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

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ANZ have revised their forecast for the housing markets and now see prices falling as much as 20 percent in Sydney and Melbourne.
They previously predicted 10 percent falls peak to trough on their <a href="/news/anz-revise-property-forecasts-and-see-10-percent-declines-in-sydney-and-melbourne">second forecast revision</a> back in June.
The ANZ said expect Sydney house prices to return to 2015 levels, with the current weakness <a href="/expert-insights/buying/prices-likely-to-remain-subdued-into-2020-anz-research">running through to 2020</a>.
They now forecast declines between 15 to 20 percent.
<div class="article__content">
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<div class="cq-article-content-media section"><img src="https://www.afr.com/content/dam/images/h/1/8/8/e/l/image.imgtype.afrArticleInline.620x0.png/1542869601500.png" alt=" " width="620"></div>
<div class="cq-article-content-media section"> </div>
<div class="cq-article-content-media section">Sydney and Melbourne had been proving more difficult to predict than the other capitals.</div>
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"Until recently, housing prices have been performing broadly as we expected," ANZ's economist Daniel Gradwell and Jo Masters said. 
"In fact, most capital cities are still tracking in line with our forecasts. 
</div>
<div class="cq-article-content-paras section">
"Sydney and Melbourne, however, are not.
"We had expected by this stage to see some evidence that price declines in these cities were moderating, as the impact of credit tightening started to wind down.
"But price falls are continuing at a material pace and are broadening through most segments of these markets." 
The revisions for the Sydney and Melbourne outlook are now more in line with fellow economists.
CoreLogic-Moody Analytics however suggest Sydney house prices <a href="/news/sydney-house-values-to-grow-0-6-in-2019-corelogic-moody-s-analytics-australian-home-value-index-forecast">will grow 0.6 percent in 2019.</a>
 
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jonathanchancellor-7SQnKwU6yx

ANZ revise forecast upwards to 20 percent house price declines in Sydney and Melbourne

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The ANZ chief executive Shayne Elliott predicts the pace of home loan growth will slow by roughly half to an all-time low.
He says the "extraordinary" boom in mortgage debt over the past three decades will come to an end.
But Elliott forecast the rate of housing credit growth would "trend towards" 2 to 3%, compared with the 5 to 6% of recent times.
"We’ve had 30 years where home lending has grown, for most of that, double-digit every year, and more recently at 5-6%," he said.
"That’s an extraordinary market growth over a period of time, and we’ve all become used to it, we just don’t think that’s sustainable. We think that that will be much more subdued.
“The reasons are house prices are already high, households already carry reasonable levels of debt, so it’s hard for people to borrow even more. And remember what fuelled a lot of the ability of people to borrow has been lower interest rates.
<p data-gtm-vis-recent-on-screen-6236702_632="1540981245653" data-gtm-vis-first-on-screen-6236702_632="1540981245653" data-gtm-vis-total-visible-time-6236702_632="4000" data-gtm-vis-has-fired-6236702_632="1">“All of those things kind of conspire to say the outlook will be softer.”
<p data-gtm-vis-recent-on-screen-6236702_632="1540981245653" data-gtm-vis-first-on-screen-6236702_632="1540981245653" data-gtm-vis-total-visible-time-6236702_632="4000" data-gtm-vis-has-fired-6236702_632="1">Elliott said an average Australian household with an income of $110,000 could theoretically borrow up to about $550,000 three years ago, but this maximum had now fallen to $440,000 for the same household.
"The reason for that is all of the myriad of changes that banks and regulators have made around borrowing capacity," he said.
ANZ has cut its interest-only loans by close to two-fifths over the past 18 months.
But it faces a crunch over the next two years as the volume of expiring interest only (IO) loans peaks.
The third-largest home lender on Wednesday said it had cut interest only loans to 22% of its home loan mix in the September quarter.
It was 36% in the March quarter last year.
Loans to investors slipped to 32% from 34%.
WA, the mining-dependent state, represents the worst part of ANZ's home loan portfolio.
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j.ballantyne1990-6AQqhLzZaK

ANZ faces crunch with property borrowers on interest only loans

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Commercial property confidence is at much more encouraging levels than its residential counterpart, according to the latest ANZ Property Council Survey.
The survey found that the gap in confidence between commercial and residential property has now reached record levels.
Despite this, commercial sentiment has also dropped.
The drop in sentiment in the most recent quarter occurred across all segments, although the retail segment is still the weakest.
<a href="https://www.propertyobserver.com.au/images/2018/10/11/AMP%20Capital%201.JPG" target="_blank">Click to enlarge </a>
<img src="https://www.urban.com.au/images/2018/10/11/AMP%20Capital%201.JPG" alt="">
Sluggish income growth, rising mortgage rates and utility costs and reduced wealth effects as house prices fall are all issues reducing the level of household consumption taking place.
Online retailing and global competition are also continuing to hinder domestic bricks and mortar retailers.
However, the industrial segment is now the most optimistic, displacing tourism.
<a href="https://www.propertyobserver.com.au/images/2018/10/11/AMP%20Capital%202.JPG" target="_blank">Click to enlarge </a>
<img src="https://www.urban.com.au/images/2018/10/11/AMP%20Capital%202.JPG" alt="">
Firms in the industrial industry report that the construction pipeline has increased further over the recent quarter, especially in New South Wales, while it remains elevated in Victoria and Queensland.
Danial Gradwell and David Plank, the authors of the report stated:
"The outlook for capital values is solid, which we think is consistent with demand coming from the strong pipeline of infrastructure projects coming through in those states.
"In addition, while online retailing is disrupting the retail sector, the storage and logistics requirements are supporting the industrial sector."
<a href="https://www.propertyobserver.com.au/images/2018/10/11/AMP%20Capital%203.JPG" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2018/10/11/AMP%20Capital%203.JPG" alt="">
"It is disappointing to see that survey respondents’ appraisal of the federal government has retreated considerably," the report said.
"While the September quarter showed a solid improvement in the government performance index (likely in response to the 2018-19 Budget), the subsequent leadership spill in August appears to have hindered confidence once more."
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Commercial property confidence is solid, for now: ANZ

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The ANZ-Property Council Survey for the December quarter shows that sentiment in Australia’s property sector has fallen sharply to the lowest level in two years. 
Sentiment in the residential segment has fallen to the lowest level since 2012.
NAB found the same results in their Quarterly Australian Residential Property Survey, which prompted them to change their forecast to predict further losses.
Much like NAB's survey, ANZ-Property Council Survey found that bearing the brunt of the weaker confidence was New South Wales and Victoria.
They noted the decline was recorded across all states and territories. 
Click here <a href="https://www.propertyobserver.com.au/images/2018/10/11/ANZ-Figure1.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/2018/10/11/ANZ-Figure1.jpg" alt="">
David Plank, ANZ head of Australian economics, said the downturn in the housing outlook is significant, although not surprising. 
"The survey supports our view that both house prices and residential construction are set for a period of decline," Plank said.
"The expectations of tighter credit availability and higher interest rates, if realised, will weigh on the housing market for some time.
"We think housing prices will nudge lower through to 2020, before stabilising through the remainder of that year," Plank suggested.
He said that they do not anticipate the scale of price declines accelerating, given that the economy and household finances are still generally in good shape.
ANZ expect housing construction to post material declines through 2019 and 2020.
Click here <a href="https://www.propertyobserver.com.au/images/2018/10/11/ANZ-figure2.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/2018/10/11/ANZ-figure2.jpg" alt="">
Ken Morrison, chief executive of Property Council of Australia, said that sentiment is softening in critical areas.
“This report shows that sentiment – while still positive – is softening in critical areas across an industry that is Australia’s biggest employer and supports 1.4 million jobs,” Morrison said.
“This shift in sentiment needs to be on the radar of policy makers because now more than ever we need strong investment, tax and planning regimes to keep the economy strong.” 
The outlook for construction and prices has worsened, and firms expect a double whammy of tighter credit conditions and higher interest rates over the next year. Demand from foreign buyers is still falling.
There was good news for the commercial property segment, where sentiment is much better.
"Although posting a small decline in the December quarter, confidence is still sitting at strong levels," the report read.
"The tourism, industrial and office property sectors report a solid outlook, although the retail sector is still challenged."
The ANZ/Property Council survey is based on responses from more than 900 property industry participants. The survey was conducted between 3-19 September 2018.   
 
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jrobinson-rf4aSBido9

Sentiment drops further as house prices to decline until 2020: ANZ-Property Council

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EXPERT OBSERVERS
The housing market remains weak, and many key indicators are around the worst levels in a number of years. However, the downturn is still tracking in line with our previous forecasts, and our outlook is relatively unchanged. 
We still anticipate prices will keep falling through 2018 and 2019, and we have extended our forecast into 2020, where prices are likely to remain subdued.
Nationwide, we continue to expect prices to fall around 4% in 2018 and 2% in 2019.
Click here <a href="https://www.propertyobserver.com.au/images/2018/9/27/state-forecast.jpg" target="_blank">to enlarge.</a>
<a href="https://www.propertyobserver.com.au/images/2018/9/27/state-forecast.jpg" target="_blank"><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/2018/9/27/state-forecast.jpg" alt=""></a>
 
We have extended our forecast to 2020, and we think prices will end that year flat from a year ago. We still expect Sydney and Melbourne prices to fall around 10% peak to trough, while other markets will perform better.
Click here <a href="https://www.propertyobserver.com.au/images/2018/9/27/house-prices.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/2018/9/27/house-prices.jpg" alt="">
 A number of headwinds will continue to weigh on the market, including further credit tightening, out of cycle rate increases, and eventual RBA rate hikes. But despite these challenges, the risks around financial stability have not worsened to date.
Credit availability, or the lack thereof, is also an issue for housing construction. 
The current round of projects is already locked in, with a record level of investment in progress. But we have concerns over the next round of projects, and expect to see construction fall steadily through 2019 and 2020.
Daniel Gradwell and Joanne Masters are economists at ANZ.
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Prices likely to remain subdued into 2020: ANZ Research

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ANZ have announced a new gauge for looking at dwelling prices in Australia using Google search trends.
The ANZ Housing Search Index looks at search terms such as “stamp duties”, “mortgage loan comparison”, “auctions today” and “moving company” to look at market sentiment.
<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/2018/8/8/FIGURE%201.jpg" alt="">
The information is available through Google Trends, which has been operating since January 2014.
It claims that “significant research has shown that this data may correlate with the levels of economic activity in given industries, and thus may be helpful in predicting macro indicators”.
“The (year on year) change in the index can track annual shifts in housing prices, three months in advance.”
<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/2018/8/8/FIGURE%202.jpg" alt="">
ANZ say that it plans to use the tool as an additional information point to assist in its analysis.
It claims that the index is already providing potentially useful information.
“The index suggests Australia’s house prices may stabilise later this year, consistent with the message sent by auction clearance rates,” the report said.  
“It is early days, however, so we aren’t getting too carried away with the signal.”
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New ANZ tool analyses Google searches for housing market sentiment 

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ANZ has cut owner-occupier principal and interest rates on its basic home loan, bringing the rate down by 34 basis points to 3.65 per cent.
ANZ has also cut some of its fixed home loan rates by up to 24 basis points for owner-occupier principal and interest and up to 13 basis points for investor principal and interest loans.
This follows similar loan rate cuts from Commonwealth Bank earlier this week.
According to the latest Canstar data 10 different institutions made rate changes to their home loan products, with a total of 58 product level changes recorded.
Sally Tindall, research director at RateCity.com.au, said it was a surprising move from ANZ to buck the rate-hike trend.
"This is now the lowest ongoing variable rate offered by a Big Four bank," she said. 
“It shows that the bank is competing hard to get new customers as non-banks threaten their market share."
“This comes at a time when the market was expecting ANZ to hike rates and not cut them and the Royal Commission has turned the playing field on its head,” she concluded.
<img src="https://www.urban.com.au/images/2018/8/3/Canstar%201.JPG" alt="">
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ANZ now offers the lowest ongoing variable home loan rate among Big Four

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EXPERT OBSERVER
The value of Australian housing finance commitments rose slightly in May, but not by enough to offset recent weakness.
The value of monthly approvals is more than five per cent lower than a year ago. Investors are the main driver of this weakness, edging down another 0.1% m/m, while the owner-occupier segment is performing better (+0.8% m/m). 
The fall in investor demand is clearly related to APRA’s macroprudential policies.
<img src="https://www.urban.com.au/images/2018/7/11/ANZ-1.JPG" alt="">
In 2015, the 10% speed limit on investor borrowing saw a sharp drop in the presence of investors, and the subsequent limit on interest only loans in 2017 has had a similar impact.
Even the removal of the 10% growth limit, announced at the end of April 2018, is unlikely to drive renewed strength.
As a result, the share of new lending going toward investors is at the lowest level in several years. 
<img src="https://www.urban.com.au/images/2018/7/11/ANZ-2.JPG" alt="">
The fall in investor borrowing is also seen in finance for the construction and purchase of new dwellings, which continues to fall.
This provides further evidence that we have moved past the peak in building approvals.
 <img src="https://www.urban.com.au/images/2018/7/11/ANZ-3.JPG" alt="">
A central feature of our view on the housing market is that credit conditions continue to tighten through the remainder of 2018.
This is expected to result in further weakness in housing finance going forward, which will in turn weigh on housing prices and building approvals.
Daniel Gradwell is a Senior Economist at ANZ Research
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Australian housing finance up in April, unlikely to be sustained: Daniel Gradwell

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EXPERT OBSERVATION
The May building approvals data support ANZ's view that the peak in new housing approvals has past.
Weak housing finance results and the ongoing tightening of credit availability are likely to see approvals continue to ease.
From an investment point of view, the backlog of work will keep activity elevated over the near term, but construction is expected to fall through the end of this year and 2019.
<img src="https://www.urban.com.au/images/2018/7/3/ANZ%20Past%20Peak%20Approval.JPG" alt="">
Australian residential building approvals were slightly weaker than market expectations in May, falling 3%, after a 5% decline in the previous month.
Queensland was the main driver of this weakness.
Apartment approvals in the state fell 35%, to the lowest level in four years.
The historically stable segment of detached houses saw a 20% fall in approvals.
While these falls follow quite strong results in the last two months, the 2,700 dwellings approved in Queensland in May is the weakest monthly result since June 2013.
<img src="https://www.urban.com.au/images/2018/7/3/ANZ%20Detached%20House.JPG" alt="">
Detached house approvals also recorded a significant decline in Victoria, down 10%.
However, strength in the unit/apartment segment (+15% m/m) meant that Victorian approvals were overall unchanged.
These results are consistent with ANZ's view that Australia is past the peak in housing approvals.
<img src="https://www.urban.com.au/images/2018/7/3/ANZ%20weak%20housing%20finance.JPG" alt="">
Looking forward, the decline in housing finance for the construction and purchase of new dwellings suggests that building approvals will continue to trend lower.
The tighter credit environment appears to be impacting the construction side, as well as prices, but a large backlog of work will support investment in the near term.
Daniel Gradwell is the senior economist for <a href="https://www.anz.com.au/">ANZ</a>.
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New housing approvals past peak with further weakness likely: ANZ

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EXPERT OBSERVATION
Weakness in Australia’s housing market has persisted longer than we expected. We have revised our forecasts and now expect to see peak-to-trough price declines of around 10% in Sydney and Melbourne, with smaller declines elsewhere.
This doesn’t derail Australia’s economic outlook. The weaker housing market reflects a regulatory induced tightening in the supply of credit rather than tighter monetary policy. We think, as a result, that the impact on the economy will be a less pervasive. There are also offsets to the weaker housing market. For instance, we revised up our outlook for wages in the very near term, and larger-than-expected tax cuts are a positive development. 
We think for 2018 GDP growth will stay around the 3% level reached in Q1. We expect similar growth in 2019, before a slowdown in government spending, investment and net exports sees growth drop to around 2.5% in 2020. 
Growth in the order of 3% for this year and next is expected to push the unemployment rate down to 5% by the end of 2019. In turn this tighter labour market supports higher wage growth. The lift in wages helps the outlook for inflation, with core inflation lifting to 2.3% y/y by the end of 2020. 
Falling unemployment and rising wages would allow the RBA to conclude that sufficient progress is being made toward the mid-point of the inflation target, which may prompt it to reduce monetary accommodation in 2019. Previously, we expected the RBA to tighten in May 2019. Our weaker house price outlook makes this timing challenging. While the RBA does not specifically target house prices, we think it will be reluctant to start tightening policy if house prices are still falling. Hence we have pushed the first hike to August to allow more time for stability to emerge, with another to follow in November and then for the cash rate to sit at 2% in 2020. 
Obvious downside risks to our outlook come from: the threats to global trade, the possibility that house prices fall by more than we expect and/or that they have a more negative impact than we assume. An upside risk could be a much lower-than-assumed AUD, as the RBA lags the Fed further.
Click here <a href="https://www.propertyobserver.com.au/images/2018/6/19/figure1.jpg" target="_blank">to enlarge.</a>
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HOUSE PRICES EXPECTED TO FALL FURTHER, WITH IMPLICATIONS FOR THE TIMING OF OUR RBA CALL 
The housing market is weaker than we expected. Instead of prices stabilising in the first half of 2018 they have continued to decline. As a consequence we now expect to see peak- to-trough price declines of around 10% in Sydney and Melbourne, with smaller declines elsewhere (Figure 2). See our June Housing Chartpack for our revised outlook. 
Click here <a href="https://www.propertyobserver.com.au/images/2018/6/19/figure2.jpg" target="_blank">to enlarge.</a>
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A weaker housing outlook affects our outlook for household spending. We think there are offsets, like a slightly firmer outlook for wages and more generous tax cuts than we had factored into our last forecast update. Overall our projections for GDP, employment and inflation are broadly similar to the last update despite the weaker track for house prices. 
This also reflects the fact that the source of house price weakness is a regulatory induced tightening in the supply of credit rather than one triggered by RBA rate hikes. We think this has a less pervasive impact on the economy than falling house prices brought about by higher interest rates would have. Not least because much of the impact of tighter credit supply is centred on Sydney and Melbourne rather than being country wide. 
We do, however, think the housing market’s path will influence the RBA’s policy deliberations. We think that our expectations – a decline in unemployment toward 5%, a gradual acceleration in wages and a lift in core inflation above 2% – support the case for a higher cash rate at some point. But the weaker outlook for housing will also matter, in our view. While the RBA doesn’t focus on house prices specifically, we doubt it will be comfortable tightening if house prices are still falling as that would add to the downside risks for the economy at a time when the inflation outlook doesn’t require an aggressive approach. We think the RBA will want to be confident that the housing market is stable before it raises the cost of debt. 
Our updated forecasts show house prices falling until the end of 2018 and then stabilising in the first half of 2019. It is possible that, by May, sufficient evidence of stability will be in place. A rate hike could take place then, as we previously expected. 
We now think it more likely, though, that the RBA will wait a little longer before tightening, not only to ensure that the housing market has stabilised but also to ensure that the unemployment rate gets closer to 5%. As such, we have shifted the timing of the first rate hike to August 2019, with a second hike in November. This also gets us well past a possible May election. The lift in the cost of debt triggers a further modest weakening in the housing market. The RBA is then expected to keep the cash rate at 2% through 2020.
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SOLID GDP GROWTH STILL EXPECTED OVER THE NEXT TWO YEARS 
We have updated our GDP forecasts in the light of several factors, specifically our revised outlook for the housing market and the release of the Q1 GDP data. But also taking account of the policy measures announced in the May Commonwealth Budget, most notably the bigger tax cuts than we expected in our March forecast. The forecast horizon has also been extended out to 2020. We still expect solid growth this year and next, looking for around 3% in each year (Figure 3). We anticipate slower growth of 2.5% in 2020, as growth in public sector spending slows and the contribution from net exports turns negative.
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Our forecasts for the household sector are largely unchanged from our last update, despite weaker house prices. Consumption is likely to grow relatively modestly, given the constraints of low wage growth, high debt and now falling house prices. Slightly higher wages and bigger tax cuts than we expected provide offsets to the weakness in house prices. The outlook for housing investment is also likely to be subdued, with activity likely to eke out one more quarter of expansion, before gradually declining through H2 2018 and 2019 in response to lower approvals and higher interest rates in 2019. In 2020 we expect activity to stabilise, with a stable cash rate and ongoing solid population growth helping to support demand. 
The outlook for private investment remains positive, and we continue to expect robust growth over the next few years. Surveys continue to suggest that firms are planning to expand capex and that capacity utilisation rates are high, with businesses reporting that they are bumping up against premises and plant limitations. We have, however, shaved our forecasts a little given heightened global uncertainty, particularly on the trade front, a modest downgrade to investment plans in the Capex Survey and recent weakness in non- residential building approvals. Overall though, the outlook remains good, and we expect business investment to be a key support to GDP growth over the next few years. 
Another key support to growth will come from the public sector. The pipeline of infrastructure spending suggests that activity will continue to expand this year and next, although we see 2019 as the peak and expect activity to flatten out in 2020. Public consumption is set to continue to grow strongly with the ongoing roll-out of the National Disability Insurance Scheme (NDIS) supporting spending (Figure 4). Overall, public demand should continue to punch above its weight in terms of its contribution to GDP growth over the next few years. 
Click here <a href="https://www.propertyobserver.com.au/images/2018/6/19/figure4.jpg" target="_blank">to enlarge.</a>
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LNG is likely to be a key driver of the 0.6ppt contribution from net exports over the year to December 2018. We expect the 2019 contribution to be smaller and net exports to turn negative in 2020. Solid export growth and elevated commodity prices should help to support profit growth. 
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We continue to expect the unemployment rate to fall to 5.2% by the end of this year and then reach 5% by the end of 2019 (Figure 5). Ongoing solid growth should help to erode spare capacity through 2020, pushing the unemployment rate below the key 5% level. 
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Wages growth is likely to remain subdued, although we have actually lifted our near term forecasts a touch. The recent improvement in the Wage Price Index (including bonuses) suggests that an increase in the difficulty of finding suitable labour is pushing businesses to lift pay to attract workers (Figure 6). This should eventually feed through into the headline measure. Moreover, the Fair Work Commission has just announced another larger-than- usual increase in the minimum wage of 3.5%, to start on 1 July. Given ongoing spare capacity in the labour market, however, the improvement in wage growth is expected to be gradual, with y/y growth in the Wage Price Index lifting to 2.4%, 2.6% and 2.9% by end- 2018, 2019 and 2020 respectively. 
The slight improvement in wages seen to date has translated to a lift in household income growth. The 1.1% real annual growth is far off the low of -0.2% recorded in Q2 2017, however it remains well below consumption growth of 2.9%. Consequently, the household saving rate continues to fall. It is now only just above 2% – the lowest rate since the financial crisis.
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We expect household income to lift in coming years, allowing spending growth to broadly maintain the pace of the past few years without the need for further declines in the saving rate (Figure 7). If we are wrong, and income growth fails to recover, the low level of the saving rate will limit households’ capacity to maintain the recent spending pace.
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While the outlook for household incomes and spending continues to be the key domestic downside risk to our forecasts, increasing global trade tensions have now raised the risks around the external sector. Clearly the evolution of trade discussions and geopolitical issues will have an important influence on Australia’s economy, given its large trade exposure. Any disappointment on this front has the potential to flow through to the business investment outlook, crimping a key driver of the current recovery. 
NEAR-TERM INFLATION OUTLOOK A TOUCH HIGHER 
We have nudged our near–term inflation forecasts higher, although we continue to expect only a very gradual acceleration in inflationary pressures. We now expect core inflation to hit 2% y/y in Q3 2018 – previously Q4 2018 – which partly reflects base effects from the solid 0.5% q/q result in Q1 2018. 
Looking forward, our forecast for core inflation at the end of 2019 is unchanged, at 2.1% y/y, as wage growth accelerates only slowly and retail price deflation continues. Our profile for headline CPI is somewhat higher, largely reflecting our expectation that petrol prices will provide a significant boost over the remainder of this year. We now see headline CPI accelerating to 2.3% y/y by December 2018 (up from a previous forecast of 2.0% y/y). In annual average terms, we expect headline CPI to rise by 2.2% in both 2018 and 2019 (Figure 8, below). 
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David Plank is head of Australian economics at ANZ.
 
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