problem when generated by socio-economic disadvantage and when it compromises people’s safety and security. This is likely in cities where housing costs are high.
<img src="https://counter.theconversation.com/content/96110/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">Broader measures are needed to improve the supply of affordable housing. This includes dedicated programs such as the National Rental Affordability Scheme (NRAS) and extra funding for social housing. Enforceable laws that go beyond the Public Health and Wellbeing Act in Victoria and NSW Fair Trading strata reforms are also needed to monitor overcrowding and avoid the negative impacts of severe overcrowding.
Shanaka Herath, Vice-Chancellor’s Postdoctoral Research Fellow, University of Wollongong
Rebecca Bentley, Associate Professor, Centre for Health Equity, Melbourne School of Population and Global Health, University of Melbourne
This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/overcrowded-housing-looms-as-a-challenge-for-our-cities-96110" target="_blank">original article</a>.
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Overcrowded housing looms as a challenge for our cities

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<div>
Fitch Ratings does not expect a "sharp or subdued" correction in the housing market because economic growth and unemployment will remain "benign."
</div>
<div>
Fitch forecasts 2.7 per cent economic growth, 5.5 per cent unemployment and reliance on commodity exports as a possible source of volatility.
"High residential property prices and borrower indebtedness could also cause economic stress," the report concludes.
As part of a housing "stress test", the global credit rating agency recently calculated that the big four would suffer $24 billion in losses if house prices fell 43 per cent and defaults hit 13 per cent.
However, recoveries from lenders' mortgage insurers would cut the loss to about $19 billion.
It suggested the $1.3 trillion mortgage books of Australia's big four banks could withstand an Ireland-style correction in property prices but the lenders' ability to deal with second-order impacts remained uncertain.
"CBA would experience the largest losses under our analysis, followed by Westpac, reflecting these banks' larger exposures to Australian mortgages than ANZ and NAB," the agency said.
</div>
<div>
Fitch's forecast for Australian economic growth came as the Reserve Bank of Australia warned that high domestic debt makes households more sensitive to changes in income and interest rates.
It estimated households should be able to afford a mortgage rate "well more than 2 per cent higher than it is currently".
<div>
The most probable source of an economic shock would be external, Fitch suggests.
"A rapid increase in the unemployment rate remains the most likely driver of a significant housing market correction, although sharply higher interest rates would also pressure some borrowers – given the level of household debt."
The agency said another risk was the rollover of $480 billion of interest-only loans over the next three years.
</div>
<div>Fitch foresees a further tightening of underwriting standards, given the increased scrutiny of the Hayne royal commission, which could affect the housing market. </div>
<div>
"This will probably result in a further decline in the maximum amount many borrowers can obtain from a bank, and could have an adverse impact on house prices as a result."
</div>
</div>
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Fitch doesn't expect sharp property correction

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The upturn in demand for residential land in the major eastern state centres is expected to begin to peter out over 2017/18 as the new housing market faces emerging headwinds, according to leading industry analyst and economic forecaster, BIS Oxford Economics.
According to the company’s Outlook for Residential Land 2017 to 2022 report series, residential lot production in Sydney, Melbourne and South East Queensland is around its peak in this cycle and will begin to fall away. In contrast, demand for land in Adelaide and Perth has been weakening and will continue to soften.
However, BIS Oxford Economics senior manager and report series author, Angie Zigomanis, said that the forecast downturns in the eastern state centres are likely to be moderate. New supply in these markets has been more pronounced in the unit/apartment sector, with markets continuing to experience a deficiency of detached house stock that is likely to continue to underpin demand.
Nevertheless, new housing demand has still risen to high levels. Sydney is estimated to have recorded its highest level of residential land production over 2016/17. Lot production in Melbourne peaked in 2014/15 but has remained close to this peak in the subsequent two years. Similarly, the Brisbane, Gold Coast and Sunshine Coast markets have been experiencing a moderate upturn since 2013/14 after an extended period of weakness.
“Steady price growth in houses in the initial stages of the housing construction upturn improved land price affordability and shifted some demand from the established house market, to the new house and land market,” said Zigomanis.
“This not only encouraged a greater percentage of home purchasers to opt for a new house over an established one, but also established house owners to sell up and upgrade to a new, larger house.”
In contrast to the strength of the eastern state capitals, the Adelaide land market has softened considerably, in line with weak population growth and a subdued local economy. Lot production in 2016/17 was well below its peak and there are few key economic drivers on the horizon.
Meanwhile, the Perth market continues to struggle both in absorbing the declines in mining investment and in broadening its economic base. Migration and population growth have fallen to well below their pre- mining boom levels. Despite easing lot production, dwelling supply has remained well above underlying demand adding to a significant dwelling oversupply, which will weigh on any cyclical upturn in the coming years.
<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/2017/12/7/lot-production-chart.jpg" alt="">
Lot production in the main east coast capital cities and the Gold and Sunshine Coasts has been underpinned by solid population growth and a housing deficiency, and has been facilitated by record- low interest rates that drove new house demand.
Zigomanis states that the rise in new housing activity is now easing some of the demand pressures in the market, while the deterioration of housing and land price affordability will impact demand for new houses and consequently limit the next round of lots produced.
“Most markets saw house price growth outpace land price growth through the early stages of the upturn, which improved the value proposition for a new house”, said Zigomanis. “That said, land prices have now largely caught up and this gap will have narrowed, making new housing less attractive.”
As a result, many cities are expected to see demand for land and lot production decline over 2017/18 and 2018/19.
Land production in Sydney was estimated at 11,300 lots in 2016/17; its highest level in the past 25 years. Although a sizeable dwelling deficiency is still estimated to be in place in Sydney, it is now being eroded by new dwelling supply. Meanwhile, the house and land price growth through the upturn has seen affordability diminish, as evidenced by rising net outflows of population from Sydney. This is expected to see lot production begin to ease back from 2017/18.
Record population growth has been the main driver of demand for new houses and land in Melbourne. Together with affordable land, this has also seen lot production sustained at record levels since 2014/15.
“However, there have been significant rises in land prices in Melbourne in 2017, and this has seen new house affordability deteriorate,” said Zigomanis. “While lot production is likely to remain high in 2017/18 as recent pre-sales of residential lots are delivered, the resultant weaker demand will cause lot production to fall away from 2018/19.”
After bottoming out at a 20-year low of 4,800 lots in 2012/13, the resultant undersupply in Brisbane initiated an upturn that has been supplemented by strengthening net interstate migration inflows, with an estimated 9,400 lots created in 2016/17. A further rise is forecast in 2017/18, before significant oversupply in the Brisbane apartment market plays through to demand for new housing.
The Gold Coast and Sunshine Coast markets have followed the lead of Brisbane. A weak market and emerging dwelling deficiency saw lot production rise from a low base in 2013/14 through to a peak in 2016/17. Both markets arguably benefit from migration from Brisbane, Sydney and, to an extent, Melbourne, as affordability becomes increasingly constrained in those cities.
Lot production in Adelaide has been more moderate than the eastern state centres. Low interest rates and modest house price growth has supported some buyer demand. However, slowing economic conditions and easing population growth are now weighing on the market.
Similarly, lot production in the Perth market is now falling after a peak in 2014/15. The decline in mining-related investment has caused net interstate migration to shift from an inflow to an escalating outflow, while overseas migration has fallen. Consequently, demand for new houses has slumped, impacting the land market.
Through the upturns in all markets, developers have sought to keep land affordable and maintain margins by steadily reducing the size of the lots sold. However, it appears that median lot sizes have stabilised in most cities in the past two-to-three years. This suggests there is a lower limit to what the market will absorb. Moreover, it makes the economics of development more challenging as rising costs cannot be met by further reductions to the size of lots.
An expected softening in house price growth over 2017/18 and 2018/19 is expected to play through to land prices, which in turn will make it more difficult for developers to maintain margins as construction costs continue to escalate. Together with recent solid rises in land prices making affordability more challenging, and strong construction alleviating some of the undersupply pressures, most markets are expected to experience an easing in lot production in the next two-to-three years.
Separately, changing lifestyle choices and affordability preferences have also seen greater demand for medium and high density dwellings, at the expense of new houses, across the country.
The downturn in new dwelling supply will eventually see a rising deficiency re-emerge in most markets. Together with an expected acceleration in economic growth by the turn of the decade, this will underpin rising demand through the next cycle. 
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jrobinson-rf4aSBido9

Emerging headwinds will dampen demand for new houses and land across the major centres: BIS

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Australia’s housing market will likely record moderate dwelling price rises in 2018, which will beat a slower rate than the price gains in 2017, led by a slowdown in Sydney, according to SQM housing expert Louis Christopher in his new report. 
SQM Research’s base case forecast is for capital city dwelling prices to rise between 4% to 8% in 2018, which would represent a fall from a growth rate of approximately 8.5% over the past 12 months to 30 September 2017. 
The rate of property price increases will be slower in 2018, predominantly due to a slowdown in the Sydney housing market, which should continue into the first half of the year. Melbourne’s property market will also lose some momentum, however, this will only be a relatively modest slowdown, according to predictions in Christopher’s Housing Boom and Bust Report. 
“Offsetting a slowdown in Melbourne and Sydney will be first-year property market recoveries for Perth and Darwin and an ongoing real estate boom in Hobart’s property market, which is set to record the highest level of accelerated price growth of any capital city next year at between 8% to 13%,” Christopher said.
Click here <a href="https://www.propertyobserver.com.au/images/2017/10/18/Crash1.jpg" target="_blank">to enlarge</a>.
<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/2017/10/18/Crash1.jpg" alt="">
Brisbane’s property market will experience slightly stronger gains than those posted in 2017, with property prices forecast to rise between 3% to 7%. However, the persistent overhang of surplus property listings will hold back property in that city from a faster rate of inflation. 
The base case for all capital cities forecasts assumes no changes in interest rates next year, a stable exchange rate and the existing restrictions by APRA on investment lending to remain in place. 
“Through the actions of APRA earlier this year, a possible deeper housing correction in Sydney and Melbourne has been averted, for now. Accelerated population growth rates in Melbourne and Sydney have enabled the cities to avoid severe property downturns. On the flipside, housing affordability will likely continue to deteriorate in 2018 with growth in property prices still outpacing wages growth,” said Christopher. 
“The authorities were right to take action earlier this year to restrict investing lending by banks. Failure to have taken action would have resulted in out-of-control Sydney and Melbourne housing markets, where additional aggressive monetary policy may well have triggered a large fall in dwelling prices in 2018,” said Christopher.
“APRA’s action, which came earlier than I had expected, has meant that the Sydney housing market is cooling sooner than expected. That has meant our Sydney forecast for this year of price growth of 11% to 16% will not be reached and a more moderate 6% to 8% increase in prices can be anticipated for 2017.
“Our Sydney forecast for 2018 is for a 4% to 8% increase in prices whereby Sydney will record a soft market in the first half of the year, but property prices will start to recover in the second half as the banks will likely increase investment lending once again. There have been reports of banks investment lending ratios being under the maximum thresholds allowed, so we can expect a rise next year as banks increase investment lending up to this limit.” 
“Hobart’s property market is expected to remain the fastest growing city in 2018, with the combination of a fast economy and housing supply shortages likely to ensure the second year running of double digit price rises for that city,” Christopher said. 
Christopher’s Housing Boom and Bust Report this year also has a full breakdown of every postcode in the country covering current market statistics and its postcode investor ratings. The full report can be found on <a href="https://www.sqmresearch.com.au" target="_blank">www.sqmresearch.com.au</a> for $69.95.
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jonathanchancellor-7SQnKwU6yx

No Sydney housing crash in 2018, but we will see a slowdown: SQM's Louis Christopher

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GUEST OBSERVER
Australian housing finance approvals firmed in Dec. The number of new approvals for owner occupiers rose 2.6%, broadly in line with market expectations and consolidating on a 1.9% gain in Nov to be up 9.8%yr. Ex-refi, the number of 'new' loan approvals was up 1.6%mth, 4.6%yr.
Note that changes in lending criteria and borrowing rates for investor loans is indirectly boosting owner occupier activity. Although the bulk of the initial ‘switching’ effect seemed to come through between June and Sep. On the other side of this effect, the value of loans to investors dropped 19% between April and Oct but stabilised in the closing months of 2015, rising 1% in Nov and a further 0.6% in Dec (though still down 13.6%yr).
The total combined value of loans – our preferred gauge of housing demand at the moment given the aforementioned category switching – was up 0.8%mth, 6.4%yr. Growth is significantly flatter once refinance is excluded – the value of refi approvals surged 36% over the year to Dec 2015, accounting for almost all of the growth in the total value of new loans (ex refi, the value of loans is up just 0.2%yr).
Construction-related finance approvals posted a particularly strong month, up 5.2%mth led by 12.4% jump in approvals for the purchase of newly-built dwellings, which incudes 'off the plan' purchases. Note that many of these loans will be post the completion of building rather than a forward indicator of future work. That said, loans for construction were also up 1.8%mth, suggesting a degree of resilience outside the 'high rise' segment that has driven the declinein dwelling construction approvals to date.
Unfortunately, the state detail from the report is of limited use as the value of investor loans and total loans is not available until additional data is published next week. That said, the number of owner-occupier loans ex refi is showing strong gains across both NSW and Vic, with WA the only state showing material weakness.
Overall the picture is of some stabilisation after a sharp investor-led softening over the second half of last year. This weekend’s auction results will be the first meaningful reading on how much this may have carried into 2016. This week's update on consumer sentiment showed assessments of 'time to buy a dwelling' at still weak levels, albeit with some improvement in NSW &amp; Vic. Price measures hint at some firming in recent months although the summer holiday hiatus makes this and other housing data notoriously unreliable over Jan-Feb period.
Matthew Hassan is senior economist with <a href="https://www.westpac.com.au/" target="_blank">Westpac</a>.
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Australian housing finance December 2015: Westpac's Matthew Hassan

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Sydney remains the only capital city where units had a lower level of resales at a loss than houses over the June 2015 quarter, according to Core Logic RP Data's latest Pain &amp; Gain report.
The report found during the quarter 7.7% of houses and 12.6% of units were resold for less than their previous purchase price.
In the capital cities, 5% of houses and 8.4% of units were resold at a loss. Regional houses and units figures are 12.5% and 23.8% respectively. 
<a href="/images/2015/09/29/Screen%20Shot%202015-09-29%20at%2012.18.01%20PM.png" target="_blank">Click to enlarge</a>
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Houses and units suffering resale losses: CoreLogic RP Data

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A Minister for Cities and the Built Environment will help Australia make the most of its productivity powerhouses, says the Green Building Council of Australia (GBCA).
The Prime Minister Malcolm Turnbull has appointed South Australian Jamie Briggs as Australia’s first Minister for Cities and the Built Environment.
“This appointment recognises not only the importance of our cities as the engine room of the nation’s productivity and prosperity, but also the central role the built environment plays in tackling many of Australia’s greatest challenges," the GBCA’s chief executive officer, Romilly Madew said.
“Minister Briggs’ long-awaited appointment will enable us to better tackle the challenges we face – challenges such as climate change, population growth, ageing demographics, congestion, housing affordability, liveability and social inclusion."
The Property Council of Australia chief executive Ken Morrison warmly welcomed Malcolm Turnbull as "perhaps our most urbanist Prime Minister ever."
"He has lost no time in placing cities firmly on the federal agenda," Mr Morrison said.
"Make no mistake about it, this is a key economic appointment.
"The move recognises that in the most urbanised country in the world Australia's productivity challenges are going to be need to be met in our cities.
"With the property industry accounting for one ninth of Australia's GDP and employing 1.1 million people - more than mining and manufacturing combined - there is an increasing urban dimension to the economy.
"Jamie Briggs is a smart appointment as the new Cities Minister given his record in securing the government's $50 billion infrastructure commitment in last year's budget.
"The move mirrors one already made by the Opposition last year in appointing Anthony Albanese as shadow cities minister, and it is very pleasing to now see a bipartisan approach to the importance of this issue."
The Property Council also congratulated Scott Morrison - a former head of research for the organisation in the 1990s - on his appointment as federal Treasurer.
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