Melbourne developer Spacious Group has completed Voyage Altona, one of the closest new apartment developments to Altona Beach.

Off the plan purchasers have started moving into the 49-apartment project on Pier Street, with the remaining move-in-ready one-, two- and three-bedroom apartments starting from just over $500,000.

Display apartments have now been fitted out, allowing prospective buyers to inspect the completed residences by appointment.

[smartcode_project:default project_id=112195 project_image_fid=372638]

The completed apartments feature open-plan living and dining areas which extend onto private balconies and terraces, while full-height glazing maximises natural light throughout the interiors.&nbsp;

Hybrid timber-look flooring, stone benchtops, Miele appliances, porcelain-tiled bathrooms and generous storage feature throughout the building which also features landscaped communal areas, expansive shared terraces, lift access and secure on-grade parking.

Drawing inspiration from its bayside setting, Voyage adopts a restrained palette of warm neutral tones and textured finishes. Many of the apartments take advantage of views across Port Phillip Bay, while the indoor-outdoor living spaces have been designed to make the most of the coastal outlook.

[smartcode_project:default project_id=112195 project_image_fid=3286]

Voyage was developed to address what Spacious Group identified as an undersupply of higher-quality apartment product in Altona, with a focus on owner-occupiers looking to remain within the bayside community.

"Voyage responds to very strong local buyer demand for quality, owner-occupier-focused product," says Barry Plant Projects Director Jarrod Farey, who has handled sales since the project's launch.

"The project delivers an elevated lifestyle proposition, with its design and quality of finish far exceeding anything previously produced in the area, as well as its proximity to Pier Street Village and the beach."

The majority of purchasers have been local downsizers and owner-occupiers looking to stay within the Altona community but who previously had limited opportunities to buy a brand-new apartment.

[smartcode_project_cta:default project_id=112195]

Joel Robinson

Spacious Group completes Voyage Altona in Altona's beachside precinct

Homecorp has secured approval for a $360 million apartment development at Budds Beach, paving the way for one of the Gold Coast's most amenity-rich residential projects to launch later this year.

Gold Coast City Council has approved Lýon Residences, a 32-level tower that will deliver 178 two and three-bedroom apartments across a prominent corner site at 8-10 Acacia Avenue and 25-27 Oak Avenue.

The approval comes as developers continue to invest in premium lifestyle-driven apartment projects on the Gold Coast, where owner occupiers are increasingly prioritising amenity as much as apartment size and location.

<a href="https://www.apartments.com.au/new-apartments/l-on-residences-25-27-oak-avenue-surfers-paradise-qld-4217">Lýon Residences</a> has been designed around a resort-style wellness offering, headlined by a Moroccan-inspired spa precinct featuring treatment rooms, a Nordic sauna and steam room, hot and cold plunge pools, a soaking pool and a residents-only juice bar.

The rooftop will include a heated infinity pool and spa, residents' lounge with private kitchen and bar, gymnasium, yoga and Pilates studio, outdoor entertaining areas and barbecue facilities overlooking the Surfers Paradise skyline.

<img alt="Lyon" data-entity-type="file" data-entity-uuid="2d3e29af-8793-486e-a684-52cef862241f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-15%20at%204.32.26%E2%80%AFPM.png?VersionId=ayG2zpLf3SS6Zy8XmKDcQods4kVWb0gm" />

Homecorp Founder and CEO Ron Bakir said Budds Beach provided the ideal location for the company's latest luxury apartment project.

"Budds Beach represents one of the most unique and sought-after pockets of the Gold Coast, and Lýon Residences has been designed to reflect that sense of rarity and refinement," Bakir said.

The project arrives as wellness continues to become a defining feature of new residential developments both in Australia and internationally.

The latest Global Wellness Institute figures show wellness real estate remains the fastest-growing segment of the global wellness economy and is forecast to exceed $1.8 trillion by 2030. Australia continues to rank among the world's 15 largest wellness real estate markets, with developers increasingly integrating health, recreation and community facilities into apartment projects.

Queensland is also experiencing strong population growth, with the Gold Coast continuing to outperform many other Australian cities as demand for new housing remains elevated ahead of the 2032 Olympic and Paralympic Games.

Bakir said the project had been designed to respond to that shift in buyer expectations.

"Strong population growth and sustained demand across the Gold Coast continue to highlight the need for well-designed new housing supply. Lýon Residences responds directly to this demand while setting a new benchmark for residential living," he said.

Each apartment has been designed to maximise views across the coastline, the Nerang River and the Gold Coast hinterland.

Located just minutes from Surfers Paradise beach and the Broadwater, the development also offers easy access to the light rail network, Broadbeach and Burleigh Heads.

Early site works are underway, with construction expected to commence later this year.

Homecorp approved for Budds Beach apartment tower, Lýon Residences

New apartment developments with uninterrupted, north-facing views over Perth's Swan River are exceptionally rare.

Recognising just how limited those opportunities are, <a href="https://www.apartments.com.au/developers/edge-visionary-living">Edge Visionary Living</a>, one of Perth's most respected builder-developers, targeted <a href="https://www.apartments.com.au/developments/applecross-wa-6153">Applecross</a>, assembling an unrepeatable 6,342 sqm riverfront site on the corner of Moreau Mews and Canning Beach Road to create one of Perth's only new north-facing apartment developments directly overlooking the Swan River.

Today, <a href="https://www.apartments.com.au/buildings/riviere-residences-applecross-59-canning-beach-road-applecross-wa-6153">Rivière Residences</a> offers buyers a unique opportunity to choose between completed residences ready to move into now and off-the-plan homes in the final stage, Rivière West.

[smartcode_project:default project_id=28384 project_image_fid=3823]

Across the completed East and Central buildings, residents are already enjoying the development's luxury amenity, while two of the precinct's hospitality venues are now open.

The completed component of the development gives buyers the advantage of experiencing the finished product firsthand, including its uninterrupted river views, while still having the opportunity to secure a residence in the final stage.

"People are wowed by the view and the quality of the apartments,"&nbsp;Edge Visionary Living Sales Executive, Holly McSweeney, says.

"They're looking for the convenience of lock-and-leave living, but they're not looking to downsize on quality."

[smartcode_project:default project_id=28384 project_image_fid=3826]

The rarity of the development hasn't been lost on prospective buyers, McSweeney says.

For McSweeney, it all comes back to a location that is becoming increasingly difficult to replicate.

"Location, location, location," she says. "We are nestled right on the front of the Swan River. You can never get built out, so wherever you are in Rivière Residences, you've got views of the river forever."

The unique waterfront position has resonated particularly strongly with local downsizers. McSweeney says many buyers are long-time Applecross residents looking to transition from large family homes into a luxury apartment without sacrificing space, quality or the lifestyle they've enjoyed for decades.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/N_FowNW0wu8?si=vb25XFq1wZ-iufAW" title="YouTube video player" width="560"></iframe>

A major focus for Edge in recent years has been resident amenity. Across its apartment portfolio, from beachfront developments in Scarborough to luxury towers in South Perth, the developer has increasingly invested in the spaces beyond the apartment itself.

The strategy has largely been shaped by downsizer demand. Many buyers are moving from large family homes with swimming pools and established gardens. While they're looking to leave the maintenance behind, they don't want to compromise on lifestyle.

At Rivière, <a href="https://www.apartments.com.au/architects/hillam-architects">Hillam Architects</a> designed the resident facilities as an extension of each apartment. A 25-metre heated swimming pool takes advantage of the north-facing river outlook, complemented by a large gym, sauna and steam rooms, private dining spaces, residents' lounges, a cinema, games room, and dedicated wine and whisky rooms.

[smartcode_project:default project_id=28384 project_image_fid=372542]

The waterfront location has also proved to be a major drawcard. Residents are within walking distance of the Raffles Hotel, South of Perth Yacht Club, the Heathcote Cultural Precinct and the cafés, restaurants and boutiques along Ardross Street.

Beyond the location and amenity, McSweeney says many buyers take confidence from Edge's fully integrated development model.

Having delivered apartments across Perth for decades, Edge now designs, develops and constructs its projects in-house, giving the company greater control over quality, delivery and the finished product.

"What I love is when people walk through their apartment for the first time and say, 'This is better than what we imagined,'" McSweeney says. "We hear that all the time."

Completed apartments in the East and Central buildings are now available to inspect by appointment, while Rivière West, the final stage of the precinct, is expected to be completed in the first quarter of 2027.

[smartcode_project_cta:default project_id=28384]

North-facing Swan River views drive demand at Rivière Residences in Applecross

Nearly 60 per cent of apartments at McNab Group's $220 million The Tannery development in Brisbane's West End have sold ahead of the project's public launch, including a suburb-record $2.57 million sale for a two-bedroom apartment.

The early sales campaign has secured buyers for 50 of the project's 87 apartments, highlighting continued demand for larger owner-occupier apartments that combine generous floorplans with premium lifestyle amenities in one of Brisbane's most tightly held inner-city suburbs.

[smartcode_project:default project_id=143337 project_image_fid=374768]

McNab Group Executive Chairman Michael McNab said selling more than half the project before launch reflected changing buyer expectations.

"Selling more than half the project before public sales open tells us buyers are actively seeking apartments that offer something genuinely different," McNab said.

"Today's buyers are looking beyond four walls. They want homes that genuinely enhance the way they live, with spaces that support health, connection and everyday wellbeing."

[smartcode_project:default project_id=143337 project_image_fid=374767]

A key point of difference for the project is the adaptive reuse of the heritage-listed Dixon's Tannery building, which will become The Retreat, a residents-only wellness precinct rather than being redeveloped into additional apartments.

The Retreat will feature a sauna and steam room, hot and cold plunge pools, a commercial-grade gym, Pilates studio, cinema, library, co-working spaces and private dining room. Rooftop amenities will include a swimming pool, landscaped gardens, outdoor entertaining areas and dog-friendly spaces.

[smartcode_project:default project_id=143337 project_image_fid=374760]

Designed by Cottee Parker Architects with interiors by Tom Mark Henry and landscape architecture by Aspect Studios, The Tannery comprises 87 two, three and four-bedroom apartments across 11 levels overlooking the Brisbane River.

Cottee Parker principal Dee Passenger said preserving the original tannery building had been central to the project's design.

"The easy option would have been to maximise the site's development potential with additional apartments. Instead, McNab has chosen to preserve the original tannery as a shared wellness retreat, ensuring this important piece of Brisbane's history remains at the heart of the community."

Passenger said sustainability also played a key role in the design, with materials from the original industrial site salvaged and repurposed throughout the development.

[smartcode_project:default project_id=143337 project_image_fid=374761]

Motiv CEO Carly Cottam said buyers had responded strongly to the combination of larger apartments, wellness facilities and the West End lifestyle.

"We are seeing more buyers looking for homes in the sky that provide the space and functionality of a traditional home, while benefiting from the convenience and lifestyle that apartment living brings," Cottam said.

She said purchasers included both owner occupiers and investors, with demand coming from local buyers as well as interstate purchasers.

Coinciding with the public launch, McNab also announced a partnership with Queensland Ballet, whose neighbouring Thomas Dixon Centre shares historical ties with the original Dixon family.

Located on a 4,465 sqm site at 439 Montague Road, The Tannery overlooks the Brisbane River and is around 10 minutes from the CBD.

Construction is underway, with completion expected in the second half of 2027.

[smartcode_project_cta:default project_id=143337]

More than half of residences sold before public sales as McNab announces significant partnership with Queensland Ballet

McNab's The Tannery nears 60 per cent sold before public release, sets two-bedroom West End record

Iwan Sunito's vision for a landmark mixed-use precinct in Sydney's Inner West has taken a major step forward, with approval granted for the $1.9 billion Five Dock development first unveiled earlier this year.

The approved scheme by <a href="https://www.apartments.com.au/developers/one-global-capital">One Global Capital</a> will deliver an 80,500 sqm mixed-use precinct comprising 840 apartments, integrated hotel accommodation, commercial and retail space, alongside publicly accessible open space designed to create a new destination for the growing suburb.

"This is a significant milestone for One Global Capital and for the future of housing delivery in Sydney," Sunito said.

"The Housing Delivery Authority was established to identify major housing projects capable of delivering meaningful supply more efficiently, and we are delighted that Spencer Street has been recognised as one of those projects.”

He said the declaration reflected the rapid progress achieved since acquiring control of the site.

"In less than seven months we have progressed from taking control of the site to securing entry into one of the NSW Government's most important planning pathways. It reflects the experience of our team, the strength of our consultant group led by Urbis, and our long-term commitment to delivering transformational projects that contribute to Sydney's future."

When the project was revealed earlier this year, Sunito described the opportunity as one of the strongest development sites he had worked on.

"I probably hadn't appreciated the uniqueness of the site until more recently when putting together the concept plans," Sunito said.

"The proximity to the water, and the golf course opposite, is unlike any other part of Parramatta Road. We have a unique position and view corridors over the water that makes this one of the best sites I've worked on."

The development has evolved since its initial announcement, with the approved plans increasing the residential component from the originally proposed 750 apartments to 840 homes while retaining the project's focus on creating an integrated neighbourhood rather than a standalone residential development.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/a-city-within-a-city-iwan-sunito-flags-1-5-billion-mixed-use-precinct-in-five-dock">"A city within a city": Iwan Sunito flags $1.5 billion mixed-use precinct in Five Dock</a>

The precinct will combine apartments with hotel accommodation, commercial workplaces, retail offerings and public spaces, creating a mixed-use environment intended to serve both residents and the broader Five Dock community. The proposal also continues the collaboration between One Global Capital and internationally recognised architect <a href="https://www.apartments.com.au/architects/koichi-takada-architects">Koichi Takada</a>, whose previous work with Sunito includes Infinity, Arc and Skye North Sydney.

Takada previously said the design was driven by a philosophy of integrating nature into the built environment.

"The concept for this development is born from our design approach to naturalising architecture," Takada said.

"The public realm benefits from biophilic design that integrates generous landscaping, and the development is optimised for natural daylight, airflow and water views to foster wellbeing, sustainability and spaces that foster community interaction."

Sunito has consistently described the project as a "city within a city", with a strong emphasis on creating a destination that extends beyond housing.

"We want to create a development that's not only to be seen, but to be experienced by the whole local community," he said.

The approval comes as Five Dock continues its transformation ahead of the opening of the Sydney Metro West line, with the new Five Dock station set to significantly improve connections between the Inner West, Parramatta and the Sydney CBD.&nbsp;

The precinct will also benefit from its proximity to the Parramatta Road corridor, nearby waterfront parklands and established retail and dining offerings that have made Five Dock one of Sydney's most tightly held Inner West suburbs.

Iwan Sunito secures approval for $1.9 billion Five Dock mixed-use precinct

Mortgages

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The Australian Prudential Regulation Authority has issued tough draft guidelines on how it expects banks to monitor and manage home mortgage risks.
Upon <a href="https://www.apra.gov.au/adi/PrudentialFramework/Pages/adi-consultation-packages.aspx" target="_blank">the release</a>, APRA chairman John Laker noted "increasing evidence of lending with higher risk characteristics and it does not want this trend to continue".
the current concern sits  against the backdrop where residential mortgage exposures have exhibited low default and loss rates in the $1.3 trillion Australian mortgage market. But the continued low interest rate environment has authorities concerned for when rates take off again.
Aimed at complacency among residential mortgage lenders, the draft guidelines still fall short of the stricker macro­-prudential rules adopted in recent times by other regulators especially in New Zealand and Canada.
But the draft guidelines suggest banks consider "geographic concentrations" of risky loans.
There might also be new limits on loans relative to incomes along with stronger stress-testing borrowers.
There is also the possibility of reducing financial incentives and commissions to mortgage brokers.
APRA chairman John Laker said credit standards were needed given “very active competition” between lenders and rising property markets.
The Australian Financial Review columnist Tony Boyd recently calculated that the net present value of annual commissions paid to mortgage brokers is about $600 million, based on brokers handling about half of the $28 billion in mortgages settled each month.
APRA suggests commissions paid upfront tend to encourage less rigorous attention to loan application quality. 
APRA has told the banks to review appropriate monitoring and controls “to guard against incentives to pursue loans with inadequate or false verification, marginal serviceability, excessive leverage or unsuitable terms for a borrower”.
In Australia, it is standard market practice to pay brokers either an upfront commission or a trailing commission, or both. 
"Experience has shown that commissions paid upfront tend to encourage less rigorous attention to loan application quality," the report said.
"Trailing commissions are more likely to provide incentives for brokers to retain and monitor customers. 
"A prudent approach to the use of third parties for residential mortgage lending would include appropriate compensation measures for brokers.
"Such measures include the ADI being able to end or claw back commissions where there are high levels of delinquency or process failures on loans originated by third parties."
The acting chief executive of the Australian Bankers’ Association, Diane Tate, said the industry had expected the new guidance.
APRA said it expected banks to closely monitor the share of new loans with high loan-to-valuation ratios (LVRs). While Australia has no caps on LVRs, it said those above 90% clearly exposed banks to a higher risk of losses.
‘‘Historically, residential mortgage exposures have exhibited low default and loss rates,” it said in the draft.
“However, lengthy periods of economic growth combined with low interest rates and a sustained period of rising house prices can create a sense of complacency among residential mortgage lenders.’’
APRA is taking industry feedback on the draft policy until late July.
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jchancellor-FAypfDUnLy

Upfront mortgage broker commissions under review as APRA helps RBA on risky home lending standards

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Shares of Genworth Mortgage Insurance Australia closed at a 13% premium after Australia’s biggest lenders mortgage insurer (LMI) made its public debut on the Australian Securities Exchange on Tuesday.
Genworth shares were priced at $2.65 but quicky rose to be at $2.96 in the first half-hour of trade yesterday.
Genworth’s $496 million float was the second-largest listing by value since 1 January, trailing last month’s $657 million Genesis Energy initial public offering.
Its prospectus reported Genworth Australia had been profitable for 46 of the past 48 years. 
The company is chaired by Richard Grellman.
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Genworth floats with 13% premium

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Mortgage insurer Genworth is set to list tomorrow on the Australian stock exchange after strong local and international equity interest, the second biggest initial public offering for the year to date. There was a $2.65 per share institutional price.
Genworth plans to list with a market capitalisation of around $1.72 billion. It has a 45% share of the lenders’ mortgage insurance (LMI) market in Australia, in an oligopoly as Genworth and the other main player, QBE LMI, have a combined share of around 78%.
Goldman Sachs and CBA Equities, Macquarie and UBS launched a book build last week following the decision of the US parent to sell down a 34% stake in its Australian subsidiary.
Genworth will raise about $750 million from the float, which was delayed two years ago, following heavy losses in the local LMI arm.
LMI covers lenders when borrowers default on their home loans. LMI is typically required by banks as a result of pressure from the Australian Prudential Regulation Authority and their own boards for risk mitigation when a borrower has less than 20% of the purchase price as a deposit.
Mortgage insurance covers the lender – usually banks – with Genworth the largest Australian provider, with more than 60% of its business coming from loans written by CBA, Westpac Banking Corporation and National Australia Bank.
Genworth said it expected to post a net profit of US$231 million ($248 million) for the year to 31 December, up from US$179 million in 2013.
But CLSA analyst Jan van der Schalk told the AFR the company produces an 11% return on equity, which is a “desperately poor return for a feast or famine business”.
Goldman Sachs has estimated a property price correction of 10% would have a pre-tax impact of $870 million over a two to three year period.
A hard landing for property prices – a fall of 30% – would have a pre-tax impact of $2.2 billion over two to three years.
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Genworth mortgage insurer set for ASX debut

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Luci Ellis, the head of the RBA's financial stability department, hopes Australians can see an upswing in housing prices in the larger metropolitian centres and say, ‘I don't have to buy into that. I don't have to stretch my finances’.
Not that Australian household finances are looking too stretched at the moment.
"And we'd like to see it stay that way," Luci Ellis said.
Her speech to the CITI Residential Housing Conference noted that the 15 years to 2005 saw housing prices rise noticeably faster than incomes.
"This was in large part a transition to a new equilibrium of lower inflation and interest rates, and thus higher debt and housing prices relative to incomes. That transition is over now. Housing prices are therefore going to be cycling around a slower trend than they did in the past. There will be more periods where prices are falling a little in absolute terms," she said.
The means that there was "less scope for rising markets to cover mistakes if you fall in love with a property and overpay for it".
"It means there is little room for another round of property exuberance of the type we saw just over a decade ago, in 2002 and 2003. Australia managed to have its housing boom end without a major disaster. Plenty of other countries weren't so lucky.
"Usually it's the property developers that are the source of loan defaults and financial instability, not the households with mortgages. But an overstretched household sector is hardly a good environment to have if something should go wrong elsewhere in the economy.
"That is why the Reserve Bank and the Australian Prudential Regulation Authority (APRA) have emphasised loan serviceability so much of late."
She commented that lenders had become more sophisticated in the ways they assess households' capacity to repay mortgage loans.
"Most of them have moved beyond a crude approach of applying a blanket repayment-to-income test, more likely to take people's actual living expenses into account, not just some version of the Henderson Poverty Line. After all, it doesn't seem reasonable to expect people to have a poverty-level lifestyle to pay off a million-dollar home.
"Importantly, lenders are now more likely to apply an add-on to current interest rates when calculating the repayment they use in their serviceability tests. 
"It's fair to say that serviceability calculations are binding for first home buyers and less binding for trade-up buyers and investors. So it's no surprise that as interest rates have fallen, it's the trade-up buyers and investors whose demand has increased.
"Meanwhile first home buyers will feel squeezed out. This is probably more a cyclical phenomenon than a structural one. It is still probably quite disheartening for potential first home buyers.
"As such, it would not be a good outcome if they responded by overstretching themselves to try to get into the market during upswings."
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Disheartened FHBs warned not to overstretch home loan borrowings: RBA's Luci Ellis

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Phil Naylor has announced his intentions to resign as the chief executive officer of the Mortgage and Finance Association of Australia, taking effect 24 December.
No successor has been appointed after Naylor’s 12 years in the job.
After being at the Australian Retailers Association, he started in 2002 when the MFAA was known as the MIAA, a trade association with 2,200 members.
In 2006 the Mortgage Industry Association of Australia broadened its charter and changed its name to the Mortgage and Finance Association of Australia.
The MFAA has almost 11,000 members.
He championed uniform broker legislation.
He said getting "the rogue mortgage broker off the front page of the news" as one of his most significant achievements by cleaning up the industry along with regulators.
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Phil Naylor to exit MFAA in December

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I am often asked how one can predict residential price growth. 
Well, the only way I know how – with any form of logic and indeed, accuracy – is based around borrowing capacity. 
Spare borrowing capacity by itself doesn’t automatically mean the prices will rise; nor does over-borrowing – in isolation – result in prices falling.   
But what often comes true is that if there is spare capacity in concert with tight supply, rising sales and improving buyer confidence, then prices often do rise.  Of course, the reverse also applies. 
So which major Australian markets have spare borrowing capacity?  Which ones are already pushed to the limit?  Read on….
Assumptions 
In a similar vein to our <a href="https://matusikmissive.com.au/2014/04/15/6858/" target="_blank">recent</a> missive on housing affordability, we have made some assumptions. And in this regard we did the following: 
<ul>
<li>Went to the 2011 Census for each capital city and found the median family household income.</li>
<li>Worked out – via average weekly earnings – which are updated by state/territory twice each year – how much, by proxy, family incomes may have risen since the last census.</li>
<li>Applied a basic online ‘how much can I borrow’ calculator using a principal and interest loan; 30 year time frame against several levels of interest.</li>
<li>Used AFG’s mortgage index to determine the average loan to value ratio for each state/territory.  We used this to determine the average level of deposit in each case.</li>
<li>Recorded dwelling prices by capital for all dwellings according to the latest release from RPData.</li>
</ul>
Interest rate settings
We used five interest rate settings.
<ul>
<li>5.2% – which is the average rate for a current three-year fixed loan, according to the RBA.</li>
<li>5.95% – which is the current average variable rate, again according to the RBA.</li>
<li>6.25% – which would represent a 0.25% movement upwards in the cash rate, based on the current average variable rate.</li>
<li>6.5% – or a 0.5% movement upwards in the cash rate.</li>
<li>7.5% – or the average variable interest rate over the last 20 years.</li>
</ul>
Our aim
Our aim here is to find out two things: 
<ul>
<li>The degree of potential price movement based on today’s record low interest rates</li>
<li>The possible impact rising interest rates would have on borrowing capacity and its potential impact on prices</li>
</ul>
So here are some of the results – all for March 2014.
Sydney
Median dwelling price                                                          $762,000
Median family household income                                           $97,500
Maximum borrowing capacity at 5.2%                                   $675,000
Maximum borrowing capacity at 5.95%                                 $620,000
Maximum borrowing capacity at 6.25%                                 $600,000
Maximum borrowing capacity at 6.5%                                   $585,000
Maximum borrowing capacity at 7.0%                                   $530,000
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Melbourne
Median dwelling price                                                          $669,000
Median family household income                                           $93,500
Maximum borrowing capacity at 5.2%                                   $590,000
Maximum borrowing capacity at 5.95%                                 $550,000
Maximum borrowing capacity at 6.25%                                 $525,000
Maximum borrowing capacity at 6.5%                                   $515,000
Maximum borrowing capacity at 7.0%                                   $465,000
 
Brisbane
Median dwelling price                                                          $482,000
Median family household income                                           $89,750
Maximum borrowing capacity at 5.2%                                   $590,000
Maximum borrowing capacity at 5.95%                                 $545,000
Maximum borrowing capacity at 6.25%                                 $530,000
Maximum borrowing capacity at 6.5%                                   $515,000
Maximum borrowing capacity at 7.0%                                   $465,000
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Perth
Median dwelling price                                                          $615,000
Median family household income                                           $105,750
Maximum borrowing capacity at 5.2%                                   $680,000
Maximum borrowing capacity at 5.95%                                 $625,000
Maximum borrowing capacity at 6.25%                                 $605,000
Maximum borrowing capacity at 6.5%                                   $590,000
Maximum borrowing capacity at 7.0%                                   $535,000
 
Australia 
Median dwelling price                                                          $500,000
Median family household income                                           $82,250
Maximum borrowing capacity at 5.2%                                   $555,000
Maximum borrowing capacity at 5.95%                                 $510,000
Maximum borrowing capacity at 6.25%                                 $495,000
Maximum borrowing capacity at 6.5%                                   $480,000
Maximum borrowing capacity at 7.0%                                   $435,000
Potential price direction
Dwelling prices in both Sydney and Melbourne, even at today’s low interest rates, appear to have overshot the average family’s capacity to pay. 
Our analysis suggests, based on a 5.2% three year variable interest rate, that Sydney’s current median dwelling price of $762,000 is 19% more than most living in Sydney can afford.  This ratio is 16% in Melbourne.
In contrast, and again using a 5.2% interest rate; Brisbane’s dwelling prices could increase by up to 14% before maxing out the average Brisbane family’s borrowing capacity.  Perth has about 9% spare capacity; and on average across the country there is about 7% potential dwelling price growth, given the present low interest rates.
Adelaide, Hobart, Darwin and even Canberra have some room to move – based on spare borrowing capacity and current low interest rates – when it comes to dwelling prices.
Rising interest rates
Rising interest rates could see price falls.  This is especially the case in both Sydney and Melbourne and to some degree in Perth, Brisbane and Canberra.  
A 0.25% lift in interest rates could see a 1% fall in Australian house prices.  A 0.5% lift in interest rates could mean a 3% to 5% fall in real estate prices is possible.  If variable interest rates went back to their longer term average of 7.5%, the dwellings prices could fall by as much as 10% Australia-wide.
Could rise and fall
Now they could fall; just like they could rise further across much of the country, given the current low interest rates.  
As said at the beginning, a range of other factors – supply, sales direction and confidence for example – also impact on a residential market’s direction.  
Additional factors
As seen in the case of Sydney and Melbourne – and as is now starting to emerge in Brisbane’s inner city new apartment market – several additional factors are pushing prices beyond even the maximum price levels rationalised by historically cheap interest rates.  
These include:
<ul>
<li>Chinese buyers seeking a safe harbour for their money and attracted, to some degree, by our favourable exchange rate.</li>
<li>Demand from self-managed super funds – burgeoning from the current ability to borrow for residential assets and by the banks pushing SMSFs to borrow, to help fuel their credit growth.</li>
<li>Human exuberance – we are like lemmings – there is no other way to describe it.</li>
</ul>
Final word
At present, purchasing power or the amount you can afford to borrow at prevailing low interest rates, is a major determinant of current dwelling values.  If buyers choose to max out their borrowing capacity, then dwellings prices across much of the country have got some way to grow yet.
Other factors have and are continuing to push some local price points beyond what’s rational. Interest rates, in time, will normalise.  Those markets which have broken logic are very likely to see price falls.
Buyers should be thinking about the worth of a dwelling based on a more normal interest rate setting, before bidding on it.  Investors need to think about local rental returns rather than inter-city price comparisons. 
Visit Michael's <a href="https://www.matusik.com.au/" target="_blank">website</a>, read <a href="https://www.matusikmissive.com.au/" target="_blank" rel="nofollow">his blog</a>, follow him on <a href="https://www.facebook.com/ThinkMatusik?fref=ts" target="_blank" rel="nofollow">Facebook</a> and <a href="https://www.twitter.com/michaelmatusik" target="_blank" rel="nofollow">Twitter</a>, or connect via <a href="https://www.linkedin.com/in/michaelmatusik" rel="nofollow">LinkedIn</a>.
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Residential price predictions: Which major Australian markets have spare borrowing capacity?

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Lender Australian First Mortgage has cut its three-year rate from 5.19% to 5.09%.
AFM has lowered two-year fixed rate from 4.83% to 4.78%.
AFM managing director Tanya White told The Advisor AFM regularly looked for opportunities to review its interest rates outside of the Reserve Bank’s cash rate movements.
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AFM drops three year fixed rates to 5.09%

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GUEST OBSERVATION
The Commission of Audit has recommended including homes above a certain value in the means test that determines who gets the age pension and how much. Under the proposal, homes valued in excess of A$500,000 would be assessable for singles, while for couples the trigger would be A$750,000.
The family home is currently exempt from the assets test but the commission argues this is inequitable because it means high levels of wealth are sheltered. It suggests a more comprehensive means testing regime be put in place by 2027-28.
If this proposal is picked up by the federal government, it would see a sizable group of retirees required to call on the equity in their homes to help fund their retirement.
It would be a brave government that “forced” pensioners to sell their homes to release that equity, which makes reverse mortgages a likely tool for retirees who need to convert their home into cash flow.
Even now, a reverse mortgage can be an alternative to “downsizing” into a smaller and cheaper home to release funds for retirement.
How reverse mortgages work
A reverse mortgage allows homeowners to access a loan, or a regular stream of cash (an annuity), using their home as collateral. Borrowers continue to live in the property until death – or they move into aged care – after which the loan is repaid from the sale of the house.
The mortgage can apply to the full value of a property, or borrowers may be able to access “residual value protection”, allowing them to set aside a portion of the house’s value to be available for aged care or as an inheritance.
Interest rates are generally higher than for standard home loan products due to less competition in this sector and higher risks for the lender.
For some years now, on the back of the lessons learnt from the global financial crisis, there have been government-imposed rules around “negative equity” that prevent lenders from extracting repayments beyond the value of the house. This means lenders can suffer a loss if the loan amount exceeds the value of the house at the date of the sale, something that may happen in a softening property market.
Reverse mortgages involve compounding interest, where interest charges are added onto the loan as they accrue. This means the loan amount can rise quickly.
Taking out a reverse mortgage can affect the availability of funds for major items such as aged care and bequests, and it can have an impact on other family members who may live in the house. Ultimately reverse mortgages demand a much higher degree of financial literacy from individuals, who may need professional advice on issues such as tax and Centrelink implications.
Could we end up like the US?
Despite the fact that reverse mortgages helped send mortgage insurer the Federal Housing Administration bankrupt in the US, the market there is <a href="https://www.reuters.com/article/2014/03/17/us-banking-reversemortgages-idUSBREA2G05T20140317">returning</a>.
How would increased demand for reverse mortgages change the Australian financial system?
The bulge of baby boomers entering retirement, along with a change to means testing along the lines proposed, could be expected to lead to an increase demand in such products. In theory, new lenders would be attracted into the market, thus increasing competition and driving interest rates down (in relative terms, against the risk-free rate).
Three main sources of risk are apparent, the first of which is declining real estate values, or the risk of negative equity. The loan amount may end up being larger than expected if the borrower enjoys a long life or property values fall.
Second, with a reverse mortgage the lender generally has no recourse to assets other than the home. Third, at this stage of life borrowers may neglect maintenance and property improvements, eroding the value of the home.
Many of these risks, in particular real estate values and an ageing population, are systematic and may become systemic. Should reverse mortgages enjoy significant growth, as projected, Australian lenders would have increased exposure to house price risk. If house prices dropped, more defaults would occur.
The impact of growth in reverse mortgages on the housing market itself may be limited, as properties are sold only after death or upon a move into aged care. But there may be a decrease in downsizing activity if these products become more popular.
An alternative to bank lending
Currently, reverse mortgages are mainly provided by the banking sector, which is already over-exposed to mortgages. At the same time, the superannuation sector is looking for long-term investment opportunities. Why not create financial products where super funds provide cash flow for retirees in exchange for access to the value in their homes?
Some super fund members may not want further exposure to Australian real estate, particularly if they are already house owners, but this could be an additional option in the current portfolio of investment choices offered by funds to their members.
The outcome might be comparable to the situation in overseas pension systems – such as Germany’s – where pensions are organised to a large degree as intergenerational wealth transfers, where one generation pays for the next generation.
Such a system could increase the resilience and efficiency of the Australian financial system.
Harry Scheule is associate professor, finance, UTS Business School at University of Technology, Sydney.<img src="https://counter.theconversation.edu.au/content/26433/count.gif" alt="The Conversation" width="1" height="1" style="line-height: 1.3em;">
Harry Scheule does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>. 
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Reverse mortgages need a rethink if they’re the new age pension

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ANZ has launched another advertising campaign featuring The Mentalist actor Simon Baker.
The new commercial promoting the bank’s home loans was created by Whybin/TBWA Melbourne.
The ads feature the actor in his character Patrick Jane from the TV show The Mentalist and a couple in a furniture store. 
Jane, a psychic, points out the needs for their furniture decision to be aligned with their desired home extensions, ambitions and requisite home loan.
Simon Baker has now appeared in the ANZ series since 2011 when he replaced the unhelpful bank clerk, Barbara the banker in Bankworld, which was a creation of ANZ’s former agency M&amp;C Saatchi.
Baker has had the lead role in The Mentalist since 2008.
Photo courtesy of YouTube. 
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ANZ home loans sticks with Simon Baker

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High-risk home loans have CHOICE alerting borrowers about significant difficulties down the track.
The three products on their list are 40-year loans, family guarantees and low-deposit loans, with CHOICE head of media Tom Godfrey explaining that while they can make it easier to get from renting to buying, they carry risks.
“During the global financial crisis people were hard pressed to get a home loan approval unless they had a significant deposit. Now RAMS is offering a low-deposit loan combined with a guarantee that allows you to borrow a staggering 120% of the value of your home,” said Godfrey.   “Worryingly there has been a strong demand for these high-risk loans with one in three new home loan borrowers putting up less than the 20% normally required,” he said.
Consumers without a significant deposit are being offered products such as low LVR loans and family guarantees. Family assistance is becoming increasingly popular with home buyers, with <a href="/expert-insights/buying/the-two-aspects-stopping-most-renters-from-buying">Property Observer recently reporting that a survey calculated that 19% of buyers rely on their parents in some way</a>, with 42% of first home buyers doing so. This included using them as a guarantor, borrowing money or living with them while they invest.
Godfrey warns that those who lose their jobs, get sick or cannot keep up with repayments may see the bank requiring them to sell their homes, or repossess it.   “Getting a family member to guarantee all or part of your home might seem like a good idea for some borrowers as a way of avoiding lender’s mortgage insurance. However, the potential downside side risk for your family member is significant because if you are unable to make repayments on your home loan they may lose their house as well,” he said.   “For elderly parents who are no longer in the workforce and worked all their life to finally own their home, this is a high-risk strategy and can be devastating if things go wrong.”
Of these three, however, he said that 40-year loans come with the most risk – particularly as they can backfire if the interest rate goes up again. He suggests that those who take this loan do so as they cannot afford the monthly repayments on a 30-year term, and so are more vulnerable to rate changes.
Looking at a 30 and a 40 year loan on a $300,000 home, an extra $140,800 in interest ends up being paid – despite repayments being just $4.88 more per day for the 30-year loan.
“The average interest rate for standard home loans over the last 20 years has been 7.6% compared to 5.9% today. Be prepared for rates to go up.”
CHOICE recommends the following four tips for new buyers:
<ol>
<li>Check if you can afford rates increasing by 3%. 
</li>
<li>Consider fixing part of your loan, called a split loan. You can make extra payments into the variable portion of the loan. 
</li>
<li>Don’t try beating the bank. Even economists are often wrong when predicting long-term interest rate movements. 
</li>
<li>If you’re thinking about providing a family guarantee for someone, consider alternatives and important factors such as: <ul>
<li>Taking an unsecured personal loan for the amount you want to give the person and ask them to make all or part of the repayments. The interest rate will be higher but the risks are much smaller. 
</li>
<li>Make sure you have enough savings to cover the guarantee if problems arise. 
</li>
<li>If things go wrong, and the lender threatens to sell your house, immediately seek legal advice. If you make a complaint to the Financial Ombudsman Service or the Credit Ombudsman Service the bank has to pause the enforcement proceedings while the complaint is assessed.  </li>
</ul>
</li>
</ol>
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