Queensland builder-developer MAYD has revealed the first look at its major North Kirra beachfront development, lodging amended plans that reduce the number of apartments and increase the proportion of larger residences.

The project is planned across a substantial 4,742 sqm amalgamated site spanning seven lots at <a href="https://www.apartments.com.au/new-apartments/2-6-pacific-parade-bilinga-qld-4225">2-6 Pacific Parade</a> and 27-33 Golden Four Drive in Bilin​ga, directly opposite Nor​th Kirra Beach.

<a href="https://www.apartments.com.au/developers/mayd-group">MAYD</a> secured the site for $32.5 million in 2025, in what was one of the Gold Coast's largest property transactions of the year.

The development will be delivered across two stages, with the first stage carrying an estimated gross realisation value of around $360 million.

The latest amendments seek to reduce the overall apartment count and shift the project further toward the owner-occupier market, with larger residences designed for buyers wanting considerably more space than traditionally offered in a beachfront apartment.

The residential mix will include townhomes, oversized two-bedroom apartments, substantial three-bedroom residences and four-bedroom homes.

MAYD has appointed Cera Stribley to lead the architecture and interiors, with the Melbourne-based design practice drawing on the beachfront setting through a series of ocean-facing terraces and heavily landscaped balconies.

Strong horizontal forms and curved balconies will define the exterior, with subtropical landscaping integrated throughout the building to soften the built form and increase the connection between the residences and the beachfront.

The project will also include an extensive collection of resident wellness and lifestyle facilities, continuing the broader shift across the Gold Coast's luxury apartment market toward larger homes supported by resort-style amenity.

<img alt="MAYD" data-entity-type="file" data-entity-uuid="d1bcbb05-e659-4b47-8bd4-1e595315e2ad" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%202.05.03%E2%80%AFPM.png?VersionId=jj0XEud1X1DuLt7_KyElhjMdZGOXmLHP" />

MAYD Founder Todd Mould said North Kirra was increasingly appealing to buyers attracted to the more established, lower-density character of the southern Gold Coast.

"North Kirra presents one of the most compelling luxury residential opportunities currently emerging in Australia, combining absolute beachfront with the character and authenticity that buyers are increasingly seeking, and the same sense of tight-knit community that defined Burleigh and Currumbin perhaps 10 or 15 years ago," Mould said.

"With Gold Coast Airport on its doorstep, it also offers a level of accessibility that broadens its appeal across almost every market demographic."

The project comes as the southern Gold Coast continues to attract an increasing share of high-end apartment development and buyer activity.

Kirra in particular has emerged as one of the region's more tightly held beachfront markets, with its relatively low-density character, established surf and hospitality scene and proximity to Gold Coast Airport differentiating it from the higher-density markets further north.

Mould said those characteristics had informed the approach MAYD and Cera Stribley had taken to the project.

"We've worked closely with Cera Stribley to create a vision that is deeply connected to its surroundings," he said.

"Inspired by the coastline itself, the architecture has been shaped around space, privacy and resort-style living, creating a collection of homes that reflects the next generation of luxury on the southern Gold Coast."

MOTIV Managing Director Carly Cottam, who has been appointed to market the project, said buyer attention had continued to move south along the Gold Coast.

"Purchasers who may once have defaulted to Broadbeach, Main Beach or Surfers Paradise are increasingly recognising the value of a genuine beachfront location that offers lower density, strong amenity and a more established sense of community," Cottam said.

"Kirra has a powerful combination of growing demand and genuine scarcity. Beachfront supply is inherently constrained, the area remains relatively low density, and buyers are increasingly placing a premium on locations that feel established, uncrowded and authentic rather than heavily developed."

Cottam said the proximity to Gold Coast Airport was also proving increasingly important for interstate and second-home buyers.

"Being minutes from Gold Coast Airport makes it particularly compelling for interstate buyers, frequent travellers and second-home purchasers who can access an authentic coastal lifestyle almost immediately after stepping off a flight."

The acquisition takes MAYD's active development portfolio to more than $500 million, with the North Kirra project representing one of its largest undertakings to date.

MAYD is targeting an early 2027 launch.

Joel Robinson

First look at MAYD's North Kirra mixed-use precinct

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Castle Hill, the longtime hub of the Hills District, has been one of the major beneficiaries of Sydney's Metro expansion, with improved connectivity helping drive continued population growth, development and buyer demand across the Hills District.

But despite that growth, the suburb has seen relatively few major new apartment projects brought to market over the past 18 months.

Hills District developer Reve Group is looking to fill that gap with <a href="https://www.apartments.com.au/new-apartments/nova-r-ve-castle-hill-2-garthowen-crescent-castle-hill-nsw-2154">Nova Rêve</a>, a major new mixed-use precinct on the corner of Garthowen Crescent and Old Castle Hill Road, a short walk from Castle Hill Metro Station and Castle Towers.

[smartcode_project:default project_id=152737 project_image_fid=377679]

The project will comprise three residential towers alongside a hotel, restaurants, cafes and a skybar, more than 1,600 sqm of ground-floor retail and almost an acre of landscaped gardens.

It represents the largest project undertaken by Reve Group, the development arm of the Kassis family, which has been building across the Hills District for more than 30 years through Kassis Homes.

[smartcode_project:default project_id=152737 project_image_fid=377675]

Nova Rêve also represents a significant step up from the family's first apartment development, Grand Rêve, which was delivered nearby on Garthowen Crescent.

Grand Rêve introduced larger, house-like apartment layouts and premium inclusions including Wolf and Sub-Zero appliances to the Castle Hill market.

Nova Rêve takes that approach to a precinct scale, combining the residential component with hospitality, retail and substantial public and resident landscaping.

[smartcode_project:default project_id=152737 project_image_fid=377685]

Reve Group Managing Director Sam Kassis said the project reflected the family's three decades of building in the Hills, which has evolved from trophy homes on quarter-acre blocks to larger-scale apartment development.

"Grand Rêve was our first apartment project here and it showed us what this pocket of Castle Hill could be. Nova Rêve is the refinement of that idea: not just apartments, but a place the whole suburb can use," Kassis said.

A key part of that approach is the hotel, which has been designed to operate as an amenity for the wider Castle Hill community rather than solely hotel guests.

It will include restaurants, cafes, skybars and all-day dining, alongside conference and event facilities catering to business functions, community groups and private events.

At ground level, more than 1,600 sqm of shops and cafes will open onto the surrounding streets and landscaped areas.

Almost an acre of gardens designed by Land and Form Studios will run through the precinct, incorporating pathways, seating, barbecue areas and children's play spaces.

[smartcode_project:default project_id=152737 project_image_fid=377680]

Reve Group's Romio Georges said creating an active ground plane had been central to the planning of Nova Rêve.

"There are gardens with pathways, barbecues, seating and play areas, shops and cafes opening onto the street, and a hotel with restaurants and a skybar that anyone in Castle Hill can walk into," Georges said.

The project's elevated position on one of Sydney's highest ridgelines will also provide apartments with outlooks toward the Sydney skyline, surrounding parkland and the Blue Mountains.

More than 80 per cent of the apartments will occupy corner positions, with Turner responsible for both the architecture and interiors.

&nbsp;

[smartcode_project_cta:default project_id=152737]

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Nova Rêve arrives as Reve Group bets on Castle Hill's next growth phase

A collection of just 25 large-format apartments and penthouses overlooking Goodwin Park is entering the Coolangatta market, with <a href="https://www.apartments.com.au/new-apartments/marea-residences-coolangatta-27-27a-dixon-street-coolangatta-qld-4225">Maréa Residences</a> combining a low-density, residential-only approach with uninterrupted park and Pacific Ocean outlooks.

Located at 27 Dixon Street, Maréa comprises three and four-bedroom residences alongside a limited number of dual-level penthouses, with the project positioned between Goodwin Park and <a href="https://www.apartments.com.au/developments/coolangatta-qld-4225">Coolangatta</a>’s coastal precinct.

Construction has commenced, with completion currently estimated for late 2027. Three-bedroom residences are priced from $1.8 million.

[smartcode_project:default project_id=150999 project_image_fid=374005]

The project has been designed around its northern outlook across the park, with the building’s architecture, landscaping and material palette intended to establish a connection with the neighbouring green space. The residences have been configured to maximise natural light and views across Goodwin Park towards the ocean.

Inside, the material palette incorporates timber, stone and brushed brass, complemented by curved detailing and ambient lighting. Kitchens and bathrooms carry the same natural material approach, while residences also include basement parking, storage and lift access.

Maréa’s penthouses are arranged over two levels and include private pools, adding another layer to the project’s focus on larger-format apartment living. Across the development, residences are configured with three or four bedrooms rather than the broader mix of smaller apartment types commonly found in larger projects.

[smartcode_project:default project_id=150999 project_image_fid=374010]

Resident amenity is concentrated at rooftop level, where landscaped entertaining terraces and pools take advantage of elevated views across Coolangatta and the Pacific Ocean.

The project has so far been particularly well received by local owner-occupiers and downsizers, according to Urban Activation Property Sales and Marketing Director Matt George, with the residential-only format, construction quality and northern park outlook among the features resonating with purchasers.

“The uninterrupted northern aspect overlooking Goodwin Park has been a key point of difference, with buyers attracted to the sense of serenity and open space the park provides, while still enjoying easy access to the ocean and being within walking distance of the lifestyle and amenities Coolangatta has to offer,” George said.

[smartcode_project:default project_id=150999 project_image_fid=374002]

“The combination of high-quality construction, a residential-only building, park outlook and proximity to the beach has resonated strongly with the local downsizer market.”

The Dixon Street address is within walking distance of Coolangatta Beach and the broader southern Gold Coast coastline, including the surf breaks at Snapper Rocks and Kirra. Coolangatta’s cafés, restaurants and retail are nearby, while Gold Coast Airport is also within close proximity.

[smartcode_project_cta:default project_id=150999]

Maréa Residences brings parkside apartments to Coolangatta

Melbourne developer PDG has secured Victorian Government approval for its $1.5 billion Southbank development <a href="https://www.apartments.com.au/new-apartments/the-one-1-queens-bridge-street-southbank-vic-3006">The One</a>, clearing the way for the long-dormant riverfront site opposite Crown to finally be developed.

The Minister for Planning has approved the project at 1-29 Queens Bridge Street, with the Department of Transport and Planning issuing the planning permit following its assessment.

The approval will allow PDG to develop the prominent 5,059 sqm site with a major mixed-use tower comprising premium apartments, including branded residences, a luxury hotel and boutique office space.

PDG acquired the site in late 2024, with its position directly opposite Crown's main entrance and near Melbourne's Arts Precinct making it one of Southbank's most significant remaining development opportunities.

<img alt="PDG" data-entity-type="file" data-entity-uuid="3933013e-6332-4386-b9be-089df05caf17" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%209.29.22%E2%80%AFAM.png?VersionId=sITIgBqDL0N3VNSMwWEmF5UA.uvcsRyu" />

Designed by COX in collaboration with ODO and PDG, the tower's architecture draws on the movement of the Yarra River, with six vertical pleats running the height of the sculpted facade.

The project will also see the heritage-listed Queens Bridge Hotel restored and incorporated into the development&nbsp;with new hospitality and public uses, including a rooftop venue.

A significant component of The One will be its residential amenity.

More than 5,000 sqm of resident facilities will be delivered across a single level, making it one of the largest consolidated residential amenity offerings proposed in an Australian apartment development.

The planning approval also incorporates a major upgrade of Queensbridge Square, which PDG will deliver in partnership with the City of Melbourne.

<img alt="PDG" data-entity-type="file" data-entity-uuid="73167fcd-1031-4b6f-a408-a064cfe45ed1" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-27%20at%209.29.17%E2%80%AFAM.png?VersionId=Pf1AEWxw6SNmBqR0zQW5lyEze.MtxgFp" />

The existing square will be revitalised as a new civic and pedestrian space along the Yarra River, strengthening the connection between the project, Southbank and the riverfront.

PDG Founder and Managing Director Vince Giuliano said the approval represented a major milestone for a site which has remained largely underutilised for more than 15 years.

“This is the most significant Planning Permit approval Melbourne has seen in recent years,” Giuliano said.

“For more than 15 years, this site has remained underutilised. This approval enables us to deliver a project that will contribute meaningfully to the revitalisation of Southbank, restore and reactivate an important heritage building, and create a new civic and hospitality destination for Melbourne.”

The latest approval follows an earlier planning permit issued by the City of Melbourne covering demolition works across part of the site at 9-29 Queens Bridge Street. Those demolition and early works are already underway.

PDG has also started generating early interest in the residential component from owner-occupiers ahead of a planned public launch in early 2027.

PDG secures approval for $1.5bn Southbank apartment development, The One

Local developer Harridan is seeking to turn its Woolloongabba apartment project into the first stage of a broader transformation of Burke Street, using a new 16-storey mixed-use building to establish a greener pedestrian connection toward the rapidly evolving Boggo Road transport and knowledge precinct.

The South East Queensland developer has filed plans for 154 apartments on the <a href="https://www.apartments.com.au/new-apartments/4-burke-street-woolloongabba-qld-4102">southern side of Burke Street</a>, where its proposal has been designed alongside a wider vision by LatStudios for the street.

That vision positions the southern side of Burke Street for buildings of 15 storeys and above, while envisaging lower-rise development of up to five storeys on the northern side to transition into Woolloongabba's existing character housing. It also proposes wider pedestrian verges, deep planting, new street trees and upgrades to the pedestrian approach to Boggo Road Station.

The Harridan development itself has been designed by Brisbane-based Arqus Design and will comprise 154 apartments across 16 storeys. The mix is weighted heavily toward two-bedroom apartments, with 121 proposed alongside 10 one-bedroom and 23 three-bedroom residences. There will typically be around 14 units per floor.

A lower-ground car park and three podium levels will accommodate 156 resident parking spaces, along with visitor and commercial parking. There will also be 154 resident bicycle spaces and 40 visitor bicycle parks.

&nbsp;

Harridan is a family-owned developer and part of the Holmwood Highgate Group, with more than three decades of development activity across South East Queensland. Its portfolio spans residential, commercial and industrial property, with current residential projects including Riverbank on Byron in Bulimba, Esperance Residences in Carina and The Precinct at Kinross Road in Thornlands.

Wooloongabba has been popular for apartment developers, particularly since the announcement of the 2032 Summer Olympics games in Brisbane.

While there have been a lot of development applications, it has failed to materialize into real supply.&nbsp;

Sarazin has been the major player in the area. They are under construction at Murcia Residences, on the fringe of East Brisbane and Woolloongabba. They have just launched <a href="https://www.apartments.com.au/new-apartments/the-stanley-residences-woolloongabba-8-trafalgar-street-woolloongabba-qld-4102">The Stanley Residences</a>, in Woolloongabba on Trafalagar Street. They also have Nuage coming soon on the nearby <a href="https://www.apartments.com.au/new-apartments/nuage-woolloongabba-14-wellington-road-woolloongabba-qld-4102">Wellington Road</a>.

First look: Harridan plans Burke Street transformation beside Boggo Road transport hub

Bubble

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The Satterley Property Group has seen no indication of softening demand or an impending price correction in its Victorian operations.
Jack Hoffmann, general manager of Satterley Property Group Victoria, noted the land market and the established market "were two very different beasts.” 
“We’re hearing all this talk of ‘is there or isn’t there a bubble?’ and that the established housing market, particularly the inner city apartment market, is in serious trouble.
"But this simply isn’t the case for the land market.”
 Satterley lay claim to around eight per cent of the Victorian land market with its portfolio having included Coburg Hill, Plenty River, Riverstone and Tarneit.
“The median land price grew by four per cent last year, which hardly indicates that we have entered a bubble.”
“While any price correction would inevitably have an effect on the entire market we expect that the land market, barring any unforeseeable event, would be largely sheltered from any significant impact,” Jack Hoffmann said.
He identified a consistent level of supply as a key factor keeping the land market from approaching bubble-like conditions.
“The reason that the land market has grown at a more sustainable rate than the established market is supply.
"The state government has done a good job of approving enough land for development, which is now readily developable, to satisfy demand.
“As a result you currently have around 170 active land developments in Victoria, compared to around 90 in 2010,” Mr Hoffmann added.
In 2013 Satterley Property Group announced plans to secure 10 per cent of the Melbourne residential new house and land market, with its successful bid for Victorian Government-owned land at Point Cook.
The company said in 2013 it believed the house and land package market in Melbourne was then close to the bottom of the cycle.
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jchancellor-FAypfDUnLy

No bubble with Melbourne house and land: Satterley

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With plenty of talk about a housing bubble and home values climbing much higher in Sydney and Melbourne, housing is looking expensive to many Australians. 
Low interest rates and the strong gains in certain areas are making residential housing investment quite attractive for some which is one of the drivers resulting in increasing home values. While housing may be looking expensive to locals, the declining Australian dollar means that it may be looking more attractive to foreign buyers.
Since combined capital city home values reached their most recent low point in May 2012 they have risen by 26.8%. At the same time the Australian dollar has fallen by -13.3% over that period in trade-weighted index terms. While the depreciation in the dollar has no impact on local buyers, for off-shore buyers the fall in the Australian dollar is likely to make Australian housing even more attractive. Furthermore, the Reserve Bank continues to state that there is a need for an even lower dollar which would exacerbate the relative affordability even further.
Foreign buyers are meant to be purchasing brand new homes in most instances. There have been numerous recent reports of foreign buyers not adhering to these rules.  Furthermore a recent parliamentary inquiry found that the Foreign Investment Review Board was significantly underfunded and as a result has not been able to effectively monitor and enforce foreign investment rules.
<a href="/images/2015/07/08/Chart-31.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2015/07/08/Chart-31.jpg" alt="">
Combined capital city home values have increased by 26.8% between May 2012 and June 2015. Keep in mind that these figures are heavily influenced by the Sydney and Melbourne housing markets with these the only two capital cities recording value growth in excess of this figure over the period. When you look at that 26.8% increase across other currencies you can see the impact of the falling exchange rate. Of those currencies highlighted only the Japanese Yen and Indonesian Rupiah have seen values rise by a greater amount. Across most other currencies the relative value rises have been significantly lower than they have been in Australian dollar terms.
Once you look at capital cities that have seen relatively lower recent capital growth, there has been a significant improvement in Australian housing affordability for foreign buyers. Not to mention the fact that in many of these foreign countries mortgage holders are borrowing at significantly lower interest rates than those available to Australians.
Sydney
<a href="/images/2015/07/08/Chart-21.jpg" target="_blank">Click to enlarge</a>
 
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Melbourne
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Brisbane
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Adelaide
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Perth
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Hobart
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Darwin
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Canberra
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<img src="/images/2015/07/08/Chart-9.jpg" alt="">
 
With the RBA stating that the Australian dollar remains overvalued, any further falls in the Aussie dollar are likely to result in even more attractive buying conditions for foreign buyers. Given this it is imperative that foreign investment rules are tightened and FIRB improve their surveillance work.  A central register of foreign buyers would also be seemingly important. The Victorian Government has recently announced that it will increase fees and charges to foreign buyers of property in that state.  Despite howls of protest it would seem that this is likely to have little material impact on foreign demand for housing.  Furthermore, a national approach similar to this would be a good step towards appropriately funding FIRB to undertake their review and surveillance of foreign housing investment.  Particularly given that should the dollar fall further demand from off-shore buyers is likely to increase.
Earlier this week Federal Treasury released the Exposure Drafts and Regulatory Impact Statement of legislation designed to tighten foreign investment rules, including those relating to residential real estate. The document can be read <a href="https://treasury.gov.au/ConsultationsandReviews/Consultations/2015/Implementing-Foreign-Investment-Reforms" target="_blank">here</a> and submissions can be made up until Friday 17 July.
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ckusher-ujnxiKuFQs

Australian property, expensive for us, not so for foreigners: Cameron Kusher 

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Australian property prices are potentially heading towards a correction in the next two or three years, the leading investment bank, UBS says.
Its bubble analysis of soaring property prices concluded there was no sign yet of any impending cause for the burst, hence its vague 2016-2017 timeline.
"Overall, housing is showing some bubble-like features, but it lacks a trigger to pop it near-term," UBS senior economist George Tharenou said.
A rate hike by the RBA will be the key to any price correction, noting previously home prices growth periods were hit by interest rate increases in 2003, 2007 and 2010.
"Those downturns were only triggered when the RBA hiked," he said. 
"Historically the key catalyst for housing approvals to peak is RBA rate hikes; not excess supply or unemployment."
The wealth advisory group noted in newspaper reports that average house price to income ratio was tracking at record rates of 5.5, similar to bubble-like peak levels prior to the corrections of 2003, 2007 and 2010.
George Tharenou said he hoped that prices will moderate "so we get a soft landing."
"The risk case, of course, is that that won’t happen,” he said.
UBS predicts national investment in housing will grow by 10% into 2016, prompted by record low home borrowing interest rates. 
"My forecast is for 6% (house price growth this year) and I have a soft landing in my forecast, but I’ve been thinking this for a while and the market has only continued to ­accelerate.”
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UBS bubble forecast, but no apparent price pop trigger

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Last month 29 Terry Street, the so-called Surry Hills skinny terrace, sold under the hammer for $965,000 to a Chinese investor.
Today the neighbouring <a href="https://www.realestate.com.au/property-house-nsw-surry+hills-119927281" target="_blank">31 Terry Street</a> - listed trying to match or better that result - was passed in at $805,000.
It too is a two-storey terrace with a 2.85 metre width, a land size of 38 square metres and an internal size of 48 square metres.
Listing agent, Wiseberry’s David Cradock said next door was a good benchmark, but after today's auction told Property Observer the neighbouring price had "stunned" the market. It is now for sale at $949,000.
The weekend's initial auction clearance rate was 82%, according to Australian Property Monitors, the fourth consecutive weekend with a weakening success rate. Pymble had the top house price at $4.7 million and Liverpool the cheapest apartment at $338,000.
<img src="https://i1.au.reastatic.net/456x342/064206b001dd0322a8fb230c511e2e8bcd16d25733aea7e1a3870626ccd0824b/main.jpg" alt="31 Terry Street, Surry Hills" title="31 Terry Street, Surry Hills" data-index="0">
The terrace was last sold in 2001 for $299,000. In January 2013, the home had a weekly asking rental price of $460.
Council rates are $789.60 p.a and water rates are $940 p.a.
The current $460pw rental was suggested as having potential of $600pw with renovation.
The narrow 1870s Sydney terrace is located near Central Station between Foveaux Street and Kippax Street.
A renovated 38 square metre terrace three doors away sold at $633,000 in May two years ago.
Another Surry Hills weekend offering sold through Cooley Auctions for $1.2 million when offering by Charles Touma at Belle Property. It was a renovated 1890s Victorian terrace on a 103 sqm parcel (below) at 79 Goodlet Street.
<img src="https://i1.au.reastatic.net/456x342/38d3acf2f9ac7fed73edc569cfc9c4cf345ac82679fb3fa070c08d88d75414c6/main.jpg" alt="79 Goodlet Street, Surry Hills" title="79 Goodlet Street, Surry Hills" data-index="0"> 
The two bedroom Goodlet Street offering with 80 sqm space sold at $760,000 in 2009. It had been up for rent at $770 a week in early 2014.
There were strong results out west with auctioneer Rob Trovato securing the sale of a development site offering (below) at 60 Blaxcell Street, Granville for $1.575 million.
<img src="https://i4.au.reastatic.net/456x342/c20fdedba356a2e8a3a10a10c6005a05e059ec9e6219773888f12f297db5518f/image3.jpg" alt="60 Blaxcell Street, Granville" title="60 Blaxcell Street, Granville" data-index="2">
There were 40 plus registered when offered through Soon Tee at LJH Granville.
<img src="https://i2.au.reastatic.net/456x342/91c26cc12d7fa108155885aef991e30a76cd3409f5d9367427be7999b09d91bf/main.jpg" alt="60 Blaxcell Street, Granville" title="60 Blaxcell Street, Granville" data-index="0">
The four bedroom brick veneer 1950s home sat on a huge 1052 sqm corner block of land with 16 metre frontage. It last traded in 1996 a $212,000.
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Second Surry Hills skinny terrace auction result suggests Sydney shedding its price exuberance

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Here’s the most remarkable statistic to emerge from the residential real estate industry this year: 32% of people think there’s a bubble.
The remarkable thing is that so few believe in the bubble BS. Media has been running bubble stories daily. Recently a new B word has taken up headline space: bloodbath, now a popular word to describe predictions from the lunatic fringe who subscribe to bubble theories.
But, according to an Investor Insight Survey, 55% of respondents said there was no property bubble and 13% were unsure.
Media, being the strange twisted animal that it is, chose to highlight the 32% who do apparently believe there’s a bubble, with the inference that this number is significantly high. My reaction was quite the opposite: that it’s amazingly low, given that media constantly tells us that one exists.
Among the many unworthy things that Nazi propaganda guy Joseph Goebbels gave to the world was the notion that “if you tell a lie big enough, and keep repeating it, people will eventually come to accept it as the truth”.
That principle, if that’s the right word, is alive and thriving in Australian media today. Most of what consumers believe to be true about real estate – the affordability crisis, the chronic housing shortage crisis, the bubble, the Great Australian Dream is dead, etc – are lies that have been repeated so often that many people accept them as truth.
This week the Australian Bureau of Statistics published its Residential Property Price Indexes, which are the latest figures to demonstrate the lie in the boom/bubble/bloodbath nonsense much beloved by tabloid media.
Sydney’s price index is up 13% and the next best is Melbourne’s 4.7% annual rise. Brisbane has managed 3.9%, Canberra 3%, Adelaide 2.5% and Hobart 1.9%. The price indexes for both Perth and Darwin have fallen slightly. The weighted average rise for the eight cities is 6.9%, but seven of the eight cities are well below that average.
I’ve scrutinised these figures, and similar data from other sources, from lots of different angles and directions. I’ve turned them upside down. I’ve looked at them in a mirror. I’ve examined them through a magnifying glass. And I cannot find a national property boom there. And without a boom, there is no bubble. And without a bubble, there is no prospect of a bloodbath.
Few media outlets reported the ABS figures, as they don’t fit with the pre-conceived story line of runaway markets, blistering price surges and world-shatter<a name="_GoBack" href=""></a>ing bubbles. Goebbels also gave us the idea, much utilised by journalists today, that you never let the facts get in the way of a good story.
The latest “bloodbath” forecast has come from a couple of attention-seeking conspiracy-theory twits who have put in a submission to yet another parliamentary inquiry in an attempt to drum up a bit of publicity for their consulting business.
They’ve predicted a bloodbath. Naturally media had a field day with it. If someone is silly enough to predict a market crash, journalists will be delighted to recycle it as news, regardless of how outlandish it is or how often the forecasters have been wrong in the past.
I’ve added this to the very large list of people who have predicted bloodbaths, bubbles bursting and markets collapsing in Australian real estate over the past 15 years.
I have a heightened awareness of such predictions because I recently conducted a research exercise for a client on the predictions newspapers and other media outlets have made about real estate prices since the start of the century.
Over 15 years there has been a constant barrage of articles making doomsday predictions about the housing market. Subsequent outcomes have proved them all wrong. Not one has been correct.
I recently published a Top 20 list of worst predictions about property prices. For example, in January 2012 visiting US spruiker Jordan Wirsz, seeking to drum up some free publicity, predicted a bloodbath in which house values would fall 60% in 2013. He forecast land values would fall 90%. 
Not surprisingly, this did not happen. There is no precedent, not in Australia nor in any other nation on planet Earth, for such a calamitous decline in values. The actual outcome? Capital city prices, on average, rose 9% in 2013 and 8% in 2014, with most of that growth occurring in Sydney.
But Wirsz’s ludicrous prediction, which should not have been published by any credible media organisation, was just one of numerous doomsday forecasts made over the past 15 years, and all of them have been proven false. They have come from US spruikers, Australian economists and the lunatic fringe brigade of anti-real estate campaigners.
But if Wirsz lobs in Australia again next month and predicts our property values will fall 100% - in other words, every property will be worth zero - newspapers around the nation will publish it, television will rush to do interviews and politicians will call for a parliamentary inquiry.
TERRY RYDER is the founder of <a href="https://www.hotspotting.com.au/" target="_blank">hotspotting.com.au</a>. You can <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email him</a> or follow him on <a href="https://twitter.com/hotspotting" target="_blank">Twitter.</a> 
Terry was recently joined by Property Observer editor at large Jonathan Chancellor for a webinar on why research is the key to successful property investing in 2015. You can download slides and audio from the webinar here.
 
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Without a boom, there is no bubble: Terry Ryder

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That pesky property bubble is mainly contained to the investors chasing yields and taking advantage of a chronic under-supply which is driving up rents – well it was however, we are now starting to see rents flat lining given supply has significantly increased.
New lending initiatives are quickly changing the investor landscape where I suspect it will be a very long time before we see lenders offering 90 per cent loans as we are now seeing lending ratios sitting more around the 70% mark. <a href="/expert-insights/overseas-buyers-will-support-sydney-house-prices-during-apra-crackdown-nab">Overseas buyers will support Sydney house prices during APRA crackdown: NAB</a>; it is fair to say that the federal government won’t be tweaking the foreign buyer ratios (presently at 100 per cent) anytime soon.
There is a reason for this; Australia’s population is set to hit 40 million people by 2056. In order to meet this demand we will see the greatest infrastructure spending in Australia’s history given it’s been calculated that by 2056 Australia will need a further 1,100,000 apartments. Across Australia that means an additional 27,000 apartments each year for the next 41 years, it is expected Sydney and Melbourne will do the majority of the heavy lifting. This also plainly identifies why the Baird government wants to amalgamate the councils to ensure that these new developments keep getting approved.
The message is quite clear that if you want to reside in close proximity to the CBD you will have to live with an avalanche of high density developments.
This week the residential data from the 34th Property Directions Survey was released which is an industry based group comprising property experts – Valuers, Fund Managers, Property Analysts and Property Financiers.
<ul>
<li>58% of respondents stated that Sydney residential property was in or entering a bubble, while 53%t of the respondents believe that the Melbourne property market is in the same position. Seventy per cent of the survey respondents do not believe that the Brisbane residential market was in a bubble.</li>
<li>The majority of the respondents also believe residential property prices will continue to rise for 6 to 12 months. Fifty – three per cent of respondents believe that Sydney residential property prices will continue to rise for either 6 or 12 months with 26% stating 18 months. Respondents are more certain in their predictions for Melbourne residential property with 76%seeing prices continuing to rise for 6 to 12 months.</li>
<li>In 2016, Sydney residential property is seen as reaching the top of the property cycle and moving past the top in 2017. In 2016 respondents see Melbourne residential property having passed the top of the cycle but remaining close to the top through to 2017. Brisbane residential property is seen to be just nearing the top of the cycle.</li>
<li>All respondents to the Property Directions Survey see low interest rates as either a significant or very significant driver of demand for residential property in Sydney, while 95% also point to foreign investment being significant or very significant.</li>
<li>Respondents list a number of other factors they also believe play a role in increasing demand in Sydney, such as population growth, low supply over the past decade and the trend towards smaller households.</li>
<li>The major drivers are considered to be similar for the Melbourne residential property market however 94% see foreign investment as a significant or very significant driver and 87% sight low interest rates as significant to very significant.</li>
<li>A large majority of respondents see low interest rates as the main driver of demand and prices for Brisbane and Perth residential property; however this view is not as strong as it is for Sydney and Melbourne. The majority of survey respondents do not view foreign investment as a significant or very significant factor in driving demand in Brisbane or Perth, but believe negative gearing plays a bigger role.</li>
<li>Most respondents believe both interest rates and inflation will remain similar for next year, while moving higher in the next three years.</li>
<li>It’s a different story with foreign investment, with a small majority of respondents believing levels will remain similar for the next six months. Respondents are less certain over the next 12 months, but most see foreign investment at similar or higher levels. Respondents are even more uncertain about the outlook for 2018,</li>
<li>Some respondents listed current or emerging factors which they believe may have an impact on the Australian property market. Factors listed include a slowing Chinese economy, any increase in the unemployment rate and potential changes to foreign investment or immigration rules.</li>
</ul>
So the eastern seaboard is where we will see the majority of the new developments with NSW leading the way. This again will be investor led although it would be reasonable to suggest that with such a huge apartment platform the house prices will continue to rise with less single residential housing being built.
With that in mind it’s scary to think where prices will go for houses within a 15 kilometre radius of the Sydney CBD. Through the roof springs to mind.
As for that pesky property bubble – it won’t be doing any damage when the vast majority of suburbs across Sydney are posting record low stock levels. When markets are booming (or bubbling along) you see record stock levels which is the complete opposite to what we are seeing across Sydney at the present.
<h4>MOSMAN – 2088</h4>
• Number of houses on the market this time last year – 85
• Number of houses on the market last week – 55
• Number of houses on the market this week – 46
• Number of apartments on the market this time last year – 63
• Number of apartments on the market last week – 41
• Number of apartments on the market this week – 43
<h4>CREMORNE – 2090</h4>
• Number of houses on the market this time last year – 8
• Number of houses on the market last week – 7
• Number of houses on the market this week – 2
• Number of apartments on the market this time last year – 9
• Number of apartments on the market last week – 11
• Number of apartments on the market this week – 8
<h4>NEUTRAL BAY – 2089</h4>
• Number of houses on the market this time last year – 9
• Number of houses on the market last week – 3
• Number of houses on the market this week – 2
• Number of apartments on the market this time last year– 42
• Number of apartments on the market last week – 29
• Number of apartments on the market this week – 30
 
ROBERT SIMEON is a director of <a href="https://www.rwm.com.au/" target="_blank" title="RWM" rel="nofollow">Richardson Wrench Mosman and Neutral Bay</a> and has been selling residential real estate in Sydney since 1985.  He has also been writing real estate blog <a href="https://www.rwm.com.au/news/" target="_blank" title="Virtual Realty News" rel="nofollow">Virtual Realty News</a> since 2000. 
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Living with an avalanche of high density development: Robert Simeon

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The Melbourne buyers' advocate David Morrell says he is finding it "incredibly hard to buy because you cannot justify the prices."
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He said most reserves were being passed easily.
"Are we in a bubble? Of course we are. It just depends who is caught with the parcel," he said.
 "But in my opinion, it is incredibly hard to buy because you cannot justify the prices," he suggested in his regular Monday auction roundup in the Australian Financial Review.
He recently blogged "the really bubbling bubble" is at $1 million to $5 million.
He pointed the finger at a June $4.66 million Armadale sale (photo below) at 39 Lambeth Avenue — "a street where anything starting with a $4 would be hard to justify." 
<img src="https://i1.au.reastatic.net/456x342/fbf55072cbb6b761411114c1532d68b13e37f8d41325530b7bec5cf4a47ac81c/main.jpg" alt="39 Lambeth Avenue, Armadale" title="39 Lambeth Avenue, Armadale" data-index="0">
Only a month ago Morrell wasn't calling it a bubble.
"Our suspicion is that this isn’t a bubble, it’s a jumping castle.
"Frenetic leaps until it springs a leak and then a slow deflate."
But another Melbourne buyers' agent Mal James continues finding homes for clients, noting while typically at well above agent estimates, they have been <a href="https://marketnews.com.au/documents/May_Results.xlsx.pdf" target="_blank" style="line-height: 1.3em;">rarely above his own price appraisals</a>.
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Buyers' agent David Morrell says top end Melbourne bubble prices can't be justified 

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The arguments Terry Ryder presents need to be anchored in facts, he urged last week, and we couldn’t agree more. The subject of Mr Ryder’s piece for Property Observer was about recent GetUp email on negative gearing and unfortunately the facts of the matter were the first casualty. 
Getting into the policy nuances of an issue as complex as housing affordability is challenging in a blog. What we have to do is cut through the haze of complexity, often used by politicians and lobbyists to diffuse popular calls for reform, and get to the heart of the issue in clear language, anchored in the facts. With the luxury of a few more words, let’s go through Mr Ryder’s statements compared to GetUp’s, and see which way the facts fall.
1. Mr Ryder said we were wrong to claim “millions of first home buyers” were priced out of the market, because: “Australia has 8.6 million households, of which 6 million are homeowners and much of the rest (according to the research) are renters by choice.”
Mr Ryder was looking at household data, not individuals - but if you look at individuals, the last census in 2011 <a href="https://www.abs.gov.au/websitedbs/censushome.nsf/home/factsheetshtdc?opendocument&amp;navpos=450" target="_blank">found about 2.3 million people in Australia rent</a> (and that figure doesn’t include the people who want to buy, but are living at home with their parents rather than renting). 
Mr Ryder does not provide any reference to the “research” allegedly showing most of these are “renters by choice.” However, a November 2014 report by the <a href="https://www.ahuri.edu.au/publications/download/ahuri_51002_fr2" target="_blank">The Australian Housing and Urban Research Institute</a>, under a section titled “deferring, not rejecting purchase”, shows renting for longer to save for a later purchase is one of several approaches would-be homebuyers are using to deal with higher prices.
It’s difficult to know for sure how many renters would rather be home owners, so we probably should have qualified it by saying “potentially” millions in our email, but when you look at the numbers and the research there are plenty of clues to suggest millions of renters would rather own their own homes. 
2. He claims, “25% of all current residential sales are to first-time buyers.” 
That’s wrong. The <a href="https://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/5609.0Main%20Features3Apr%202015?opendocument&amp;tabname=Summary&amp;prodno=5609.0&amp;issue=Apr%202015&amp;num=&amp;view=" target="_blank">Australian Bureau of Statistics Housing Finance figures for April 2015</a> shows first home buyers made up just 15% of residential sales. The last time first home buyers made up 25% of the market was nearly five years ago, in October 2009. In fact, this precipitous drop in less than five years supports the proposition that would-be first home buyers are being pushed out of the market.
3. He questions the link between negative gearing and housing affordability, saying, “An 18-month federal parliamentary inquiry … couldn’t provide any definitive evidence that it did.”
Research from the Australian Bureau of Statistics shows housing finance for investment properties rose from 16% to over 40% over the past 25 years, with the proportion of people renting increasing over that period, too. In particular, rental loss reported through negative gearing exploded after the capital gains tax discount was introduced in 1999. All this points to more investors in the market bidding up the price.
4. Though it’s not a key point in our email, Mr Ryder takes issue with the implication that investors are buying a second or third property, referencing ATO data showing “three-quarters of investors own only one property.” 
But that ATO data refers to investment properties. Mr Ryder forgets most people who buy an investment property are also owner occupiers. So when they buy an investment property, it’s generally their second property.
5. Mr Ryder says “the [GetUp] claim about ‘a skyrocketing housing market’ is patently absurd, given that only one of the eight capital cities has a boom market.” 
If that’s true, we’re not sure what all the fuss is about in the media, every single day. But let’s look at the figures and listen to the experts.  
A fascinating article on 15 April by ABC Business journalist Michael Janda quotes:
<ul>
<li>RMIT housing expert Emeritus Professor Mike Berry: "Housing prices more or less doubling over the last 10, 12 years in the capital cities.”</li>
<li>ABS statistics: Australian capital city home prices rose 68% over the past 10 years, and 125% in the decade before.</li>
<li>
BIS figures: over the last 40 years Australia has seen stronger house price growth than anywhere except Norway.
</li>
<li>International property analysts at Demographia: Australia is one of the world's least affordable places to live, with their measure of median home prices to median incomes showing all five of Australia's biggest cities are "severely unaffordable," with Sydney and Melbourne in the world's top 10, along with Tweed Heads.</li>
</ul>
According to the International Monetary Fund, Australia has the third highest house prices, relative to the level of people's incomes, among 24 advanced economies.
Even if you limit the discussion to the Sydney and Melbourne property markets, that’s where more than nine million Australians live. Other capital cities, like Perth and Brisbane, have also seen<a href="https://www.abs.gov.au/AUSSTATS/abs@.nsf/DetailsPage/6416.0Dec%202014?OpenDocument#Time" target="_blank"> dramatic price rises</a> at times within the past 12 years (more than doubling and a 75% increase, respectively) that have made it very difficult for first home buyers. 
6. Mr Ryder disputes this statement: “A massive $4.2B in negative gearing tax breaks per year go to the top 10% of income earners.”
The $4.2 billion in tax breaks for the top 10% of income earners is the combined impact of the negative gearing and Capital Gains Tax (CGT) discount - we should have said this in the email (and have since done so on the web page). That figure comes from the GetUp commissioned Australia Institute report, ‘It’s the revenue stupid,’ released in May this year, which was cited in the email.
The wider issue is how negative gearing interacts with the capital gains tax discount to drive up prices. It is the two policies working together that makes property investment so profitable and means that more and more of it is happening. For this very reason, scrapping the capital gains tax discount is also part of the GetUp/Australia Institute policy recommendations. It is simply too difficult to tell that entire story in one blog (and many in the media have had the same difficulty), though we have information about it online.
7. Mr Ryder then cites ATO data to argue that most Australians who own an investment property earn less than $100,000. 
On this point it is essential to understand that one of the core purposes of using negative gearing is to reduce the investor’s taxable income (i.e. below $100,000, or $80,000, the marginal tax thresholds).
As ABC Business Journalist Michael Janda explains, “the “ATO's measure of ‘total income’ includes net, not gross, rent - that is, rental earnings or losses after deductions such as interest payments have already been removed. The very reason that many housing investors fall below the $80,000 threshold is because they have used negative gearing to slash their tax bill.”
For this reason, both Mr Janda and Greg Mckenna (in an article for Business Insider), point out that the HILDA survey data, used by the Reserve Bank of Australia (RBA), is more accurate. According to the RBA (as cited in Mr McKenna’s piece), “investor households with incomes in the top 20 per cent of the income distribution owe the bulk of the investor housing debt and over a quarter of total housing debt outstanding … The bottom 20% [of the income distribution] account for just 2% of investor housing debt.”
For further reinforcement, Professor Judy Yates, one of the country’s most respected housing experts, who was seconded by the Australian government to work on their National Housing Strategy, said: “the biggest benefits [of negative gearing] go to high-income households, lowest benefits go to lower-income households."
8. Mr Ryder next takes issues with our claim there’s a “consensus among housing experts and economists that negative gearing is one policy area driving unaffordable housing.”
In arguing this, he says only a minority are concerned about negative gearing, and describes highly respected economist, Saul Eslake, as being part of the “lunatic fringe”. (Who knew the chief economist at Merrill Lynch could possibly be considered fringe?) Nevertheless, here are a few other notable ‘lunatics’ who have shown concern about negative gearing:
<ul>
<li>Former Governor of the Reserve Bank Bernie Fraser </li>
<li>Former Commonwealth Bank CEO David Murray </li>
<li>ANZ boss Mike Smith</li>
<li>Australian Council of Social Service </li>
<li>John Daley, CEO of the Grattan Institute </li>
<li>The Australia Institute </li>
</ul>
We’d run out of pixels if we completed the list.
9. Mr Ryder claims “the GetUp campaign is based on the notion that eliminating negative gearing will somehow make housing cheaper.” 
Except, that’s not what we said. The GetUp/Australia Institute policy recommendation was to limit future negative gearing to new properties, which currently represent only six per cent of the value of negatively geared purchases. By driving investment dollars into new properties, the idea is to stimulate the creation of additional housing supply, which can help reduce prices and rents, as well as create construction jobs. This is also an approach that’s been put forward by the McKell Institute and is reportedly being considered by the Labor party.
But, to take Mr Ryder’s point on more directly, the logic is pretty straight forward. Reducing the tax incentives for investors buying second hand property will reduce demand for that property and therefore put downward pressure on prices. 
10. Finally, Mr Ryder takes issue with our reference to the property bubble. He says, “What we have seen throughout history is that boom markets eventually stop growing and prices level out. But we have never seen a crash, not in the history of this nation.”
In fact, RBA data shows several <a href="https://www.rba.gov.au/publications/rdp/1999/pdf/rdp1999-06.pdf" target="_blank">precipitous price drops in the history of the Australian property market</a>, including in 1891 and the Great Depression. And if we go just a bit outside the direct experience of our nation, the entire Global Financial Crisis was triggered by a property bubble and crash in just one country - the United States. As a reminder, that included the near collapse of some of the largest financial institutions in the world (only prevented through massive government intervention) and recessions in most industrialised nations of a scope and duration not seen since the Great Depression (prevented in Australia only by a $52.4 billion stimulus package). So property bubbles and crashes do happen and they can have pretty dire consequences.
Tens of thousands of Australians have signed the petition calling for reform to negative gearing - we’re disappointed to hear Mr Ryder doesn’t support it, but GetUp’s member driven, which means if members don’t support a campaign they are free not to. We welcome constructive criticism, but as Mr Ryder said, it needs to be grounded in the facts. 
Picture this: 43% of Australia’s wealth is held in real property now, compared to 30% of America’s wealth in 2001, just prior to the Global Financial Crisis. Australia also has just four banks holding 75% of all Australian mortgages. So, if you want to talk about systemic economic risks, then the property bubble would have to be at the top of your list. With that in mind, it makes sense why Saul Eslake, the RBA Governor and the Treasury Secretary, among others, have been so concerned.
In the context of so much risk, the burden is on Mr Ryder to explain what magical mechanism would prevent the Australian housing bubble from a price crash.
Mark Connelly is GetUp's Campaign Director. GetUp can be reached <a href="https://www.getup.org.au" target="_blank">here</a>.
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Property market facts are stubborn things: GetUp's Mark Connelly

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The debate over Sydney’s property price bubble (Yes there is! No there isn’t!) sits smack bang in the middle of one of the most fascinating economic questions of our time: how risky is sudden asset price inflation?
And if the risk is judged to be high what, if anything, are policymakers to do about it?
In the 24/7 world of US and European bond markets, traders’ Bloomberg screens have bleated dire warnings since bond yields went negative last year for the first time in modern economic history. In China, speculators watch equity markets in Shanghai and Shenzhen that have risen more than 150% in the past 12 months. And in Australia, Australian_property_bubble is its own Wikipedia page.
As my former boss Saul Eslake pointed out last week in the Sydney Morning Herald, to use the term bubble in relation to asset prices is “emotionally laden”. It has no definition in the academic literature, other than a generalised notion of a sudden and upward acceleration in asset price movements that poses the risk of a violent crash.
Alan Greenspan’s famous term “irrational exuberance,” was another expression of emotion. Bubbles – the endgame of a bull market – are not as well defined as a bear market, which generally refers to a 20% or more fall in equity prices, or an economic recession, which is two consecutive quarters of negative GDP growth.
What is a bubble and other tricky definitions
One of the big challenges in defining a bubble is in establishing its start. Sydney property prices are a case in point. In 2014, the ABS residential property price index for Sydney indicated a 14.7% rise for the year. That’s strong growth, and was at least double the rate of growth seen in other capital cities. But extend the starting point back five years, and Sydney’s property prices have increased by 39%, roughly on par with Canberra (36%) and Melbourne (35%). Go back 10 years, and Sydney’s property price growth of 57% is significantly less than the national weighted average of (85%) and less than half that of Darwin (168%) and Perth (133%), or even Melbourne (113%).
So are Sydney property prices in bubble territory, or are they just catching up after a period of flat-to-negative growth in the early 2000s? What of other factors such as the underlying dynamics of supply and demand, housing density, urban planning and land value?
When policymakers are staring in the face a potential bubble, their real concern is the underlying drivers of that sudden, rapid surge. Is the bubble a symptom of systemic risk?
Growth in credit and foreign investors
In Sydney’s case, two potential systemic risks merit scrutiny. The first is the very rapid growth in credit being used for property investment; that is, the expansion of leverage. The second is increasing foreign investment that is reportedly flowing into the Sydney property market, purportedly from China.
These are, however, two very different risk stories. Of the two, leverage is far more pernicious. Excessive household leverage in particular walks down a well-worn path toward financial instability - as the global financial crisis amply reminded us - where it can take years for families to repair their balance sheets after a hit. “Buyer beware” is a theoretically correct construct, but not a particularly practical one should a government have to face down armies of homeowners sinking under negative equity.
Rising capital inflows hold much less risk, particularly in an Australian context. A sufficient magnitude of outflows would dampen market prices, potentially cause the Australian dollar to weaken somewhat and ultimately require some current account adjustment. One could argue that this outcome may be an upside risk for growth, not a downside one.
Reserve Bank of Australia governor Glenn Stevens’ comments last week in Brisbane make it clear that his focus is square on the risk of leverage. He notes pointedly that Australian households already have a high debt burden taken on in the years leading up to the 2008 financial crisis; the point of the speech was a plea was for government to shoulder the burden by getting on with a boost in useful (non-mining) infrastructure investment while cheap finance is so plentiful.
Macroprudential actions
Should Stevens’ concerns on household indebtedness move from words to action, the policy response would be to temper leverage. The most targeted and effective approach is to make borrowing more expensive through more stringent customer debt-to-income tests.
The RBA and Australian Prudential Regulation Authority (APRA) could also reduce the allowable maximum loan-to-valuation ratios (LVRs) thereby requiring higher deposits – following the example of the Reserve Bank of New Zealand – or, in a nod to recommendations in the Financial Services Inquiry, increase the Big Four banks’ risk weights on capital held against mortgage loans.
These types of measures are often called “macroprudential”– that is, regulations applied to maintain financial system stability by directly addressing perceived underlying risks. Macroprudential regulation is a term that has come back into vogue in the post-GFC world. In reality, the concepts are not new.
As Luci Ellis and Paul Woolley pointed out in an RBA paper back in 2012, a macroprudential policy stance is more a state of mind around monitoring and acting on systemic risks rather than a specific set of policy measures or tools.
Lower stamp duties, increase capital gains tax?
A second course of action would be for the federal or state government to shift market dynamics through tax incentives. Lowering stamp duties would reduce transactions costs, potentially freeing up more supply in the existing housing stock. So could shifting the pension asset test to increase the incentive to downsize from the family home once it is no longer needed. Introducing greater capital gains tax on properties sold within a short period or reducing the benefits of negative gearing would go a long way toward discouraging investor-driven acquisitions, while imposing new levies on purchases by non-residents could dampen capital inflows.
The problem with changing property-related tax policies for residents is twofold; not everyone will be happy, and the need for gradual introduction to allow for adjustment means impacts may be slow. An additional issue with trying to limit property purchases by non-residents through tax is that its target is a great unknown.
Hong Kong’s failure to deflate
As will be discussed in depth in a paper released by the Australian Centre for Financial Studies and Finsia this week, there continues to be a remarkable lack of comprehensive and reliable data on both the source and ultimate destination of foreign investment into Australia, and particularly into the residential and commercial property market. With such thin evidence as to both the total size and the source of these anecdotal flows, policymakers are shooting in the dark.
Beyond this, it cannot be guaranteed that raising borrowing costs and shifting tax incentives would deflate a perceived property bubble. Hong Kong and Singapore have both tried it, and arguably failed. In 2010, Hong Kong moved to simultaneously require a significant increase in deposits for investment properties while also adopting additional stamp duties on investment properties, with higher penalties for non-resident investors. Singapore followed suit in 2013.
The impact on Hong Kong has been negligible. Despite concerns of market disruption in 2010, property prices continued to climb and hit an all-time high last year. Singapore did see its property prices flatten in 2013, then fall by 4% in 2014.
However, there has also been a significant decline in the volume of both existing and new home sales according to the Urban Redevelopment Authority, suggesting that these measures may not have had the desired impact of increasing housing affordability or supply. And although prices have not increased, they remain high relative to Singapore household income.
Crazy indeed.
Amy Auster is Deputy Director at the Australian Centre for Financial Studies. She can be contacted <a href="https://www.australiancentre.com.au/AboutUs/Staff/AmyAuster" target="_blank">here</a>.
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Blowing bubbles: the tricky task of tackling Sydney's property market 

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John Flavell, CEO of home loan experts Mortgage Choice, while not denying the property market is hot in parts of Sydney and Melbourne, says we are not experiencing a property price bubble.
"To state that a property bubble exists in Sydney and Melbourne you would have to believe we will see a sudden and dramatic reduction in property prices over a very short period of time.
"Property prices, like the prices for anything else, are driven fundamentally by supply and demand.
"Is that going to change rapidly or significantly in either Sydney or Melbourne and cause a bust?," he asked. 
"In Australia we have a modest rate of population growth driving modest increases in property demand. 
"We have had historically low levels of new construction keeping supply tight, especially in Sydney and Melbourne. 
"We continue to see high rates of urbanization, particularly in NSW and Victoria, as our population is attracted and retained by our largest cities given the employment opportunities and the amenities they provide.
"If you are prepared to believe basic rules of supply and demand do not apply to the Sydney and Melbourne property markets, and if you believe the population is about to go backwards overnight. 
"If you believe that we will be able to manufacture new land close to the heart of our busiest urban centres, if you believe that we are all about to flee to the country and there is a fleet of trains that could take us there and if you believe we all want to move our families into studio apartments and forego our houses, then you just might believe that a property bubble exists in Sydney and Melbourne.
"Property in Sydney and Melbourne is expensive, but it is not about to get any cheaper," he said.
Meanwhile the demand for fixed rate home loans ticked up a little during May, after the Reserve Bank’s decision to cut the cash rate to 2%.
Mortgage Choice found fixed rate home loans made up 18.17% of all loans written in May - up from 17.91% in April. Its chief executive John Flavell says the demand accompanies speculation that Australia was potentially now at the bottom of the rate cycle.   “Following last month’s rate cut, the domestic economy has started to shows signs of improvement. Consumer sentiment improved dramatically, while business conditions retraced some of the gains reported in March.”
 
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